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Federal Energy Regulatory Commission, DOE.
Final rule.
The Federal Energy Regulatory Commission (Commission) is revising its regulations to incorporate by reference, with certain enumerated exceptions, the latest version (Version 003) of the Standards for Business Practices and Communication Protocols for Public Utilities adopted by the Wholesale Electric Quadrant (WEQ) of the North American Energy Standards Board (NAESB) as mandatory enforceable requirements. These standards update NAESB's WEQ Version 002 and Version 002.1 Standards to reflect policy determinations made by the Commission in the Order Nos. 890 series of orders and other orders. In addition, the Commission is listing informationally, as guidance, NAESB's Smart Grid Standards (WEQ-016 through WEQ-020) in Part 2 of the Commission's regulations.
This rule will become effective October 24, 2014. Dates for implementation are provided in the Final Rule. The incorporation by reference of certain publications listed in this rule is approved by the Director of the Federal Register as of October 24, 2014.
1. The Federal Energy Regulatory Commission (Commission) is amending its regulations under the Federal Power Act (FPA)
2. These revised standards update earlier versions of these standards that the Commission previously incorporated by reference into its regulations at 18 CFR 38.2. These new and revised standards include modifications to support Order Nos. 890, 890-A, 890-B and 890-C,
3. The Version 003 Standards also include modifications to the OASIS-related standards that NAESB states support Order Nos. 676, 676-A, 676-E and 717 and add consistency.
4. NAESB is a non-profit standards development organization established in January 2002 that serves as an industry forum for the development and promotion of business practice standards that promote a seamless marketplace for wholesale and retail natural gas and electricity. Since 1995, NAESB and its predecessor, the Gas Industry Standards Board, have been accredited members of the American National Standards Institute (ANSI), complying with ANSI's requirements that its standards reflect a consensus of the affected industries.
5. NAESB's standards include business practices that streamline the transactional processes of the natural gas and electric industries, as well as communication protocols and related standards designed to improve the efficiency of communication within each industry. NAESB supports all four quadrants of the gas and electric industries—wholesale gas, wholesale electric, retail gas, and retail electric. All participants in the gas and electric industries are eligible to join NAESB and participate in standards development.
6. NAESB develops its standards under a consensus process so that the standards draw support from a wide range of industry members. NAESB's procedures are designed to ensure that all industry members can have input into the development of a standard, whether or not they are members of NAESB, and each standard NAESB adopts is supported by a consensus of the relevant industry segments. Standards that fail to gain consensus support are not adopted.
7. In Order No. 676, the Commission not only adopted business practice standards and communication protocols for the wholesale electric industry, it also established a formal ongoing process for reviewing and upgrading the Commission's OASIS standards and other wholesale electric industry business practice standards. In later orders in this series, the Commission incorporated by reference: (1) The Version 001 Business Practice Standards;
8. In Order No. 890, the Commission revisited the
9. A number of the findings made by the Commission in the Order No. 890 series of orders necessitated revisions to
10. The Version 003 standards include five categories of standards not previously incorporated by reference by the Commission that were developed by NAESB in response to the Order No. 890 series of orders. These include: (1) Standards that NAESB previously submitted to support SAMTS;
11. In Order No. 717, the Commission made several modifications related to the posting requirements associated with the Standards of Conduct. Specifically, the Commission discontinued the requirement for public utilities to post standards of conduct information on their OASIS sites.
12. The Joint Electric Scheduling Subcommittee (JESS), a standing joint subcommittee made up of participants from NAESB and the North American Electric Reliability Corporation (NERC), has been tasked with coordinating efforts to maintain and modify, as needed, the coordinate interchange business practice standards in WEQ-004 with their associated reliability standards. JESS now leads the effort to harmonize the Coordinate Interchange (WEQ-004) standards with the WEQ-001, WEQ-003 and WEQ-013 Business Practice Standards in light of revisions made to the Electronic Tagging Functional Specification, previously maintained by NERC, and now maintained and updated, as needed, by NAESB. The WEQ adopted additional modifications to the WEQ-004 standards to use abbreviations, acronyms, definitions and terms consistent with those in Standard WEQ-000 and to provide consistency across all WEQ standards.
13. WEQ adopted modifications to support consistency between the WEQ business practice standards and the Wholesale Gas Quadrant (WGQ) Gas/Electric Coordination standards. In addition, WEQ made modifications to the business practice standards to harmonize the terms and definitions contained within the WEQ business practice standards with the definitions of those terms used in the business practice standards for other quadrants. These changes were also coordinated to be consistent with definitions and terms contained in the NERC Glossary.
14. Also included in the WEQ Version 003 standards are standards developed to support Smart Grid applications as well as standards related to the measurement and verification of Demand Response (DR) and Energy Efficiency (EE) products. These standards have been referenced in earlier reports filed with the Commission before the completion of the WEQ Version 003 standards. The Smart Grid application standards had been referenced in a report filed with the Commission on July 7, 2011 in Docket No. RM05-5-021. The DR and EE measurement and verification standards were referenced in a report filed with the Commission on May 2, 2011 in Docket No. RM05-5-021 and have been the subject of Commission action.
15. NAESB's September 18 Filing includes an interpretation of standards WEQ-001-9.1 and WEQ-001-10.1 and recites the results of a quadrant-wide effort to provide a common location for all abbreviations, acronyms and definitions of terms that created the WEQ-000 Business Practice Standards and addresses both internal inconsistencies and inconsistencies between the standards and terms and definitions in the NERC Glossary.
16. In a notice of proposed rulemaking issued on July 18, 2013, the Commission proposed to amend its regulations to incorporate by reference, with certain enumerated exceptions, the WEQ Version 003 Standards.
17. Finally, on November 27, 2013 NAESB filed a report with the Commission stating that it made minor corrections to Standards WEQ-000, WEQ-001, WEQ-002, WEQ-003, WEQ-013, and WEQ-014. The Commission considers these corrections non-substantive and we will incorporate these corrections by reference to ensure the standards we adopt are as accurate and up-to-date as possible.
18. The specific NAESB standards that we are incorporating by reference in this Final Rule are:
19. In addition, in this Final Rule, we will list informationally, in Part 2 of our regulations, as non-mandatory guidance:
20. In a change from our prior practice, we are requiring public utilities and those entities with reciprocity tariffs to modify their open access transmission tariffs (OATTs) to include the WEQ standards that we are incorporating by reference by making a compliance filing by December 1, 2014.
21. NAESB approved the standards under its consensus procedures.
22. Comments in response to the WEQ Version 003 NOPR were filed by eleven commenters and one reply commenter. A number of comments expressed general support for the Commission's proposals
23. In Order No. 676-E, the Commission declined to incorporate by reference NAESB Standards WEQ-001-14.1.3 and WEQ-001-15.1.2 (both related to ATC Narrative) because these
24. PJM believes that the proposed one-day posting goal and five-day posting requirement are reasonable.
25. PJM states that, in the event that the Commission would prefer a strict one-day posting requirement, it could specify that an entity could avoid self-reports of administrative violations of the rule so long as the average missed postings per year does not exceed a set value (e.g., 75 percent of postings) and does not exceed, for example, three days for posting. PJM states that, with such a structure, a preference for one-day posting could be implemented, while avoiding the need for administratively burdensome self-reporting in those instances where, due to unforeseen circumstances, the Transmission Provider is unable to meet the requirement.
26. In Duke Energy's view there are instances when a Transmission Provider will need longer than one day to post an ATC narrative.
27. TDU Systems expressed concern with the timetable in Standard WEQ-001-14.1.3 and WEQ-001-15.1.2 encouraging the Transmission Provider to strive to post a zero ATC narrative for each Constrained Posted Path within one business day and the requirement to post the narrative within five business days and urges that Transmission Providers post this information as soon as feasible. In addition TDU Systems indicates the requirement should be for Transmission Providers to post the zero ATC narrative and the ATC change narrative at the same time that the ATC results are published.
28. As we did in Order No. 676-E, in this Final Rule the Commission will decline to incorporate Standards 001-14.1.3 (on the posting of zero ATC narratives) and 001-15.1.2 (on the posting of ATC change narratives) by reference, as they permit Transmission Providers to post an available transfer capability change narrative within five business days of meeting the criteria under which a narrative is required to be posted, which is inconsistent with the Commission's rejection in Order No. 890 of delays in posting data.
29. The two comments challenging a one-day posting requirement for ATC narratives did not provide a compelling reason why longer than one day would be necessary to post this narrative under normal circumstances. Commenters' examples of times when extenuating circumstances would require additional time to post the narrative could arise, but would likely not reflect a normal circumstance. While we would be receptive to incorporating a revised standard that would create a self-reporting mechanism to deal with instances when special circumstances have prevented timely postings, we would not be receptive to a standard with an expansive exception from self-reporting, as suggested by PJM. Nor are we satisfied that the revised Standard adopted in WEQ Version 003 is adequate to ensure the timely posting of ATC narratives. Thus, we will decline to incorporate Standards 001-14.1.3 and 001-15.1.2 by reference and request that NAESB revise these standards to provide for a one-day posting requirement.
30. TDU Systems not only argues that the postings required by Standards 001-14.1.3 and 001-15.1.2 should be required to be made more promptly, it also argues they should be required to be made at the same time the Transmission Provider publishes its ATC results. We find, however, that TDU Systems has not demonstrated why simultaneous posting is necessary, nor has it informed us of any efforts it has made to build a consensus within NAESB for this suggested requirement. Nor has TDU Systems shown that the Standard, as adopted by NAESB is unreasonable. If TDU Systems believes that its proposal would improve upon the standards adopted by NAESB, we encourage it to work through the NAESB process to build consensus for its position and implement this change at the time when NAESB works on revisions to Standards 001-14.1.3 and 001-15.1.2 to implement our policy in
31. As we explained in the WEQ Version 003 NOPR, in the Version 003 standards, NAESB modified WEQ-001-9.7 so that it would conform to the Commission's policy granting rollover rights to requests for redirect on a firm basis.
32. NAESB modified the WEQ-001-9 Business Practice Standards (Requirements for Dealing with Redirects on a Firm Basis) and modified the definition of Unexercised Rollover Rights and added a definition for Capacity Eligible for Rollover to make the NAESB standards consistent with the Commission's regulations. NAESB also made relevant modifications to standards WEQ-001, WEQ-002 and WEQ-013 and provided examples for the conveyance of rollover rights with a redirect on a firm basis provided in Appendix B of the WEQ-001 standards. Our discussion in the WEQ Version 003 NOPR also took note of our precedent in
33. Bonneville sees a conflict between the Commission's policy in
34. Duke Energy argues that standard WEQ-001-9.7 does not reflect the guidance provided by the Commission in
35. Seattle is concerned that NAESB Version 003 standard WEQ-001-9.7 does not align with the Commission's policy regarding when a customer requesting a redirect loses its rights on the parent path.
36. TDU Systems comment that Standard WEQ 001-9.7.11 does not fully conform to the Commission's policy granting rollover rights to requests for redirect on a firm basis.
37. Tacoma Power encourages the Commission to adopt recently proposed standards by NAESB that provide for the crediting of transmission capacity toward redirect requests.
38. Clark Public Utilities comments that several standards, including WEQ-001-9.1.3, WEQ-001-9.1.3.1, WEQ-
39. The ISO/RTO Council requests that the Commission clarify that, under Standard WEQ-001-9.5, capacity on original path is released for resale when a Transmission Provider confirms a redirect request.
40. On redirects, OATI notes the inconsistency between the standards and the Commission's findings in
41. Snohomish supports the comments that argue that the Commission should not incorporate standards bearing on redirects (Seattle, Bonneville, Duke Energy and Clark Public Utilities).
42. The Commission has issued three separate orders incorporating by reference into the Commission's regulations the Business Practice Standards of NAESB's WEQ.
43. In Order No. 676, the Commission rejected NAESB Standard WEQ-001-9.7, which stated in pertinent part that, unless the transmission owner agrees, a request to redirect does not “confer any renewal rights on the redirected path.” The Commission explained that this standard (WEQ-001-9.7) did not meet the requirements of section 22.2 of the Commission's
Section 22.2 provides that, while a transmission customer's request for new service on a firm basis is pending, the transmission customer retains its priority for service on its existing path, including rollover rights on its existing path. However, once a transmission customer's request for firm transmission service at new receipt and delivery points is accepted and confirmed, the new reservation governs the rights at the new receipt and delivery points and the transmission customer can obtain rollover rights with respect to the redirected capacity.
44. NAESB sought to correct this deficiency by revising Standard WEQ-001-9.7 to make clear that a customer can obtain rollover rights on the redirected path. The revised Standard WEQ-001-9.7 states:
A Transmission Customer holding long-term firm PTP that is eligible for continued rollover rights of service may convey those rights to an alternate path or PORs and PODs through a request to Redirect on a firm basis subject to the following requirements.
45. We find that the revised Standard WEQ-001-9.7 meets the requirements of Order No. 676 by providing a customer with the ability to obtain rollover rights on a redirected path. We, therefore, will incorporate this standard by reference into our regulations.
46. In the past, the Commission has incorporated by reference Standard WEQ-001-9.5.
However, as reinforced in the Commission's recent order in
47. In light of the comments filed and our additional evaluation of the standards, we will decline to incorporate by reference Standard WEQ-001-9.5 into the Commission's regulations. We reach this decision because the confirmation criteria in Standard WEQ-001-9.5 do not satisfy all the factors delineated in
48. Standard WEQ-001-10.5 provides that the capacity available for a redirect will be reduced at the time when the request for a firm redirect is confirmed, which precedes expiration of the conditional reservation deadline.
49. To ensure that the NAESB standards conform to the Commission's
50. As explained in the WEQ Version 003 NOPR, NITS allows a Network Customer to integrate and economically dispatch and regulate its current and planned Network Resources to serve its Network Load in a manner comparable to the way a Transmission Provider uses its Transmission System to serve its Native Load Customers. In the WEQ Version 003 Standards, NAESB has included new and revised standards related to NITS within the WEQ-000, WEQ-001, WEQ-002 and WEQ-003 Business Practice Standards. We also explained that NAESB has proposed Standard WEQ-001-106.2.5, which appears to contemplate a Transmission Provider refusing a request to terminate a secondary network service.
51. Duke Energy comments that the Commission should incorporate Standard WEQ-001-106.2.5, so that Transmission Providers can deny termination of scheduled (tagged) capacity associated with a reservation for Secondary Network Service.
52. APPA believes that Standard WEQ-001-106.2.5 as drafted may not accurately reflect its intended application.
53. Thus, APPA asserts that the Commission should require NAESB to clarify its proposed Standard WEQ-001-106.2, and Standard WEQ-001-106.2.5 in particular, to avoid unduly restricting network customers' flexibility in their use of secondary network service and should give the Transmission Provider the ability to restrict the release on the OASIS of that terminated capacity if, for some reason, it is subsequently unavailable, rather than allowing a Transmission Provider to refuse the transmission customer's request to “terminate” the unscheduled portion of an existing secondary network service reservation.
54. Consistent with this change, APPA argues other sections also would need to be reworded.
55. EEI supports incorporation by reference of Standard WEQ-001-106.25.
56. OATI comments that the intent of Standard WEQ-001-106.2.5 was to allow Transmission Providers to refuse requests for termination of a secondary network resource where the requested amount of capacity to be terminated is in excess of that amount of reserved capacity that has not been scheduled, and therefore not free to be released to available transfer capability as stipulated in WEQ-001-106.2.6.
57. TDU Systems suggests that the Commission should direct NAESB to revise the NITS Standards to eliminate the discretion of a Transmission Provider to refuse a request to terminate secondary network service and to eliminate discretion in tracking designated network resource scheduling rights.
58. Standard WEQ-001-16.2.5 as currently adopted by NAESB is unclear in its application and could be read to allow Transmission Providers discretion to deny requests to terminate service in situations where this might not be warranted. The differing comments on the application and use of this standard highlight the lack of clarity in this area. Therefore, the Commission declines to incorporate WEQ-001-106.2.5 by reference at this time because, as currently drafted, it is not clear how and when this standard should be applied.
59. Thus, the Commission will incorporate by reference all of the NITS standards proposed for incorporation in the WEQ Version 003 NOPR with the exception of Standard WEQ-001-106.2. We encourage NAESB to revise and clarify this entire standard and resubmit it to the Commission with changes that make clear when and how it should be applied.
60. In the WEQ Version 003 NOPR, the Commission proposed SAMTS business practice standards to provide a process for customers to complete cross-regional transactions. As explained in the WEQ Version 003 NOPR, the SAMTS standards address the coordination of point-to-point transmission service and/or network transmission service requests across multiple transmission systems. The process requires each affected provider independently to evaluate its portion of the linked request with the opportunity for reconciliation by the customer once all the evaluations are complete. The customer then communicates reconciled information to each of the affected providers.
61. Bonneville generally supports the proposed standards allowing transmission customers to link requests and reservations over multiple transmission systems on OASIS through coordinated groups.
62. PJM supports the initiative to develop a coordinated process for SAMTS, but PJM expresses concern that the proposed standards addressing SAMTS may result in it taking longer to evaluate Transmission Service Requests with no discernible benefit to customers.
63. TDU Systems believes that the SAMTS standards are a step in the right direction and generally support them.
64. TDU Systems also recommends that the Commission direct NAESB to broaden the applicability of the SAMTS standards.
65. After consideration of the SAMTS Standards and the comments, the Commission will incorporate by reference NAESB's SAMTS standards. We note, however, that we find reasonable Bonneville's request to treat a conditional point-to-point reservation included in a coordinated group displaced through preemption comparably to a reservation that is superseded as a result of preemption. Thus, we request that NAESB consider
66. PJM has raised a concern that this standard may significantly expand the time that will be required to evaluate Transmission Service Requests without any benefit to customers. We note that, consistent with Commission precedent, PJM may request a waiver and attest that its policies are “consistent with or superior” to specific newly incorporated NAESB standards. In such a proceeding, PJM would have the opportunity to substantiate its claim that these regulations would adversely affect its timeframe to evaluate Transmission Service Requests, with no discernable benefit to customers. Waivers are evaluated on a case by case basis and any waiver request from PJM will be evaluated on its individual merits. We make no determination here as to the outcome of such a request.
67. We will deny TDU Systems' request to require Transmission Providers to create a dispute resolution mechanism for transmission customers to use in case there are disagreements over implementation of the SAMTS, as we find no necessity to make this change at this time. Thus, we will adopt the standards as adopted by NAESB, which reflects the industry consensus and we will not at this time request that NAESB make the modifications to the standard recommended by TDU Systems. We reach this decision because we find the standard as adopted by NAESB to be reasonable and see no evidence that this process will not be successful in addressing and resolving disputes between transmission customers and Transmission Providers. Under the SAMTS Standards included in WEQ Version 003, a customer will have access to each transmission owner's dispute resolution process and also will be able to file a complaint with the Commission if the dispute resolution process does not resolve the problems presented. We find it premature to modify the newly adopted SAMTS standard without any evidence that it will not be successful as is. Moreover, there has been an industry consensus for the standard as adopted by NAESB. TDU Systems may raise this issue at NAESB in the future if it finds that a sufficient number of complaints warrant seeking a consensus for revisions to this standard within NAESB. As a general matter, we encourage participation in the NAESB process in the first instance. Those advocating changes to NAESB standards would be well advised to first participate in the NAESB process and seek consensus support for their positions within the NAESB process.
68. TDU Systems also requests that we broaden the applicability of the SAMTS standards and that these Coordinated Requests should continue to be “linked” after evaluations for application of service are complete. TDU Systems provides no justification for extending linkage beyond the procurement of service and a consensus of the industry saw no need for such a change. Thus, we find the consensus standard reasonable without such an expansion. Adoption of such a modification should not be implemented until NAESB has had an opportunity to consider whether an industry consensus supports the standard. Once again, we encourage TDU Systems to seek support for its positions within the NAESB process.
69. As noted by TDU Systems, 18 CFR 37.6(e)(2) already requires that “[w]hen a request for service is denied, the Responsible Party must provide the reason for that denial as part of any response to the request. . . .” We see no need for a further change to the standards as, at this point, the standards are not inconsistent with the Commission's regulation and parties are required to comply with the Commission's regulations.
70. PJM requests clarification that, if there is a conflict between terms of a Commission-approved tariff and NAESB Business Practice Standards, the tariff takes precedence and that an ISO/RTO following the terms of its Commission-approved tariff need not seek waiver of specific NAESB standards to avoid being deemed in violation of the standards.
71. As discussed earlier, the Commission previously permitted a public utility to defer making its compliance filing until it makes an unrelated filing with the Commission to reduce the burden on filers of a stand-alone filing.
72. Public utilities may seek waiver of the standards for newly developed or newly revised standards and for the renewal of existing waivers. Our policy on when these waivers will be granted or denied is not being changed in this Final Rule. All requests for waiver and requests for renewals of prior granted waiver requests must be submitted by December 1, 2014, the same date on which the compliance filing is due.
73. Furthermore, consistent with previous practice, the Commission does not automatically extend existing waivers without Commission review and approval. When the Commission adopts new requirements, it is incumbent on a public utility that wishes to maintain a previously granted waiver applicable to the previous
74. In the WEQ Version 003 NOPR, the Commission proposed to incorporate by reference five Smart Grid standards (WEQ-016, WEQ-017, WEQ-018, WEQ-019 and WEQ-020) into the Commission's regulations. The Commission also invited comment on what version of Standard WEQ-019 should be incorporated (discussed below).
75. Bonneville supports the Commission's incorporation of the proposed standards regarding Smart Grid.
76. The ISO/RTO Council suggests that the Commission could confirm that the NAESB smart grid standards would not impose enforceable compliance mandates, particularly on ISOs and RTOs.
77. The Commission agrees with Bonneville and the ISO/RTO Council that the NAESB Smart Grid Standards have value and that their use by public utilities should be encouraged by the Commission. At the same time, however, we also find merit in EEI's arguments against incorporating these standards by reference into the Commission's regulations and in ISO/RTO Council's arguments against making these standards enforceable and mandatory. Thus, rather than incorporating these standards by reference as mandatory enforceable standards (as proposed in the WEQ Version 003 NOPR), the Commission instead will list these standards informationally in Part 2 of our regulations as non-mandatory guidance.
78. We are listing informationally the five Smart Grid Standards, as non-mandatory guidance, rather than incorporating them by reference into our regulations as mandatory requirements, because we agree with commenters that the five standards at issue were meant to provide encouragement for the development of new technologies and to foster Smart Grid interoperability by defining a set of business processes that would serve as an input into the development of a broader Smart Grid information model. In addition, we agree with the ISO/RTO Council that these NAESB standards “are building blocks that support ongoing efforts to develop future smart grid standards.”
79. In the WEQ Version 003 NOPR, the Commission noted that NAESB had ratified changes to Standard WEQ-019 on March 21, 2013 that were provided
80. Bonneville supports the Commission's incorporation of the version of the Standards ratified by NAESB on March 21, 2013.
81. The ISO/RTO Council takes no position on which version of WEQ-019 be used.
82. All of the concerns raised about our incorporation by reference of the version of Standard WEQ-019 ratified by NAESB on March 21, 2013 hinge on the concern that we might incorporate this standard as a mandatory enforceable standard. Given our decision to only list these standards informationally, as guidance, there is no remaining reason not to go with the most up-to-date version (i.e., the version ratified by NAESB on March 21, 2013) and that is the version we are listing informationally, as guidance, in this Final Rule.
83. PJM asks the Commission to continue to acknowledge in its final rule in this matter that NAESB's business practice standards associated with NITS do not apply to PJM's market construct as the NITS Standards and Order No. 890 requirements were developed to eliminate undue discrimination in the provision of transmission service and were not designed to address the more stringent requirements that necessarily apply to resources designated under a capacity construct, such as PJM's.
84. Once again, if PJM believes that its circumstances warrant a continued waiver of the regulations, it may file a request for a waiver wherein it can detail the circumstances that it believes warrant a waiver. The Commission will decide on any such waiver request on a case-by-case basis and we decline to prejudge those circumstances in the context of this rulemaking. Absent a Commission-approved waiver, compliance with the standards is required by all public utilities.
85. The ISO/RTO Council requests “the Commission attach substantial weight to applicability and scope provisions included in the WEQ standards when it considers individual ISO/RTO waiver requests.”
86. Any public utility seeking a waiver of these requirements must still comply with the requirement to file a revised tariff acknowledging its obligation to comply with the newly incorporated by reference Business Practice Standards. While it may additionally file a written request for waiver, such waiver request will not excuse compliance with the standards until such time as its waiver request is approved by the Commission. Thus, waiver requests should be filed by December 1, 2014, which is early enough to allow for Commission review prior to the compliance date. Waiver requests should identify the specific requirements from which waiver is sought and should state the reasons why a waiver is warranted. Requests for waiver related to Standard WEQ-002-5.10.3 must be filed by February 24, 2016.
87. In the past, the Commission has allowed a public utility to defer the filing of a revised tariff acknowledging its obligation to comply with the newly incorporated by reference Business Practice Standards until it makes an unrelated tariff filing. In this Final Rule, we have reconsidered that policy and find that, given the broader coverage of the NAESB standards, as well as the waiver requests received, the deferral policy may lead to confusion over the standards applicable to particular public utilities. Moreover, deferral of the filings may lead to NAESB standards being included in FPA section 205 filings, making review of the standards and waiver requests more difficult to process. We have concluded, therefore, that, as we do with respect to incorporation of the NAESB standards for natural gas, all public utilities will need to make a compliance filing that will permit uniform review of the filings and all requests for waiver. For those public utilities that want to incorporate the complete set of NAESB standards into their tariffs without modification, we will permit their initial compliance filing to specify that they are incorporating into their tariff all the standards as specified in Part 38 of the Commission's Rules of Practice and Procedure as updated and revised.
88. Consistent with this determination, we are requiring each public utility to make the required tariff filing acknowledging its obligation to comply with the newly incorporated by
89. Those public utilities that choose not to revise their tariffs to include the statement referenced above acknowledging their obligation to comply with the latest version of the Business Practice Standards incorporated by reference by the Commission must use the following language in their OATTs:
90. Public utilities should not incorporate the Smart Grid Standards (WEQ-016, WEQ-017, WEQ-018, WEQ-019 and WEQ-020) by reference, as the Commission is not incorporating these standards by reference as mandatory requirements.
91. In Standard WEQ-002-5.10, NAESB proposed an implementation schedule for NITS OASIS template interactions that would allow public utilities 18 months after the effective date of this Final Rule to transition to posting transmission customers' NITS service arrangements on the Version 2.0 NITS OASIS templates. In the WEQ Version 003 NOPR, while we discussed the details of the standards adopted by NAESB, we did not specifically address its proposed implementation schedule for NITS OASIS templates. We did, however, propose, consistent with past Commission practice, to allow public utilities the option of including these changes as part of an unrelated tariff filing in order to reduce the filing burden.
92. Duke Energy supports an 18-month development plan, plus 6 months for testing, as the implementation timeline for business practice standards associated with service across multiple transmission systems (SAMTS) and network integration transmission service (NITS).
93. Consistent with Order No. 676-E,
94. However, an 18-month implementation period appears sufficient to implement the NAESB standards incorporated by reference related to the NITS OASIS templates and commenters have not provided compelling evidence as to why additional time would be necessary. The timeline laid out in Standard WEQ-002-5.10.3 was a product of NAESB's consensus process that has been designed to require support from a wide range of industry members. As noted above, NAESB's procedures are designed to ensure that all industry members can have input into the development of a standard, whether or not they are members of NAESB, and each standard NAESB adopts is supported by a consensus of the relevant industry segments. Standards that fail to gain consensus support are
95. As to the other requirements of this Final Rule, we will require compliance with the requirements of this rule that are not related to the transition to the NITS OASIS template beginning on February 2, 2015. Compliance filings and all waiver requests, including renewal of waiver requests, must be filed by December 1, 2014. Those utilities that want to incorporate the complete set of NAESB standards into their tariffs without modification, may submit a compliance filing using the following language: “The current versions of the NAESB WEQ Business Practice Standards incorporated by reference into the Commission's regulations as specified in Part 38 of the Commission's regulations (18 CFR Part 38) are incorporated by reference into this tariff.” This will mean that those public utilities that add this provision to their tariffs will not need to make subsequent compliance filings in future years to incorporate the standards incorporated by reference by the Commission in future rulemakings so long as they continue to abide by all the newly incorporated standards. Nor will they need to make a separate tariff filing related to Standard WEQ-002.10.5.3.
96. Office of Management and Budget Circular A-119 (section 11) (Feb. 10, 1998) provides that when a federal agency issues or revises a regulation containing a standard, the agency should publish a statement in the Final Rule stating whether the adopted standard is a voluntary consensus standard or a government-unique standard. In this rulemaking, the Commission is incorporating by reference voluntary consensus standards developed by the NAESB's WEQ.
97. The following collections of information contained within this Final Rule are subject to review by the Office of Management and Budget (OMB) under Section 3507(d) of the Paperwork Reduction Act of 1995. OMB's regulations require approval of certain information collection requirements imposed by agency rules.
98. The Commission solicits comments from the public on the Commission's need for this information, whether the information will have practical utility, the accuracy of the burden estimates, ways to enhance the quality, utility and clarity of the information collected or retained, and any suggested methods for minimizing respondents' burden, including the use of automated information techniques. Specifically, the Commission asks that any revised burden or cost estimates submitted by commenters be supported by sufficient detail to understand how the estimates are generated.
99. Comments concerning the information collection promulgated in this Final Rule and the associated burden estimates should be sent to the Commission in this docket and may also be sent to the Office of Management and Budget, Office of Information and Regulatory Affairs [Attention: Desk Officer for the Federal Energy Regulatory Commission]. For security reasons, comments should be sent by email to OMB at the following email address:
100. This Final Rule will affect the following existing data collections: Standards for Business Practices and Communication Protocols for Public Utilities (FERC-717) and Electric Rate Schedule Filings (FERC-516). The following burden estimate is based on the projected costs for the industry to implement revisions to the WEQ Standards currently incorporated by reference into the Commission's regulations at 18 CFR 38.1 and to implement the new standards adopted by NAESB that we are incorporating by reference in this Final Rule.
101. The Commission sought comments on the burden of complying with the requirements imposed by these requirements. No comments were
102. The Commission's regulations adopted in this rule are necessary to establish a more efficient and integrated wholesale electric power grid. Requiring such information ensures both a common means of communication and common business practices that provide entities engaged in the wholesale transmission of electric power with timely information and uniform business procedures across multiple Transmission Providers. These requirements conform to the Commission's goal for efficient information collection, communication, and management within the electric power industry. The Commission has assured itself, by means of its internal review, that there is specific, objective support for the burden estimates associated with the information requirements.
103. OMB regulations
104. The information collection requirements of this Final Rule are based on the transition from transactions being made under the Commission's existing business practice standards to conducting such transactions under the standards incorporated by reference in this Final Rule and to account for the burden associated with the new standard(s) being incorporated by reference here (e.g., WEQ-000).
105.
106. Interested persons may obtain information on the reporting requirements by contacting the following: Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, [Attn: Ellen Brown, Office of the Executive Director, email:
107. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment.
108. The Regulatory Flexibility Act of 1980 (RFA)
109. The Commission estimates that each of the small entities to whom the Final Rule applies will incur one-time costs of $1,163.
110. In addition to publishing the full text of this document in the
111. From FERC's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.
112. User assistance is available for eLibrary and the FERC's Web site during normal business hours from FERC Online Support at 202-502-6652 (toll free at 1-866-208-3676) or email at
113. These regulations are effective October 24, 2014. The Commission has determined, with the concurrence of the Administrator of the Office of Information and Regulatory Affairs of OMB, that this rule is not a “major rule” as defined in section 351 of the Small Business Regulatory Enforcement Fairness Act of 1996.
Electric utilities, Guidance and policy statments.
Business practice standards, Electric utilities, Incorporation by reference, Reporting and recordkeeping requirements.
By the Commission.
In consideration of the foregoing, the Commission amends Parts 2 and 38, Chapter I, Title 18,
5 U.S. C. 601; 15 U.S.C. 717-717z, 3301-3432, 16 U.S.C. 792-828c, 2601-2645; 42 U.S.C. 4321-4370h, 7101-7352.
The Commission informationally lists the following NAESB Business Practices Standards as non-mandatory guidance:
(a) WEQ-016, Specifications for Common Electricity Product and Pricing Definition, WEQ Version 003, July 31, 2012;
(b) WEQ-017, Specifications for Common Schedule Communication Mechanism for Energy Transactions, WEQ Version 003, July 31, 2012;
(c) WEQ-018, Specifications for Wholesale Standard Demand Response Signals, WEQ Version 003, July 31, 2012;
(d) WEQ-019, Customer Energy Usage Information Communication, WEQ Version 003, July 31, 2012, as amended on March 21, 2013; and
(e) WEQ-020, Smart Grid Standards Data Element Table, WEQ Version 003, July 31, 2012.
(f) Copies of these standards may be obtained from the North American Energy Standards Board, 801 Travis Street, Suite 1675, Houston, TX 77002, Tel: (713) 356-0060. NAESB's Web site is at
16 U.S.C. 791-825r, 2601-2645; 31 U.S.C. 9701; 42 U.S.C. 7101-7352.
(a) Any public utility that owns, operates, or controls facilities used for the transmission of electric energy in interstate commerce or for the sale of electric energy at wholesale in interstate commerce and any non-public utility that seeks voluntary compliance with jurisdictional transmission tariff reciprocity conditions must comply with the business practice and electronic communication standards promulgated by the North American Energy Standards Board Wholesale Electric Quadrant that are incorporated by reference in paragraph (b) of this section. The material incorporated by reference in this section was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of these standards may be obtained from the North American Energy Standards Board (NAESB), 801 Travis Street, Suite 1675, Houston, TX 77002, Tel: (713) 356-0060. NAESB's Web site is at
(b) The business practice and electronic communication standards the Commission incorporates by reference are as follows:
The following appendix will not be published in the Code of Federal Regulations.
Occupational Safety and Health Administration (OSHA), Labor.
Correcting amendments.
On April 11, 2014 (79 FR 20316), the Occupational Safety and Health Administration published a final rule: Revising the general industry standards for electric power generation, transmission, and distribution work and for electrical protective equipment; revising the construction standard for electric power transmission and distribution work; and adopting a new construction standard for electrical protective equipment. The final rule updated those standards and made the general industry and construction standards consistent. This document corrects errors in the preamble and regulatory text of the final rule.
These corrections become effective on September 24, 2014.
On April 11, 2014, OSHA published a final rule: (1) Revising its general industry and construction standards at 29 CFR 1910.269 and 29 CFR part 1926, subpart V, respectively; (2) revising its general industry standard for electrical protective equipment at 29 CFR 1910.137 and adding a corresponding standard for construction at 29 CFR 1926.97; and (3) revising several other related provisions in OSHA's standards for general industry and construction (79 FR 20316).
OSHA has identified some errors in the preamble and regulatory text. One of those errors is in OSHA's explanation of training requirements for unqualified employees. The preamble stated that unqualified employees who operate, but do not maintain, circuit breakers must receive training in accordance with § 1910.269(a)(2)(i) or § 1926.950(b)(1) (79 FR 20348-20349). However, as noted in several other places in the preamble, in general, neither § 1910.269 nor subpart V govern the electrical safety-related work practices used by unqualified employees. (See, for example, 79 FR 20339, 20348, and 20410.) As described later, OSHA is correcting the preamble discussion at 79 FR 20349 to indicate that such unqualified employees generally must receive training under § 1910.332 or § 1926.21(b), as applicable.
In addition, Appendix A-2 to final § 1910.269 inaccurately describes how to determine whether § 1910.269 or subpart S of part 1910 contains the applicable requirements for electrical safety-related work practices. The flow chart in that appendix asks whether the employee is qualified “as defined in § 1910.269(x).” In subpart V, final § 1926.950(a)(1)(ii) states explicitly that subpart V does not apply to electrical safety-related work practices for unqualified employees. Thus, for the purposes of subpart V, if a worker is not a qualified employee as defined in § 1926.968, subpart V does not address the electrical safety-related work practices that employee must use. However, the exemption in final (and the previous version of) § 1910.269(a)(1)(ii)(B) is less direct, excluding electrical safety-related work practices covered by subpart S of part 1910. In subpart S, § 1910.331(b) provides that §§ 1910.332 through 1910.335, which address training, selection and use of work practices, use of equipment, and safeguards for personnel protection, apply to work performed by unqualified persons on, near, or with electric power generation, transmission, or distribution installations. Consequently, the
Table 1 to Appendix A-2 lists, in separate columns, paragraphs in § 1910.269 that apply regardless of compliance with subpart S and paragraphs in § 1910.269 for which compliance with subpart S is deemed to be compliance with § 1910.269. This table in the final rule inadvertently lists the paragraph numbers as they appeared in the previous version of § 1910.269. OSHA is correcting these references to match the corresponding provisions in the final rule. OSHA is also adding references to new provisions that have no counterpart in subpart S to the list of provisions requiring compliance regardless of compliance with subpart S (specifically, the information-transfer requirements in § 1910.269(a)(3) and the requirements on protection from flames and electric arcs in § 1910.269(l)(8)). In addition, the Agency is moving § 1910.269(i)(3) on portable and vehicle-mounted generators from the list of provisions that apply regardless of compliance with subpart S to the list of provisions for which compliance with subpart S is deemed to be compliance with § 1910.269. When OSHA adopted the previous version of § 1910.269 in 1994, subpart S did not contain requirements for portable or vehicle-mounted generators. However, the 2007 revisions to the installation requirements in subpart S included provisions equivalent to those in § 1910.269(i)(3) (72 FR 7136; Feb. 14, 2007). Those subpart S requirements appear in § 1910.304(g)(3).
OSHA also found an error in the regulatory text of final § 1910.269(h), which contains requirements for portable ladders and platforms. In the preamble to the final rule, OSHA explained why the Agency did not apply final § 1926.955(b)(1) to portable ladders as follows:
Paragraph (b)(1) of final § 1926.955 requires portable platforms to be capable of supporting without failure at least 2.5 times the maximum intended load in the configurations in which they are used. Paragraph (b)(1) in the proposed rule also applied this requirement to portable ladders. However, § 1926.1053(a)(1), which also applies, already specifies the strength of portable ladders. Having two standards with different strength requirements for portable ladders would be confusing. Consequently, OSHA revised § 1926.955(b)(1) in the final rule so that it covers only portable platforms. [79 FR 20405]
Section 1926.1053 does not apply to portable ladders used in work covered by § 1910.269, and the general industry requirements for portable ladders in subpart D of part 1910 do not contain comparable requirements for the strength of portable wood ladders (§ 1910.25) or metal ladders (§ 1910.26) and do not address portable fiberglass ladders at all. Consequently, the rationale behind OSHA's decision to drop portable ladders from final § 1926.955(b)(1) does not apply to the equivalent requirement in final § 1910.269(h)(2)(i). However, in adopting that provision in final § 1910.269, OSHA copied the language from final § 1926.955(b)(1), thus inadvertently dropping the strength requirement for portable ladders from the general industry provision. This document corrects that oversight and restores the language from the previous version of the standard.
Table 34 on page 20590 is corrected to read as follows:
Electric power, Fire prevention, Hazardous substances, Incorporation by reference, Occupational safety and health, Safety.
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, U.S. Department of Labor, 200 Constitution Ave. NW., Washington, DC 20210, authorized the preparation of this document.
This action is taken pursuant to sections 3704
The Occupational Safety and Health Administration amends Parts 1910 and 1926 of Title 29 of the Code of Federal Regulations as follows:
29 U.S.C. 653, 655, 657; Secretary of Labor's Order No. 12-71 (36 FR 8754), 8-76 (41 FR 25059), 9-83 (48 FR 35736), 1-90 (55 FR 9033), 6-96 (62 FR 111), 5-2007 (72 FR 31159), 4-2010 (75 FR 55355), or 1-2012 (77 FR 3912), as applicable; and 29 CFR part 1911.
The revisions read as follows:
(h) * * *
(2) * * *
(i) In the configurations in which they are used, portable ladders and platforms shall be capable of supporting without failure at least 2.5 times the maximum intended load.
40 U.S.C. 3701
Environmental Protection Agency.
Final rule; correction.
The Environmental Protection Agency (EPA) is correcting a final rule that appeared in the
This rule is effective on October 3, 2014.
Ginger Vagenas, Air Planning Office (AIR-2), U.S. Environmental Protection Agency, Region IX, (415) 972-3964,
In FR Doc. 2014-20920 appearing on page 52205 in the
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes tolerances for residues of fluensulfone in or on cucurbit vegetables and fruiting vegetables. Makhteshim Agan of North American Inc. (MANA), doing business as (dba) ADAMA, requested these tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA).
This regulation is effective September 24, 2014. Objections and requests for hearings must be received on or before November 24, 2014, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2012-0593, is available at
Lois Rossi, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2012-0593 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before November 24, 2014. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).
In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2012-0593, by one of the following methods:
•
•
•
Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at
In the
Based upon review of the data supporting the petition, EPA has revised the proposed tolerance levels of 1.0 and 0.6 ppm for cucurbits and fruiting vegetables to 0.50 and 0.50 ppm, respectively. The reasons for these changes are explained in Unit IV.C.
Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”
Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for fluensulfone including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with fluensulfone follows.
EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. Fluensulfone has low acute toxicity via the oral, dermal, and inhalation routes of exposure. It is not an eye or skin irritant but is a skin sensitizer. Acute oral toxicity studies were also conducted with the metabolites thiazole sulfonic acid (TSA), butene sulfonic acid (BSA), and methyl sulfone (MeS). The results indicated TSA and BSA were of low toxicity (Toxicity Category III), while MeS was of moderate toxicity (Toxicity Category II) by the oral route of exposure. The acute oral toxicity studies indicated that BSA and TSA were comparably less toxic than fluensulfone. Twenty-eight-day oral toxicity studies conducted with BSA and TSA were submitted and also indicated that both metabolites are of much lower toxicity than the parent compound. Based on the available data addressing toxicity of the BSA and TSA metabolites, the Agency has determined that they are not of toxicological concern.
Exposure to fluensulfone results in effects on the hematopoietic system (decreased platelets, increased white blood cells, hematocrit, and reticulocytes), kidneys, and lungs. Body weight and clinical chemistry changes were observed across multiple studies and species. Evidence of qualitative increased susceptibility of infants and children to the effects of fluensulfone was observed in the 2-generation reproduction study in rats, wherein pup death was observed at a dose that resulted in body weight effects in the dams. There was no evidence of either qualitative or quantitative susceptibility in developmental toxicity studies in rats or rabbits.
Dietary and inhalation studies in rats showed evidence of portal-of-entry effects in the forestomach, pharynx, epiglottis, and nasal cavity. The most sensitive endpoints for assessing human health risk are the increased pup-loss effects for acute dietary exposure; body weight, hematological and clinical chemistry changes for chronic dietary as well as short/intermediate term dermal exposures; and clotting time, decreased thymus weight, and portal-of-entry effects (histopathology of the epiglottis and nasal cavity) for inhalation exposures (short/intermediate term).
Decreased locomotor activity in females, and decreased spontaneous activity, decreased rearing, and impaired righting response in both sexes were observed in the acute
Although the mouse carcinogenicity study showed an association with alveolar/bronchiolar adenomas and carcinomas in the female, EPA has determined that quantification of risk using the chronic reference dose (RfD) will account for all chronic toxicity, including carcinogenicity, that could result from exposure to fluensulfone and its metabolites. That conclusion is based on the following considerations:
1. The tumors occurred in only one sex in one species.
2. No carcinogenic response was seen in either sex in the rat.
3. The tumors in the mouse study were observed at a dose that is almost 13 times higher than the dose chosen for risk assessment.
4. Fluensulfone and its metabolites are not mutagenic.
Specific information on the studies received and the nature of the adverse effects caused by fluensulfone as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at
Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD)—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see
1.
i.
ii.
iii.
iv.
2.
Based on the Pesticide Root Zone Model Ground Water (PRZMGW), the estimated drinking water concentrations (EDWCs) of fluensulfone and its metabolites of toxic concern for acute exposures are estimated to be 11.80 parts per billion (ppb) for surface water and 77.6 ppb for ground water and for chronic exposures are estimated to be 0.173 ppb for surface water and 52.5 ppb for ground water.
Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For acute dietary risk assessment, the water concentration value of 77.6 ppb was used to assess the contribution to drinking water. For chronic dietary risk assessment, the water concentration of value 52.5 ppb was used to assess the contribution to drinking water.
3.
4.
EPA has not found fluensulfone to share a common mechanism of toxicity with any other substances, and fluensulfone does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that fluensulfone does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's Web site at
1.
2.
Although there is evidence of increased qualitative susceptibility in the 2-generation reproduction study in rats, there are no residual uncertainties with regard to pre- and/or post-natal toxicity following
3.
i. The toxicity database for fluensulfone is complete.
ii. Decreased locomotor activity in females, and decreased spontaneous activity, decreased rearing, and impaired righting response in both sexes were observed in the acute neurotoxicity study at the lowest dose tested. No other evidence for neurotoxicity was observed in the other studies in the toxicity database, including a subchronic neurotoxicity study. The doses and endpoints chosen for risk assessment are all protective of the effects seen in the acute neurotoxicity study.
iii. There is no evidence that fluensulfone results in increased susceptibility in
iv. There are no residual uncertainties identified in the exposure databases. The current dietary assessment is based on high-end assumptions such as maximum residue levels from field trials of the parent compound in food, 100 PCT, and modeled estimates of residues in drinking water. EPA made conservative (protective) assumptions in the groundwater and surface water modeling used to assess exposure to fluensulfone in drinking water. Furthermore, there are no proposed residential uses. These assessments will not underestimate the exposure and risks posed by fluensulfone.
EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the aPAD and cPAD. For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.
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Suitable methods for tolerance enforcement have been developed and independently validated. For all matrices and analytes, the limit of quantitation (LOQ), defined as the lowest spiking level where acceptable precision and accuracy data were obtained, was determined to be 0.01 milligram/kilogram (mg/kg). The limit of detection (LOD) was defined to be 30% of the LOQ (i.e. 0.0003 mg/kg). The Food and Drug Administration (FDA) multi-residue methods are not suitable for detection and enforcement of fluensulfone residues (as the sulfonic acid metabolite BSA) in non-fatty matrices.
Adequate enforcement methodology (reverse-phase high performance liquid chromotography-mass spectrometry/mass spectrometry (HPLC-MS/MS)) is available to enforce the tolerance expression.
The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address:
In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.
The Codex has not established MRLs for fluensulfone.
The proposed tolerance levels, 1.0 and 0.6 ppm for cucurbits and fruiting vegetables, respectively, differ from those being established by EPA. Although both the petitioner and EPA have used the OECD calculation procedures to obtain tolerance levels, the residue definitions being used are different. The petitioner's proposed levels are based on residues of BSA and TSA, combined and expressed as parent fluensulfone whereas the EPA-calculated tolerances are based on residues of only the BSA metabolite, expressed as parent fluensulfone. Furthermore, the petitioner combined residue data from the representative commodities to obtain their proposed tolerances. In accordance with policy, EPA calculated separate tolerance levels for each representative commodity and then selected the maximum tolerance estimate within each group, resulting in tolerance levels of 0.80 ppm and 0.70 ppm for cucurbits and fruiting vegetables, respectively.
However, in order to mitigate estimated worker risks associated with chemigation operations, Makhteshim has reduced the proposed application rate from 3.5 lb. fluensulfone per acre to 2.5 lb. per acre. For purposes of establishing a tolerance that is reflective of the revised application rate, the residue data were re-evaluated. The resulting tolerance level for both cucurbit vegetables and fruiting vegetables is 0.50 ppm.
Therefore, tolerances are established for residues of the nematicide fluensulfone, including its metabolites and degradates, in or on vegetables, cucurbit, group 9 at 0.50 ppm and vegetables, fruiting, group 8-10 at 0.50 ppm. Compliance with the tolerance levels specified below is to be determined by measuring only 3,4,4-trifluoro-but-3-ene-1-sulfonic acid, calculated as the stoichiometric equivalent of fluensulfone.
This final rule establishes tolerances under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this final rule has been exempted from review under Executive Order 12866, this final rule is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerances in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this final rule. In addition, this final rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, 40 CFR chapter I is amended as follows:
21 U.S.C. 321(q), 346a and 371.
(a)
(b)
(c)
(d)
Federal Communications Commission.
Final rule.
In this document, the Federal Communications Commission (FCC) streamlines and eliminates outdated provisions of the Commission's rules governing the construction, marking, and lighting of antenna structures.
Effective October 24, 2014 except for the amendments to 47 CFR 17.4, 17.48, and 17.49, which contain information collection requirements that have not been approved by the Office of Management and Budget (OMB). The Commission will publish a document in the
Michael Smith of the Spectrum and Competition Policy Division, Wireless Telecommunications Bureau, (202) 418-0584,
This is a summary of the
1. The Communications Act of 1934, as amended (the Act) grants the Commission authority to require painting and/or lighting of radio towers that may constitute a hazard to air navigation. Part 17 of the Commission's rules prescribes certain procedures for antenna structure registration (ASR) and sets forth standards to determine whether a structure may impact air navigation, consistent with recommendations made by the Federal Aviation Administration (FAA). In particular, the Commission requires antenna structure owners to register and exercise primary responsibility for painting and lighting of antenna structures meeting the registration criteria. To ensure the ongoing compliance of antenna structures with marking and lighting requirements, part 17 also prescribes rules governing the maintenance of the marking and lighting on antenna structures, including routine inspection obligations.
Under the current part 17 rules, any proposed or existing antenna structure that requires notice of proposed construction to the FAA must be registered with the Commission. As a result, the Commission exercises joint, and in some circumstances overlapping oversight with the FAA of certain antenna structures. All antenna structures that are subject to part 17 rules are therefore also subject to the FAA's part 77 rules concerning the safety of the navigable airspace. Under its rules, the FAA requires notification for the construction or alteration of any antenna structure that exceeds 60.96 meters (200 feet) in height above ground level, or where certain other conditions are met, including proximity to an airport runway. Antenna structure owners must file a form with the FAA, and that agency in turn determines whether the construction or alteration is subject to lighting or marking specifications prescribed in the current version of an FAA Advisory Circular entitled
2. In order to register the structure with the Commission, the antenna structure owner must submit the FAA's study and a no hazard determination, along with FCC Form 854. The Commission then verifies with the FAA the accuracy of the marking and lighting specifications provided by the applicant. If the Commission accepts the application, it issues an ASR form (Form 854R), which typically incorporates the FAA's no hazard marking and/or lighting specifications and assigns the antenna an ASR number. Once an antenna structure is registered, its owner must ensure that the structure complies with all of the relevant FAA chapters specified on the registration, or the owner may be subject to Commission enforcement action. No changes to the specifications in the ASR are permitted without prior approval from both the FAA and the Commission; owners wishing to change an antenna structure's specifications must first seek FAA approval, and only then may they file a request with the Commission to amend the ASR. Prior to changing the marking or lighting on the structure, antenna structure owners must receive an amended ASR form from the Commission incorporating the change.
3. In 2010, the Commission initiated a proceeding to update and modernize its part 17 rules to improve compliance and enforcement objectives, and to eliminate outdated and burdensome requirements that may no longer serve safety objectives. In the
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5. To help ensure that its rules continue to reflect current FAA guidelines and publications, the Commission further delegates rulemaking authority to the Wireless Telecommunications Bureau (WTB) to make nonsubstantive, editorial revisions to the Commission's part 17 rules to reflect future FAA rule changes and recommendations after providing an opportunity for notice and comment. The Commission anticipates that this limited delegation of authority will help to mitigate conflicts that may arise as a result of other rulemakings or new recommendations by the FAA, and will allow the Commission to more rapidly address situations where its rules may diverge from FAA requirements.
6. In the (NPRM), the Commission proposed several revisions to its rules governing the ASR process to update and modernize them while ensuring the safety of pilots and aircraft passengers. In particular, the (NPRM) proposed to clarify requirements and harmonize them with current FAA rules. The part 17 rules that the Commission revises overlap in significant respects with FAA rules, reflecting its shared responsibility to ensure that the infrastructure the Commission regulates does not pose a risk to public safety. Diverging requirements create unnecessary ambiguity for antenna structure owners attempting to comply with both sets of rules which ultimately harm the public interest. Accordingly, in the actions the Commission takes, it seeks to provide clarity to antenna structure owners and, where appropriate, defer to the FAA on matters of air safety.
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9. The Commission declines to adopt the proposal from the Conservation Groups to expressly reference any FAA Advisory Circulars or other relevant policy documents that may address antenna structure owners' latitude to adopt lighting configurations that reduce adverse effects to birds and wildlife, consistent with aircraft navigation safety. Notwithstanding concerns regarding the effect of antenna structure lighting on wildlife, referencing particular circulars in the Commission's rules could lead to confusion, given the likelihood that the requirements or policies reflected in these publications will evolve over time. Furthermore, the FAA has not yet revised its Advisory Circulars to reflect the availability of new lighting configurations that do not employ steady-burning lights, and so citing to the current publications will not address the concerns of conservation advocates. Under the Commission's revised rules, antenna structure owners may still be able to change their lighting configurations to those that reduce impact on birds and wildlife, consistent with current or future FAA recommendations. The Commission notes that it previously encouraged antenna structure owners and conservation advocates to work together to reduce negative effects on wildlife, and the Commission's rules specifically require an Environmental Assessment (EA) for avian effects of antenna structures exceeding certain heights pending a final determination as to what, if any, permanent measures should be adopted specifically for the protection of migratory birds.
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12. Conservation Groups is the sole commenter to oppose this proposal. It urges the Commission to retroactively impose new specifications requiring the extinguishment of certain steady burning lights as a result of recommendations from the FAA 2012 Conspicuity Study. While the Commission understands the concerns of Conservation Groups regarding the effect of antenna structure lighting on
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15. The Commission also declines to impose a requirement that antenna structure owners use specific survey methods when conducting site measurements or that height measurements must be accurate within one foot and coordinates accurate within one second of latitude or longitude. Instead, the Commission will continue to defer to the FAA, and will require antenna structure owners to provide height and location measurements matching those provided to the FAA in their applications. Commenters overwhelmingly oppose both the Commission applying its own accuracy standards, and requiring a particular survey method. The Commission concludes that adopting accuracy standards or survey methods that differ from those required by the FAA may be unduly burdensome and could cause confusion, which in turn could discourage compliance and ultimately harm air safety. While requiring its own accuracy standards, or mandating the use of particular survey methods (e.g., GPS) could improve the accuracy of information that the Commission keeps on file, it is the Commission's goal to harmonize its approach with the FAA's where doing so will not harm air safety. From the record, the Commission is convinced that the standards set by the FAA, as the expert agency on air safety, are sufficient here. Further, generally requiring compliance with existing FAA guidelines rather than codifying the FAA's current standard will avoid confusion and allow the Commission's rules to keep pace with FAA policies as they evolve over time.
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20. The Commission also concludes that it would not serve the public interest to apply part 17 lighting and marking requirements to voluntarily registered antenna structures. Commenters broadly oppose applying the part 17 rules to these antenna structures, and as indicated above, the Commission finds that requiring owners to designate whether a structure is registered voluntarily will resolve any ambiguity or confusion concerning whether such requirements apply. The Commission will permit owners of voluntarily registered structures to withdraw their registrations, but, as the Commission determines that continuing to allow such registrations is in the public interest, the Commission will not require these registrations to be removed from the database or amended to indicate that they were voluntarily filed.
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23. In general, the Commission will not require antenna structure owners to post the ASR number at both an access point and the base of the structure. The Commission agrees with the commenters that contend that posting the ASR number at both the base and an access point in cases in which there is only one antenna structure is unnecessary. However, in certain circumstances the informational benefit to the public of posting multiple signs outweighs the burden on antenna structure owners. Where more than one publicly accessible access point exists, the Commission modifies its rules to require posting at each access point location. Likewise, where a single perimeter fence surrounds multiple antenna structures, the Commission will require that owners post the registration both at any access points, and at the base of the structure. With regard to those commenters that argue that the rules should not require multiple ASR numbers to be posted at a facility, the Commission finds that the burden on antenna structure owners of posting multiple ASR numbers is outweighed by the benefits to the public and to air safety of conspicuously displaying this information. As discussed in the (NPRM), it is important that FAA and Commission personnel, as well as members of the public, can quickly and easily identify a particular structure in order to report a lighting outage or other air safety hazard.
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26. As discussed below, the Commission revises its rules to address certain requirements that concern the maintenance of the marking and lighting on antenna structures, including inspection and maintenance of lighting, records of extinguishment or improper functioning of lights, and maintenance of painting. In particular, the Commission amends its rules to exempt antenna structure owners with network operations center (NOC)-based monitoring systems from quarterly inspection requirements. The
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28. The (NPRM) sought comment on whether to eliminate the inspection requirement entirely, noting that the rule may create confusion about the scope of an antenna structure owner's regulatory obligations and lead an owner to incorrectly conclude that if it performs the required inspections, it may not be subject to enforcement action if its lights fail to function. Alternatively, the Commission sought comment on whether to exempt or modify inspection obligations for antenna structures using advanced NOC-based self-monitoring technologies. The Commission has implemented a waiver process in cases where advanced monitoring systems are in place, and has granted a number of partial waivers, permitting the petitioning antenna structure owners to conduct annual rather than quarterly inspections. Under this process, an antenna structure owner petitioning for relief must demonstrate that the monitoring system it utilizes employs self-diagnostic functions—such as alarm notification, 24-hour polling, and manual contact—and a NOC staffed with trained personnel capable of responding to alarms 24 hours per day, 365 days per year, as well as a backup Operations Center that, in the event of a catastrophic failure at the primary NOC, has specific procedures for transferring the monitoring duties of the system. Once WTB, under delegated authority, has had an opportunity to evaluate a request and determine that a particular monitoring system is sufficiently robust as to justify grant of a waiver, other antenna structure owners utilizing the same monitoring system may petition for relief on an expedited basis. Where an antenna structure owner seeks to utilize a new monitoring system that has not previously been approved, it may petition the Commission for relief, and waivers are generally granted where the petitioner can demonstrate that their system employs the same functionalities as ones previously granted approval. There is a pending request by American Tower Corporation (ATC) seeking a waiver of inspection requirements altogether based on its use of an advanced monitoring system.
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30. The Commission therefore concludes that, on balance, the public interest would be served by adopting a procedure to exempt qualifying antenna structure owners from quarterly inspection requirements. In doing so, the Commission emphasizes that the Commission's top priority is to ensure that the lighting required under the ASR remains on or, if required lights become extinguished, that the structure owner promptly requests a NOTAM. The Commission reminds antenna structure owners that if these requirements are not met, they may be subject to enforcement action, regardless of how robust their monitoring systems may be.
31. As discussed above, this exemption affects three specific groups of antenna structure owners: (1) those that were previously granted waivers for their antenna structures monitored by approved systems; (2) those that employ approved systems but have not yet sought approval from the Commission; and (3) those that employ new systems for which no antenna structure owner has been granted waiver relief by the Commission. The Commission discusses the application of its decision with respect to each of these groups in turn.
32. Antenna structure owners that were previously granted a waiver for their antenna structures monitored by qualifying systems are exempt from all inspection obligations, as long as they continue to meet the advanced monitoring obligations to which they have already certified. Other antenna structure owners that have not yet sought a waiver but use an advanced monitoring system that has previously been approved by the Commission may also certify that they are eligible for an exemption from the inspection obligations with respect to any antenna structure utilizing a NOC-based system. Specifically, the Commission will modify its ASR system, as Verizon suggests, to allow structure owners to demonstrate that they are eligible for an exemption. Structure owners must provide a certification and supporting documentation demonstrating that they use an advanced monitoring system that has been previously approved by the
33. The Commission declines to eliminate inspection obligations in their entirety. Although some commenters support the elimination of all inspection obligations, the Commission finds that there are important public safety benefits associated with periodic inspection of the control devices, indicators, and alarm systems associated with the lighting for antenna structures that do not employ advanced monitoring systems. The Commission concludes that the quarterly inspection requirement provides a necessary layer of required diligence to protect against lighting failures going unnoticed in cases where antenna structure owners are maintaining structures with older monitoring systems. In the absence of an advanced system that continually monitors lighting and system malfunctions, the Commission finds that quarterly inspections are essential to public safety because they help to ensure the reliable detection of lighting malfunctions. The Commission therefore declines to delete 47 CFR 17.47 in its entirety.
34. The Commission further declines to require registered structures to install monitoring systems as proposed by AFCCE. The Commission finds that such a requirement would be unnecessary because the new exemption will provide adequate incentives for antenna structure owners to adopt technologically advanced systems, and because the use of quarterly inspections should suffice to ensure that the public safety will be adequately protected for those owners that do not employ these advanced systems. The Commission also declines to adopt a third-party certification process for waiver requests. The Commission does not anticipate that the number of new system requests would support the development of a third-party certification process, and the Commission therefore finds that it would serve the public interest to continue with its already established waiver/exemption process. Thus WTB, under delegated authority, will continue to evaluate petitions for exemption of any new NOC-based systems using the same process it used in granting previous waiver requests.
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37. With regard to the reporting requirement of 47 CFR 17.48(a), which provides that the FAA shall be notified by telephone or telegraph, the Commission eliminates the requirement for using a specific means of notification (which currently contains the outdated reference to telegraph) and require instead notification by means acceptable to the FAA. The FAA currently requires notification by a nationwide toll-free telephone number for reporting lighting outages. This change serves the public interest because it harmonizes the Commission's reporting requirement with the FAA's reporting requirements and it clarifies the rule by eliminating a previously specified option that is no longer viable.
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40. The Commission declines to impose specific timeframes for replacing or repairing extinguished lights. The Commission finds that antenna structure lighting repair does not lend itself to specific repair timelines due in part to the widely varied circumstances and complications that can make certain repairs too difficult or dangerous if a fixed schedule is required. Many of these variables are often beyond the control of the antenna structure owner, because such factors as delivery of replacement equipment, difficulty of repair, and limited structure access due to the location or weather conditions can make the timing of certain repairs difficult to predict. Most commenters do not support the imposition of specific repair timelines, preferring instead rules that provide antenna structure owners the flexibility to make their repairs in a reasonable period of time. The Commission finds that declining to adopt fixed repair timelines best meets its goals of ensuring timely repairs to lighting malfunctions and consistent enforcement of its rules, without imposing unreasonable burdens on antenna structure owners. In the absence of specific timeframes, the Commission finds that it serves the public interest to require an antenna structure owner to replace or repair extinguished lights as soon as practicable, as discussed above. The Commission's revised rules provide a general, consistent standard that will help ensure that those tasked with timely repairs may undertake them safely and efficiently under widely differing circumstances while still preserving aviation safety.
41. The Commission declines to delete 47 CFR 17.48(b) and 17.56(a), which would eliminate the requirements providing for the repair of antenna structure lighting, as well as automatic indicators or automatic control or alarm systems. The Commission finds that it serves the public interest to retain these rules while revising them to ensure that the Commission provides antenna structure owners with clear guidance and a consistent standard to ensure timely repairs to antenna structure lighting malfunctions. Moreover, because the FAA does not accept notifications or issue NOTAMs for extinguished steady burning side intermediate lights, which are required in many FAA lighting styles, in absence of these rules, the Commission has no requirements applicable to antenna structure owners in connection with their obligations to repair and maintain these lights.
42. The Commission decline to require a second lighting system, for antenna structures in very remote locations, which is consistent with its requirements in other locations. The Commission finds that adopting a special rule for remote locations to require a second lighting system for structures in those areas would impose additional costs on antenna structure owners that the Commission finds to be, on balance, unnecessary, given the effectiveness of other rules requiring timely lighting repair. The Commission finds that its rules requiring antenna structure owners to complete repairs of lighting malfunctions on their antenna structures in a timely manner helps to ensure aviation safety and obviates the need for secondary systems.
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47. The Commission decline to prescribe a particular distance from which the chart is to be compared with the top half of the structure. Commenters advocate making this comparison from a number of specific locations, including at the base, at the top half of the structure, or at a distance of one-quarter mile from the structure. Although placing the chart directly over the surface of a portion of the top half of the structure would provide the best results, the Commission recognizes that measurement directly over the surface may not always be practical due to weather or access limitations.
48. The Commission declines to compel painting of antenna structures every ten years. The Commission finds that structure owners are best able to determine how to safely and efficiently comply with the antenna structure maintenance requirements of its rules, and it is unnecessary to prescribe a fixed, ten-year painting mandate for this purpose. A rigid repainting requirement would not materially benefit antenna structure conspicuity and aviation safety beyond the requirement to clean and repaint as necessary to maintain good visibility. The Commission finds that the use of the FAA's In-Service Aviation Orange Tolerance Chart, in conjunction with the Commission's current cleaning and repainting standards, is the best way to promote aircraft safety, provide clear guidance to antenna structure owners, and ensure consistent enforcement.
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51. In addition, the Commission clarifies that a structure is considered an antenna structure from the start of construction through dismantlement, regardless of when it begins and ceases to transmit radio energy. Commenters generally support this clarification, and the Commission agrees that the scope of the rule does not include the construction of a building on which an antenna may be situated, but refers to the construction of the antenna structure itself. The Commission also emphasizes that an antenna structure owner's obligations do not cease until the structure is dismantled. The record supports clarifying who bears responsibility for compliance with the rules, and when a structure is within the purview of the part 17 rules, and the Commission finds that doing so will help promote air safety and serve the public interest.
52. Some commenters express concern that this proposal could be read to encompass Distributed Antenna Systems (DAS), and urge that the Commission make clear that such systems are exempt from the part 17 review. DAS, as well as small cells and other new wireless technologies, use large numbers of smaller antennas, deployed at lower heights and supported by compact radio equipment to provide broadband services. The benefit of these technologies is that they can be deployed on utility poles, street lamps, water towers, rooftops, or inside buildings to fill in coverage gaps. The Commission declines to expressly exempt such systems from its modification to the part 17 definitions. The Commission does not anticipate that the part 17 rules will ordinarily affect such systems because registration is generally only required for structures of sufficient height to affect air safety, and such heights are significantly greater than that of most DAS antennas.
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55. Nevertheless, the Commission declines to cross-reference FAA rules that may expand the scope of its rules in the future. Instead, the Commission adopts modifications to part 17 to clarify that antenna structures must be registered only when notice to the FAA is required due to physical obstruction (as for structures of sufficient height, or proximity to airports). The Commission retains the notification criteria in 47 CFR 17.7, but updates these to reflect the FAA's current notification criteria and exemptions. The Commission agrees with commenters that these changes will provide clarity and prevent future FAA rulemakings from expanding the scope of its rules without providing parties the opportunity for public comment. As noted above, the Commission delegates authority to WTB to update the part 17 rules to comport with future FAA rule changes regarding what tower constructions or alterations require FAA notification after an opportunity for notice and comment. This delegated authority will help ensure that the Commission's rules can be quickly updated to remain in harmony with the FAA's notification requirement, while providing interested parties an opportunity to comment on any changes before they take effect.
56. The Commission does, however, delete from its rules the notice requirement for applicants proposing new or modified facilities on federal land in its entirety, a proposal supported by all commenters addressing this issue. The procedures that this rule references were abolished in 1977 at the request of the agencies affected, and the Commission concludes that there is no reason to retain this notification requirement. Finally, the Commission deletes the rules regarding exhibiting and maintaining lights as unnecessary and potentially confusing given that these requirements are already contained in each antenna structure's no hazard determination. Commenters generally support these deletions, which will provide clarity by removing requirements that could conflict with the rule changes adopted above.
57. The Commission make the following ministerial edits to conform with the other rule amendments adopted in this Order: the Commission adds a heading to the definition of antenna farm area and changes antenna towers to antenna structures in 47 CFR 17.2(b); deletes an outdated provision in 47 CFR 17.4(a)(2) requiring certain registrations by July 1, 1998; and adds a cross-reference to 47 CFR 17.4(f) in 47 CFR 17.4(e).
58. This document contains revised information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. It will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies are invited to comment on the modified information collection requirements contained in the proceeding. In addition, the Commission notes that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198 44 U.S.C.
59. The Commission has assessed the effects of eliminating and updating particular provisions of part 17 governing the construction, marking, and lighting of antenna structures. Specifically, the Commission updates the means by which antenna structure owners are required to provide tenant licensees a copy of the antenna structure registration, how registration numbers are displayed on or around the antenna structure and, for improper functioning antenna structure lights, how the FAA is notified and for how long the records are retained. The Commission also updates requirements regarding when the FCC should be notified of certain events, what changes in structure height or location require a new Antenna Structure Registration, require a notation when structures are registered voluntarily, and provide a standardized means for registrants to certify that they qualify for the exemption from quarterly inspection requirements. The Commission finds that these updates improve efficiency, reduce regulatory burdens, and enhance compliance with antenna structure painting and lighting requirements, while continuing to ensure aircraft safety. In addition, the Commission has described impacts that might affect small business, which includes most businesses with fewer than 25 employees.
60. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice of Proposed Rule Making (NPRM). The Commission sought written public comment on the proposals in the (NPRM), including comment on the IRFA. Because the Report and Order amends the Commission's rules, this Final Regulatory Flexibility Analysis (FRFA) is included to conform with the RFA.
61. Section 303(q) of the Communications Act vests in the Commission the authority to require
62. Streamlining and eliminating outdated provisions of the Commission's part 17 rules governing the construction, marking, and lighting of antenna structures improves efficiency, reduces regulatory burdens, and improves compliance with tower painting and lighting requirements, while continuing to ensure the safety of pilots and aircraft passengers nationwide. This action marks another step in the Commission's process reform efforts, and will allow the Commission to modernize its rules while adhering to its statutory responsibility to prevent antenna structures from being hazards to air navigation.
63. One commenter directly responded to the IRFA, raising concerns that the IRFA did not identify rules that might duplicate, overlap, or conflict with the rules proposed in the (NPRM). Specifically, the comments by Hammet & Edison addressed the Commission's proposal to defer to the FAA's criteria for when notice of construction or alteration is required. At the time of the (NPRM), a then-pending FAA rulemaking was considering whether to require notice for structures that emit specific radio frequencies, given the FAA's concerns over the impact of these frequencies on pilot communication. Hammet & Edison request that the Commission reconsider the (NPRM) in light of these concerns.
64. In response to concerns by Hammet & Edison and other commenters about the potential for the scope of the Commission's part 17 rules to expand as a result of an FAA rulemaking, the Report and Order declines to adopt the proposal from the (NPRM) to defer to the FAA on these criteria. The FAA did not adopt the expanded scope proposed originally, however a decision on that issue remains pending. Instead, the Report and Order adopts modifications to the relevant rules in part 17 to reflect the current FAA notification criteria and exemptions. This accommodation will alleviate concerns raised by commenters about FAA rule changes expanding the scope of the part 17 rules, and are adequately addressed in this FRFA.
65. In addition, a number of commenters raised concerns about the impact on small businesses of the Commission's lighting and marking requirements. This FRFA explains below how the revised rules adopted in the Report and Order will affect antenna structure owners, particularly owners that are small businesses.
66. Pursuant to the Small Business Jobs Act of 2010, the Commission is required to respond to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration (SBA), and to provide a detailed statement of any change made to the proposed rules as a result of those comments. The Chief Counsel did not file any comments in response to the proposed rules in this proceeding.
67. The RFA directs agencies to provide a description of, and, where feasible, an estimate of, the number of small entities that may be affected by the rules adopted herein. The RFA generally defines the term small entity as having the same meaning as the terms small business, small organization, and small governmental jurisdiction. In addition, the term small business has the same meaning as the term small business concern under the Small Business Act. A small business concern is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA).
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71. In 2009, the Commission conducted Auction 86, the sale of 78 licenses in the BRS areas. The Commission offered three levels of bidding credits: (i) A bidder with attributed average annual gross revenues that exceed $15 million and do not exceed $40 million for the preceding three years (small business) received a 15 percent discount on its winning bid; (ii) a bidder with attributed average annual gross revenues that exceed $3 million and do not exceed $15 million for the preceding three years (very small business) received a 25 percent discount on its winning bid; and (iii) a bidder with attributed average annual gross revenues that do not exceed $3 million for the preceding three years (entrepreneur) received a 35 percent discount on its winning bid. Auction 86 concluded in 2009 with the sale of 61 licenses. Of the ten winning bidders, two bidders that claimed small business status won 4 licenses; one bidder that claimed very small business status won three licenses; and two bidders that claimed entrepreneur status won six licenses.
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74. Similarly, according to Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, PCS, and Specialized Mobile Radio (SMR) Telephony services. Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees. Consequently, the Commission estimates that approximately half or more of these firms can be considered small. Thus, using available data, the Commission estimates that the majority of wireless firms can be considered small.
75. Other relevant information about PLMRs is as follows. The Commission's 1994 Annual Report on PLMRs indicates that at the end of fiscal year 1994 there were 1,087,267 licensees operating 12,481,989 transmitters in the PLMR bands below 512 MHz. Because any entity engaged in a commercial activity is eligible to hold a PLMR license, the revised rules in this context could potentially impact every small business in the United States.
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80. With respect to the second category, which consists of entities that use, or seek to use, MAS spectrum to accommodate their own internal communications needs, MAS serves an essential role in a range of industrial, safety, business, and land transportation activities. MAS radios are used by companies of all sizes, operating in virtually all U.S. business categories, and by all types of public safety entities. For the majority of private internal users, the definition developed by the SBA would be more appropriate than the Commission's definition. The applicable definition of small entity in this instance appears to be the Wireless Telecommunications Carriers (except satellite) definition under the SBA rules. Under that SBA category, a business is small if it has 1,500 or fewer employees. For this category, census data for 2007 show that there were 11,163 establishments that operated for the entire year. Of this total, 10,791 establishments had employment of 99 or fewer employees and 372 had employment of 100 employees or more. Thus under this category and the associated small business size standard, the Commission estimates that the majority of wireless telecommunications carriers (except satellite) are small entities that may be affected by the proposed action.
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82. According to Commission staff review of the BIA Financial Network, Inc. Media Access Pro Television Database as of March 31, 2013, about 90 percent of an estimated 1,385 commercial television stations in the United States have revenues of $35.5 million or less. Based on this data and the associated size standard, the Commission concludes that the majority of such establishments are small. The Commission has estimated the number of licensed noncommercial educational (NCE) stations to be 396. The Commission does not have revenue estimates for NCE stations. These stations rely primarily on grants and contributions for their operations, so the Commission assumes that all of these entities qualify as small businesses. In addition, there are approximately 567 licensed Class A stations, 2,227 licensed low power television (LPTV) stations, and 4,518 licensed TV translators. Given the nature of these services, the Commission will presume that all LPTV licensees qualify as small entities under the above SBA small business size standard.
83. The Commission notes that in assessing whether a business entity qualifies as small under the above definition, business control affiliations must be included. The Commission's estimate, therefore, likely overstates the number of small entities affected by the proposed rules, because the revenue figures on which this estimate is based do not include or aggregate revenues from affiliated companies.
84. In addition, an element of the definition of small business is that the entity not be dominant in its field of operation. The Commission is unable at this time and in this context to define or quantify the criteria that would establish whether a specific television station is dominant in its market of operation. Accordingly, the foregoing estimate of small businesses to which the rules may apply does not exclude any television stations from the definition of a small business on this basis and is therefore over-inclusive to that extent. An additional element of the definition of “small business” is that the
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91. The category of Satellite Telecommunications comprises establishments primarily engaged in providing telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications. Census Bureau data for 2007 show that 607 Satellite Telecommunications establishments operated for that entire year. Of this total, 533 establishments had annual receipts of under $10 million, and 74 establishments had receipts of $10 million or more. Consequently, the Commission estimates that the majority of Satellite Telecommunications firms are small entities that might be affected by this action.
92. The second category, i.e., All Other Telecommunications, comprises establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing Internet services or voice over Internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry. For this category, Census data for 2007 shows that there were a total of 2,639 establishments that operated for the entire year. Of those 2,639 establishments, 2,333 operated with annual receipts of less than $10 million and 306 with annual receipts of $10 million or more. Consequently, the Commission estimates that a majority of All Other Telecommunications establishments are small entities that might be affected by its action.
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94. As of June 28, 2013, there are approximately 113,612 registration records in a `Constructed' status and 13,572 registration records in a `Granted, Not Constructed' status in the ASR database. This includes both towers registered to licensees and towers registered to non-licensee tower owners. The Commission does not keep information from which it can easily determine how many of these towers are registered to non-licensees or how many non-licensees have registered towers. Regarding towers that do not require antenna structure registration, the Commission does not collect information as to the number of such towers in use and therefore cannot estimate the number of tower owners who would be subject to the proposed rules. Moreover, the SBA has not developed a size standard for small businesses in the category Tower Owners. Therefore, the Commission is unable to determine the number of non-licensee tower owners that are small entities. The Commission believes, however, that when all individuals owning 10 or fewer towers and leasing space for collocation are included, non-licensee tower owners, number in the thousands, and that nearly all of these qualify as small businesses under the SBA's definition for All Other Telecommunications. In addition, there may be other non-licensee owners of other wireless infrastructure, including DAS and small cells, that might be affected by the regulatory measures proposed in this Report and Order. The Commission does not have any basis for estimating the number of such non-licensee owners that are small entities.
95. The Report and Order adopts several reporting, recordkeeping, and other compliance requirements which could affect small entities. First, the Report and Order amends the Commission's rules to require that owners display the Antenna Structure Registration (ASR) number so that it is visible to a member of the general public who reaches the closest publicly accessible location near the antenna structure base. Where more than one publicly accessible access point exists, the Commission modifies its rules to require posting at each access point location. Likewise, where a single perimeter fence surrounds multiple antenna structures, the Commission will require that owners post the registration both at any access points, and at the base of the structure. These requirements are necessary to ensure that the FAA and Commission personnel, as well as members of the public, can quickly and easily identify a particular structure in order to report a lighting outage or other air safety hazard in a timely fashion. The Commission also modifies its rules to allow owners to provide tenants the ASR number and link to the Commission's online system via mail, email, or other electronic means, as an alternative to providing a paper copy of Form 854R. This update of the Commission's rules will reduce the compliance burden on all antenna structure owners, including small entities.
96. Further, the Commission revises its rules to require antenna structure owners to provide the FAA with regular updates on the status of their repairs of lighting outages so that the FAA can maintain notifications to aircraft throughout the entire period of time the antenna structure remains unlit. These updates will also include updates to its estimated return-to-service date to the FAA. The Commission concludes that on balance, this limited burden on antenna structure owners, which may include small entities, is insignificant compared to the need to have accurate antenna structure lighting outage information, as pilots rely on this information to ensure air safety. The Commission also eliminates the requirement for using a specific means of notification (which currently contains the outdated reference to telegraph) and requires instead notification by means acceptable to the FAA. This change clarifies the rule by eliminating a previously specified option that is no longer viable, which in turn will lessen the burden on antenna structure owners, including small entities.
97. Finally, the Commission revises its rules to require antenna structure owners to maintain a record of observed or otherwise known extinguishments or improper functioning of structure lights for two years, and to provide such records to the Commission upon request. Limiting the retention time period to two years lessens the burden on antenna structure owners, which may include small entities, without hindering the Commission's ability to monitor an antenna structure owner's compliance record.
98. The RFA requires an agency to describe any significant alternatives that it has considered in developing its approach, which may include the following four alternatives (among others): (1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.
99. The rule changes herein are intended both to promote aircraft navigation safety and also to reduce regulatory burdens on small entities by clarifying the relationship between the Commission's rules and procedures and those of the FAA and ensuring continued consistency in those rules and procedures. The Commission asked commenters to suggest alternatives that may further reduce the impact on small entities while achieving the above intended goals. The Commission specifically sought comment on whether to further reduce regulatory burdens on small entities by amending 47 CFR 17.17(b) (redesignated as 47 CFR 17.24) to provide that a revised FAA Circular does not impose new obligations on already-approved antenna structures. The Commission sought comment on whether such deregulatory action would unduly limit the Commission's flexibility and whether it would afford appropriate deference to the FAA's expertise and how possible alternatives could further lessen the burden on small businesses while achieving these goals.
100. For each of the rule changes, the Commission sought discussion, and where relevant, alternative proposals, on the effect that each new requirement, or alternative rules, might have on small entities. For each rule change, the Commission sought discussion about the burden that the rule change would impose on small entities and how the Commission could impose such rule
101. As a result, the rule modifications the Commission implements in this Report and Order will reduce redundancy, conflicts and ambiguity in antenna marking and lighting regulations. In pursuit of that end, the Commission has: (1) deleted any reference to older FAA Advisory Circulars, instead requiring structure owners to generally comply with the FAA's no hazard determination and associated study for a structure in establishing painting and lighting specifications; (2) eliminated the stated exemptions to the lighting and marking criteria for previously authorized structures and clarified that existing antenna structures will generally not be required to comply with any new lighting and marking requirements unless the FAA mandates application of such changes with regard to a particular structure; (3) amended the rules to provide that any change in height of one foot or greater, or any change in coordinates of one second or greater requires prior approval; (4) lengthened the notification and dismantlement requirements to provide that the owner of an antenna structure shall notify the Commission within five days of when a construction or alteration of a structure reaches its greatest height, when a construction or alteration is dismantled or destroyed, and when there are any changes in structure height or ownership; (5) continued to allow owners to voluntarily register antenna structures and required owners to designate when a particular registration is done voluntarily; (6) modified the rules to allow owners to provide tenants the ASR number and link to the Commission's online system via mail, email, or other electronic means, as an alternative to providing a paper copy of Form 854R; (7) exempted qualifying NOC-based monitoring systems from quarterly inspection obligations, thereby eliminating the quarterly inspection obligation for those towers using sufficiently robust monitoring systems; (8) limited the time period to two years for requiring antenna structure owners to maintain a record of observed or otherwise known extinguishments or improper functioning of structure lights and providing such records to the Commission upon request; and (9) harmonized its tower cleaning and repainting standards with the FAA's and declined to- require tower repainting every ten years. While not specifically targeted at small firms, these numerous measures are intended to lessen the regulatory burden on all tower owners and operators.
102. The IRFA in the (NPRM) of this proceeding omitted reference to the FAA in section F of the IRFA even though the (NPRM) addressed Commission rules that in some cases duplicated, overlapped, or were inconsistent with rules of the FAA. Notwithstanding the omission of Section F, the (NPRM) and the IRFA explained how the Commission's rules overlap and are inconsistent with the FAA's rules. Accordingly, the (NPRM
103. In the
104. The Commission sought extensive public comment on these issues in the (NPRM), and in the attached IRFA. After an exhaustive review of the record and a careful weighing of the costs and benefits, the Commission adopted the proposed regulatory changes to eliminate duplicative, overlapping, or conflicting regulations, thereby achieving improved regulatory harmonization with the FAA.
105. The Commission will send a copy of the Report and Order, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act.
106. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, will send a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.
107. The Commission will send a copy of this Report and Order to Congress and the Government Accountability Office pursuant to the Congressional Review Act.
108.
109.
110.
111.
112. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center,
Commission organization.
Administrative practice and procedures, Telecommunications.
Aviation safety, Communications equipment, Construction, marking, and lighting of antenna strucutres, Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR parts 0, 1, and 17 as follows:
Sec. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155, 225, unless otherwise noted.
(d)
(1) Designate radio protection areas for mandatory Vessel Traffic Services (VTS) and establish marine channels as VTS frequencies for these areas; or
(2) Designate regions for shared commercial and non-commercial vessel use of VHF marine frequencies.
(3) Designate by footnote to frequency table in § 80.373(f) of this chapter marine VHF frequencies are available for intership port operations communications in defined port areas.
15 U.S.C. 79
(a) * * *
(5) Upon receipt of FCC Form 854, and attached FAA final determination of “no hazard,” the Bureau may prescribe antenna structure painting and/or lighting specifications or other conditions in accordance with the FAA airspace recommendation. Unless otherwise specified by the Bureau, the antenna structure must conform to the FAA's painting and lighting recommendations set forth in the FAA's determination of “no hazard” and the associated FAA study number. The Bureau returns a completed Antenna Structure Registration (FCC Form 854R) to the registrant. If the proposed structure is disapproved the registrant is so advised.
Secs. 4, 303, 48 Stat. 1066, 1082, as amended; 47 U.S.C. 154, 303. Interpret or apply secs. 301, 309, 48 Stat. 1081, 1085 as amended; 47 U.S.C. 301, 309.
(b) The purpose of this part is to prescribe certain procedures for antenna structure registration and standards with respect to the Commission's consideration of proposed antenna structures which will serve as a guide to antenna structure owners.
(a)
(b)
(c)
(a) The owner of any proposed or existing antenna structure that requires notice of proposed construction to the Federal Aviation Administration (FAA) due to physical obstruction must register the structure with the Commission. (See § 17.7 for FAA notification requirements.) This includes those structures used as part of stations licensed by the Commission for the transmission of radio energy, or to be used as part of a cable television head end system. If a Federal Government antenna structure is to be used by a Commission licensee, the structure must be registered with the Commission. If the FAA exempts an antenna structure from notification, it is exempt from the requirement that it register with the Commission. (See § 17.7(e) for exemptions to FAA notification requirements.)
(1) For a proposed antenna structure or alteration of an existing antenna structure, the owner must register the structure prior to construction or alteration.
(2) For a structure that did not originally fall under the definition of “antenna structure,” the owner must register the structure prior to hosting a Commission licensee.
(b) Except as provided in paragraph (e) of this section, each owner of an antenna structure described in paragraph (a) of this section must file FCC Form 854 with the Commission. Additionally, each owner of a proposed structure referred to in paragraph (a) of this section must submit a valid FAA determination of “no hazard.” In order to be considered valid by the Commission, the FAA determination of “no hazard” must not have expired prior to the date on which FCC Form 854 is received by the Commission. The height of the structure will be the highest point of the structure including any obstruction lighting or lightning arrester. If an antenna structure is not required to be registered under paragraph (a) of this section and it is voluntarily registered with the Commission after the effective date of this rule, the registrant must note on FCC Form 854 that the registration is voluntary. Voluntarily registered antenna structures are not subject to the lighting and marking requirements contained in this part.
(e) If the owner of the antenna structure cannot file FCC Form 854 because it is subject to a denial of Federal benefits under the Anti-Drug Abuse Act of 1988, 21 U.S.C. 862, the first tenant licensee authorized to locate on the structure (excluding tenants that no longer occupy the structure) must register the structure using FCC Form 854, and provide a copy of the Antenna Structure Registration (FCC Form 854R) to the owner. The owner remains responsible for providing to all tenant licensees and permittees notification that the structure has been registered, consistent with paragraph (f) of this section, and for posting the registration number as required by paragraph (g) of this section.
(f) The Commission shall issue to the registrant FCC Form 854R, Antenna Structure Registration, which assigns a unique Antenna Structure Registration Number. The antenna structure owner shall immediately provide to all tenant licensees and permittees notification that the structure has been registered, along with either a copy of Form 854R or the Antenna Structure Registration Number and a link to the FCC antenna structure Web site:
(g) Except as described in paragraph (h) of this section, the Antenna Structure Registration Number must be displayed so that it is conspicuously visible and legible from the publicly accessible area nearest the base of the antenna structure along the publicly accessible roadway or path. Where an antenna structure is surrounded by a perimeter fence, or where the point of access includes an access gate, the Antenna Structure Registration Number should be posted on the perimeter fence or access gate. Where multiple antenna structures having separate Antenna Structure Registration Numbers are located within a single fenced area, the Antenna Structure Registration Numbers must be posted both on the perimeter fence or access gate and near the base of each antenna structure. If the base of the antenna structure has more than one point of access, the Antenna Structure Registration Number must be posted so that it is visible at the publicly accessible area nearest each such point of access. Materials used to display the Antenna Structure Registration Number must be weather-resistant and of sufficient size to be easily seen where posted.
(i) Absent Commission specification, the painting and lighting specifications recommended by the FAA are mandatory (see § 17.23). However, the Commission may specify painting and/or lighting requirements for each antenna structure registration in addition to or different from those specified by the FAA.
(j) Any change or correction in the overall height of one foot or greater or coordinates of one second or greater in longitude or latitude of a registered antenna structure requires prior approval from the FAA and modification of the existing registration with the Commission.
(k) Any change in the marking and lighting that varies from the specifications described on any antenna structure registration requires prior approval from the FAA and the Commission.
(c) If the owner of the antenna structure cannot file FCC Form 854 because it is subject to a denial of Federal benefits under the Anti-Drug Abuse Act of 1988, 21 U.S.C. 862, the
The revisions and addition read as follows:
A notification to the FAA is required, except as set forth in paragraph (e) of this section, for any of the following construction or alteration:
(b) Any construction or alteration that exceeds an imaginary surface extending outward and upward at any of the following slopes:
(1) 100 to 1 for a horizontal distance of 6.10 kilometers (20,000 feet) from the nearest point of the nearest runway of each airport described in paragraph (d) of this section with its longest runway more than 0.98 kilometers (3,200 feet) in actual length, excluding heliports.
(2) 50 to 1 for a horizontal distance of 3.05 kilometers (10,000 feet) from the nearest point of the nearest runway of each airport described in paragraph (d) of this section with its longest runway no more than 0.98 kilometers (3,200 feet) in actual length, excluding heliports.
(3) 25 to 1 for a horizontal distance of 1.52 kilometers (5,000 feet) from the nearest point of the nearest landing and takeoff area of each heliport described in paragraph (d) of this section.
(d) Any construction or alteration on any of the following airports and heliports:
(1) A public use airport listed in the Airport/Facility Directory, Alaska Supplement, or Pacific Chart Supplement of the U.S. Government Flight Information Publications;
(2) A military airport under construction, or an airport under construction that will be available for public use;
(3) An airport operated by a Federal agency or the United States Department of Defense.
(4) An airport or heliport with at least one FAA-approved instrument approach procedure.
(e) A notification to the FAA is not required for any of the following construction or alteration:
(1) Any object that will be shielded by existing structures of a permanent and substantial nature or by natural terrain or topographic features of equal or greater height, and will be located in the congested area of a city, town, or settlement where the shielded structure will not adversely affect safety in air navigation;
(2) Any air navigation facility, airport visual approach or landing aid, aircraft arresting device, or meteorological device meeting FAA-approved siting criteria or an appropriate military service siting criteria on military airports, the location and height of which are fixed by its functional purpose;
(3) Any antenna structure of 6.10 meters (20 feet) or less in height, except one that would increase the height of another antenna structure.
(a) Their height exceeds any obstruction standard requiring notification to the FAA (see § 17.4(a) and § 17.7).
(c) An antenna installation is of such a nature that its painting and lighting specifications in accordance with the FAA airspace recommendation are confusing, or endanger rather than assist airmen, or are otherwise inadequate. In these cases, the Commission will specify the type of painting and lighting or other marking to be used for the particular structure.
Unless otherwise specified by the Commission, each new or altered antenna structure must conform to the FAA's painting and lighting specifications set forth in the FAA's final determination of “no hazard” and the associated FAA study for that particular structure. For purposes of this part, any specifications, standards, and general requirements set forth by the FAA in the structure's determination of “no hazard” and the associated FAA study are mandatory. Additionally, each antenna structure must be painted and lighted in accordance with any painting and lighting requirements prescribed on the antenna structure's registration, or in accordance with any other specifications provided by the Commission.
No change to painting or lighting criteria or relocation of airports shall at any time impose a new restriction upon any then existing or authorized antenna structure or structures, unless the FAA issues a new determination of “no hazard” and associated FAA study for the particular structure.
(c) Is exempt from paragraph (b) of this section for any antenna structure monitored by a system that the Wireless Telecommunications Bureau has determined includes self-diagnostic features sufficient to render quarterly inspections unnecessary, upon certification of use of such system to the Bureau.
(a) Shall report immediately to the FAA, by means acceptable to the FAA, any observed or otherwise known extinguishment or improper functioning of any top steady burning light or any flashing obstruction light, regardless of its position on the antenna structure, not corrected within 30 minutes. If the lights cannot be repaired within the FAA's Notices to Airmen (NOTAM) period, the owner shall notify the FAA to extend the outage date and report a return-to-service date. The owner shall
(b) An extinguishment or improper functioning of a steady burning side intermediate light or lights, shall be corrected as soon as practicable, but notification to the FAA of such extinguishment or improper functioning is not required.
The owner of each antenna structure which is registered with the Commission and has been assigned lighting specifications referenced in this part must maintain a record of any observed or otherwise known extinguishment or improper functioning of a structure light. This record shall be retained for a period of two years and provided to the FCC or its agents upon request. The record shall include the following information for each such event:
Antenna structures requiring painting under this part shall be cleaned or repainted as often as necessary to maintain good visibility. Evaluation of the current paint status shall be made by using the FAA's In-Service Aviation Orange Tolerance Chart. This chart is based upon the color requirements contained in the National Bureau of Standards Report NBSIR 75-663, Color Requirements for the Marking of Obstructions.
Replacing or repairing of lights, automatic indicators or automatic control or alarm systems shall be accomplished as soon as practicable.
The owner of an antenna structure for which an Antenna Structure Registration Number has been obtained must notify the Commission within 5 days of completion of construction (FCC Form 854-R) and/or dismantlement (FCC Form 854). The owner must also notify the Commission within 5 days of any change in structure height or change in ownership information (FCC Form 854).
Federal Communications Commission.
Final rules; announcement of effective date.
In this document, the Commission announces that the Office of Management and Budget (OMB) has approved, for a period of three years, the information collection requirements contained in the regulations in the “Unlicensed National Information Infrastructure (U-NII) Devices in the 5 GHz Band.” The information collection requirements were approved on August 27, 2014 by OMB.
The amendments to 47 CFR 15.407(j), published at 79 FR 24569, May 1, 2014, is effective September 24, 2014.
For additional information contact Nancy Brooks on (202) 418-2454 or email
This document announces that on August 27, 2014, OMB approved, for a period of three years, the information collection requirements contained in 47 CFR 15.407(j). The Commission publishes this document to announce the effective date of this rule section. See, Revision of Part 15 of the Commission's Rules to Permit Unlicensed National Information Infrastructure (U-NII) Devices in the 5 GHz Band, ET Docket No. 13-49; FCC 14-30, 79 FR 24569, May 1, 2014.
As required by the Paperwork Reduction Act of 1995, (44 U.S.C. 3507), the Commission is notifying the public that it received OMB approval on August 27, 2014, for the information collection requirement contained in 47 CFR 15.407(j). Under 5 CFR part 1320, an agency may not conduct or sponsor a collection of information unless it displays a current, valid OMB Control Number.
No person shall be subject to any penalty for failing to comply with a collection of information subject to the Paperwork Reduction Act that does not display a valid OMB Control Number.
The OMB Control Number is 3060-1199 and the total annual reporting burdens for respondents for this information collection are as follows:
Federal Communications Commission.
Correcting amendments.
On May 1, 2014, the Commission released a Report and Order, “Unlicensed National Information Infrastructure (U-NII) Devices in the 5 GHz Band.” This document contains corrections to the final regulations that appeared in the
Effective September 24, 2014.
Aole Wilkins, Office of Engineering and Technology, (202) 418-2406 or email
The final regulations that are the subject of this correction relates to “Unlicensed National Information Infrastructure (U-NII) Devices in the 5 GHz Band” under § 15.407(a)(2) and (h)(2) of the rules.
As published, the amendatory instructions in the final regulations contain errors that are misleading and need immediate correction.
Communications equipment, Radio.
Accordingly, 47 CFR part 15 is corrected by making the following correcting amendments:
47 U.S.C. 154, 302a, 303, 304, 307, 336, 544a, and 549.
(a) * * *
(2) For the 5.25-5.35 GHz and 5.47-5.725 GHz bands, the maximum conducted output power over the frequency bands of operation shall not exceed the lesser of 250 mW or 11 dBm + 10 log B, where B is the 26 dB emission bandwidth in megahertz. * * *
(h) * * *
(2) Radar Detection Function of Dynamic Frequency Selection (DFS). U-NII devices operating with any part of its 26 dB emission bandwidth in the 5.25-5.35 GHz and 5.47-5.725 GHz bands shall employ a DFS radar detection mechanism to detect the presence of radar systems and to avoid co-channel operation with radar systems. Operators shall only use equipment with a DFS mechanism that is turned on when operating in these bands. The device must sense for radar signals at 100 percent of its emission bandwidth. The minimum DFS detection threshold for devices with a maximum e.i.r.p. of 200 mW to 1 W is −64 dBm. For devices that operate with less than 200 mW e.i.r.p. and a power spectral density of less than 10 dBm in a 1 MHz band, the minimum detection threshold is −62 dBm. The detection threshold is the received power averaged over 1 microsecond referenced to a 0 dBi antenna. For the initial channel setting, the manufacturers shall be permitted to provide for either random channel selection or manual channel selection.
(i) Operational Modes. The DFS requirement applies to the following operational modes:
(A) The requirement for channel availability check time applies in the master operational mode.
(B) The requirement for channel move time applies in both the master and slave operational modes.
(ii) Channel Availability Check Time. A U-NII device shall check if there is a radar system already operating on the channel before it can initiate a transmission on a channel and when it has to move to a new channel. The U-NII device may start using the channel if no radar signal with a power level greater than the interference threshold values listed in paragraph (h)(2) of this section, is detected within 60 seconds.
(iii) Channel Move Time. After a radar's presence is detected, all transmissions shall cease on the operating channel within 10 seconds. Transmissions during this period shall consist of normal traffic for a maximum of 200 ms after detection of the radar signal. In addition, intermittent management and control signals can be sent during the remaining time to facilitate vacating the operating channel.
(iv) Non-occupancy Period. A channel that has been flagged as containing a radar system, either by a channel availability check or in-service monitoring, is subject to a non-occupancy period of at least 30 minutes. The non-occupancy period starts at the time when the radar system is detected.
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
Clarification.
This document clarifies PHMSA's policy regarding applications for classification approval of Display Aerial Shells with Attachments, provided they conform to the acceptable criteria described in this guidance, and otherwise comply with APA Standard 87-1 requirements. Although the APA Standard 87-1 provides requirements for Display Aerial Shells, it does not specifically address Display Aerial Shells with Attachments.
September 24, 2014.
Mr. Ryan Paquet, Director, Approvals and Permits Division, Office of Hazardous Materials Safety, (202) 366-4512,
In this document, PHMSA's Office of Hazardous Materials Safety (OHMS) is issuing this policy regarding its classification approval of Display Aerial Shells with Attachments, which describes acceptable criteria for these types of fireworks. PHMSA previously evaluated and approved these devices; however, PHMSA has not previously published guidance regarding the approval of these types of fireworks. This clarification will help fireworks manufacturers and their U.S. designated agents who file applications on their behalf to provide accurate applications to PHMSA for approval, which will minimize the delay in processing these applications while sustaining the current level of safety.
PHMSA's OHMS, Approvals and Permits Division, receives approval applications for various types of fireworks, including Division 1.3G Display Aerial Shells with Attachments. Division 1.3G fireworks applications may be approved in accordance with subpart C of part 173 of the Hazardous Materials Regulations (HMR, 49 CFR parts 171-180). Division 1.3G fireworks applicants have the option for obtaining an EX classification approval without prior testing by a DOT-approved explosive test laboratory, provided that the firework device is manufactured in accordance with the APA Standard 87-1 and passes a thermal stability test as required by § 173.64(a)(1) and (2). The APA Standard 87-1 currently does not specifically address Display Aerial Shells with Attachments; however, it does provide the requirements for display shells.
Display Aerial Shells with Attachments that conform to the acceptable criteria described in this guidance and all applicable requirements in the APA Standard 87-1 (i.e., chemical compositions and shell diameter sizes), may be submitted to PHMSA for approval.
PHMSA considers Display Aerial Shells with Attachments to be cylindrical or spherical cartridges containing pyrotechnic compositions with attached external components. An attachment is a component that contains pyrotechnic composition that is attached to the outside of a Display Aerial Shell, and may be ignited by its own independent fuse. Display Aerial Shells with Attachments range from 2 inches (50mm) to 10 inches (250mm) in exterior diameter and are classed as UN0335, Fireworks, Division 1.3G.
To be accepted for review and consideration, PHMSA expects Display Aerial Shells with Attachments to be designed so that they (1) remain attached to the display aerial shell, (2) do not leak pyrotechnic composition during transportation, and (3) are constructed of sturdy materials, such as (but not limited to) plastic, Kraft paper, or cardboard (this does not apply to tails). Designs must meet the requirements of 40 CFR 173.56(b) or 173.64, the requirements in the APA Standard 87-1, and must pass a thermal stability test as required by § 173.64(a)(2).
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
Clarification.
This document clarifies PHMSA's policy regarding applications for classification approval of Display Mines provided they conform to the acceptable criteria described in this guidance, and otherwise comply with the APA Standard 87-1 requirements.
September 24, 2014.
Mr. Ryan Paquet, Director, Approvals and Permits Division, Office of Hazardous Materials Safety, (202) 366-4512, PHMSA, 1200 New Jersey Avenue SE., Washington, DC 20590.
In this document, PHMSA's Office of Hazardous Materials Safety (OHMS) is issuing this policy regarding its classification approval of Display Mines, which describes acceptable criteria for these types of fireworks. PHMSA previously evaluated and approved these devices; however, PHMSA has not previously published guidance regarding the approval of these types of fireworks. This clarification will help fireworks manufacturers and their U.S. designated agents that file applications on their behalf, to provide accurate applications to PHMSA for approval, which will minimize the delay in processing these applications, while sustaining the current level of safety.
PHMSA's OHMS, Approvals and Permits Division, receives approval applications for various types of fireworks, including Division 1.3G Display Mines. Division 1.3G fireworks applications may be approved in accordance with subpart C of part 173 of the Hazardous Materials Regulations (HMR, 49 CFR parts 171-180). Division 1.3G fireworks applicants have the option for obtaining an EX classification approval without prior testing by a DOT-approved explosive test laboratory, provided that the firework device is manufactured in accordance with the APA Standard 87-1 and passes a thermal stability test as required by § 173.64(a)(1) and (2). The APA Standard 87-1 currently does not specifically address Display Mines; however, it does provide the requirements for display shells.
Display Mines that conform to the acceptable criteria described in this guidance, and all applicable requirements in the APA Standard 87-1, (e.g., chemical compositions and shell diameter sizes), may be submitted to PHMSA for approval classification.
PHMSA considers a Display Mine to be a cylindrical or spherical cartridge that contains a propelling charge and does not contain a primary burst charge or a main delay fuse. Internal effects (e.g. crossettes or small display shells) are permitted to contain a burst charge and an internal delay fuse. The internal effects are launched from a tube by the propelling charge. Display Mines range from 2 inches (50mm) to 10 inches (250mm) in exterior diameter and are classed as UN0335, Fireworks, Division 1.3G.
To be accepted for review and consideration, PHMSA expects Display Mines to be designed so that they (1) will not leak pyrotechnic composition during transportation in accordance with § 173.54(c); and (2) are constructed of sturdy materials, such as (but not
Issued in Washington, DC, under authority delegated in 49 CFR 1.97.
National Highway Traffic Safety Administration (NHTSA), DOT.
Final rule.
This document revises the list of vehicles not originally manufactured to conform to the Federal Motor Vehicle Safety Standards (FMVSS) that NHTSA has decided to be eligible for importation. This list is published in an appendix to the agency's regulations that prescribe procedures for import eligibility decisions. The list has been revised to add all vehicles that NHTSA has decided to be eligible for importation since October 1, 2013, and to remove all previously listed vehicles that are now more than 25 years old and need no longer comply with all applicable FMVSS to be lawfully imported. NHTSA is required by statute to publish this list annually in the
The revised list of import eligible vehicles is effective on September 24, 2014.
George Stevens, Office of Vehicle Safety Compliance, NHTSA, (202) 366-5308.
Under 49 U.S.C. 30141(a)(1)(A), a motor vehicle that was not originally manufactured to conform to all applicable FMVSS shall be refused admission into the United States unless NHTSA has decided that the motor vehicle is substantially similar to a motor vehicle originally manufactured for importation into and sale in the United States, certified under 49 U.S.C. 30115, and of the same model year as the model of the motor vehicle to be compared, and is capable of being readily altered to conform to all applicable FMVSS. Where there is no substantially similar U.S.-certified motor vehicle, 49 U.S.C. 30141(a)(1)(B) permits a nonconforming motor vehicle to be admitted into the United States if its safety features comply with, or are capable of being altered to comply with, all applicable FMVSS based on destructive test data or such other evidence as the Secretary of Transportation decides to be adequate.
Under 49 U.S.C. 30141(a)(1), import eligibility decisions may be made “on the initiative of the Secretary of Transportation or on petition of a manufacturer or importer registered under [49 U.S.C. 30141(c)].” The Secretary's authority to make these decisions has been delegated to NHTSA. The agency publishes notices of eligibility decisions as they are made.
Under 49 U.S.C. 30141(b)(2), a list of all vehicles for which import eligibility decisions have been made must be published annually in the
Executive Order 12866, “Regulatory Planning and Review” (58 FR 51735, October 4, 1993), provides for making determinations about whether a regulatory action is “significant” and therefore subject to Office of Management and Budget (OMB) review and to the requirements of the Executive Order. The Executive Order defines 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 $100 million or more or adversely affects 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 rule will not have any of these effects and was not reviewed under Executive Order 12866. It is not significant within the meaning of the DOT Regulatory Policies and Procedures. The effect of this rule is not to impose new requirements. Instead it provides a summary compilation of decisions on import eligibility that have already been made and does not involve new decisions. This rule will not impose any additional burden on any person. Accordingly, the agency believes that the preparation of a regulatory evaluation is not warranted for this rule.
We have not conducted an evaluation of the impacts of this rule under the National Environmental Policy Act. This rule does not impose any change that would result in any impacts to the quality of the human environment. Accordingly, no environmental assessment is required.
Pursuant to the Regulatory Flexibility Act, we have considered the impacts of this rule on small entities (5 U.S.C. Sec. 601 et seq.). I certify that this rule will not have a significant economic impact upon a substantial number of small entities within the context of the Regulatory Flexibility Act. The following is our statement providing the factual basis for the certification (5 U.S.C. Sec. 605(b)). This rule will not have any significant economic impact on a substantial number of small businesses because the rule merely furnishes information by revising the list in the Code of Federal Regulations of vehicles for which import eligibility decisions have previously been made. Accordingly, we have not prepared a Final Regulatory Flexibility Analysis.
Executive Order 13132 requires NHTSA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism
This rule will have no direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government as specified in Executive Order 13132. Thus, the requirements of section 6 of the Executive Order do not apply to this rule.
The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually. This rule will not result in additional expenditures by State, local or tribal governments or by any members of the private sector. Therefore, the agency has not prepared an economic assessment pursuant to the Unfunded Mandates Reform Act.
Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), a person is not required to respond to a collection of information by a Federal agency unless the collection displays a valid OMB control number. This rule does not impose any new collection of information requirements for which a 5 CFR Part 1320 clearance must be obtained. DOT previously submitted to OMB and OMB approved the collection of information associated with the vehicle importation program in OMB Clearance No. 2127-0002.
Pursuant to Executive Order 12988, “Civil Justice Reform,” we have considered whether this rule has any retroactive effect. We conclude that it will not have such an effect.
Executive Order 12866 requires each agency to write all rules in plain language. Application of the principles of plain language includes consideration of the following questions:
Under the National Technology and Transfer and Advancement Act of 1995 (Pub. L. 104-113), “all Federal agencies and departments shall use technical standards that are developed or adopted by voluntary consensus standards bodies, using such technical standards as a means to carry out policy objectives or activities determined by the agencies and departments.” This rule does not require the use of any technical standards.
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
This rule is not subject to Executive Order 13045 because it is not “economically significant” as defined under Executive Order 12866, and does not concern an environmental, health, or safety risk that NHTSA has reason to believe may have a disproportionate effect on children.
NHTSA finds that prior notice and opportunity for comment are unnecessary under 5 U.S.C. 553(b)(3)(B) because this action does not impose any regulatory requirements. This rule merely revises the list of vehicles not originally manufactured to conform to the FMVSS that NHTSA has decided to be eligible for importation into the United States since the last list was published in September, 2013.
In addition, so that the list of vehicles for which import eligibility decisions have been made may be included in the next edition of 49 CFR Parts 572 to 999, which is due for revision on October 1, 2014, good cause exists to dispense with the requirement in 5 U.S.C. 553(d) for the effective date of the rule to be delayed for at least 30 days following its publication.
Imports, Motor vehicle safety, Motor vehicles.
In consideration of the foregoing, Part 593 of Title 49 of the Code of Federal Regulations is amended as follows:
49 U.S.C. 322 and 30141(b); delegation of authority at 49 CFR 1.95.
(a) Each vehicle on the following list is preceded by a vehicle eligibility number. The importer of a vehicle admissible under any eligibility decision must enter that number on the HS-7 Declaration Form accompanying entry to indicate that the vehicle is eligible for importation.
(1) “VSA” eligibility numbers are assigned to all vehicles that are decided to be eligible for importation on the initiative of the Administrator under § 593.8.
(2) “VSP” eligibility numbers are assigned to vehicles that are decided to be eligible under § 593.7(f), based on a petition from a manufacturer or registered importer submitted under § 593.5(a)(1), which establishes that a substantially similar U.S.-certified vehicle exists.
(3) “VCP” eligibility numbers are assigned to vehicles that are decided to be eligible under § 593.7(f), based on a petition from a manufacturer or registered importer submitted under Sec. 593.5(a)(2), which establishes that the vehicle has safety features that
(b) Vehicles for which eligibility decisions have been made are listed alphabetically, first by make, then by model, then by model year.
(c) All hyphens used in the Model Year column mean “through” (for example, “1995-1999” means “1995 through 1999”).
(d) The initials “MC” used in the Make column mean “Motorcycle.”
(e) The initials “SWB” used in the Model Type column mean “Short Wheel Base.”
(f) The initials “LWB” used in the Model Type column mean “Long Wheel Base.”
(g) For vehicles with a European country of origin, the term “Model Year” ordinarily means calendar year in which the vehicle was produced.
(h) All vehicles are left-hand-drive (LHD) vehicles unless noted as RHD. The initials “RHD” used in the Model Type column mean “right-hand-drive.”
(i) For vehicle models that have been determined to be eligible for importation based on a petition submitted under Sec. 593.5(a)(1), which establishes that a substantially similar U.S.-certified vehicle exists, and no specific body style(s) are listed, only the body style(s) of that vehicle model that were U.S.-certified by the original manufacturer are eligible for importation. For example, if the original manufacturer manufactured both sedan and wagon body styles for the described model, but only certified the sedan for the U.S. market, the wagon body style would not be eligible for importation under that determination.
National Highway Traffic Safety Administration, DOT.
Final rule.
This document adopts fees for Fiscal Year 2015 relating to the registration of importers and the importation of motor vehicles not certified as conforming to the Federal motor vehicle safety standards (FMVSS). These fees will also apply beyond Fiscal Year 2015 until further notice. These fees are needed to maintain the registered importer (RI) program. We are increasing the fees for the registration of a new RI from $805 to $844 and the annual fee for renewing an existing registration from $676 to $726. The fee to reimburse Customs for conformance bond processing costs will increase from $9.09 to $9.34 per bond. The fee for the review, processing, handling, and disbursement of cash deposits that are submitted in lieu of a conformance bond will increase from $495 to $499. We are increasing the fees for the importation of a vehicle covered by an import eligibility decision made on an individual model and model year basis. For vehicles determined eligible based on their substantial similarity to a U.S. certified vehicle, the fee will increase from $101 to $138. For vehicles determined eligible based on their capability of being modified to comply with all applicable FMVSS, the fee will also increase from $101 to $138. The fee for the inspection of a vehicle will remain $827. The fee for processing a conformity package will decrease from $12 to $10. If the vehicle has been entered electronically with Customs through the Automated Broker Interface (ABI) and the RI has an email address, the fee for processing the conformity package will continue to be $6, provided the fee is paid by credit card. If NHTSA finds that the information in the entry or the conformity package is incorrect, the processing fee will increase from $57 to $59, representing a $2 increase in the fee that is currently charged when there are one or more errors in the ABI entry or omissions in the statement of conformity.
The amendments established by this final rule will become effective on October 1, 2014. Petitions for reconsideration must be received by NHTSA not later than November 10, 2014.
Petitions for reconsideration of this final rule should refer to the docket and notice numbers identified above and be submitted to: Administrator, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE., West Building, Washington, DC 20590. It is requested, but not required, that 10 copies of the petition be submitted. The petition must be received not later than 45 days after publication of this final rule in the
Clint Lindsay, Office of Vehicle Safety Compliance, NHTSA (202-366-5291). For legal issues, you may call Nicholas Englund, Office of Chief Counsel, NHTSA (202-366-5263).
This rule was preceded by a notice of proposed rulemaking (NPRM) that NHTSA published on July 31, 2014 (79 FR 44363).
The National Traffic and Motor Vehicle Safety Act, as amended by the Imported Vehicle Safety Compliance Act of 1988, and recodified at 49 U.S.C. 30141-30147 (“the Act”), provides for fees to cover the costs of the importer registration program, the cost of making import eligibility decisions, and the cost of processing the bonds furnished to Customs. Certain fees became effective on January 31, 1990, and have been in effect, with modifications, since then. On June 24, 1996, we published a document in the
We are required to review and make appropriate adjustments at least every two years in the fees established for the administration of the RI program.
The fees proposed in this document reflect the one percent increase in General Schedule salary rates that were effective January 1, 2014 and the slight increases in indirect costs attributed to the agency's overhead costs since the fees were last adjusted.
There were no comments in response to the notice of proposed rulemaking.
Section 30141(a)(3) of Title 49, U.S. Code provides that RIs must pay the annual fees established “to pay for the costs of carrying out the registration program for importers. . . .” This fee is payable both by new applicants and by existing RIs. To maintain its registration, each RI, at the time it submits its annual fee, must also file a statement affirming that the information it furnished in its registration application (or in later submissions amending that information) remains correct. 49 CFR 592.5(f).
To comply with the statutory directive, we reviewed the existing fees and their bases in an attempt to establish fees that would be sufficient to recover the costs of carrying out the registration program for importers for at least the next two fiscal years. The initial component of the Registration Program Fee is the fee attributable to
We must also recover costs attributable to maintenance of the registration program that arise from the need for us to review a registrant's annual statement and to verify the continuing validity of information already submitted. These costs also include anticipated costs attributable to the possible revocation or suspension of registrations and reflect the amount of time that we have devoted to those matters in the past two years.
Based upon our review of these costs, the portion of the fee attributable to the maintenance of the registration program is approximately $511 for each RI. When this $511 is added to the $333 representing the registration application component, the cost to an applicant for RI status comes to $844, which is the fee we are adopting. This represents an increase of $39 over the existing fee. When the $511 is added to the $215 representing the annual statement component, the total cost to an RI for renewing its registration comes to $726, which represents an increase of $50.
Section 594.6(h) enumerates indirect costs associated with processing the annual renewal of RI registrations. The provision states that these costs represent a
Section 30141(a)(3)(B) also requires registered importers to pay other fees the Secretary of Transportation establishes to cover the costs of “making the decisions under this subchapter.” This includes decisions on whether the vehicle sought to be imported is substantially similar to a motor vehicle that was originally manufactured for importation into and sale in the United States and certified by its original manufacturer as complying with all applicable FMVSS, and whether the vehicle is capable of being readily altered to meet those standards. Alternatively, where there is no substantially similar U.S.-certified motor vehicle, the decision is whether the safety features of the vehicle comply with, or are capable of being altered to comply with, the FMVSS based on destructive test information or such other evidence that NHTSA deems to be adequate. These decisions are made in response to petitions submitted by RIs or manufacturers, or on the Administrator's own initiative.
The fee for a vehicle imported under an eligibility decision made in response to a petition is payable in part by the petitioner and in part by other importers. The fee to be charged for each vehicle is the estimated
Since we last amended the fee schedule, the overall number of vehicle imports by RIs has increased, while the number of petitions has remained approximately the same. The total number of vehicles that RIs imported between 2009 and 2013 was 117,512 or approximately 23,502 vehicles each year. Over the same period, the number of vehicles imported under an import eligibility petition that was submitted by an RI (as opposed to an import eligibility decision initiated by the agency) increased to 1,987 or approximately 397 vehicles each year. Over the past five years, RIs submitted 83 petitions to NHTSA, averaging 17 per year and the agency has devoted more staff time reviewing and processing import eligibility petitions since we last revised the fees.
Based on these trends, the
We are not increasing the current fee of $175 that covers the initial processing of a “substantially similar” petition. Likewise, we are also maintaining the existing fee of $800 to cover the initial costs for processing petitions for vehicles that have no substantially similar U.S.-certified counterpart. In the event that a petitioner requests an inspection of a vehicle, the fee for such an inspection will remain $827 for vehicles that are the subject of either type of petition.
The importation fee varies depending upon the basis on which the vehicle is determined to be eligible. For vehicles covered by an eligibility decision on the agency's own initiative (other than vehicles imported from Canada that are covered by import eligibility numbers VSA-80 through 83, for which no eligibility decision fee is assessed), the fee remains $125. NHTSA determined that the costs associated with previous eligibility determinations on the agency's own initiative would be fully recovered by October 1, 2014. We will apply the fee of $125 per vehicle only to vehicles covered by determinations made by the agency on its own initiative on or after October 1, 2014.
Section 30141(a)(3) also requires a registered importer to pay any other fees the Secretary of Transportation
The Department of Homeland Security (Customs) exercises the functions associated with the processing of these bonds. To carry out the statute, we make a reasonable determination of the costs that Department incurs in processing the bonds. In essence, the cost to Customs is based upon an estimate of the time that a GS-9, Step 5 employee spends on each entry, which Customs has judged to be 20 minutes.
When the fee schedule was last amended, we projected General Schedule salary raises to be effective in January 2013 and 2014. Based on the increase in hourly costs attributable to the approximately one percent raises in salaries of employees on the General Schedule that became effective on January 1, 2014, we are increasing the processing fee by $0.25, from $9.09 per bond to $9.34. This increase reflects the fact that GS-9 salaries have been increased since we last amended the fee schedule in 2012. The $9.34 fee will more closely reflect the direct and indirect costs that are actually associated with processing the bonds.
In lieu of sureties on a DOT conformance bond, an importer may offer United States money, United States bonds (except for savings bonds), United States certificates of indebtedness, Treasury notes, or Treasury bills (collectively referred to as “cash deposits”) in an amount equal to the amount of the bond. 49 CFR 591.10(a). The receipt, processing, handling, and disbursement of the cash deposits that have been tendered by RIs cause the agency to consume a considerable amount of staff time and material resources. NHTSA has concluded that the expense incurred by the agency to receive, process, handle, and disburse cash deposits may be treated as part of the bond processing cost, which NHTSA is authorized to set a fee under 49 U.S.C. 30141(a)(3)(A). We first established a fee of $459 for each vehicle imported on and after October 1, 2008, for which cash deposits or obligations of the United States are furnished in lieu of a conformance bond.
The agency considered its direct and indirect costs in calculating the fee for the review, processing, handling, and disbursement of cash deposits submitted by importers and RIs in lieu of sureties on a DOT conformance bond. We are increasing the fee from $495 to $499, which represents an increase of $4. The factors that the agency has taken into account in proposing the fee include time expended by agency personnel, the slight increase in overhead and contractor costs, and the increase in projected salary costs based on the General Schedule increase on January 1, 2014.
Each RI is currently required to pay $12 per vehicle to cover the costs the agency incurs in reviewing a certificate of conformity. We have found that these costs have decreased from $12 to an average of $10 per vehicle. Although our overhead and contractor costs increased and the salary and benefit costs are slightly greater based on the General Schedule salary increase, the number of certificates of conformity submitted for agency review has increased. This has decreased the agency's cost attributed to the review of each certificate of conformity. Based on these costs, we are decreasing the fee charged for vehicles for which a paper entry and fee payment is made, from $12 to $10, a difference of $2 per vehicle. However, if an RI enters a vehicle through the Automated Broker Interface (ABI) system, has an email address to receive communications from NHTSA, and pays the fee by credit card, the cost savings that we realize allow us to significantly reduce the fee to $6. We are maintaining the fee of $6 per vehicle if all the information in the ABI entry is correct.
Errors in ABI entries not only eliminate any time savings, but also require additional staff time to be expended in reconciling the erroneous ABI entry information to the conformity data that is ultimately submitted. Our experience with these errors has shown that staff members must examine records, make time-consuming long distance telephone calls, and often consult supervisory personnel to resolve the conflicts in the data. We have calculated this staff and supervisory time, as well as the telephone charges, to amount to approximately $59 for each erroneous ABI entry. Adding this to the $6 fee for the review of conformity packages on automated entries yields a total of $65, representing a $2 increase in the fee that is currently charged when there are one or more errors in the ABI entry or in the statement of conformity.
NHTSA is required under 49 U.S.C. 30141(e) to “review and make appropriate adjustments at least every 2 years in the amounts of the fees” relating to the registration of importers, the processing of bonds, and making decisions concerning the importation of nonconforming vehicles. The statute further requires the agency to “establish the fees for each fiscal year before the beginning of that year.” This final rule implements the statutory provisions.
According to the Administrative Procedure Act (APA) a final rule generally cannot become effective until thirty days after the date on which the rule was issued. The APA contains an exemption that allows a rule to become effective prior to thirty days after the rule is issued if the agency finds that there is good cause for an earlier effective date and the good cause finding is published with the final rule.
Because 49 U.S.C. 30141(e) requires the agency to establish the new fee schedule before the beginning of the next fiscal year, we believe that there is good cause for this final rule to become effective prior to thirty days after the date of publication of today's final rule. Allowing today's final rule to become effective prior to a date thirty dates after this rule is published will allow the new fee schedule to be in place at the beginning of the new fiscal year as required by the statute.
In the NPRM, we proposed to make this rule effective October 1, 2014, and did not receive any comments on this issue. Accordingly, the effective date of this final rule is October 1, 2014.
Executive Order 12866, “Regulatory Planning and Review” (58 FR 51735, October 4, 1993), provides for making determinations whether a regulatory action is “significant” and therefore subject to Office of Management and Budget (OMB) review and to the requirements of the Executive Order. The Order defines 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 $100 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.
NHTSA has considered the impact of this rulemaking action under Executive Order 12866, E.O. 13563, and the Department of Transportation's regulatory policies and procedures. This rulemaking is not significant. Accordingly, the Office of Management and Budget has not reviewed this rulemaking document under Executive Order 12886 or 13563. Further, NHTSA has determined that the rulemaking is not significant under Department of Transportation's regulatory policies and procedures. Based on the level of the fees and the volume of affected vehicles, NHTSA currently anticipates that the costs of the final rule would be so minimal as not to warrant preparation of a full regulatory evaluation. The action does not involve any substantial public interest or controversy. The rule will have no substantial effect upon State and local governments. There will be no substantial impacts upon a major transportation safety program. A regulatory evaluation analyzing the economic impact of the final rule establishing the registered importer program, adopted on September 29, 1989, was prepared, and is available for review in the docket.
Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601
The agency has considered the effects of this rulemaking under the Regulatory Flexibility Act, and certifies that the rules being adopted will not have a significant economic impact upon a substantial number of small entities.
The following is NHTSA's statement providing the factual basis for the certification (5 U.S.C. 605(b)). The adopted amendments will primarily affect entities that currently modify nonconforming vehicles and that are small businesses within the meaning of the Regulatory Flexibility Act; however, the agency has no reason to believe that these companies would be unable to pay the fees proposed by this action. In most instances, these fees would not be changed or would be only modestly increased (and in some instances decreased) from the fees now being paid by these entities. Moreover, consistent with prevailing industry practices, these fees should be passed through to the ultimate purchasers of the vehicles that are altered and, in most instances, sold by the affected registered importers. The cost to owners or purchasers of nonconforming vehicles that are altered to conform to the FMVSS may be expected to increase (or decrease) to the extent necessary to reimburse the registered importer for the fees payable to the agency for the cost of carrying out the registration program and making eligibility decisions, and to compensate Customs for its bond processing costs.
Governmental jurisdictions will not be affected at all since they are generally neither importers nor purchasers of nonconforming motor vehicles.
Executive Order 13132 on “Federalism” requires NHTSA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications.” Executive Order 13132 defines the term “policies that have federalism implications” to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under Executive Order 13132, NHTSA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or NHTSA consults with State and local officials early in the process of developing the proposed regulation.
NHTSA has examined today's final rule pursuant to Executive Order 13132 (64 FR 43255, August 10, 1999) and concluded that the rule does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government as specified in Executive Order 13132. Moreover, NHTSA is required by statute to impose fees for the administration of the RI program and to review and make necessary adjustments in those fees at least every two years. Thus, the requirements of section 6 of the Executive Order do not apply to this rulemaking action.
NHTSA has analyzed this final rule for purposes of the National Environmental Policy Act. The final rule would not have a significant effect upon the environment because it is anticipated that the annual volume of motor vehicles imported through registered importers would not vary significantly from that existing before promulgation of the rule.
Pursuant to Executive Order 12988 “Civil Justice Reform,” the agency has considered whether the amendments adopted in this final rule will have any retroactive effect. NHTSA concludes that those amendments will not have any retroactive effect. Judicial review of the rule may be obtained pursuant to 5 U.S.C. 702. That section does not require that a petition for reconsideration be filed prior to seeking judicial review.
The policy statement in section 1 of Executive Order 13609 provides, in part that the regulatory approaches taken by foreign governments may differ from those taken by U.S. regulatory agencies to address similar issues. In some cases, the differences between the regulatory approaches of U.S. agencies and those of their foreign counterparts might not be necessary and might impair the ability of American businesses to export and compete internationally. In meeting shared challenges involving health,
Executive Order 13211 applies to any rule that: (1) Is determined to be economically significant as defined under E.O. 12866, and is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (2) that is designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. If the regulatory action meets either criterion, we must evaluate the adverse energy effects of the proposed rule and explain why the proposed regulation is preferable to other potentially effective and reasonably feasible alternatives considered by NHTSA. As noted above, this final rule is not significant under E.O. 12866. NHTSA also believes that this final rule has no effect on the supply, distribution, or use of energy.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually (adjusted for inflation with the base year of 1995). Before promulgating a rule for which a written assessment is needed, Section 205 of the UMRA generally requires NHTSA to identify and consider a reasonable number of regulatory alternatives and to adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of Section 205 do not apply when they are inconsistent with applicable law. Moreover, Section 205 allows NHTSA to adopt an alternative other than the least costly, most cost-effective or least burdensome alternative if the agency publishes with the final rule an explanation why that alternative was not adopted. Because this final rule will not require the expenditure of resources beyond $100 million annually, this action is not subject to the requirements of Sections 202 and 205 of the UMRA.
Under the Paperwork Reduction Act of 1995, a person is not required to respond to a collection of information by a Federal agency unless the collection displays a valid OMB control number. Part 594 includes collections of information for which NHTSA has obtained OMB Clearance No. 2127-0002, a consolidated collection of information for “Importation of Vehicles and Equipment Subject to the Federal Motor Vehicle Safety, Bumper and Theft Prevention Standards,” approved through April 30, 2017. This final rule will not affect the burden hours associated with Clearance No. 2127-0002 because we are only adjusting the fees associated with participating in the registered importer program. The new fees that we are adopting will not impose new collection of information requirements or otherwise affect the scope of the program.
Executive Order 13045, “Protection of Children from Environmental Health and Safety Risks” (62 FR 19855, April 23, 1997), applies to any rule that (1) is determined to be “economically significant” as defined under E.O. 12866, and (2) concerns an environmental, health, or safety risk that NHTSA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, we must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned rule is preferable to other potentially effective and reasonably feasible alternatives considered by us. This rulemaking is not economically significant and does not concern an environmental, health, or safety risk.
Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, (15 U.S.C. 272) directs NHTSA to use voluntary consensus standards in its regulatory activities unless doing so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies, such as the Society of Automotive Engineers (SAE). The NTTAA directs the agency to provide Congress, through the OMB, with explanations when it decides not to use available and applicable voluntary consensus standards.
In this final rule, we are adjusting the fees associated with the registered importer program. We are making no substantive changes to the program nor did we adopt any technical standards. For these reasons, Section 12(d) of the NTTAA does not apply.
Anyone is able to search the electronic form of all submissions received into any of our dockets by the name of the individual submitting the comment or petition (or signing the comment or petition, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
The Department of Transportation assigns a regulation identifier number (RIN) 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. You may use the RIN that appears in the heading on the first page of this document to find this action in the Unified Agenda.
Imports, Motor vehicle safety, Motor vehicles.
In consideration of the foregoing, 49 CFR Part 594 is amended as follows:
49 U.S.C. 30141, 31 U.S.C. 9701; delegation of authority at 49 CFR 1.95.
(a) Each person filing an application to be granted the status of a Registered Importer pursuant to part 592 of this chapter on or after October 1, 2014, must pay an annual fee of $844, as calculated below, based upon the direct and indirect costs attributable to:
(b) That portion of the initial annual fee attributable to the processing of the application for applications filed on and after October 1, 2014, is $333. The sum of $333, representing this portion, shall not be refundable if the application is denied or withdrawn.
(d) That portion of the initial annual fee attributable to the remaining activities of administering the registration program on and after October 1, 2014, is set forth in paragraph (i) of this section. * * *
(h) * * * This cost is $25.73 per man-hour for the period beginning October 1, 2014.
(i) Based upon the elements and indirect costs of paragraphs (f), (g), and (h) of this section, the component of the initial annual fee attributable to administration of the registration program, covering the period beginning October 1, 2014, is $511. When added to the costs of registration of $333, as set forth in paragraph (b) of this section, the costs per applicant to be recovered through the annual fee are $844. The annual renewal registration fee for the period beginning October 1, 2014, is $726.
(e) For petitions filed on and after October 1, 2014, the fee payable for seeking a determination under paragraph (a)(1) of this section is $175. * * *
(b) If a determination has been made pursuant to a petition, the fee for each vehicle is $138. * * *
(c) If a determination has been made on or after October 1, 2014, pursuant to the Administrator's initiative, the fee for each vehicle is $125. * * *
(c) The bond processing fee for each vehicle imported on and after October 1, 2014, for which a certificate of conformity is furnished, is $9.34.
(e) The fee for each vehicle imported on and after October 1, 2014, for which cash deposits or obligations of the United States are furnished in lieu of a conformance bond, is $499.
(d) The review and processing fee for each certificate of conformity submitted on and after October 1, 2014 is $10. * * *
49 U.S.C. 30118, 30120: delegations of authority at 49 CFR 1.95.
In proposed rule document 2014-21118 appearing on pages 54482 through 54516 in the issue of Thursday, September 11, 2014, make the following corrections:
1. On page 54494, in table 2, in column number 2 “Goals”, the first entry corresponding with year “2013” should read “265,000”.
2. On page 54494, in table 3, in column number 2 “Goals”, the first entry corresponding with year “2013” should read “70,000”.
Bureau of Safety and Environmental Enforcement (BSEE), Interior.
Advance notice of proposed rulemaking.
The BSEE is seeking comments on improving safety for operations related to helicopters and helidecks on fixed offshore facilities. Specifically, BSEE invites comments on whether to incorporate in its regulations certain industry and/or international standards for design, construction, and maintenance of offshore helidecks, as well as standards for aviation fuel quality, storage and handling. The BSEE also invites comments on whether it should incorporate existing standards, with modifications, and/or develop and propose new government regulatory standards for safety of helidecks and aviation fuel systems. As an alternative to incorporating or developing such standards, BSEE invites comments on whether to require submission of aviation-related safety plans for helidecks and offshore aviation fuel systems on Outer Continental Shelf (OCS) facilities. The BSEE also seeks information on past accidents or other incidents involving helidecks, helicopters, or aviation fuel on or near fixed OCS facilities.
Submit comments by November 24, 2014. The BSEE may not fully consider comments received after this date.
You may submit comments on this notice by any of the following methods. Please use the Regulation Identifier Number (RIN) 1014-AA22 as an identifier in your comments. In addition, please refer to “Oil and Gas and Sulphur Operations in the Outer Continental Shelf—Helideck and Aviation Fuel Safety for Fixed Offshore Facilities, 1014-AA22,” in your comments and include your name and return address. The BSEE may post all submitted comments, in their entirety, at
Ralph Colleli, Regulations and Standards Branch, 703-787-1831, email address:
In accordance with the Outer Continental Shelf Lands Act (OCSLA), BSEE and the U.S. Coast Guard (USCG) share regulatory authority over offshore facilities engaged in oil and gas operations—including exploration, development, and production activities—on the OCS. Among other purposes, BSEE's regulations for offshore operations seek to prevent injury or loss of life and damage to property, natural resources, and the environment. As one means of achieving these goals, BSEE incorporates by reference in its regulations many industry standards applicable to offshore oil and gas operations.
Although the Federal Aviation Administration (FAA) has broad authority regarding helicopter-related safety issues and onshore and offshore flight safety, BSEE has the lead responsibility for safety of helidecks and aviation fuel storage and handling on fixed offshore facilities, while the USCG has the lead responsibility for helidecks and aviation fuel handling on floating offshore facilities. Currently, BSEE's regulations incorporate and require compliance with certain industry standards that address some safety issues related to helidecks and the presence of helicopters and aviation fuel on fixed offshore facilities. However, BSEE's existing regulations do not comprehensively address helideck or aviation fuel safety issues.
Recent reports by the U.S Centers for Disease Control and Prevention (CDC) and the Helicopter Safety Advisory Conference confirm that helicopter accidents and helicopter-related incidents on or near offshore facilities are a significant concern. Similarly, incident reports submitted by offshore operators to the Minerals Management Service (MMS)—BSEE's predecessor agency—or to BSEE over the past 15 years indicate that incidents involving helicopter operations on or near offshore facilities have resulted in several fatalities, significant injuries and substantial property damage.
The BSEE has reviewed existing industry and international standards for helideck and aviation fuel safety and believes that certain standards, if incorporated into BSEE's regulations for fixed offshore facilities, could improve safety and reduce risks of injury and
Before incorporating any existing standards or otherwise revising our regulations, we seek additional information about helicopter, helideck, and aviation fuel-related incidents related to fixed offshore facilities. In addition, we invite public comments on other issues related to offshore helideck and aviation fuel safety, including:
The BSEE promotes safety, protects the environment, and conserves offshore oil and gas resources through vigorous regulatory oversight and enforcement. The BSEE derives its regulatory authority primarily from the OCSLA, as amended, 43 U.S.C. 1331-1356a, which establishes Federal control over the OCS and authorizes the Secretary of the Interior (the Secretary) to regulate oil and natural gas exploration, development, and production operations on the OCS. In Secretarial Order 3299 (May 19, 2010), the Secretary assigned BSEE the responsibility for offshore safety and environmental enforcement, including the authority to:
To carry out its responsibilities, BSEE regulates exploration, development, and production of oil and natural gas on the OCS to enhance safety and environmental protection in a way that reflects advancements in technology and new information. In addition to developing and implementing such regulatory requirements, BSEE collaborates with standards development organizations and the international community to develop and revise safety and environmental standards, which BSEE may incorporate into its regulatory program. The BSEE also conducts on-site inspections to ensure compliance with regulations, lease terms, and approved plans. Detailed information concerning BSEE's regulations and guidance for the offshore industry may be found on BSEE's Web site at:
The BSEE encourages you to participate in this advance notice of proposed rulemaking (ANPR) by submitting written comments as provided in the
In accordance with the National Technology Transfer and Advancement Act of 1995, Public Law 104-113, and OMB Circular A-119, Federal agencies are directed to use standards developed by voluntary consensus standards bodies—domestic or international—in lieu of adopting government-unique standards, except where inconsistent with law or impracticable. In addition, Federal agencies may choose to use standards developed by entities other than voluntary consensus standards bodies in their regulations.
The BSEE frequently uses standards (
Federal regulations at 1 CFR part 51 govern how BSEE and other Federal agencies incorporate various documents by reference. Agencies may incorporate a document by reference by publishing the document's title, edition, date, author, publisher, identification number, and other specified information in the
In a Memorandum of Agreement (MOA) dated September 30, 2004 (No. OCS-01), MMS and USCG identified, and agreed on how to share, certain responsibilities for regulation of OCS facilities. Under that MOA, MMS and USCG agreed that MMS (now BSEE) has the lead responsibility for aircraft (
a.
b.
Section 250.154(a)(2) requires all OCS facilities with helidecks to display identification signs that include the weight capacity of the helidecks and that are visible from the air. Section 250.490(f)(7) requires facilities operating in hydrogen sulfide (H2S) areas to submit contingency plans to BSEE that describe circumstances under which it is appropriate to evacuate personnel by helicopter during H2S emergencies; while section 250.490(j)(13)(viii) requires facilities to limit H2S-related evacuation flights to the circumstances described in their contingency plans and to provide respirator equipment to helicopter crews and passengers in such emergencies.
The BSEE's regulations also incorporate and require compliance with several industry standards that address helideck and aviation fuel safety issues.
In addition, 30 CFR 250.901(a)(14) requires that plans for design, analysis, fabrication, installation, use, maintenance, inspection, and assessment of all OCS platforms comply with API RP 14J (Design and Hazards Analysis for Offshore Production Facilities, Second Edition), as appropriate.
While sections 250.901 and 250.114 do not directly impose helideck or aviation fuel storage requirements on facility operators, they allow BSEE to consider whether plans for offshore production platforms are consistent with API RP 14J and whether the installation of electrical systems on all facilities is consistent with API RP 14F/14FZ.
In addition, BSEE's regulations require that each offshore facility be covered by a Safety and Environmental Management System (SEMS) program that addresses, among other things, safety and environmental hazards related to design, construction, operation and maintenance of the facility (
Moreover, section 250.107 requires OCS operators to: Perform all operations in a safe and workmanlike manner; maintain all equipment and work areas in a safe condition; and immediately control, remove or otherwise correct any health, safety or fire hazard. Under this authority, BSEE has issued notices of Incidents of Noncompliance (INCs) for unsafe conditions involving helidecks or related equipment or areas. From 1998 to mid-2013, MMS/BSEE issued over 400 INCs under section 250.107(a) to fixed OCS facilities for unsafe conditions involving helidecks.
Despite the existing BSEE and USCG regulatory provisions, safety of helicopter-related systems and operations on and near offshore facilities remains a concern. In April 2013, the CDC reported that, based on industry data, the leading cause of death for offshore oil and gas extraction workers between 2003 and 2010 was transportation to and from work sites.
Similarly, in May 2014, the Helicopter Safety Advisory Conference (HSAC)—an organization that represents petroleum companies, drilling and oil service companies, and helicopter operators and manufacturers and that focuses on identifying and sharing information about offshore helicopter safety in the GOM—reported that there were 21 offshore helicopter accidents in the GOM between 2009 and 2013, resulting in 11 fatalities and 15 injuries. The HSAC also reported that, between 1999 and 2013, 17 offshore helicopter accidents involved helideck or other obstacle strikes, and six accidents involved aviation fuel management problems (although HSAC's report does not indicate how many helicopter incidents involved fixed offshore facilities and how many involved MODUs or floating offshore facilities).
The HSAC has also stated that, over the years, its member organizations have reported engine-related events resulting from aviation fuel contamination, although it is not clear from HSAC's statements whether the reported fuel management and contamination problems occurred onshore or offshore (
The BSEE's own incident data also indicate that there are ongoing safety concerns with helidecks and helicopter-related operations on OCS facilities. Under section 250.188, the BSEE receives reports from OCS operators and lessees regarding certain incidents—including fatalities, significant injuries, property damage exceeding $25,000, and fires and explosions—that occur anywhere on their lease areas. Between 1998 and mid-2014, BSEE received almost 100 incident reports involving helicopters, helidecks, or aviation fuel on or near fixed OCS facilities in the GOM and Pacific regions. Many of these reports involved helicopters crashing or ditching in the water before or after landing on OCS facilities for reasons (
The CDC, HSAC and BSEE reports do not indicate, however, whether any of the OCS facilities involved in helicopter-related incidents were or were not meeting voluntary industry standards for helidecks and aviation fuel safety at the time.
Several industry and other organizations have developed voluntary standards or guidance expressly addressing safety issues related to helicopters, helidecks, and aviation fuel on offshore facilities.
API RP 2L (Planning, Designing, and Constructing Heliports for Fixed Offshore Platforms), 4th Ed. (1999, reaffirmed 2006), is a widely accepted voluntary consensus standard for design and construction of new helidecks on fixed offshore platforms. Among other safety issues, API RP 2L addresses:
The API is in the process of updating and substantially revising API RP 2L. It is our understanding that API expects to publish revisions to API RP 2L in three stages. The first stage (tentatively referred to as API 2L-1) is undergoing review in the API standard setting process and may be published later in 2014. We understand that API 2L-1 is intended to address planning, design and construction of new helidecks on fixed offshore platforms. The second phase of the revisions to API RP 2L (tentatively called API 2L-2) is expected to address assessment, maintenance and management of existing (legacy) helidecks constructed prior to the publication of API RP 2L in 1996. The third phase of the revisions (tentatively API 2L-3) is expected to address operations and management of all new and existing helidecks.
The BSEE has participated in relevant API committees and working groups responsible for drafting the first phase of the revisions to API RP 2L and will continue to closely monitor development of that document as well as the second and third phases of the revisions.
The HSAC has published several RPs applicable to offshore helicopter and helideck operations and aviation fuel quality. The HSAC—although not a consensus standard-setting organization—developed these RPs and guidelines in cooperation with API, the Offshore Operators Committee, and various other industry and technical organizations interested in offshore and aviation safety.
Specifically, HSAC RP 2004-1 (Offshore Helideck Inspections) complements existing API RP 2L by recommending practices and providing
In addition, HSAC RP 2008-01 (GOM Helideck Markings) is intended to provide some consistency for markings on fixed platform helidecks in the GOM, based in part on API RP 2L and in part on international standards such as Annex 14 to the Convention on International Civil Aviation (CICA) adopted by the International Civil Aviation Organization (ICAO) and the United Kingdom's (UK) Civil Aviation Authority Publication (CAP) 437 (Standards for Offshore Helicopter Landing Areas), Feb. 2013. In particular, HSAC RP 2008-01 provides detailed guidance for issues such as:
Although helicopter operators are typically responsible for ensuring the quality of their own fuel under agreements with offshore facility operators, HSAC RP 2004-02 (Jet Fuel Quality Control Procedures), revised May 2012, offers guidance on storage, distribution and sampling of jet fuel, and on inspection of fueling systems for offshore helicopter flights. For example, HSAC RP 2004-02 recommends that:
Other HSAC RPs address additional safety issues related to offshore helicopter and helideck operations. For example:
While the FAA recognizes BSEE's purview over fixed offshore helidecks, the FAA also publishes information for potential use by pilots in performing their duties safely even in situations where other agencies may have regulatory responsibility. In particular, the FAA's
All of the documents described previously are potential candidates for incorporation by reference, in whole or in part, in BSEE's regulations for fixed offshore facilities. However, some portions of some of the HSAC standards apply to issues (
In addition to the API and HSAC standards described previously, several international organizations have issued guidance documents that contain recommendations for helicopter, helideck, and aviation fuel safety on offshore facilities. For example, the International Association of Oil and Gas Producers (OGP)
The OGP guidelines are, in turn, largely based on international codes and agreements, other guidance documents and industry best practices. In particular, OGP relies heavily on volumes I (Aerodromes) and II (Heliports) of Annex 14 to the CICA as adopted by the ICAO.
Other international standards or codes also address offshore helicopter-related safety.
Among other things, the 2009 MODU Code addresses:
In addition to such international standards, several foreign countries with significant offshore oil and gas operations have adopted regulations, standards, and guidance applicable to helidecks and aviation fuel safety on fixed and floating offshore facilities. For example, the Norwegian Oil and Gas Association (OLF)
Although BSEE is not required to incorporate by reference any standards that are not adopted by voluntary consensus standard-setting organizations, each of the above domestic and international documents, as well as others not described above, may contain valuable information on the best available and safest technology for fixed OCS facilities.
In addition to considering incorporating by reference existing industry or other domestic and/or international standards, BSEE is considering other regulatory approaches to reduce aviation-related safety risks for fixed offshore facilities. For example, some portions of an otherwise useful standard may be out of date or may be incompatible with portions of another potentially useful standard. In such cases, BSEE could incorporate in the regulations relevant parts of an existing standard, and/or adopt appropriate modifications to other parts of that standard or other standards, and/or develop and adopt new prescriptive requirements to minimize risks and improve safety.
The BSEE is also considering whether any newly incorporated or other new regulatory standards for helideck design or construction, and for aviation fuel systems, should apply only to new helidecks and aviation fuel systems installed on fixed facilities after the effective date of such final regulations, or should also apply to existing helidecks and fuel systems on fixed OCS facilities, even if that requires retrofitting. Accordingly, BSEE will seek additional information on the potential costs and other impacts of retrofitting.
As an alternative to incorporating specific standards or adopting other prescriptive requirements, BSEE is considering whether to require owners or operators of fixed OCS facilities to develop aviation-related safety plans that would demonstrate how the owner or operator would ensure safe helicopter, helideck, and aviation fuel system operations. For example, such a plan could demonstrate that a fixed OCS facility would comply with certain industry or other standards that, taken together, would reduce risks and ensure safe and workmanlike conditions and safe work areas. The BSEE is also considering whether such plans, if required, should be submitted to and approved by BSEE or should be subject to evaluation by BSEE upon request (like the SEMS programs required under Subpart S of 30 CFR part 250).
In addition, in order to determine whether OCS facilities and their personnel are complying with such plans, BSEE is considering whether such aviation-related safety plans should be subject to periodic auditing by BSEE or by an accredited third-party (like the SEMS programs,
Finally, BSEE is aware of the importance of consistency between regulatory requirements for all OCS facilities, whether fixed or floating. Accordingly, BSEE is considering various options for coordinating any future proposed rulemaking with the USCG to maximize consistency between BSEE's and USCG's rules. The BSEE also plans to consult with the FAA and other agencies interested in safety of offshore helicopter operations, as appropriate.
For the reasons described above, BSEE seeks public comments on the following issues only. Although BSEE is not required to respond in writing to such comments, BSEE will consider relevant comments in developing any proposed rules for improving safety of helidecks and aviation fuel storage and handling on fixed OCS facilities. Please identify the specific issue that your comments address by referring to the following issue numbers.
(1) In addition to the statistical reports and summaries described in this notice, what other relevant, reliable data on accidents or other safety issues related to helicopters, helidecks, or aviation fuel systems on fixed offshore facilities should BSEE consider before deciding whether to propose any new regulations?
(2) Which existing domestic or international standards or guidance documents, if any, related to planning, design, construction, inspection, maintenance and/or use of helidecks on fixed offshore facilities should BSEE consider incorporating by reference in its regulations? What would the potential cost impacts be if BSEE incorporated, and required compliance with, such documents?
(3) Which domestic or international standards or guidance for aviation fuel quality, storage, or handling should BSEE consider incorporating in its regulations for fixed offshore facilities? What would the potential cost impacts be if BSEE incorporated, and required compliance with, such documents?
(4) If you think that BSEE should consider incorporating any existing standards for helidecks or aviation fuel systems, please identify any specific provisions in those standards that BSEE should not incorporate, or that BSEE should modify or supplement before incorporation.
(5) If you are a fixed offshore facility owner or operator, please describe how you currently address any existing industry or other standards regarding safety of helidecks and aviation fuel systems.
(6) What differences between fixed and floating offshore facilities should BSEE consider with regard to whether any existing standards that apply to floating offshore facilities should be incorporated by BSEE for applicability to fixed offshore facilities? How important is it that requirements for helidecks and/or aviation fuel systems on fixed and floating offshore facilities be consistent?
(7) What provisions, if any, of USCG's regulations for helidecks on MODUs (46 CFR parts 108 and 109) should BSEE consider in developing any helideck regulations for fixed offshore facilities?
(8) If, as an alternative to requiring facilities to comply with specific standards, BSEE required owners or operators of fixed offshore facilities to develop aviation-related safety plans demonstrating how they would ensure safe helicopter, helideck, and aviation fuel management operations, how should BSEE ensure the adequacy of, and compliance with, such plans?
(a) For example, should BSEE or an accredited third party or some other entity conduct audits of such plans to verify the adequacy and proper implementation of the plans?
(9) If BSEE proposes to incorporate any existing industry standard or prescribe any other requirements for
(10) If BSEE decides to apply any new regulatory standards for helideck design or construction, and for aviation fuel systems, to all existing helidecks and fuel systems on fixed OCS facilities, even if that required retrofitting existing helidecks or aviation fuel systems, what types of costs would existing facilities potentially incur?
(11) What structural, technical or economic issues related to the aging of existing offshore facilities and helidecks should BSEE consider when deciding how to improve aviation-related safety on fixed OCS facilities?
(12) Are you aware of any potential risks from helicopter engines ingesting methane or other gases vented from a fixed OCS facility and, if so, how should BSEE address those potential risks?
Office of Elementary and Secondary Education, Department of Education.
Proposed requirements; correction.
On September 8, 2014, the Department of Education published in the
Effective September 24, 2014.
In the
20 U.S.C. 6303(g); Consolidated Appropriations Act, 2014 (Pub. L. 113-76).
Elizabeth Ross, U.S. Department of Education, 400 Maryland Avenue SW., Room 3C116, Washington, DC 20202. Telephone: (202) 260-8961 or by email:
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service, toll free, at 1-800-877-8339.
You may also access documents of the Department published in the
National Aeronautics and Space Administration.
Proposed rule.
NASA is updating the NASA FAR Supplement (NFS) with the goal of eliminating unnecessary regulation, streamlining overly-burdensome regulation, clarifying language, and simplifying processes where possible. This proposed rule is the second in a series and includes updates and revisions to 14 parts of the NFS. On January 18, 2011, President Obama signed Executive Order (E.O.) 13563, Improving Regulations and Regulatory Review, directing agencies to develop a plan for a retrospective analysis of existing regulations. The revisions to this proposed rule are part of NASA's retrospective plan under E.O. 13563 completed in August 2011.
Interested parties should submit comments to NASA at the address below on or before November 24, 2014 to be considered in formulation of the final rule.
Interested parties may submit comments, identified by RIN number 2700-AE09 via the Federal eRulemaking Portal:
Leigh Pomponio, NASA, Office of Procurement, (202) 358-0592, email:
The NASA FAR Supplement (NFS) is codified at 48 CFR part 1800. Periodically, NASA performs a comprehensive review and analysis of the regulation, makes updates and corrections, and reissues the NASA FAR Supplement. The last reissue was in 2004. The goal of the review and analysis is to reduce regulatory burden where justified and appropriate and make the NFS content and processes more efficient and effective, faster and simpler, in support of NASA's mission. Consistent with Executive Order (E.O.)
Further, this proposed rule provides notice that no regulatory changes will be made to the following eight parts of the NFS:
NASA analyzed the existing regulation to determine whether any portions should be modified, streamlined, expanded, or repealed in order to make the regulation more efficient and effective. Special emphasis was placed on identifying and eliminating or simplifying overly burdensome processes that could be streamlined without jeopardizing Agency mission effectiveness. Additionally, NASA sought to identify current regulatory coverage that is not regulatory in nature, and to remove or relocate such coverage to internal guidance. In addition to substantive changes, this proposed rule includes administrative changes necessary to make minor corrections and updates.
Specifically, the major changes in this proposed rule are summarized as follows:
Part 1809—Contractor Qualifications:
—1809.206-70, Small businesses, is deleted. FAR 19.6 adequately addresses small business participation and requirements and NASA supplementation is not needed.
—The prescription at 1809.206-71 and the clause at 1852.209-70, Product Removal from Qualified Products List, are deleted. The clause is not necessary as FAR 52.209-1, Qualification Requirements, sufficiently covers product removal from Qualified Products Lists.
—Contractor Team Arrangements in 1809.6, the prescription at 1809.607, and the clause at 1852.209-72, Composition of the Contractor, are removed. FAR 9.6 adequately addresses teaming arrangements and NASA supplementation is not needed.
Subpart 1815.4—Contract Pricing:
—To conform to FAR, “cost or pricing data” terminology is changed throughout the subpart to clearly distinguish between “certified cost or pricing data” and “data other than certified cost or pricing data.” These changes are consistent with changes made to FAR, 15.4, by FAC 2005-45, FAR Case 2005-036, Definition of Cost or Pricing Data.
Part 1816—Types of Contracts:
—NASA technical performance initiatives at 1816.402-270, and the corresponding clause at 1852.216-88, are revised to change “non-hardware contracts” to “supply and service contracts” to conform to the FAR terminology and to broaden application to include services.
1816.405-274(g)(1)and (2), Award Fee evaluation factors, is revised to reflect current small business subcategories by adding small disadvantaged business (SDB), and Historically Black Colleges and Universities (HBCU) and to delete the requirement to evaluate performance against small businesses in specified NAICS groups consistent with the ruling in Rothe Dev. Corp. v. Dept. of Defense, 545 F.3d (Fed. Cir 2008).
—1816.405-274(g)(4), to add specificity, award fee evaluation factors, is revised to specify that 10 percent, in lieu of the currently specified `up to 15 percent', of available award fee shall be assigned to the contractor's performance against the subcontracting plan.
—Award fee evaluation, at 1816.405-275, is revised to indicate that contacting officers may supplement, but not alter, the FAR adjectival rating descriptions. The FAR gives COs this authority; it is reiterated here because the NFS instructions may otherwise appear to override the FAR authority.
—Part 1817—Special Contracting Methods:
—1817.71, Exchange or sale of personal property, is deleted from this part, and will be relocated to part 1845, and be proposed as part of Rule #3 in the NFS Rewrite series.
—The clause 1852.217-70, Property Administration and Reporting, is deleted as unnecessary. The appropriate FAR 45 and NFS 1845 property clauses should be used for interagency acquisitions.
—In the clause 1852.217-71, Phased Acquisition Using Down-Selection Procedures, paragraph (e) is revised to delete the last sentence. NASA no longer provides paper copies of solicitations because solicitations are electronically available via the internet (NASA Acquisition Internet Service, FedBizOps, etc.)
Part 1819—Small Business Programs:
—The policy at 1819.201 is revised to clarify an annual goal of five percent for prime and subcontract awards to SDBs and to set forth a three percent goal for HUBZone and service-disabled, veteran-owned small business (SDVOSB) concerns.
—1819.201 is revised to remove the phrase “not traditionally dominated” and replace it with “had low involvement level” to better describe the past participation level of small businesses in high-technology area. It is also revised to clarify NASA's annual goal of 5 percent of prime and subcontract awards to small SDBs and women-owned small businesses (WOSBs), and a three percent goal for HubZone and SDVOSB concerns.
—Protesting a small business representation at 1819.302 is revised to include `rerepresentation' in the title, to conform to FAR, and to establish a notification requirement to the Agency Small Business Office and the Small Business Administration (SBA)when the contracting officer (CO) determines that an award must be made to protect the public interest.
—Clause prescriptions are added at 1819.811-3.
—Subpart 1819.10, Small Business Competitiveness Demonstration Program, is removed in its entirety, to conform to FAR.
—At Subpart 1819.70, the eight percent goal is removed. This is an administrative reporting requirement that does not require regulatory coverage.
—Subpart 1819.71, NASA Rural area small business plan, is removed. NASA is required to create an internal plan addressing this requirement, but there is no need for regulatory coverage.
—Subpart 1819.72, NASA Mentor-Protégé Program, is updated to clarify policy and program requirements, such as indicating the program goal is not only to develop viable suppliers for NASA, but also for other Government and commercial entities, specify that required subcontracting plan cannot be a commercial plan, clarify the office to which applications should be submitted, specify that a protégé many be an active SBIR/STTR or AbilityOne Program participant. Further, sections 1819.7203, Mentor Approval Process, 1819.7204, Protégé Selection, and 1819.7205, Mentor-protégé agreements, are deleted in their entirety because they are not regulatory in nature and are now covered in the NASA Mentor-Protégé Guidance at
—1819.7302(c),(d), and (e) are revised to allow the contracting officer to deviate from certain SBIR/STTR program requirements after coordination with the NASA SBIR Program Manager/Coordinator in accordance with SBA's SBIR Program Directive which can be found at
—Clause 1852.219-11, Special 8(a) Contracting Conditions, and Provision
—The clause at 1852.219-75 is retitled as `Individual Subcontracting Reports' and a requirement is added for contractors to enter goals as a percentage of total contract value as well as a percentage of total subcontract dollars.
—1852.219-76, NASA's eight percent goal is deleted. This is an internal NASA reporting requirement and a clause is not necessary.
—1852.219-79, Mentor Requirements and Evaluation, is revised to advise contractors that their evaluation will include consideration of the extent to which the mentor has contributed to advancing the protégé's technical readiness level.
Part 1823—Environment, Energy and Water Efficiency, Renewable Technologies, Occupational Safety, and Drug-Free Workplace:
—Subpart 1823.10, Federal Compliance with Right-to-Know Laws and Pollution Prevention Requirements, is deleted because E. O. 13423, as implemented in the FAR, now requires contractors to comply with the Agency's environmental management system.
—The prescription at 1823.71 and corresponding clause at 1852.223-71 are clarified to specifically address radio frequency rather than just generic frequency.
Part 1827—Patents, Data, and Copyrights:
—The entire part has been revised and renumbered to conform to the FAR and the recodification of the National Aeronautics and Space Act (Space Act).
—1827.302(a), the second sentence has been removed as it is not necessary. For inventions made under contracts with small businesses and nonprofit organizations, NASA follows FAR 27.302.
—1827.302(b)(2)(v) (formerly at 1827.301(d)) provides clarifying language specifying that under NASA contracts, with entities other than a small business or nonprofit organizations, title to subject inventions may vest in NASA in accordance with its authority under the Space Act.
—1827.302(b)(3) was revised to conform to the language regarding waivers in the Space Act (51 U.S.C. 20135). Additionally, the changes provide clarifying guidance on NASA's requirements for meeting the statutory standard of “any invention or class of inventions.”
—1827.302(g) is revised to clarify the language, and to reference the legal authority underlying the preference for products resulting from subject inventions to be manufactured substantially in the United States.
—1827.302(k) adds coverage on NASA policy regarding monetary awards for inventions in accordance with 14 CFR 1240.105.
—1827.303(b)(1)(i)(formerly at 1827.303(a)(1)(B)) has been modified to clarify the process for a contracting officer to determine status of a contractor that claims to be a small business concern or nonprofit organization.
—1827.303(b)(1)(iii) adds new Agency instructions on completing FAR 52.227-11(j), as directed by that clause.
—1827.303(b)(7) prescribes use of Alternate V of FAR 52.227-11 when a contractor is directed to fulfill the Government's obligations under a Cooperative Research and Development Agreement (CRADA).
—1827.303(d)(formerly 1827.303-70(d)) reflects changes in identifying installation Patent Representatives.
—1827.304-2(a)(3)adds clarifying guidance on use of NFS clauses when issuing contracts for other agencies. When the funding agency does not specify a patent rights clause to be used, NFS clauses will be used.
—1827.304-3 (formerly at 1827.304-4) clarifies flow down of applicable patent rights clauses in subcontracts.
—Section 1827.404-4(b)(1) clarifies requirements related to release of software to others under NFS clause 1852.227-14.
—1827.404-4(b)(2)(ii)adds open source software release as a basis for granting the contractor's request to assert copyright in software developed under the contract.
—1827.405-4 and 1827.409-70 are revised to address Government property requirements. In accordance with FAR 45.000, the FAR Government-furnished-property provisions do not apply to software and intellectual property. Accordingly, NFS clause 1852.227-88, Government-Furnished Computer Software and Related Technical Data, was added and was modeled, in part, after the Defense Federal Acquisition Regulation Supplement(DFARS) Clause 252.227-7025(c), Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends.
—1827.409(d) is revised to provide consistency and protect the Government's rights and option for deferred ordering of data; it also provides additional guidance on the use of the clause at FAR 52.227-16, Additional Data Requirements.
—Clause 1852.227-11 is renamed and renumbered to conform with FAR.
—Clause 1852.227-14(c)(1)(iv) adds a requirement for contractors to include a Government rights notice in their publications, in order to protect the Government's license in a scientific and technical article, based on or containing data first produced in the performance of the subject contract, and submitted for publication in academic, technical or professional journals, symposia proceedings or similar works. This requirement is modeled after the Department of Energy Acquisition Regulation (DEAR) clause (48 CFR Part 970.5227-2(d)(2)).
Part 1828—Bonds and Insurance:
The following are removed from subpart 1828.1 because no supplementation is required by NASA. FAR coverage on bid guarantees and payment and performance bonds is adequate.
—1828.101, Bid guarantees
—1828.101-70, NASA solicitation provision
—1828.103, Performance and payment bonds and alternatives.
—1828.103-70, Subcontractors performing construction work under non-construction contracts.
—1828.103-71, Solicitation requirements and contract clauses.
—The clause prescription at 1828.311-1 is revised to delete “must” and replace it with “shall”, and to delete “as prescribed in FAR 28.311-1” and replace it with “in solicitations and contracts, other than those for construction contracts and those for architect-engineer services, when a cost-reimbursement contract is contemplated”, for clarification because FAR 28.311-1 requires use “in accordance with agency policy.”
—The clause at 1852.228-73, Bid Bond, is deleted because it is redundant. FAR clause 52.228-1 already provides fill-ins for the percent or dollar amount of the bid bond.
Part 1831—Contract Cost Principles and Procedures:
—The prescription at 1831.205-671, Solicitation provision, and the provision at 1852.231-71, Determination of Compensation Reasonableness, are revised to delete the $500,000 threshold and replace it with the “threshold for obtaining certified cost or pricing data (FAR 15.403-4)”, to conform with the FAR and to ensure that periodic inflationary adjustments made in the FAR also apply to the NFS.
Part 1832—Contract Financing:
—The prescription at 1832.705-270(a), NASA clauses for limitation of cost or funds, is revised to require the clause be included in all fixed-price, incrementally-funded contracts and task orders, rather than just those for research and development. All fixed-price, incrementally-funded contracts should include the requirements at 1852.232-77.
—1832.1110, Solicitation provision and contract clauses, is revised to indicate that NASA utilizes the System for Award Management (SAM) and it is not necessary for contractors to register separately with NASA for electronic funds transfer.
Part 1837—Service Contracting:
—Coverage on access to sensitive information is deleted at 1837.203 as well as the clauses at 1852.237-72, Access to Sensitive Information, 1852.237-73, Release of Sensitive Information.
The NFS addresses protection and handling of sensitive information in 1827.
Part 1842—Contract Administration and Audit Services:
—Because coverage addressing delegation to Contracting Officer's Representatives (CORs) is being relocated to NFS Part 1801 to conform with the FAR, the prescription at 1842.271 and the clause at 1852.242-70, Technical Direction, are proposed for deletion from 1842. These sections will be proposed for addition to 1801 with the next NFS rewrite rule, #3 in the series.
PART 1849—Terminations
—The prescription at 1849.505-70, NASA contract clause, and the clause at 1852.249.72, Termination (Utilities), are deleted because the FAR termination clauses do not require supplementation by NASA.
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This proposed rule is not a “significant regulatory action” under section 3(f) of E.O. 12866. This proposed rule is not a major rule under 5 U.S.C. 804.
NASA does not expect this proposed rule to 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
This proposed rule contains no new information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). Patent and copyright reports required by NFS Part 1827 are covered under existing, OMB-approved collection 2700-0052.
Government procurement.
Accordingly, 48 CFR Parts 1809, 1815, 1816, 1817, 1819, 1823, 1827, 1828, 1831, 1832, 1837, 1842, 1849, and 1852 are proposed to be amended as follows:
51 U.S.C. 20113(a).
51 U.S.C. 20113(a).
(a) NASA has waived the requirement for the submission of certified cost or pricing data when contracting with the Canadian Commercial Corporation (CCC). This waiver applies to the CCC and its subcontractors. The CCC will provide assurance of the fairness and reasonableness of the proposed price. This assurance should be relied on; however, contracting officers shall ensure that the appropriate level of data other than certified cost or pricing data is submitted by subcontractors to support any required proposal analysis, including a technical analysis and a cost realism analysis. The CCC also will provide for follow-up audit activity to ensure that any excess profits are found and refunded to NASA.
(b) NASA has waived the requirement for the submission of certified cost or pricing data when contracting for Small Business Innovation Research (SBIR) program Phase II contracts. However, contracting officers shall ensure that the appropriate level of data other than certified cost or pricing data is submitted to determine price reasonableness and cost realism.
51 U.S.C. 20113(a).
(a) Pursuant to the guidelines in 1816.402, NASA has determined that a performance incentive shall be included in all contracts that are based on performance-oriented documents (see FAR 11.101(a)), except those awarded under the commercial item procedures of FAR Part 12, where the primary deliverable(s) is (are) hardware with a total value (including options) greater than $25 million. Any exception to this requirement shall be approved in writing by the head of the contracting activity. Performance incentives may be included in supply and service contracts valued under $25 million, acquired under procedures other than Part 12, at the discretion of the contracting officer upon consideration of the guidelines in 1816.402. Performance incentives, which are objective and measure performance after delivery and acceptance, are separate from other incentives, such as cost or delivery incentives.
(b) When a performance incentive is used, it shall be structured to be both positive and negative based on performance after acceptance, unless the contract type requires complete contractor liability for product performance (e.g., fixed price). In this latter case, a negative incentive is not required. In structuring the incentives, the contract shall establish a standard level of performance based on the salient performance requirement. This standard performance level is normally the contract's target level of performance. No performance incentive amount is earned at this standard performance level. Discrete units of measurement based on the same performance parameter shall be identified for performance above and, when a negative incentive is used, below the standard. Specific incentive amounts shall be associated with each performance level from maximum beneficial performance (maximum positive incentive) to, when a negative incentive is included, minimal beneficial performance or total failure (maximum negative incentive). The relationship between any given incentive, either positive or negative, and its associated unit of measurement should reflect the value to the Government of that level of performance. The contractor should not be rewarded for above-standard performance levels that are of no benefit to the Government.
(c) The final calculation of the performance incentive shall be done when performance, as defined in the contract, ceases or when the maximum positive incentive is reached. When performance ceases below the standard established in the contract and a negative incentive is included, the Government shall calculate the amount due and the contractor shall pay the Government that amount. Once performance exceeds the standard, the
(d) When the deliverable supply or service lends itself to multiple, meaningful measures of performance, multiple performance incentives may be established. When the contract requires the sequential delivery of several items (e.g., multiple spacecraft), separate performance incentive structures may be established to parallel the sequential delivery and use of the deliverables.
(g)(1) The contractor's performance against the subcontracting plan incorporated in the contract shall be evaluated. Emphasis may be placed on the contractor's accomplishment of its goals for subcontracting with small business, small disadvantaged business, HUBZone small business, women-owned small business, veteran-owned small business, service-disabled veteran-owned small business concerns, and Historically Black Colleges and Universities—Minority Institutions (HBCU/MIs). The evaluation should consider both goals as a percentage of subcontracting dollars as well as a percentage of the total contract value.
(2) The contractor's achievements in subcontracting high technology efforts as well as the contractor's performance under the Mentor-Protégé Program, if applicable, may also be evaluated.
(3) The evaluation weight given to the contractor's performance against the considerations in paragraphs (g)(1) and (g)(2) shall be significant (up to 10 percent of available award fee) and shall be separate from all other factors.
(a) All award fee contracts shall utilize the adjectival rating categories and associated descriptions as well as the award fee pool available to be earned percentages for each adjectival rating category contained in FAR 16.401(e)(3)(iv). Contracting officers may supplement these descriptions with more specifics relative to their procurement but they cannot alter or delete the FAR adjectival rating descriptions.
* * *
(f)* * * A clause substantially as stated at 1852.216-88 may be included in lower dollar value supply or service contracts at the discretion of the contracting officer.
51 U.S.C. 20113(a).
51 U.S.C. 20113(a).
(a)(i) * * * The participation of these entities is emphasized in high-technology areas where they have had low involvement level.
(a)(ii) NASA biennially negotiates Agency small business prime and subcontracting goals with the Small Business Administration pursuant to section 15(g) of the Small Business Act (15 U.S.C. 644). In addition, NASA has an annual goal of five percent for prime and subcontract awards to small disadvantaged businesses (SDBs) and women-owned small businesses (WOSBs), and a three percent goal for HubZone and service-disabled, veteran-owned small business concerns.
(h) When the contracting officer determines in writing that an award must be made to protect the public interest, the contracting officer shall notify the Headquarters Office of Procurement, Program Operations Division, the Headquarters Office of Small Business Programs, and the SBA.
(b) The contracting officer shall insert the clause at 1852.219-75, Individual Subcontracts Reporting, in solicitations and contracts containing the clause at FAR 52.219-9, except for contracts covered by an approved commercial subcontracting plan.
(a) The contracting officer shall insert the clause at 1852.219-11, Special 8(a) Contract Conditions, in contracts and purchase orders awarded directly to the 8(a) contractor when the acquisition is accomplished using the procedures of FAR
(d) The contracting officer shall insert the clause at 1852.219-18, Notification of Competition Limited to Eligible 8(a) Concerns, in competitive solicitations and contracts when the acquisition is accomplished using the procedures of FAR
(1) The clause at 1852.219-18 with Alternate I to the FAR clause at 52.219-18 will be used when competition is to
(2) The clause at 1852.219-18 with Alternate II to the FAR clause at 52.219-18 will be used when the acquisition is for a product in a class for which the Small Business Administration has waived the nonmanufacturer rule (see FAR
(e) Follow the prescription at FAR 19.811-3(e).
(a) * * *
(1) Provide incentives to NASA contractors, performing under at least one active, approved subcontracting plan negotiated with NASA, to assist protégés in enhancing their capabilities to perform as viable NASA contractors, other Government contractors, and commercial suppliers on contract and subcontract requirements.
(a) Eligibility of Mentors: To be eligible as a mentor, an entity must be—
(1) A large prime contractor performing with at least one approved subcontracting plan, other than a commercial plan, negotiated with NASA, pursuant to FAR Subpart 19.7, the Small Business Subcontracting Program. A contractor may apply to become a mentor if they currently are not performing under a NASA contract as long as they are currently performing another Federal agency contract with an approved subcontracting plan. The NASA mentor-protégé agreement, however, will not be approved until the mentor company is performing under a NASA contract with an approved subcontracting plan; and
(2) Eligible for receipt of Government contracts. An entity will not be approved for participation in the Program if, at the time of submission of the application to the Headquarters Office of Small Business Programs, the entity is currently debarred or suspended from contracting with the Federal Government pursuant to FAR Subpart 9.4, Debarment, Suspension, and Ineligibility.
(b) Eligibility of Protégés: To be eligible to participate as a protégé, an entity must be—
(1) Classified as a Small Disadvantaged Business (SDB), a small disadvantaged business, a women-owned small business, an historically underutilized business zone concern, a veteran-owned, service-disabled small business, an historically black college and university, or a minority institution. The protégé entity may also be an active NASA SBIR/STTR Phase II company, or an entity participating in the AbilityOne program.
(2) Eligible for the award of Federal contracts; and
(3) A small business according to the Small Business Administration (SBA) size standard for the North American Industry Classification System (NAICS) code that represents the contemplated supplies or services to be provided by the protégé to the mentor.
(c) A protégé firm may self-certify to a mentor firm that it meets the requirements set forth in paragraph (b) of this seciton. Mentors may rely in good faith on written representations by potential protégés that they meet the specified eligibility requirements.
If advance payments are contemplated, the mentor must first have the advance payments approved the contracting officer in accordance with FAR Subpart 32.4, Advance Payments for Non-commercial items.
(a) To participate in the Program, entities approved as mentors in accordance with 1819.7203, will submit a complete agreement package to the Contracting Officer who will forward the completed agreement package to the cognizant Small Business Specialist at the NASA Center. The submission package must include the following—
(1) A signed mentor-protégé agreement;
(2) A signed protégé application;
(3) The estimated cost of the technical assistance to be provided, broken out per year and per task, in a separate cost volume; and
(4) Additional information as may be requested by the NASA OSBP; and
(5) A signed letter of endorsement of the agreement by the contracting officer and the contracting officer representative.
(b) The mentor-protégé agreement must be approved by the Assistant Administrator, NASA OSBP, prior to the mentor incurring eligible costs for developmental assistance provided to the protégé.
(c) The cognizant NASA center will issue a contract modification, if justified, prior to the mentor incurring costs for developmental assistance to the protégé.
(a) Mentors will be eligible to earn a separate award fee associated with the provision of developmental assistance to NASA SBIR/STTR Phase II Protégés only. The award fee will be assessed at the end of the Mentor-Protégé agreement period.
(b) The overall developmental assistance performance of NASA contractors, in promoting the use of small businesses as subcontractors, will be a required evaluation factor in award fee plans.
(c) Evaluation criteria to determine the award fee should include:
(1) Benefit of the agreement to NASA;
(2) Active participation in the Program;
(3) The amount and quality of developmental assistance provided;
(4) Subcontracts awarded to small businesses and others;
(5) Success of the protégés in increasing their business as a result of receiving developmental assistance; and
(6) Accomplishment of any other activity as related to the mentor-protégé relationship.
(d) The Award Fee Pilot Program is an addition to the credit agreement. Participants that are eligible for award fee may also receive credit under their individual contract's award fee plan.
(e) The protégé semiannual report required by paragraph (d) must be submitted separately from the Mentor's semiannual report submission.
(f) Contracting officers shall insert the clause at 1852.219-85, Conditions for Final Payment—SBIR and STTR Contracts, in all Phase I and Phase II contract awarded under the Small Business Technology Transfer (STTR) Program and the Small Business Innovation Research (SBIR) Program established pursuant to Pub. L. 97-219 (The Small Business Innovation Development Act of 1982.)
51 U.S.C. 20113(a).
The contracting officer shall insert the clause at
51 U.S.C. 20113(a).
This part prescribes NASA policies, procedures, and contract clauses pertaining to patents, data, and copyrights. The provisions of
As used in this subpart—
(a)
(b)
(1) For NASA contracts, the contractor right to elect title under the FAR only applies to contracts with small businesses and nonprofit organizations. For other business entities, see paragraph (2)(v);
(2)(v) Under any NASA contract with other than a small business or nonprofit organization (i.e., contracts subject to Section 20135(b) of the Act), title to subject inventions vests in NASA when the determinations of Section 20135(b)(1)(A) or (b)(1)(B) have been made. The Administrator may grant the contractor a waiver of title in accordance with 14 CFR Part 1245.
(3)
(c)
(e)
(f)
(g)
(i)
(1) For NASA contracts with other than a small business firm or a nonprofit organization, where title to any subject inventions vests in NASA, the contractor is normally granted, in accordance with the NASA Patent Waiver Regulations, 14 CFR 1245.108, a revocable, nonexclusive, royalty-free license in each patent application filed in any country and in any resulting patent. The license extends to any of the contractor's domestic subsidiaries and affiliates within the corporate structure, and includes the right to grant sublicenses of the same scope to the extent the contractor was legally obligated to do so at the time the contract was awarded. The license and right are transferable only with the approval of the Administrator, except when transferred to the successor of that part of the contractor's business to which the invention pertains.
(2) The procedures for revoking or modifying the license to a contractor that is other than a small business firm or a nonprofit organization are described in 14 CFR 1245.108.
(k)
(a)(1) The contracting officer shall insert the provision at
(b)(1) When the clause at
(i) To qualify for the clause at
(iii) The contracting officer shall complete paragraph (j) of the clause at FAR 52.227-11 with the following: Communications and information submissions required by this clause will be made to the individuals identified in the clause at 1852.227-72, Designation of New Technology Representative and Patent Representative.
(iv) See also paragraph (d)(3) of this section.
(6) Alternate IV to 52.227-11 is not used in NASA contracts. See instead 1827.303(b)(1).
(7) The contracting officer shall consult with the center patent or intellectual property counsel regarding the use of Alternate V in contracts for the performance of services at a NASA installation when a contractor is directed to fulfill the Government's obligations under a Cooperative Research and Development Agreement (CRADA) authorized by 15 U.S.C. 3710a. Alternate V may be included in, or added to, the contract when it is contemplated that a Contractor will be directed to fulfill NASA's obligations under a CRADA, but should be added prior to the contractor performing work under the CRADA.
(d)(1) The contracting officer shall insert the clause at 1852.227-70, New Technology-Other than a Small Business Firm or Nonprofit Organization, in all NASA solicitations and contracts with other than a small business firm or a nonprofit organization (i.e., those subject to section 21035(b) of the Act), if the contract is to be performed in the United States, and has as a purpose the performance of experimental, developmental, research, design, or engineering work. Contracts for any of the following purposes may be considered to involve the performance of work of the type described above (these examples are illustrative and not all inclusive):
(i) Conduct of basic or applied research.
(ii) Development, design, or manufacture for the first time of any machine, article of manufacture, or composition of matter to satisfy NASA's specifications or special requirements.
(iii) Development of any process or technique for attaining a NASA objective not readily attainable through the practice of a previously developed process or technique.
(iv) Testing of, evaluation of, or experimentation with a machine, process, concept, or technique to determine whether it is suitable or
(v) Construction work or architect-engineer services having as a purpose the performance of experimental, developmental, or research work or test and evaluation studies involving such work.
(vi) The operation of facilities or the coordination and direction of the work of others, if these activities involve performing work of any of the types described in paragraphs (i) through (v) of this section.
(2) The contracting officer shall insert the provision at
(3) The contracting officer shall insert the clause at
(e)(1) When work is to be performed outside the United States by contractors that are not domestic firms, the clause at
(2) When one of the conditions in FAR 27.303(e)(1)(i) through (iv) is met, the contracting officer shall consult with the center patent or intellectual property counsel to determine the appropriate clause.
(b)(1)
(c)
(d)
(f)
(g)
(h)
(a)(3)(i) When a contract is placed for another agency with a small business or nonprofit organization and the agency does not request the use of a specific patent rights clause, the contracting officer shall use the clause at
(ii) When a contract is placed for another agency with other than a small business or nonprofit organization, the contracting officer, in accordance with Section 20135 of the Act, shall use the clause at 1852.227-70, New Technology—Other than a Small Business Firm or Nonprofit Organization (see 1827.303(d)(1)).
(iii) When work is to be performed outside the United States by contractors that are not domestic firms, the contracting officer shall use one of the clause described in 1827.303(e)(1).
(a) Unless otherwise authorized or directed by the contracting officer, contractors awarding subcontracts at any tier shall select and include in the subcontracts one of the clauses identified in subparagraphs (a)(1) or (2) of this section. At all tiers, the applicable clause identified below shall be modified to identify the parties as follows: References to the Government are not changed, and in all references to the Contractor the subcontractor is substituted for the Contractor so that the subcontractor has all rights and obligations of the Contractor in the clause.
(1) The clause at 1852.227-70, New Technology—Other than a Small Business Firm or Nonprofit Organization, shall be used in any subcontract with other than a small business firm or a nonprofit organization if a purpose of the subcontract is the performance of experimental, developmental, research, design, or engineering work of any of the types described in 1827.303(d)(1).
(2) The clause at
FAR 27.304-4 shall apply unless otherwise provided in the NASA Patent Waiver Regulations, 14 CFR Part 1245, Subpart 1.
When the Government acquires the entire right to, title to, and interest in an invention under the clause at 1852.227-70, New Technology—Other than a Small Business Firm or Nonprofit Organization, a determination of title is to be made in accordance with Section 20135(b) of the Act (51 U.S.C. 20135(b)),
(b)(1) NASA's intent is to ensure the most expeditious dissemination of computer software developed by it or its contractor. Accordingly, when the clause at FAR 52.227-14, Rights in Data—General, is modified by
(2) The contracting officer may, in consultation with the center patent or intellectual property counsel, grant the contractor permission to assert claim to copyright, publish, or release to others computer software first produced in the performance of a contract if:
(i) The contractor has identified an existing commercial computer software product line or proposes a new one and states a positive intention of incorporating identified computer software first produced under the contract into that line, either directly itself or through a licensee;
(ii) The contractor has identified an existing open source software project or proposes a new one and states a positive intention of incorporating identified computer software first produced under the contract into that project, or has been instructed by the Agency to incorporate software first produced under the contract into an open source software project or otherwise release the software as open source software;
(iii) The contractor has made, or will be required to make, substantial contributions to the development of the computer software by co-funding or by cost-sharing, or by contributing resources (including but not limited to agreement to provide continuing maintenance and update of the software at no cost for Governmental use); or
(iv) The concurrence of the Agency Counsel for Intellectual Property, or designee, is obtained.
(c)(1) The contractor's request for permission in accordance with 1827.404-4(b) may be made either before contract award or during contract performance.
(2)(i) If the basis for permitting the assertion under 1827.404-4(b)(2) is subsection (i), then the permission shall be granted by a contract modification prepared by the contracting officer in consultation with the Center patent or intellectual property counsel that contains appropriate assurances that the computer software will be incorporated into an existing or proposed new commercial computer software product line within a specified reasonable time, with contingencies enabling the Government to obtain the right to distribute the software for commercial use, including the right to obtain assignment of copyright where applicable, in order to prevent the computer software from being suppressed or abandoned by the contractor.
(3) When any permission to copyright is granted, any copyright license retained by the Government shall be of the same scope as set forth in subparagraph (c)(1) of the clause at
(d) If the contractor has not been granted permission to assert claim to copyright, paragraph (d)(4)(ii) of the clause at FAR 52.227-14, Rights in Data—General (as modified by 1852.227-14) enables NASA to direct the contractor to assert claim to copyright in computer software first produced under the contract and to assign, or obtain the assignment of, such copyright to the Government or its designated assignee. The contracting officer may, in consultation with the center patent or intellectual property counsel, so direct the contractor in situations where copyright protection is considered necessary in furtherance of Agency mission objectives, needed to support specific Agency programs, or necessary to meet statutory requirements.
(b)(1) When the clause at
(2) The contracting officer, with the concurrence of the center patent or intellectual property counsel, is the approval authority for use of Alternate I of the clause at FAR 52.227-14. An example of its use is where the principal purpose of the contract (such as a contract for basic or applied research) does not involve the development, use, or delivery of items, components, or processes that are intended to be acquired for use by or for the Government (either under the contract in question or under any anticipated follow-on contracts relating to the same subject matter).
(3) The contracting officer shall review the disclosure purposes listed in
(4) The contracting officer shall consult with the center patent or intellectual property counsel regarding the acquisition of restricted computer software with greater or lesser rights than those set forth in Alternate III of the clause at
(5) The contracting officer, with the concurrence of the center patent or intellectual property counsel, is the approval authority for the use of Alternate IV in any contract other than a contract for basic or applied research to be performed solely by a college or
(d) The clause at 52.227-16, Additional Data Requirements, shall be used in all solicitations and contracts involving experimental, developmental, research, or demonstration work (other than basic or applied research to be performed under a contract solely by a university or college when the contract amount will be $500,000 or less), unless after consultation between the Contracting Officer and the center patent or intellectual property counsel a determination is made otherwise.
(h) Normally the clause at 52.227-20, Rights in Data—SBIR Program, is the only data rights clause used in SBIR contracts. However, if during the performance of an SBIR contract (Phase I, Phase II, or Phase III) the need arises for NASA to obtain delivery of limited rights data or restricted computer software as defined in the clause at
(m)(1) The contracting officer, shall consult with the center patent or intellectual property counsel and the installation software release authority to determine when to use the clause at
(2) The clause may be included in, or added to, the contract when it is contemplated that computer software and related technical data will be provided to the contractor as Government-furnished information for use in performing the contract.
51 U.S.C. 20113(a).
The contracting officer shall insert the clause at
51 U.S.C. 20113(a).
51 U.S.C. 20113(a).
(a) The contracting officer shall insert the clause at
51 U.S.C. 20113(a).
51 U.S.C. 20113(a).
51 U.S.C. 20113(a).
As prescribed in 1819.811-3(a), insert the following clause in lieu of 52.219-11:
(a) This contract is issued as a direct award between the contracting activity and the 8(a) contractor pursuant to a Partnership Agreement between the Small Business Administration (SBA) and the National Aeronautics and Space Administration. Accordingly, the SBA is not a signatory to this contract. SBA does retain responsibility for 8(a) certification, 8(a) eligibility determinations and related issues, and providing counseling and assistance to the 8(a) contractor under the 8(a) program. The cognizant SBA district office is:
(b) The contracting activity is responsible for administering the contract and taking any action on behalf of the Government under the terms and conditions of the contract; provided, however, that the contracting activity shall give advance notice to the SBA before it issues a final notice terminating performance, either in whole or in part, under the contract. The contracting activity
(c) The contractor agrees to notify the Contracting Officer, simultaneous with its notification to SBA (as required by SBA's 8(a) regulations), when the owner or owners upon whom 8(a) eligibility is based plan to relinquish ownership or control of the concern. Consistent with Section 407 of Public Law 100-656, transfer of ownership or control shall result in termination of the contract for convenience, unless SBA waives the requirement for termination prior to the actual relinquishing of ownership and control.
As prescribed in 1819.811-3(d), insert the following clause:
(a) Offers are solicited only from small business concerns expressly certified by the Small Business Administration (SBA) for participation in the SBA's 8(a) Program and which meet the following criteria at the time of submission of offer—
(1) The Offeror is in conformance with the 8(a) support limitation set forth in its approved business plan; and
(2) The Offeror is in conformance with the Business Activity Targets set forth in its approved business plan or any remedial action directed by the SBA.
(b) By submission of its offer, the Offeror represents that it meets all of the criteria set forth in paragraph (a) of this clause.
(c) Any award resulting from this solicitation will be made directly by the Contracting Officer to the successful 8(a) offeror selected through the evaluation criteria set forth in this solicitation.
(d)(1)
(2) The ______[
As prescribed in 1819.708-70(b), insert the following clause:
When submitting Individual Subcontracting Reports in eSRS in accordance with FAR 52.219-9(l)(1), the contractor shall enter goals as a percentage of total contract value as well as a percentage of total subcontract dollars.
(b) * * *
(5) To what extent the mentor contributed to advancing the protégé's technical readiness level.
As prescribed in
(a) The contractor or subcontractor shall obtain equipment authorization of use of radio frequencies required in support of this contract following the procedures in NPR 2570.1, NASA Radio Frequency (RF) Spectrum Management Manual.
(b) For any experimental, developmental, or operational equipment for which the appropriate equipment frequency authorization has not been made, the Contractor or subcontractor shall provide the technical and operating characteristics of the proposed electromagnetic radiating device to the NASA Center Facility Spectrum Manager during the initial planning, experimental, or developmental phase of contractual performance.
(c) This clause, including this paragraph (c), shall be included in all subcontracts that call for developing, producing, testing, or operating a device for which a radio frequency authorization is required.
As prescribed at 1827.303(b)(1), modify the clause at
(5) The Contractor may use whatever format is convenient to disclose subject inventions required in subparagraph (c)(1). NASA prefers that the contractor use either the electronic or paper version of NASA Form 1679, Disclosure of Invention and New Technology (Including Software) to disclose subject inventions. Both the electronic and paper versions of NASA Form 1679 may be accessed at the electronic New Technology Reporting Web site
(6) In addition to the above, the Contractor shall provide the New Technology Representative identified in this contract at 1852.227-72 the following:
(i) An interim new technology summary report every 12 months (or such longer period as the Contracting Officer may specify) from the date of the contract, listing all subject inventions required to be disclosed during the period or certifying that there were none.
(ii) A final new technology summary report, within 3 months after completion of the contracted work,
(iii) Upon request, the filing date, serial number and title, a copy of the patent application, and patent number and issue date for any subject invention in any country in which the contractor has applied for patents.
(iv) An irrevocable power to inspect and make copies of the patent application file, by the Government, when a Federal Government employee is a co-inventor.
(iii) The Contractor shall, through employee agreements or other suitable Contractor policy, require that its employees “will assign and do hereby assign” to the Contractor all right, title, and interest in any subject invention under this Contract.
(j) For the purposes of this clause, communications between the Contractor and the Government shall be as specified in the NASA FAR Supplement at 1852.227-72, Designation of New Technology Representative and Patent Representative.
(2) The Contractor shall include the clause in the NASA FAR Supplement at 1852.227-70, New Technology—Other than a Small Business Firm or Nonprofit Organization, suitably modified to identify the parties, in all subcontracts, regardless of tier, for experimental, developmental, research, design, or engineering work to be performed by other than a small business firm or nonprofit organization. At all tiers, the New Technology—Other than a Small Business Firm or Nonprofit Organization clause shall be modified to identify the parties as follows: References to the Government are not changed, and in all references to the Contractor the subcontractor is substituted for the Contractor so that the subcontractor has all rights and obligations of the Contractor in the clause.
As prescribed in 1827.409(b)(1), modify the clause at FAR 52.227-14 by: (1) Adding the following subparagraph (iv) to paragraph (c)(1) of the basic clause; (2) by adding the following provision to the end of Alternate IV if used in lieu of paragraph (c)(1) of the basic clause; and (3) by adding subparagraph (4) to paragraph (d) of the basic clause:
(iv) The contractor shall mark each scientific and technical article based on or containing data first produced in the performance of this contract and submitted for publication in academic, technical or professional journals, symposia proceedings or similar works with a notice, similar in all material respects to the following, on the cover or first page of the article, reflecting the Government's non-exclusive worldwide license in the copyright.
This work was authored by employees of [
The contractor shall mark each scientific and technical article based on or containing data first produced in the performance of this contract and submitted for publication in academic, technical or professional journals, symposia proceedings or similar works with a notice, similar in all material respects to the following, on the cover or first page of the article, reflecting the Government's non-exclusive worldwide license in the copyright.
This work was authored by employees of [
(4)(i) The Contractor agrees not to assert claim to copyright, publish or release to others any computer software first produced in the performance of this contract unless the Contracting Officer authorizes through a contract modification.
(ii) The prohibition on “release to others”, as set forth in (d)(4)(i), does not prohibit release to another Federal Agency for its use or its contractors' use, as long as any such release is consistent with any restrictive markings on the software. Any restrictive markings on the software shall take precedence over the aforementioned release. Any release to a Federal Agency shall limit use to the Federal Agency or its contractors for Government purposes only. Any other release shall require the Contracting Officer's prior written permission.
(iii) If the Government desires to obtain copyright in computer software first produced in the performance of this contract and permission has not been granted as set forth in paragraph (d)(4)(i) of this clause, the Contracting Officer may direct the contractor to assert, or authorize the assertion of, a claim to copyright in such data and to assign, or obtain the assignment of, such copyright to the Government or its designated assignee.
As prescribed in 1827.303(d)(1), insert the following clause:
(a) Definitions. As used in this clause—
(1) When used in relation to any invention other than a plant variety, the conception or first actual reduction to practice of the invention; or
(2) When used in relation to a plant variety, that the Contractor has at least tentatively determined that the variety has been reproduced with recognized characteristics.
(b)
(1)
(i) Any reportable item that the Administrator considers to be a subject invention shall be presumed to have been made in the manner specified in paragraph (1)(A) or (1)(B) of Section 20135(b) of the National Aeronautics and Space Act (51 U.S.C. 20135(b)) (hereinafter “the Act”), and the above presumption shall be conclusive unless at the time of reporting the reportable item in accordance with paragraph (e)(2) of this clause the Contractor submits to the Contracting Officer a written statement, containing supporting details, demonstrating that the reportable item was not made in the manner specified in the Act.
(ii) Regardless of whether title to a given subject invention would otherwise be subject to an advance waiver or is the subject of a petition for waiver as described in paragraph (b)(3) of this clause, the Contractor may nevertheless file the statement described in paragraph (b)(1)(i) of this clause. The Administrator will review the information furnished by the Contractor in any such statement and any other available information relating to the circumstances surrounding the making of the subject invention and will notify the Contractor whether the Administrator has determined that the subject invention was made in the manner specified in paragraph (1)(A) or (1)(B) of Section 20135(b) of the Act.
(2)
(3)
(i) Section 20135(g) of the Act provides for the promulgation of regulations by which the Administrator may waive all or any part of the rights of the United States with respect to any invention or class of inventions made or that may be made under conditions specified in paragraph (1)(A) or (1)(B) of Section 20135(b) of the Act. The promulgated NASA Patent Waiver Regulations, 14 CFR Part 1245, Subpart 1, provide procedures for the Contractor to submit petitions (requests) for waiver of rights and guidance for NASA in acting on petitions for such waiver of rights.
(ii) As provided in 14 CFR 1245, Subpart 1, the Contractor may petition, either prior to execution of the contract or within 30 days after execution of the contract, for advance waiver of rights to any invention or class of inventions that may be made under a contract. If such a petition is not submitted, or if after submission it is denied, the Contractor (or an employee inventor of the Contractor) may petition for waiver of rights to an identified subject invention within eight months of first disclosure of invention in accordance with paragraph (e)(2) of this clause, or within such longer period as may be authorized in accordance with 14 CFR 1245.105.
(c)
(1) With respect to each subject invention for which a waiver of rights has been granted, the Government reserves—
(i) An irrevocable, nonexclusive, nontransferable, royalty-free license for the practice of such invention throughout the world by or on behalf of the United States or any foreign government in accordance with any treaty or agreement with the United States; and
(ii) Such other rights as stated in 14 CFR 1245.107.
(2) Nothing contained in this paragraph (c) shall be considered to grant to the Government any rights with respect to any invention other than a subject invention.
(d)
(1) The Contractor is hereby granted a revocable, nonexclusive, royalty-free license in each patent application filed in any country on a subject invention in which the Government has title and in any resulting patent, unless the Contractor fails to disclose the subject invention within the times specified in paragraph (e)(2) of this clause. The Contractor's license extends to its domestic subsidiaries and affiliates, if any, within the corporate structure of which the Contractor is a party and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of the Administrator except when transferred to the successor of that part of the Contractor's business to which the invention pertains.
(2) The Contractor's domestic license may be revoked or modified by the Administrator to the extent necessary to achieve expeditious practical application of the subject invention pursuant to an application for an exclusive license submitted in accordance with 37 CFR Part 404, Licensing of Government Owned Inventions. The Contractor's license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical application and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of the Administrator to the extent the Contractor, its licensees, or its domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country.
(3) Before revoking or modifying the Contractor's license, the Contractor will be provided a written notice of the Administrator's intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such other time as may be authorized by the Administrator for good cause shown) after the notice to show cause why the license should not be revoked or modified. The Contractor has the right to appeal to the Administrator any decision concerning the revocation or modification of its license.
(e)
(1) The Contractor shall establish and maintain active and effective procedures to assure that reportable items are promptly identified and disclosed to Contractor personnel responsible for the administration of this New Technology-Other than a Small Business Firm or Nonprofit Organization clause within six months of conception and/or first actual reduction to practice, whichever occurs first in the performance of work under this contract. These procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of the reportable items, and records that show that the procedures for identifying and disclosing reportable items are followed. Upon request, the Contractor shall furnish the Contracting Officer a description of such procedures for evaluation and for determination as to their effectiveness.
(2) The Contractor shall disclose in writing each reportable item to the Contracting Officer within two months after the inventor discloses it in writing to Contractor personnel responsible for the administration of this New Technology-Other than a Small Business Firm or Nonprofit Organization clause or within six months after the Contractor becomes aware that a reportable item has been made, whichever is earlier, but in any event for subject inventions before any on sale, public use, or publication of such invention known to the Contractor. The
(3) The Contractor may use whatever format is convenient to disclose reportable items required in subparagraph (e)(2). NASA prefers that the Contractor use either the electronic or paper version of NASA Form 1679, Disclosure of Invention and New Technology (including computer software) to disclose reportable items. Both the electronic and paper versions of NASA Form 1679 may be accessed at the electronic New Technology Reporting Web site
(4) The Contractor shall furnish the Contracting Officer the following:
(i) Interim new technology summary reports every 12 months (or such longer period as may be specified by the Contracting Officer) from the date of the contract, listing reportable items during that period, and certifying that all reportable items have been disclosed (or that there are no such inventions).
(ii) A final new technology summary report, within 3 months after completion of the contracted work, listing all reportable items or certifying that there were no such reportable items, and listing all subcontracts at any tier containing a patent rights clause or certifying that there were no such subcontracts.
(5) The Contractor agrees, upon written request of the Contracting Officer, to furnish additional technical and other information available to the Contractor as is necessary for the preparation of a patent application on a subject invention and for the prosecution of the patent application, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions.
(6) The Contractor agrees, subject to paragraph 27.302(j) of the Federal Acquisition Regulation (FAR), that the Government may duplicate and disclose subject invention disclosures and all other reports and papers furnished or required to be furnished pursuant to this clause.
(f)
(1) The Contracting Officer or any authorized representative shall, until 3 years after final payment under this contract, have the right to examine any books (including laboratory notebooks), records, and documents of the Contractor relating to the conception or first actual reduction to practice of inventions in the same field of technology as the work under this contract to determine whether—
(i) Any such inventions are subject inventions;
(ii) The Contractor has established and maintained the procedures required by paragraph (e)(1) of this clause; and
(iii) The Contractor and its inventors have complied with the procedures.
(2) If the Contracting Officer learns of an unreported Contractor invention that the Contracting Officer believes may be a subject invention, the Contracting Officer may require the Contractor to disclose the invention to the agency for a determination of ownership rights.
(3) Any examination of records under this paragraph will be subject to appropriate conditions to protect the confidentiality of the information involved.
(g)
(1) Any time before final payment under this contract, the Contracting Officer may, in the Government's interest, withhold payment until a reserve not exceeding $50,000 or 5 percent of the amount of this contract, whichever is less, shall have been set aside if, in the Contracting Officer's opinion, the Contractor fails to—
(i) Establish, maintain, and follow effective procedures for identifying and disclosing reportable items pursuant to paragraph (e)(1) of this clause;
(ii) Disclose any reportable items pursuant to paragraph (e)(2) of this clause;
(iii) Deliver acceptable interim new technology summary reports pursuant to paragraph (e)(4)(i) of this clause or a final new technology summary report pursuant to paragraph (e)(4)(ii) of this clause; or
(iv) Provide the information regarding subcontracts pursuant to paragraph (h)(4) of this clause.
(2) Such reserve or balance shall be withheld until the Contracting Officer has determined that the Contractor has rectified whatever deficiencies exist and has delivered all reports, disclosures, and other information required by this clause.
(3) Final payment under this contract shall not be made before the Contractor delivers to the Contracting Officer all disclosures of reportable items required by paragraph (e)(2) of this clause, and an acceptable final new technology summary report pursuant to paragraph (e)(4)(ii) of this clause.
(4) The Contracting Officer may decrease or increase the sums withheld up to the maximum authorized above. No amount shall be withheld under this paragraph while the amount specified by this paragraph is being withheld under other provisions of the contract. The withholding of any amount or the subsequent payment thereof shall not be construed as a waiver of any Government rights.
(h)
(1) Unless otherwise authorized or directed by the Contracting Officer, the Contractor shall—
(i) Include this clause (suitably modified to identify the parties) in any subcontract hereunder (regardless of tier) with other than a small business firm or nonprofit organization for the performance of experimental, developmental, or research work; or
(ii) Include the clause at
(iii) Modify the applicable clause in any subcontract hereunder (regardless of tier) to identify the parties as follows: References to the Government are not changed, and in all references to the Contractor, the subcontractor is substituted for the Contractor so that the subcontractor has all rights and obligations of the Contractor in the clause.
(2) In the event of a refusal by a prospective subcontractor to accept such a clause the Contractor—
(i) Shall promptly submit a written notice to the Contracting Officer setting forth the subcontractor's reasons for such refusal and other pertinent information that may expedite disposition of the matter; and
(ii) Shall not proceed with such subcontract without the written authorization of the Contracting Officer.
(3) In the case of subcontracts at any tier, the agency, subcontractor, and Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and NASA with respect to those matters covered by this clause.
(4) The Contractor shall promptly notify the Contracting Officer in writing upon the award of any subcontract hereunder (regardless of tier) by identifying the subcontractor, the applicable patent rights clause in the subcontract, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Contracting Officer, the Contractor shall furnish a copy of such subcontract, and, no more frequently than annually, a listing of the subcontracts that have been awarded.
(5) The subcontractor will retain all rights provided for the Contractor in the clause of paragraph (h)(1)(i) or (ii) of this clause, whichever is included in the subcontract, and the Contractor will not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor's subject inventions.
(i)
As prescribed in 1827.303(d)(2), insert the following provision in all solicitations that include the clause at 1852.227-70, New Technology-Other than a Small Business Firm or Nonprofit Organization:
(a) In accordance with Section 20135(g) of the National Aeronautics and Space Act (51 U.S.C. 20135(g)) (hereinafter “the Act”) and the NASA Patent Waiver Regulations, 14 CFR Part 1245, Subpart 1, NASA may waive all or any part of the rights of the United States with respect to any invention or class of inventions made or that may be made under a NASA contract or subcontract with other than a small business firm or a domestic nonprofit organization if the Administrator determines that the interests of the United States will be served thereby. Waiver of rights in inventions made or that may be made under such NASA contract or subcontract may be requested at different time periods. Advance waiver of rights to any invention or class of inventions that may be made under a contract or subcontract may be requested prior to the execution of the contract or subcontract, or within 30 days after execution by the selected contractor (or such longer period as may be specified by the Contracting Officer). In addition, waiver of rights to an individually identified invention or to a class of inventions made and reported under a contract or subcontract may be requested, even though a request for an advance waiver was not made or, if made, was not granted.
(b) Each request for waiver of rights shall be by petition to the Administrator. No specific forms need be used, but the request should contain a positive statement that waiver of rights is being requested under the NASA Patent Waiver Regulations; a clear indication of whether the request is for an advance waiver or for a waiver of rights for an individually identified invention or class of inventions; whether foreign rights are also requested and, if so, the countries, and a citation of the specific section or sections of the regulations under which such rights are requested. For individually identified inventions or a class of inventions, the petition shall identify each invention with particularity (e.g., by NASA's assigned number to the Disclosure of Invention and New Technology report or by title and inventorship). For advance waivers, the petition shall identify the invention or class of inventions that the Contractor believes will be made under the contract and for which waiver is being requested. To meet the statutory standard of “any invention or class of inventions,” the petition must be directed to a single invention or to inventions directed to a particular process, machine, manufacture, or composition of matter, or to a narrowly-drawn, focused area of technology. Additionally, each petition shall include an identification of the petitioner; place of business and address; if petitioner is represented by counsel, the name, address and telephone number of the counsel; the name, address, and telephone number of the party with whom to communicate when the request is acted upon; the signature of the petitioner or authorized representative; and the date of signature. In general, waivers are granted in order to provide for the widest practicable dissemination of new technology resulting from NASA programs, and to promote early utilization, expeditious development, and continued availability of this new technology for commercial purposes and the public benefit. Thus, it is preferable that the petition also include a description of the Contractor's plan for commercializing the invention or class of inventions for which waiver is being requested (e.g., identify specific fields of use).
(c) Petitions for advance waiver of rights should, preferably, be included with the proposal, or at least in advance of contract negotiations. Petitions for advance waiver, prior to contract execution, shall be submitted to the Contracting Officer. All other petitions shall be submitted to the Patent Representative designated in the contract.
(d) Petitions submitted with proposals selected for negotiation of a contract will be forwarded by the Contracting Officer to the installation Patent Counsel for processing and then to the Inventions and Contributions Board. The Board will consider these petitions and where the Board makes the findings to support the waiver, the Board will recommend to the Administrator that waiver be granted, and will notify the petitioner and the Contracting Officer of the Administrator's determination. The Contracting Officer will be informed by the Board whenever there is insufficient time or information or other reasons to permit a decision to be made without unduly delaying the execution of the contract. In the latter event, the petitioner will be so notified by the Contracting Officer. All other petitions will be processed by installation Patent Counsel and forwarded to the Board. The Board shall notify the petitioner of its action and if waiver is granted, the conditions, reservations, and obligations thereof will be included in the Instrument of Waiver. Whenever the Board notifies a petitioner of a recommendation adverse to, or different from, the waiver requested, the petitioner may request reconsideration under procedures set forth in the Regulations.
As prescribed in 1827.303(d)(3), insert the following clause:
(a) For purposes of administration of the clause of this contract entitled “New Technology—Other than a Small Business Firm or Nonprofit Organization” or “Patent Rights—Ownership by the Contractor,” whichever is included, the installation New Technology and Patent Representatives identified at
(b) Disclosures of reportable items and of subject inventions, interim new technology summary reports, final new technology summary reports, utilization reports, and other reports required by the applicable “New Technology” or “Patent Rights—Ownership by the Contractor” clause, as well as any correspondence with respect to such matters, shall be directed to the New Technology Representative unless transmitted in response to correspondence or request from the Patent Representative. Inquiries or requests regarding disposition of rights, election of rights, or related matters shall be directed to the Patent Representative. This clause shall be included in any subcontract hereunder requiring a “New Technology—Other than a Small Business Firm or Nonprofit Organization” clause or “Patent Rights—Ownership by the Contractor” clause, unless otherwise authorized or directed by the Contracting Officer. The respective responsibilities and authorities of the aforementioned representatives are set forth in 1827.305-270 of the NASA FAR Supplement.
As prescribed in 1827.303(a)(1), the contracting officer shall insert the following provision in solicitations for experimental, developmental, or research work to be performed in the United States when the eventual awardee may be a small business or a nonprofit organization:
This solicitation contains the patent rights clauses of
As prescribed in 1827.303(e)(1), insert the following clause:
(a) As used in this clause, the term “invention” means any invention, discovery or improvement, and “made” means the conception or first actual demonstration that the invention is useful and operable.
(b) The Contractor shall report promptly to the Contracting Officer each invention made in the performance of work under this contract. The report of each such invention shall:
(1) Identify the inventor(s) by full name; and
(2) Include such full and complete technical information concerning the invention as is necessary to enable an understanding of the nature and operation thereof.
(c) The Contractor hereby grants to the Government of the United States of America as represented by the Administrator of the National Aeronautics and Space Administration the full right, title and interest in and to each such invention throughout the world, except for the foreign country in which this contract is to be performed. As to such foreign country, Contractor hereby grants to the Government of the United States of America as represented by the Administrator of the National Aeronautics and Space Administration an irrevocable, nontransferable, nonexclusive, royalty-free license to practice each such invention by or on behalf of the United States of America or any foreign government pursuant to any treaty or agreement with the United States of America, provided that Contractor within a reasonable time files a patent application in that foreign country for each such invention. Where Contractor does not elect to file such patent application for any such invention in that foreign country, full right, title and interest in and to such invention in that foreign country shall reside in the Government of the United States of America as represented by the Administrator of the National Aeronautics and Space Administration.
(d) The Contractor agrees to execute or to secure the execution of such legal instruments as may be necessary to confirm and to protect the rights granted by paragraph (c) of this clause, including papers incident to the filing and prosecution of patent applications.
(e) Upon completion of the contract work, and prior to final payment, Contractor shall submit to the Contracting Officer a final report listing all inventions required to be reported under this contract or certifying that no such inventions have been made.
(f) In each subcontract, the Contractor awards under this contract where the performance of research, experimental design, engineering, or developmental work is contemplated, the Contractor shall include this clause (suitably modified to substitute the subcontractor in place of the Contractor) and the name and address of the Contracting Officer.
As prescribed in 1827.409(g), insert the following clause:
(a) Any delivered commercial computer software (including documentation thereof) developed at private expense and claimed as proprietary shall be subject to the restricted rights in paragraph (d) of this clause. Where the vendor/contractor proposes its standard commercial software license, those applicable portions thereof consistent with Federal laws, standard industry practices, the Federal Acquisition Regulations (FAR) and the NASA FAR Supplement, including the restricted rights in paragraph (d) of this clause, are incorporated into and made a part of this purchase order/contract. Those portions of the vendor's/contractor's standard commercial license or lease agreement that conflict with Federal law (e.g., indemnity provisions or choice of law provisions that specify other than Federal law) are not incorporated into and made a part of this purchase order/contract and do not apply to any computer software delivered under this purchase order/contract.
(b) If the vendor/contractor does not propose its standard commercial software license until after this purchase order/contract has been issued, or until at or after the time the computer software is delivered, such license shall nevertheless be deemed incorporated into and made a part of this purchase order/contract under the same terms and conditions as in paragraph (a) of this clause. For purposes of receiving updates, correction notices, consultation, and similar activities on the computer software, no document associated with the aforementioned activities shall alter the terms of this clause unless such document explicitly references this clause and an intent to amend this clause and is signed by the NASA Contracting Officer.
(c) The vendor's/contractor's acceptance is expressly limited to the terms and conditions of this purchase order/contract. If the specified computer software is shipped or delivered to NASA, it shall be understood that the vendor/contractor has unconditionally accepted the terms and conditions set forth in this clause, and that such terms and conditions (including the incorporated license) constitute the entire agreement between the parties concerning rights in the computer software.
(d) The following restricted rights shall apply:
(1) The commercial computer software may not be used, reproduced, or disclosed by the Government, or Government contractors or their subcontractors at any tier, except as provided below or otherwise expressly stated in the purchase order/contract.
(2) The commercial computer software may be—
(i) Used, or copied for use, in or with any computer owned or leased by, or on behalf of, the Government; provided, the software is not used, nor copied for use, in or with more than one computer simultaneously, unless otherwise permitted by the license incorporated under paragraphs (a) or (b) of this clause;
(ii) Reproduced for safekeeping (archives) or backup purposes;
(iii) Modified, adapted, or combined with other computer software, provided that the modified, combined, or adapted portions of the derivative software incorporating restricted computer software shall be subject to the same restricted rights; and
(iv) Disclosed and reproduced for use by Government contractors or their subcontractors in accordance with the restricted rights in paragraphs (d)(2)(i), (ii), and (iii) of this clause; provided they have the Government's permission to use the computer software and have also agreed to protect the computer software from unauthorized use and disclosure.
(3) If the incorporated vendor's/contractor's software license contains provisions or rights that are less restrictive than the restricted rights in paragraph (d)(2) of this clause, then the less restrictive provisions or rights shall prevail.
(4) If the computer software is otherwise available without disclosure restrictions, it is licensed to the Government, without disclosure restrictions, with the rights in paragraphs (d)(2) and (3) of this clause.
(5) The Contractor shall affix a notice substantially as follows to any commercial computer software delivered under this contract:
Notice—Notwithstanding any other lease or license agreement that may pertain to, or accompany the delivery of, this computer software, the rights of the Government regarding its use, reproduction and disclosure are set forth in Government Contract No. ______.
As prescribed in 1827.409(m), insert the following clause:
(a)
(1) In the possession of, or directly acquired by, the Government whereby the Government has title or license rights thereto; and
(2) Subsequently furnished to the Contractor for performance of a Government contract.
“
(b) The Government shall furnish to the Contractor the GFCS described in this contract or in writing by the Contracting Officer. The Government shall furnish any related technical data needed for the intended use of the GFCS.
(c)
(1) The Contractor shall not, without the express written permission of the Contracting Officer, reproduce, distribute copies, prepare derivative works, perform publicly, display publicly, release, or disclose the GFCS or related technical data to any person except for the performance of work under this contract.
(2) The Contractor shall not modify or enhance the GFCS unless this contract specifically identifies the modifications and enhancements as work to be performed. If the GFCS is modified or enhanced pursuant to this contract, the Contractor shall provide to the Government the complete source code, if any, and all related documentation of the modified or enhanced GFCS.
(3) Allocation of rights associated with any GFCS or related technical data modified or enhanced under this contract shall be defined by the FAR Rights in Data clause(s) included in this contract (as modified by any applicable NASA FAR Supplement clauses). If no Rights in Data clause is included in this contract, then the FAR Rights in Data—General (52.227-14) as modified by the NASA FAR Supplement (1852.227-14) shall apply to all data first produced in the performance of this contract and all data delivered under this contract.
(4) The Contractor may provide the GFCS, and any modified or enhanced versions thereof, to subcontractors as necessary for the performance of work under this contract. Before release of the GFCS, and any modified or enhanced versions thereof, to such subcontractors (at any tier), the Contractor shall insert, or require the insertion of, this clause, including this paragraph (c)(4), suitably modified to identify the parties as follows: references to the Government are not changed, and in all references to the Contractor the subcontractor is substituted for the Contractor so that the subcontractor has all rights and obligations of the Contractor in the clause.
(d) The Government provides the GFCS in an “AS-IS” condition. The Government makes no warranty with respect to the serviceability and/or suitability of the GFCS for contract performance.
(e) The Contracting Officer may by written notice, at any time—
(1) Increase or decrease the amount of GFCS under this contract;
(2) Substitute other GFCS for the GFCS previously furnished, to be furnished, or to be acquired by the Contractor for the Government under this contract;
(3) Withdraw authority to use the GFCS or related technical data; or
(4) Instruct the Contractor to return or dispose of the GFCS and related technical data.
(f)
(g)
(h)
* * *
(d) The offeror shall require all service subcontractors provide, as part of their proposal, the information identified in (a) through (c) of this provision for cost reimbursement or non-competitive fixed-price type subcontracts having a total potential value expected to exceed the threshold for requiring certified cost or pricing data as set forth in FAR 15.403-4.
(a) * * *
(2) In paragraph (m)(1), delete “in the form prescribed by the administering office” and substitute “and Standard Form 425, Federal Financial Report.”
(c) * * *
(3) In paragraph (j)(1), insert between “statements,” and “and” “together with Standard Form 425, Federal Financial Report”
Fish and Wildlife Service, Interior.
Notice of 12-month petition finding.
We, the U.S. Fish and Wildlife Service (Service), announce a 12-month finding on a petition to list the plants
The finding announced in this document was made on September 24, 2014.
This finding is available on the Internet at
Edward D. Koch, State Supervisor, U.S. Fish and Wildlife Service, Nevada Fish and Wildlife Office, 1340 Financial Boulevard, Suite 234, Reno, NV 89502; telephone 775-861-6300; or facsimile 775-861-6301. If you use a telecommunications device for the deaf (TDD), please call the Federal Information Relay Service (FIRS) at 800-877-8339.
We identified
We identified
We completed comprehensive assessments of the biological status of
A summary of the biology, taxonomy, life history, and distribution for each of the plants follows. The reader is directed to the Species Reports for a more detailed discussion of these topics as well as the current conditions of
BLM monitored each of the four populations from 2005-2007 and in 2012. This sampling data and estimated abundance data for
Expressed in terms of acreage,
The Act directs us to determine whether any species is an endangered species or a threatened species because of any factors affecting its continued existence. We completed comprehensive assessments of the biological status of
(A) The present or threatened destruction, modification, or curtailment of its habitat or range;
(B) Overutilization for commercial, recreational, scientific, or educational purposes;
(C) Disease or predation;
(D) The inadequacy of existing regulatory mechanisms; or
(E) Other natural or manmade factors affecting its continued existence.
A species is an endangered species for purposes of the Act if it is in danger of extinction throughout all or a significant portion of its range, and is a threatened species if it is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range. For purposes of this analysis, we first evaluate the status of the species throughout all of its range, and then consider whether the species is in danger of extinction or likely to become so in any significant portion of its range.
In making this finding, information pertaining to
The Act requires that the Secretary determine whether a species is an endangered or threatened species because of any of the five factors enumerated in 16 U.S.C. 1533(a)(1). Our discussion of the threats, which we have categorized here under each of these five factors, is contained in the Species Reports (can be accessed at Docket FWS-R8-ES-2014-0039 on
All potential stressors currently acting upon
The Species Report evaluated the biological status of the species and each of the potential stressors affecting its continued existence (Service 2014a, entire). It was based upon the best available scientific and commercial data and the expert opinion of the Species Report team members. Based on the analysis and discussion contained in the Species Report, we evaluated the potential threats under the five statutory factors: Mineral exploration and development (Factors A and E); livestock grazing (Factors A and E); herbivory (Factor C); off-highway vehicle (OHV) activity and road development (Factors A and E); nonnative, invasive plant species (Factors A and E); disease (Factor C); and climate change (Factors A and E). We found that these factors currently may have minor impacts on individuals in some locations, but they are not impacting the species as a whole currently and are not expected to in the future. The full analyses of these possible stressors are documented in the Species Report and are summarized below. Based on the analysis contained in the Species Report, we find that the best available scientific and commercial information does not indicate that these stressors are causing a decline in the species or its habitat, either now or into the future.
All populations of
Herbivory by jackrabbits, resulting in clipping of flower stems and tunneling into roots, has been documented on individuals at all four populations of
OHV activity and road development is known to occur at three of the four
Nonnative, invasive plant species can negatively affect
A rust (fungal) pathogen was observed on approximately 26 percent of the overall
In the Great Basin, temperatures have risen, and current climate change projections indicate further warming over the rest of the century. Winter temperatures are projected to increase, which will change the balance of temperature and precipitation resulting in earlier spring snow runoff, declines in snowpack, and increased frequency of drought and fire events. Warmer temperatures and greater concentration of atmospheric carbon dioxide can create conditions favorable for nonnative, invasive plant species. We anticipate that the alteration of precipitation and temperature patterns could result in decreased survivorship of
The Act requires that the Secretary assess existing regulatory mechanisms in order to determine whether they are adequate to address threats to the species (Factor D). The Species Report includes discussions of applicable regulatory mechanisms for
Based on the analysis contained within the Species Report, we conclude that the best available scientific and commercial information does not indicate that there is an inadequacy of existing regulatory mechanisms to address impacts from the identified potential threats such that listing would be warranted.
When conducting our analysis about the potential threats affecting
All or some of the potential stressors could act in concert to result in cumulative stress on
The Species Report for
We found that past development has had an impact on
OHV use and road development can cause loss, degradation, and fragmentation of
When
With regard to the timing of mining-related impacts, although this activity has been previously identified as having the potential to affect
Overall, mineral exploration and development has been previously identified as having the potential to affect
The majority of
Historically, wildfire has been infrequent in the Mojave Desert due to limited fuels created by sparse vegetation. However, since the 1970s, fires have become more frequent due to recent invasions by annual grasses (Service 2014b, p. 34). Due to increasing invasion by nonnative, annual grasses, wildfire is now considered one of the primary stressors to the conservation of native plants and animals and to the maintenance of ecosystem integrity in the Mojave Desert. Regardless of an overall increase of wildfire in the Mojave Desert, there are no reported accounts of wildfire within
The direct, long-term impact from climate change to
The Act requires that the Secretary assess existing regulatory mechanisms in order to determine whether they are adequate to address threats to the species (Factor D). The Species Report includes discussions of applicable regulatory mechanisms (Service 2014b, entire). In the Species Report, the Service examines the applicable Federal, State, and other statutory and regulatory mechanisms to determine whether these mechanisms provide protections to
In 2002, the Muddy Mountains Wilderness, which supports the Muddy Mountains population of
In 2005, BLM, the Service, Nevada Division of Forestry (NDF), and the City of North Las Vegas entered a CA to retain 300 ac (121 ha) of the Upper Las Vegas Wash area in Federal ownership to establish it as the Eglington Preserve. The goal is to preserve, enhance, and restore riparian areas and their associated uplands within the Eglington Preserve. In 2011, the BLM established the 10,669-ac (4,318-ha) conservation transfer area (CTA), which contains the 300-ac (121-ha) Eglington Preserve, and encompasses one of the populations in the Las Vegas Valley. The BLM's vision for the CTA is “to preserve the natural functioning of the Upper Wash, protect the sensitive resources within, and support education, research, and low-impact recreational use. The CTA is ecologically functional to the maximum extent possible and managed to ensure the long-term integrity of the Las Vegas Formation and associated fossil beds, the rare plant habitat for
In 2007, BLM re-purchased approximately 1,103 ac (446 ha) of land that supports one of the White Basin populations of
Another population in the Las Vegas Valley was designated as a “Buckwheat Conservation Area” by Clark County in 2010. Also in 2010, the Nellis Air Force Base (AFB) established a conservation area where sites containing
As described in the Species Report, there are several Federal, State, and County protections for
Based on the analysis contained within the Species Report, we conclude that the best available scientific and commercial information does not indicate that there is an inadequacy of existing regulatory mechanisms to address impacts from the identified potential threats such that listing the plant would be warranted.
When conducting our analysis about the potential stressors affecting
All or some of the potential stressors could act in concert to result in cumulative stress on
As required in section 4(a)(1) of the Act, we conducted a review of the status of
We evaluated each of the potential stressors in the Species Report for
We evaluated each of the potential stressors in the Species Report for
The Act defines an endangered species as any species that is “in danger of extinction throughout all or a significant portion of its range” and a threatened species as any species “that is likely to become endangered throughout all or a significant portion of its range within the foreseeable future.” Based on our analyses conducted in the Species Reports and summarized in this finding, and using the best scientific and commercial information available, we find that the magnitude and imminence of threats do not indicate that
In general, we assessed the potential stressors as a continuation of current circumstances as discussed in the Species Reports (Service 2014, p. 17; Service 2014b, p. 24). In the case of
Therefore, based on our assessment of the best available scientific and commercial information, we find that listing
Under the Act and our implementing regulations, a species may warrant listing if it is an endangered or a threatened species throughout all or a significant portion of its range. The Act defines “endangered species” as any species which is “in danger of extinction throughout all or a significant portion of its range,” and “threatened species” as any species which is “likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range.” The term “species” includes “any subspecies of fish or wildlife or plants, and any distinct population segment [DPS] of any species of vertebrate fish or wildlife which interbreeds when mature.” We published a final policy interpreting the phrase “significant portion of its range” (SPR) (79 FR 37578, July 1, 2014). The final policy states that (1) if a species is found to be an endangered or a threatened species throughout a significant portion of its range, the entire species is listed as an endangered or a threatened species, respectively, and the Act's protections apply to all individuals of the species wherever found; (2) a portion of the range of a species is “significant” if the species is not currently an endangered or a threatened species throughout all of its range, but the portion's contribution to the viability of the species is so important that, without the members in that portion, the species would be in danger of extinction, or likely to become so in the foreseeable future, throughout all of its range; (3) the range of a species is considered to be the general geographical area within which that species can be found at the time the Service or the National Marine Fisheries Service makes any particular status determination; and (4) if a vertebrate species is an endangered or a threatened species throughout an SPR, and the population in that significant portion is a valid DPS, we will list the DPS rather than the entire taxonomic species or subspecies.
The SPR policy is applied to all status determinations, including analyses for the purposes of making listing, delisting, and reclassification determinations. The procedure for analyzing whether any portion is an SPR is similar, regardless of the type of status determination we are making. The first step in our analysis of the status of a species is to determine its status throughout all of its range. If we determine that the species is in danger of extinction, or likely to become so in the foreseeable future, throughout all of its range, we list the species as an endangered (or threatened) species and no SPR analysis will be required. If the species is neither an endangered nor a threatened species throughout all of its range, we determine whether the species is an endangered or a threatened species throughout a significant portion of its range. If it is, we list the species as an endangered or a threatened species, respectively; if it is not, we conclude that listing the species is not warranted.
When we conduct an SPR analysis, we first identify any portions of the species' range that warrant further consideration. The range of a species can theoretically be divided into portions in an infinite number of ways. However, there is no purpose to analyzing portions of the range that are not reasonably likely to be significant and either an endangered or a threatened species. To identify only those portions that warrant further consideration, we determine whether there is substantial information indicating that (1) the portions may be significant and (2) the species may be in danger of extinction in those portions or likely to become so within the foreseeable future. We emphasize that answering these questions in the affirmative is not a determination that the species is an endangered or a threatened species throughout a
If we identify any portions that may be both (1) significant and (2) endangered or threatened, we engage in a more detailed analysis to determine whether these standards are indeed met. The identification of an SPR does not create a presumption, prejudgment, or other determination as to whether the species in that identified SPR is an endangered or a threatened species. We must go through a separate analysis to determine whether the species is an endangered or a threatened species in the SPR. To determine whether a species is an endangered or a threatened species throughout an SPR, we will use the same standards and methodology that we use to determine if a species is an endangered or a threatened species throughout its range.
Depending on the biology of the species, its range, and the threats it faces, it may be more efficient to address the “significant” question first, or the status question first. Thus, if we determine that a portion of the range is not “significant,” we do not need to determine whether the species is an endangered or a threatened species there; if we determine that the species is not an endangered or a threatened species in a portion of its range, we do not need to determine if that portion is “significant.”
We evaluated the current ranges of
Our review of the best available scientific and commercial information indicates that neither
We request that you submit any new information concerning the status of, or threats to,
A complete list of references cited in each of the Species Reports (Service 2014a; Service 2014b) is available on the Internet at
The primary authors of this finding are the staff members of the Pacific Southwest Regional Office and the Nevada Fish and Wildlife Office (see
The authority for this section is section 4 of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of availability of fishery management plan amendment; request for comments.
The North Pacific Fishery Management Council (Council) has submitted Amendment 107 to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (BSAI FMP). Amendment 107, if approved, would establish seasonal transit areas for vessels designated on Federal Fisheries Permits (FFPs) through Walrus Protection Areas in northern Bristol Bay, AK. This action would allow vessels designated on FFPs to transit through Walrus Protection Areas in the U.S. Exclusive Economic Zone (EEZ) near Round Island and Cape Peirce from April 1 through August 15, annually. This action is necessary to restore the access of Federally-permitted vessels to transit through Walrus Protection Areas that was limited by
Comments on the amendment must be received on or before November 24, 2014.
You may submit comments on this document, identified by NOAA-NMFS-2014-0066, by any one of the following methods:
•
•
Comments sent by any other method, to any other address or individual, or received after the end of the comment period, may not be considered by NMFS. All comments received are a part of the public record and will generally be posted for public viewing on
Electronic copies of the Environmental Assessment/Regulatory Impact Review/Initial Regulatory Flexibility Analysis (Analysis) prepared for this action may be obtained from
Anne Marie Eich, 907-586-7172.
The Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) requires that each regional fishery management council submit any fishery management plan amendment it prepares to NMFS for review and approval, disapproval, or partial approval by the Secretary of Commerce. The Magnuson-Stevens Act also requires that NMFS, upon receiving a fishery management plan amendment, immediately publish a notice in the
NMFS manages the groundfish fisheries in the EEZ of the BSAI under the BSAI FMP. The Council prepared, and NMFS approved, the BSAI FMP under the authority of the Magnuson-Stevens Act. Amendment 107 would apply only to the management of the vessels transiting in the northern part of Bristol Bay, AK. This proposed action would apply to EEZ waters in statistical area 514 of the BSAI, as shown in Figure 1 to 50 CFR part 679. In this area of Bristol Bay, Federal waters occur at least 3 nm from shore.
The Council has recommended and NMFS has implemented a series of closure areas, known as Walrus Protection Areas, in Bristol Bay around important walrus haul-out sites to reduce potential disturbance to walrus from fishing activities (54 FR 50386, December 6, 1989; corrected 55 FR 1036, January 11, 1990; technically amended 56 FR 5775, February 13, 1991 and 57 FR 10430, March 26, 1992). These management measures apply in a portion of Federal waters in the EEZ (i.e., from 3 nm to 12 nm from shore). These closures were established from April 1 through September 30 to reduce disturbance to walrus haul-out sites during periods of peak walrus use (Section 1.2 of the Analysis).
If approved, Amendment 107 would establish transit areas through the Walrus Protection Area at Round Island and Cape Peirce, in northern Bristol Bay, AK. Amendment 107 would: (1) establish a transit area in the EEZ near Round Island open from April 1 through August 15, annually, north of a line from 58°47.90′ N, 160°21.91′ W to 58°32.94′ N, 159°35.45′ W; and (2) establish a transit area in the EEZ near Cape Peirce open from April 1 through August 15, annually, east of a line from 58°30.00′ N, 161°46.20′ W to 58°21.00′ N, 161°46.20′ W.
This action is necessary to restore the access to Federally-permitted vessels to transit through Walrus Protection Areas that was limited by regulations implementing Amendment 83 to the Fishery Management Plan for Groundfish of the Gulf of Alaska (GOA FMP) (76 FR 74670, December 1, 2011; corrected 76 FR 81872, December 29, 2011), and to maintain adequate protection for walruses on Round Island and Cape Peirce. This action would maintain an existing prohibition on deploying fishing gear in Walrus Protection Areas by vessels designated on an FFP.
Prior to 2012, vessel owners were able to easily surrender an FFP for a period of time to allow their vessel to transit through Walrus Protection Areas. Some vessel owners surrendered their FFPs during the spring and summer so that these vessels could transit through Walrus Protection Areas around Round Island and Cape Peirce when operating as a tender. A tender is a vessel that is used to transport unprocessed fish or shellfish received from another vessel to an associated processor (see definition at § 679.2). In northern Bristol Bay many vessels that are active in Federally-managed fisheries operate as tenders for vessels fishing in State-managed herring and salmon fisheries. These tenders receive catch in Togiak Bay, Kulukak Bay, and other bays in northern Bristol Bay and deliver that catch to processing plants in Dillingham and other communities in Bristol Bay. Prior to 2012, some vessel owners also surrendered their FFPs to allow a vessel to transit through Walrus Protection Areas to deliver processed groundfish from fishing grounds in the Bering Sea to delivery locations in northern Bristol Bay.
Without an FFP, vessels can transit through Walrus Protection Areas and avoid the additional time, operating expenses, increased exposure to weather, and navigational challenges when operating in State waters compared to vessels that are designated on an FFP and are prohibited from entering the Walrus Protection Areas. Section 1.3.2 of the Analysis describes the factors affecting vessels that are prohibited from transiting through Walrus Protection Areas. The following paragraphs summarize these factors.
On January 1, 2012, NMFS implemented Amendment 83 to GOA FMP (76 FR 74670, December 1, 2011; corrected 76 FR 81872, December 29, 2011). Regulations implementing Amendment 83 to GOA FMP (Amendment 83) limited the ability for vessel owners to easily surrender an FFP. An FFP is issued for 3-years under the FFP application process and is in effect from the effective date through the
NMFS intends the regulations implementing Amendment 83 to allow the proper tracking and accounting of Federal fishery allocations. NMFS did not intend the regulations to specifically limit the ability of vessel owners to surrender FFPs to transit through Walrus Protection Areas when operating as tenders or delivering processed groundfish. However, the regulations implementing Amendment 83 require vessel owners who had historically surrendered their FFPs in order to transit through Walrus Protection Areas when operating as tenders or delivering processed groundfish to either surrender their FFPs and be prohibited from fishing in Federal waters for up to 3 years, or retain their FFPs and be prohibited from transiting through Walrus Protection Areas.
Vessel owners prefer to transit through the Walrus Protection Areas north of Round Island because transiting to the north and outside of Walrus Protection Areas requires vessels to transit through shallower waters in State waters. This transit can be more difficult to navigate and may create additional safety concerns. Transiting to the south of Round Island and outside of the Walrus Protection Areas requires vessels to transit around Round Island and through Hagemeister Strait, which adds considerable distance and time to each transit. The additional time increases the fuel costs required for transit and potentially exposes vessels to more adverse weather conditions for a longer period of time. Vessels delivering groundfish to floating processors in the Togiak Bay area also experience increased costs because of additional transit distances. Transit through Hagemeister Strait also puts vessels in close proximity (i.e., within 3 nm) to a walrus haulout on the southern tip of Hagemeister Island. This vessel traffic may disturb walrus using the haulout on Hagemeister Island. An alternative route that would allow vessels designated on FFPs to transit through a portion of the Walrus Protection Areas north of Round Island could reduce vessel transits through Hagemeister Strait and the potential for disturbance to walrus using the haulout on Hagemeister Island.
Currently, vessels can transit through State waters (from 0 to 3 nm from the shore) near Cape Peirce while tendering herring or salmon from fishing locations near Cape Peirce or when delivering groundfish in northern Bristol Bay. As noted in Section 3.2.7.3 of the Analysis, the U.S. Fish and Wildlife Service has not monitored walrus in the Cape Peirce area for disturbance; therefore the incidence of disturbance at Cape Peirce is not known. However, vessels transiting through State waters (
NMFS is soliciting public comments on proposed Amendment 107 through the end of the comment period (see
16 U.S.C. 1801
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.
Comments regarding this information collection received by October 24, 2014 will be considered. Written comments should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), New Executive Office Building, 725 17th Street NW., Washington, DC 20502. Commenters are encouraged to submit their comments to OMB via email to:
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 of meetings.
The Tongass Advisory Committee (Committee) will meet in Klawock, Alaska. The Committee is established consistent with the Federal Advisory Committee Act of 1972 (5 U.S.C. App. 2). The most up to date information concerning the Committee, including meeting times and agendas can be found by visiting the Committee's Web site at:
The meeting will be held on:
• October 8, 2014 from 8:30 a.m. to 12:30 p.m. (AKDT).
• October 9, 2014 from 1:00 p.m. to 5:00 p.m. (AKDT).
• October 10, 2014 from 8:30 a.m. to 2:00 p.m.
All meetings are subject to change and cancellation. For status of the meetings prior to attendance, please contact the person listed under
The meeting will be held at the Fireweed Lodge at 6851 Klawock Hollis Hwy, Klawock, AK 99925. For more information on the meeting or to attend please visit the Web site listed in the
Nicole McMurren, Committee Coordinator, by phone at 907-772-5875, or by email at
The purpose of the meeting is to provide advice and recommendations on ecologically, socially, and economically sustainable forest management strategy on the Tongass National Forest with an emphasis on young growth management. Recommendations and advice may directly inform the development of a proposed action for modification of the 2008 Tongass Land Management Plan.
In addition, all agendas include time for oral public comment. Those interested in providing comment orally can register at the meeting. Anyone who would like to bring related matters to the attention of the Committee may file written statements with the Committee's staff before or after the meeting. Written comments may be sent to Jason Anderson, Designated Federal Officer, Tongass National Forest, P.O. Box 309, Petersburg, Alaska 99833; by email to
U.S. Commission on Civil Rights.
Notice of meeting.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission) and the Federal Advisory Committee Act that the Illinois Advisory Committee (Committee) will hold a meeting on Monday, September 29, 2014, at 12:00 p.m. for the purpose of discussing the recent events in Ferguson, Missouri, and determining what the appropriate next steps for the committee should be in light of these events.
Members of the public can listen to the discussion. This meeting is available to the public through the following toll-free call-in number: 888-572-7025, conference ID: 7226252. Any interested member of the public may call this number and listen to the meeting. Callers can expect to incur charges for calls they initiate over wireless lines, and the Commission will not refund any incurred charges. Callers will incur no charge for calls they initiate over land-line connections to the toll-free telephone number. Persons with hearing impairments may also follow the proceedings by first calling the Federal Relay Service at 1-800-977-8339 and providing the Service with the conference call number and conference ID number.
Member of the public are also entitled to submit written comments; the comments must be received in the regional office by October 29, 2014. Written comments may be mailed to the Midwestern Regional Office, U.S. Commission on Civil Rights, 55 W. Monroe St., Suite 410, Chicago, IL 60615. They may also be faxed to the Commission at (312) 353-8324, or emailed to Administrative Assistant, Carolyn Allen at
Records generated from this meeting may be inspected and reproduced at the Midwestern Regional Office, as they become available, both before and after the meeting. Records of the meeting will be available via
The meeting will be held on Monday, September 29, 2014, at 12:00 p.m. CST
On May 21, 2014, the March Joint Powers Authority, grantee of FTZ 244, submitted a notification of proposed production activity to the Foreign-Trade Zones (FTZ) Board on behalf of ModusLink Global Solutions, within Site 5, in Riverside, California.
The notification was processed in accordance with the regulations of the FTZ Board (15 CFR part 400), including notice in the
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on large power transformers (LPTs) from the Republic of Korea (Korea). The period of review (POR) is February 16, 2012, through July 31, 2013. The review covers five producers/exporters of the subject merchandise, Hyosung Corporation (Hyosung), Hyundai Heavy Industries Co., Ltd. (Hyundai), ILJIN, ILJIN Electric Co., Ltd. (ILJIN Electric), and LSIS Co., Ltd. (LSIS). ILJIN, ILJIN Electric, and LSIS, were not selected for individual examination.
We preliminarily determine that sales of subject merchandise by Hyosung and Hyundai were made at less than normal value during the POR. Interested parties are invited to comment on these preliminary results.
Brian Davis or David Cordell, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-7924 or (202) 482-0408, respectively.
The scope of this order covers large liquid dielectric power transformers (LPTs) having a top power handling capacity greater than or equal to 60,000 kilovolt amperes (60 megavolt amperes), whether assembled or unassembled, complete or incomplete. The merchandise subject to the order is currently classified in the Harmonized Tariff Schedule of the United States at subheadings 8504.23.0040, 8504.23.0080 and 8504.90.9540. This tariff classification is provided for convenience and Customs purposes; however, the written description of the scope of the order is dispositive. A full description of the scope of the order is contained in the memorandum from Gary Taverman, Associate Deputy Assistant Secretary for AD/CVD Operations, to Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance, titled “Decision Memorandum for Preliminary Results of Antidumping Duty Administrative Review: Large Power Transformers from the Republic of Korea; 2012-2103” (Preliminary Decision Memorandum), which is issued concurrent with and hereby adopted by this notice.
The Department has conducted this review in accordance with section 751(a)(2) of the Tariff Act of 1930, as amended (the Act). Constructed export price (CEP) is calculated in accordance with section 772 of the Act. Normal value is calculated in accordance with section 773 of the Act. For a full description of the methodology underlying our conclusions,
The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (IA ACCESS). Access to IA ACCESS is available to registered users at
We preliminarily determine that, for the period February 16, 2012, through July 31, 2013, the following dumping margins exist:
The Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results of review within five days after the date of publication of this notice.
Parties who submit arguments in this proceeding are requested to submit with each argument: (1) A statement of the issue; (2) a brief summary of the argument; and (3) a table of authorities.
Within 30 days of the date of publication of this notice, interested parties may request a public hearing on arguments raised in the case and rebuttal briefs.
The Department intends to publish the final results of this administrative review, including the results of its analysis of issues addressed in any case or rebuttal brief, no later than 120 days after publication of these preliminary results, unless extended.
Upon completion of this administrative review, the Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries.
The Department clarified its “automatic assessment” regulation on May 6, 2003.
We intend to issue liquidation instructions to CBP 15 days after publication of the final results of this review.
The following cash deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) The cash deposit rate for Hyosung and Hyundai will be that established in the final results of this administrative review; (2) for previously reviewed or investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or in the investigation but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be the all-others rate of 22.00 percent, which is the all-others rate established in the investigation.
This notice also serves as a reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On March 24, 2014, the Department of Commerce (“Department”) published in the
Bob Palmer or Irene Gorelik, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-9068 or (202) 482-6905, respectively.
On March 24, 2013, the Department published the
We gave interested parties an opportunity to comment on the
The merchandise subject to the order is certain frozen warmwater shrimp. The product is currently classified under the following Harmonized Tariff Schedule of the United States item numbers: 0306.17.00.03, 0306.17.00.06, 0306.17.00.09, 0306.17.00.12, 0306.17.00.15, 0306.17.00.18, 0306.17.00.21, 0306.17.00.24, 0306.17.00.27, 0306.17.00.40, 1605.21.10.30, and 1605.29.10.10. The written description of the scope of the order is dispositive. A full description of the scope of the
All issues raised in the case and rebuttal briefs by parties to this review are addressed in the accompanying Issues and Decision Memorandum.
In the
The Department has not made changes to any surrogate values or company-specific margin calculations since the
In the
For the final results, the calculated rates for both mandatory respondents have not changed from the
In the
The Department
We will disclose the calculations performed within five days of the date of publication of this notice to parties in this proceeding in accordance with 19 CFR 351.224(b).
Pursuant to section 751(a)(2)(A) of the Tariff Act of 1930, as amended (“the Act”) and 19 CFR 351.212(b), the Department will determine, and U.S. Customs and Border Protection (“CBP”) shall assess, antidumping duties on all appropriate entries of subject merchandise in accordance with the final results of this review. The Department intends to issue assessment instructions to CBP 15 days after the date of publication of these final results of review.
For any individually examined respondent whose weighted-average dumping margin is above
Additionally, pursuant to a refinement to its assessment practice in NME cases, if the Department continues to determine that an exporter under review had no shipments of the subject merchandise, any suspended entries that entered under that exporter's case number (
The following cash deposit requirements will be effective upon publication of the final results of this administrative review for shipments of the subject merchandise from Vietnam entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by sections 751(a)(2)(C) of the Act: (1) For the companies listed above, which have a separate rate, the cash deposit rate will be that established in the final results of this review (except, if the rate is zero or
This notice also serves as a reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this POR. Failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305, which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
This determination is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.221(b)(4).
National Ocean Service, National Oceanic and Atmospheric Administration (NOAA), Department of Commerce.
Notice of Member Solicitation for the United States Integrated Ocean Observing System Advisory Committee.
The National Oceanic and Atmospheric Administration (NOAA) is soliciting applications for membership on the United States Integrated Ocean Observing System Advisory Committee (the Committee), a Federal advisory committee. The Integrated Coastal and Ocean Observation System (ICOOS) Act of 2009 establishes a national integrated System of ocean, coastal, and Great Lakes observing systems, comprised of Federal and non-Federal components including in situ, remote, and other coastal and ocean observation, technologies, and data management and communication systems. The System is designed to address regional and national needs for ocean information; to gather specific data on key coastal, ocean, and Great Lakes variables; and to ensure timely and sustained dissemination and availability of these data to support a variety of societal benefits. These benefits include supporting national defense; marine commerce; navigation safety; weather, climate, and marine forecasting; energy siting and production; economic development; ecosystem-based management of marine and coastal areas; conservation of ocean and coastal resources; and public safety. The System is also designed to promote research to develop, test, and deploy innovations and improvements in coastal and ocean observation technologies and modeling systems.
The ICOOS Act also requires the Under Secretary of Commerce for Oceans and Atmosphere to establish a System advisory committee to provide advice to the Under Secretary and to the Interagency Ocean Observation Committee, which is responsible for planning for the integrated design, operation, maintenance, enhancement, and expansion of the System.
NOAA will hereby accept applications for membership on the Committee through November 24, 2014. The ICOOS Act of 2009 states: “Members shall be qualified by education, training, and experience to evaluate scientific and technical information related to the design, operation, maintenance, or use of the [Integrated Ocean Observing] System, or use of data products provided though the System.” NOAA encourages individuals with expertise in oceanographic data, products, and services; coastal management; fisheries management; coastal and marine spatial planning; geodesy; water levels; and other science-related fields to submit applications for Committee membership. To apply for membership on the Committee, applicants should submit a resume as indicated in the
Application materials should be sent to the address, email address, or fax number specified and must be received by November 24, 2014.
Submit an application for Committee membership, in the form of a resume, to Jessica Snowden via mail, fax, or email. Mail: 1100 Wayne Avenue, Suite 1225, Silver Spring, MD 20910; Fax: 301-427-2073; Email:
Jessica Snowden, 1100 Wayne Avenue, Suite 1225, Silver Spring, MD 20910; Telephone: 301-427-2453, Fax: 301-427-2073; Email:
This notice responds to the ICOOS Act of 2009 (Pub. L. 111-11, section 12304), which requires the Under Secretary of Commerce for Oceans and Atmosphere to solicit nominations for Committee membership. The Committee will advise the NOAA Administrator or Interagency Ocean Observation Committee on matters related to the responsibilities and authorities set forth in section 12302 of the ICOOS Act of 2009 and other appropriate matters as the Under Secretary refers to the Committee for review and advice.
The United States Integrated Ocean Observing System Advisory Committee will provide advice on:
(a) Administration, operation, management, and maintenance of the System;
(b) Expansion and periodic modernization and upgrade of technology components of the System;
(c) Identification of end-user communities, their needs for information provided by the System, and the System's effectiveness in dissemination information to end-user communities and to the general public; and
(d) Any other purpose identified by the Under Secretary of Commerce for Oceans and Atmosphere or the Interagency Ocean Observation Committee.
The Committee's voting members will be appointed by the Under Secretary of Commerce for Oceans and Atmosphere. Members shall be qualified by education, training, and experience to evaluate scientific and technical information related to the design, operation, maintenance, or use of the System, or the use of data products provided through the System. Members are selected on a standardized basis, in accordance with applicable Department of Commerce guidance. Members will be appointed for three-year terms, renewable once. One Committee member will be designated by the Under Secretary as chairperson. Full-time officers or employees of the United States may not be appointed as a voting member. Members will be appointed as special Government employees (SGEs) for purposes of section 202(a) of title 18, United States Code. Members serve at the discretion of the Under Secretary and are subject to government ethics standards. Members of the Committee will not be compensated for service on the Committee, but they may be allowed travel expenses, including per diem in lieu of subsistence, in accordance with subchapter I of chapter 57 of title 5, United States Code.
The Committee will meet at least once each year, and at other times at the call of the Under Secretary, the Interagency Ocean Observation Committee, or the Committee Chairperson. The Committee has approximately thirteen voting members. This solicitation is to obtain candidate applications for up to thirteen full voting member vacancies. Be advised that some voting members whose terms expire August 28, 2015 may be reappointed for another full term if eligible.
If an applicant submitted a resume application for the 2011
Upon selection and agreement to serve on the United States Integrated Ocean Observing System Advisory Committee, one becomes a Special Government Employee (SGE) of the United States Government. An SGE is an officer or employee of an agency who is retained, designated, appointed, or employed to perform temporary duties, with or without compensation, for not to exceed 130 days during any period of 365 consecutive days, either on a full-time or intermittent basis. After the membership selection process is complete, applicants who are selected to serve on the Committee must complete the following actions before they can be appointed as a
(a) Background Security Check (on-line Background Security Check process and fingerprinting conducted through NOAA Workforce Management); and
(b) Confidential Financial Disclosure Report: As an SGE, one is required to file annually a Confidential Financial Disclosure Report to avoid involvement in a real or apparent conflict of interest. One may find the Confidential Financial Disclosure Report at the following Web site:
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; issuance of an incidental take authorization.
In accordance with the Marine Mammal Protection Act (MMPA) regulations, notification is hereby given that NMFS has issued an Incidental Harassment Authorization (IHA) to the United States Coast Guard (USCG) to take, by harassment, small numbers of seven species of marine mammals incidental to pile driving associated with the USCG's Station Monterey waterfront repair project in Monterey, California, between June 1, 2015, through September 1, 2015.
Effective October 1, 2014, through September 30, 2015.
A copy of the application containing a list of the references used in this document, USCG's Environmental Assessment (EA), Finding of No Significant Impact (FONSI), and the IHA may be obtained by telephoning the contact listed below (see
Documents cited in this notice may be viewed, by appointment, during regular business hours, at 1315 East West Highway, Silver Spring, MD 20910.
Shane Guan, Office of Protected Resources, NMFS, (301) 427-8401.
Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
An authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s), will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant), and if the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such takings are set forth. NMFS has defined “negligible impact” in 50 CFR 216.103 as “an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.”
Except with respect to certain activities not pertinent here, the MMPA defines “harassment” as: any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild [Level A harassment]; or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering [Level B harassment].
On June 27, 2013, NMFS received an application from USCG for the taking of marine mammals incidental to its Station Monterey waterfront repairs project. The purpose of the proposed activity is to improve and maintain the structural integrity of the patrol boat pier (Pier) and potable waterline at USCG Station Monterey through the replacement of Pier piles and the water line. On March 12, 2014, NMFS published a
A notice of NMFS' proposal to issue an IHA to USCG was published in the
The
General information on the marine mammal species found in the vicinity of the project area in Washington waters can be found in Caretta
The effects of underwater noise from in-water pile driving and pile removal associated with the waterfront repair activities at the USCG's Station Monterey has the potential to result in Level B (behavioral) harassment of marine mammal species and stocks in the vicinity of the action area. The Notice of Proposed IHA included a discussion of the effects of anthropogenic noise on marine mammals, which is not repeated here. No instances of hearing threshold shifts, injury, serious injury, or mortality are expected as a result of USCG's activities given the strong likelihood that marine mammals would avoid the immediate vicinity of the pile driving area.
The primary potential impacts to marine mammals and other marine species are associated with elevated sound levels, but the project may also result in additional effects to marine mammal prey species and short-term, local water turbidity caused by in-water construction due to pile removal and pile driving. These potential effects are discussed in detail in the
In order to issue an incidental take authorization (ITA) under section 101(a)(5)(D) of the MMPA, NMFS must set forth the permissible methods of taking pursuant to such activity, and other means of effecting the least practicable impact on such species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of such species or stock for taking for certain subsistence uses (where relevant).
For the proposed USCG Station Monterey waterfront repair activities, NMFS requires that USCG implement the following mitigation measures to minimize the potential impacts to marine mammals in the project vicinity.
Bubble curtains for noise attenuation will be used during all impact pile driving to interrupt the acoustic pressure and reduce the impact on marine mammals. By reducing underwater sound pressure levels at the source, bubble curtains would reduce the area over which both Level A and B harassment would occur, thereby potentially reducing the numbers of marine mammals affected.
With the bubble curtain system in place, the exclusion zone within which marine mammal injury could occur is eliminated.
Work would occur only during daylight hours when visual monitoring of marine mammals can be implemented.
Before the commencement of in-water pile driving activities, USCG shall establish Level B behavioral harassment zones of influence (ZOIs) where received underwater sound pressure levels (SPLs) are higher than 160 dB (rms) and 120 dB (rms) re 1 µPa for impulse noise sources (impact pile driving) and non-impulses noise sources (vibratory pile driving and mechanic dismantling), respectively. The modeled maximum isopleths for ZOIs are listed in Table 1.
Once the underwater acoustic measurements are conducted during initial test pile driving, USCG shall adjust the size of the ZOIs, and monitor these zones as described under the Proposed Monitoring section below.
NMFS-approved protected species observers (PSOs) shall conduct initial survey of the exclusion zones to ensure that no marine mammals are seen within the zones before impact pile driving of a pile segment begins. If marine mammals are found within the exclusion zone, impact pile driving of the segment would be delayed until they move out of the area. If a marine mammal is seen above water and then dives below, the contractor would wait 15 minutes for pinnipeds and harbor porpoise and 30 minutes for gray and killer whales. If no marine mammals are seen by the observer in that time it can be assumed that the animal has moved beyond the exclusion zone. These criteria are based on scientific evidence that harbor seals in San Francisco Bay dive for a mean time of 0.50 minutes to 3.33 minutes (Harvey and Torok, 1994), and the mean diving duration for harbor porpoises ranges from 44 to 103 seconds (Westgate
A “soft-start” technique is intended to allow marine mammals to vacate the area before the pile driver reaches full power. For vibratory hammers, the contractor will initiate the driving for 15 seconds at reduced energy, followed by a 1-minute waiting period when there has been downtime of 30 minutes or more. This procedure shall be repeated two additional times before continuous driving is started. This procedure would also apply to vibratory pile extraction.
For impact driving, an initial set of three strikes would be made by the hammer at 40 percent energy, followed by a 1-minute waiting period, then two subsequent three-strike sets before initiating continuous driving.
Although no marine mammal exclusion zone exists due to the implementation of noise attenuation devices (i.e., bubble curtain), USCG
NMFS has carefully evaluated the applicant's proposed mitigation measures and considered a range of other measures in the context of ensuring that NMFS prescribes the means of effecting the least practicable impact on the affected marine mammal species and stocks and their habitat. Our evaluation of potential measures included consideration of the following factors in relation to one another:
• The manner in which, and the degree to which, the successful implementation of the measure is expected to minimize adverse impacts to marine mammals.
• The proven or likely efficacy of the specific measure to minimize adverse impacts as planned.
• The practicability of the measure for applicant implementation.
Any mitigation measure(s) prescribed by NMFS should be able to accomplish, have a reasonable likelihood of accomplishing (based on current science), or contribute to the accomplishment of one or more of the general goals listed below:
(1) Avoidance or minimization of injury or death of marine mammals wherever possible (goals 2, 3, and 4 may contribute to this goal).
(2) A reduction in the numbers of marine mammals (total number or number at biologically important time or location) exposed to received levels of pile driving and pile removal or other activities expected to result in the take of marine mammals (this goal may contribute to 1, above, or to reducing harassment takes only).
(3) A reduction in the number of times (total number or number at biologically important time or location) individuals would be exposed to received levels of pile driving and pile removal, or other activities expected to result in the take of marine mammals (this goal may contribute to 1, above, or to reducing harassment takes only).
(4) A reduction in the intensity of exposures (either total number or number at biologically important time or location) to received levels of pile driving, or other activities expected to result in the take of marine mammals (this goal may contribute to a, above, or to reducing the severity of harassment takes only).
(5) Avoidance or minimization of adverse effects to marine mammal habitat, paying special attention to the food base, activities that block or limit passage to or from biologically important areas, permanent destruction of habitat, or temporary destruction/disturbance of habitat during a biologically important time.
(6) For monitoring directly related to mitigation—an increase in the probability of detecting marine mammals, thus allowing for more effective implementation of the mitigation.
Based on our evaluation of the applicant's proposed measures, as well as other measures considered by NMFS, NMFS has determined that the proposed mitigation measures provide the means of effecting the least practicable impact on marine mammals species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.
In order to issue an ITA for an activity, section 101(a)(5)(D) of the MMPA states that NMFS must set forth, “requirements pertaining to the monitoring and reporting of such taking.” The MMPA implementing regulations at 50 CFR 216.104 (a)(13) indicate that requests for ITAs must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and of the level of taking or impacts on populations of marine mammals that are expected to be present in the proposed action area. USCG submitted a marine mammal monitoring plan as part of the IHA application. The plan can be found at
Monitoring measures prescribed by NMFS should accomplish one or more of the following general goals:
(1) An increase in the probability of detecting marine mammals, both within the mitigation zone (thus allowing for more effective implementation of the mitigation) and in general to generate more data to contribute to the analyses mentioned below;
(2) An increase in our understanding of how many marine mammals are likely to be exposed to levels of pile driving that we associate with specific adverse effects, such as behavioral harassment, temporary threshold shift (TTS), or permanent threshold shift (PTS); and
(3) An increase in our understanding of how marine mammals respond to stimuli expected to result in take and how anticipated adverse effects on individuals (in different ways and to varying degrees) may impact the population, species, or stock (specifically through effects on annual rates of recruitment or survival) through any of the following methods:
Behavioral observations in the presence of stimuli compared to observations in the absence of stimuli (need to be able to accurately predict received level, distance from source, and other pertinent information);
Physiological measurements in the presence of stimuli compared to observations in the absence of stimuli (need to be able to accurately predict received level, distance from source, and other pertinent information);
Distribution and/or abundance comparisons in times or areas with concentrated stimuli versus times or areas without stimuli;
(4) An increased knowledge of the affected species; and
(5) An increase in our understanding of the effectiveness of certain mitigation and monitoring measures.
USCG shall employ NMFS-approved protected species observers (PSOs) to conduct marine mammal monitoring for its Station Monterey waterfront repair project.
Before the start of the waterfront repair work, baseline biological monitoring shall be conducted to survey the potential Level A and B harassment zones on 2 separate days within 1 week before the first day of construction. Biological information collected during baseline monitoring will be used for comparison with results of monitoring during pile driving and removal activities.
Monitoring of marine mammals around the construction site shall be conducted using high-quality binoculars (
Marine mammal visual monitoring shall be conducted from the best vantage point available, including the USCG pier, jetty, adjacent docks within the harbor, to maintain an excellent view of the exclusion zone and adjacent areas during the survey period. Monitors would be equipped with radios or cell phones for maintaining contact with work crews.
Vessel-based visual marine mammal monitoring within the 120 dB and 160 dB ZOIs shall be conducted during 10% of the vibratory pile driving and removal and impact pile driving activities, respectively.
Data collection during marine mammal monitoring will consist of a count of all marine mammals by species, a description of behavior (if
USCG would be required to submit weekly monitoring reports that summarize the monitoring results, construction activities and environmental conditions to NMFS.
A final report would be submitted to NMFS within 90 days after completion of the proposed project.
In addition, NMFS requires USCG to notify NMFS' Office of Protected Resources and NMFS' Stranding Network within 48 hours of sighting an injured or dead marine mammal in the vicinity of the construction site. USCG shall provide NMFS with the species or description of the animal(s), the condition of the animal(s) (including carcass condition if the animal is dead), location, time of first discovery, observed behaviors (if alive), and photo or video (if available).
In the event that an injured or dead marine mammal is found by USCG that is not in the vicinity of the Station Monterey construction site, USCG would report the same information as listed above as soon as operationally feasible to NMFS.
Except with respect to certain activities not pertinent here, the MMPA defines “harassment” as: any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild [Level A harassment]; or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering [Level B harassment].
As discussed above, in-water pile driving (vibratory and impact) and pile removal generate loud noises that could potentially harass marine mammals in the vicinity of the USCG's proposed Station Monterey waterfront repair.
Currently NMFS uses 120 dB re 1 µPa and 160 dB re 1 µPa at the received levels for the onset of Level B harassment for non-impulse (vibratory pile driving and removal) and impulse sources (impact pile driving) underwater, respectively. For airborne noises, NMFS uses 90 dB re 20 µPa and 100 dB re 20 µPa at the received levels for the onset of Level B harassment for harbor seal and all pinnipeds except harbor seal, respectively. Table 2 summarizes the current NMFS marine mammal take criteria.
The take calculations presented here relied on the best data currently available for marine mammal populations at the jetty and in the nearby waters of Monterey Bay. The population data used are discussed in each species take calculation subsection below. The formula below was developed for calculating take due to pile driving and is applied to each group-specific noise impact threshold. The formula is founded on the following assumptions:
• All piles to be installed would have a noise disturbance distance equal to the pile that causes the greatest noise disturbance (
• It is estimated that an average of two or three piles will be installed and removed per day. The best estimate of the number of days during which pile driving would occur is 10 days, and this was used in all modeling calculations.
• Mitigation (
• An individual animal can only be taken once per method of installation during a 24 hour period.
The calculation for marine mammal take uses the following formula:
Multiplying n × ZOI produces an estimate of the abundance of animals that could be present in the area of exposure per day. The final take estimate must be a whole number; therefore, values are rounded up to the next whole number.
The ZOI impact is the estimated range of noise impact for a given threshold. Because the work will be conducted near the jetty, underwater noise is not expected to spread spherically from the source. Underwater noise contours were therefore modeled using SoundPlan. The contours were then imported to ArcGIS to calculate the area within the contours and determine the ZOI for each threshold. The ZOI for vibratory pile driving encompasses the area out to the 120 dB isopleth (Level B threshold), while the ZOI for impact driving encompasses the area out to the 160 dB isopleth (Level B threshold). It is assumed that an underwater noise attenuation system, such as a bubble curtain with an estimated 10 dB attenuation, would be used as a mitigation measure. However, the actual attenuation that will be achieved in the field is unknown and would likely vary with each installation.
Airborne noise would spread spherically from the source; therefore, the ZOI for airborne impacts was calculated as the area within a circle (Area = pi × radius
Although 10 days of total in-water work are proposed, pile extraction or driving would only occur periodically in that time, as described in earlier in this document. An average work day (beginning 2 hours after sunrise and ending 2 hours before sunset) is approximately 8 to 9 hours, depending on the month. Although it is anticipated that only 30 to 70 minutes would be spent pile driving per day, to take into account deviations from the estimated times for pile installation and extraction—and to account for the additional use of the impact pile driver in case of failure of the vibratory hammer to reach the desired embedment depth—the potential impacts were modeled as if the entire day could be spent pile driving.
The exposure assessment methodology estimates the number of individuals that would be exposed, because of pile extraction and driving activities, to noise levels that exceed established NMFS thresholds. Results of the acoustic impact exposure assessments should be regarded as conservative estimates that are strongly influenced by limited biological data. Although the numbers generated from the pile driving exposure calculations provide estimates of marine mammal exposures for consideration by NMFS, the short duration and limited extent of the repairs would limit actual exposures.
Based on the modeling results presented above, it is estimated that up to 2,099 Level B harassment takes of various species due to underwater and airborne noise from impact pile driving operations, and up to 2,849 Level B harassment takes of various species from vibratory pile driving and removal due to underwater and airborne noise. A summary of the take estimates is provided in Table 3.
Negligible impact is “an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival” (50 CFR 216.103). A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (i.e., population-level effects). An estimate of the number of Level B harassment takes, alone, is not enough information on which to base an impact determination. In addition to considering estimates of the number of marine mammals that might be “taken” through behavioral harassment, NMFS must consider other factors, such as the likely nature of any responses (their intensity, duration, etc.), the context of any responses (critical reproductive time or location, migration, etc.), as well as the number and nature of estimated Level A harassment takes, the number of estimated mortalities, and effects on habitat.
The USCG's proposed Station Monterey waterfront repair project would conduct pile driving and pile removal activities. Elevated underwater noises are expected to be generated as a result of pile driving and pile removal. However, USCG would use noise attenuation devices (i.e., bubble curtain) during the impact pile driving, thus eliminating potential for injury (PTS) and TTS. For vibratory pile driving and pile removal, noise levels are not expected to reach to the level that may cause TTS, injury (PTS included), or mortality to marine mammals. Therefore, NMFS does not expect that any animals would experience Level A (including injury) harassment or Level B harassment in the form of TTS from being exposed to in-water pile driving and pile removal associated with USCG construction project.
In addition, the USCG's proposed activities are localized and of short duration. The entire project area is limited to the USCG's Station Monterey pier and jetty. The entire waterfront repair project would replace 17 timber piles with small 14-inch steel pipe piles. The entire duration for pile driving is expected to be fewer than 10 days, assuming driving two piles per day. The duration for driving each pile would be about 20 to 25 minutes (vibratory or impact). These low intensity, localized, and short-term noise exposures may cause brief startle reactions or short-term behavioral modification by the animals. These reactions and behavioral changes are expected to subside quickly when the exposures cease. Additionally, no important feeding and/or reproductive areas for marine mammals are known to be near the proposed action area. Therefore, the take resulting from the proposed Station Monterey waterfront repair project is not reasonably expected to, and is not reasonably likely to, adversely affect the marine mammal species or stocks through effects on annual rates of recruitment or survival. Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the proposed monitoring and mitigation measures, NMFS finds that the total marine mammal take from USCG Station Monterey waterfront repair will have a negligible impact on the affected marine mammal species or stocks.
Based on analyses provided above, it is estimated that approximately 4,231 California sea lions, 70 Pacific harbor seals, 77 harbor porpoises, 6 Eastern North Pacific offshore or West coast transient killer whales (or a combination of both stocks), 10 Risso's dolphins, 10 bottlenose dolphins, and 6 gray whales could be exposed to received noise
Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the mitigation and monitoring measures, NMFS finds that small numbers of marine mammals will be taken relative to the populations of the affected species or stocks.
There are no relevant subsistence uses of marine mammals implicated by this action. Therefore, NMFS has determined that the total taking of affected species or stocks would not have an unmitigable adverse impact on the availability of such species or stocks for taking for subsistence purposes.
No species listed under the ESA are expected to be affected by these activities. Therefore, NMFS has determined that a section 7 consultation under the ESA is not required.
In January 2014, the USCG prepared a Final Environmental Assessment for Waterfront Repairs at United States Coast Guard Station Monterey, Monterey, California (EA) and provided supplement information on July 30, 2014. NMFS has reviewed the EA and concluded that the environmental consequences analyzed are reflect NMFS' action of issuance of an IHA to USCG. Therefore, NMFS determined to adopt the USCG EA and will not prepare its own EA or EIS for this action.
NMFS has issued an IHA to USCG for the potential harassment of small numbers of marine mammal species incidental to its waterfront repair project at Station Monterey in California, provided the previously mentioned mitigation, monitoring, and reporting requirements are incorporated.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of extension of public comment period.
NMFS is announcing an extension to the public comment period for the amended permit to authorize the incidental, but not intentional, take of two stocks of marine mammals listed as threatened or endangered under the Endangered Species Act (ESA), under the Marine Mammal Protection Act (MMPA), by the California (CA) thresher shark/swordfish drift gillnet fishery (>14 in mesh) and the Washington (WA)/Oregon (OR)/CA sablefish pot fishery. On August 25, 2014, NMFS solicited comments from the public on the draft negligible impact determination and on the proposal to issue a permit to vessels that operate in these fisheries for the taking of affected endangered stocks of marine mammals.
NMFS is extending the comment period for 30 days.
Information and comments must be received by close of business on October 24, 2014.
The draft amended Negligible Impact Determination and list of references contained in this notice are available in electronic form via the Internet at:
You may submit comments, identified by NOAA-NMFS-2013-0073, by any of the following methods:
•
•
Monica DeAngelis, NMFS West Coast Region, (562) 980-3232, or Shannon Bettridge, NMFS Office of Protected Resources, (301) 427-8402.
Section 101(a)(5)(E) of the MMPA, 16 U.S.C. 1361
NMFS proposes to issue an amended permit under MMPA section 101(a)(5)(E) to vessels registered in the CA thresher shark/swordfish drift gillnet fishery (>14 in mesh) to incidentally take individuals from two
The data for considering these authorizations were reviewed coincident with the 2014 MMPA List of Fisheries (LOF; 79 FR 14418, March 14, 2014), final 2013 U.S. Pacific Marine Mammal Stock Assessment (SAR; Carretta
Section 101(a)(5)(E)(i) of the MMPA requires NMFS to provide notice and opportunity for public comment on the proposed permit.
NMFS wants to provide adequate opportunity for review of all documents considered in making a negligible impact determination. Although NMFS believed all documents would be available to the public at the time we solicited comments on the draft negligible impact determination and on the proposal to issue the permit (79 FR 50626, August 25, 2014), the Moore and Barlow (in press) paper has not yet been published and made available for public review. Publication of the paper is imminent and NMFS has decided to extend the comment period to allow for publication of the paper and subsequent review of the paper for comments relevant to this proposed MMPA permit issuance. In this notice NMFS is extending the public comment period until October 24, 2014, to allow adequate time for the public to review the scientific information relevant to the amended permit under MMPA section 101(a)(5)(E) to vessels registered in the CA thresher shark/swordfish drift gillnet fishery (≥ in mesh) and vessels registered in WA/OR/CA sablefish pot fishery.
To ensure that the amended permit under MMPA section 101(a)(5)(E) is based on the best scientific information available, we are soliciting public comments on the proposed permit and the preliminary determinations supporting the permit. Specifically, we seek comments on:
First Responder Network Authority, National Telecommunications and Information Administration, U.S. Department of Commerce.
Notice and request for comments.
The First Responder Network Authority (“FirstNet”) publishes this
Submit comments on or before October 24, 2014.
The public is invited to submit written comments to this
Eli Veenendaal, First Responder Network Authority, National Telecommunications and Information Administration, U.S. Department of Commerce, 12201 Sunrise Valley Drive, M/S 243, Reston, VA 20192; 703-648-4167; or
The Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 112-96, Title VI, 126 Stat. 256 (codified at 47 U.S.C. 1401
One of FirstNet's principal first steps in carrying out this responsibility under the Act is the issuance of open, transparent, and competitive requests for proposals (“RFPs”) for the purposes of building, operating, and maintaining the network. We have and will continue to seek public comments on many technical and economic aspects of these RFPs through traditional procurement processes, including requests for information (“RFIs”) and potential draft RFPs, prior to issuance of final RFPs.
As a newly created entity, however, we are also confronted with many complex legal issues of first impression under the Act that will have a material impact on the RFPs, responsive proposals, and our operations going forward. Generally, the Administrative Procedure Act (“APA”)
Nevertheless, although excluded from these procedural requirements, FirstNet desires to solicit public comment on, in addition to technical and economic issues, certain foundational legal issues to guide our efforts in achieving our mission. The solicitation of comments on proposed legal interpretations and related implementations is more typically performed in a notice and comment process, rather than within an RFI or RFP process, including publication in the more widely accessed
Thus, in general FirstNet may pursue APA-like public notice and comment processes such as this
With respect to this
Where we have sought comment on a matter in this
Section 6202(a) of the Act charges FirstNet with the duty to “ensure the establishment of a nationwide, interoperable public safety broadband network . . . based on a single, national network architecture. . . .”
Under the state and local implementation provisions of Section 6302, however, a State may, subject to the application process described in 6302(e), choose to conduct its own deployment of a radio access network in such State, including issuing requests for proposals for the construction, maintenance, and operation of the radio access network within the State.
Section 6202(b) of the Act defines the FirstNet “core network” as providing the connectivity between the radio access network and the public Internet
Section 6202(b) defines the “radio access network” as consisting of all cell site equipment, antennas, and backhaul equipment required to enable wireless communications with devices using the public safety broadband spectrum.
We seek comments on our preliminary conclusions regarding the definitions of core network and radio access network above, including the delineation of elements between them and any possible ramifications that would result based on this construct with respect to the achievement of FirstNet's mission, particularly if a State elects to opt-out and build their own radio access network.
The Act clearly indicates that the NPSBN is intended primarily for use by public safety entities. Section 6101(a) of the Act generally directs the Federal Communications Commission (the “Commission”) to reallocate the 700 MHz D block spectrum “for use
We note that FirstNet may, as a policy matter, decide to narrow the scope of users it actually serves relative to those it can legally serve if it determines it is reasonable and appropriate to do so in support of its mission. We also recognize that, even among the multiple user groups who are allowed to use the NPSBN, separate priority and preemption parameters will be established. In the future and following appropriate consultations, we will fully address the priority and preemptive use of and access to the NPSBN among the various user groups. Prior to that, we address below the specific types of users that FirstNet is statutorily authorized to serve on the NPSBN.
In determining who is legally authorized to use the NPSBN it is helpful to first examine whether the Act expressly precludes any specific user group. We preliminarily conclude that the Act does not contain a list of expressly precluded users. Section 6212, discussed more fully in the next section of this
To reach this conclusion, we first look to the sections of the Act involving the imposition of fees to provide greater clarity about the users authorized to use the NPSBN. Section 6208(a)(1) permits FirstNet to charge “user or subscription” fees to “each entity,
Thus, although this provision explicitly identifies public safety entities and secondary users as entities for which FirstNet may charge user or subscription fees, it does appear to leave open the possibility of a group of other, unspecified entities as NPSBN users to which FirstNet may charge a network user fee, and thus presumably provide service. For example, Section 6302(f) further authorizes FirstNet to charge opt-out States “user fees” associated with use of FirstNet's core network.
A public safety entity is defined in Section 6001(26) of the Act as an “entity that provides public safety services.”
Public safety services, in turn, are defined in the Act as having “the meaning given the term in section 337(f) of the Communications Act of 1934 [the
The Communications Act defines “public safety services” to mean services:
(A) the sole or principal purpose of which is to protect the safety of life, health or property; (B) that are provided by (i) State or local government entities, or (ii) by non-governmental organizations that are authorized by a governmental entity whose primary mission is the provision of such services; and (C) that are not made commercially available to the public by the provider.
This prong of the definition of public safety services defines these services by referencing both the purpose of the services and those entities that provide them. However, the Communications Act's definition of public safety services has historically been applied not in the context of determining entities that provide services, but rather to restrict or define the particular services that can be provided over limited-use spectrum. In contrast, the Act purports to define an entity, rather than a service, as one that performs certain services.
Accordingly, the definition of public safety entity under the Act will turn on the services being provided by the entity, with the definition of such services under the Communications Act turning on both (1) the nature of the services and (2) the entity providing them. In the case of a service in general, an entity may perform different kinds of services, only some of which may qualify as public safety services. In the case of a public safety entity as defined in the Act, however, there is no “primary mission” restriction on the entity as there is in the Communications Act definition of public safety services. Nevertheless, when we consider just the Communications Act prong of the definition of public safety services in the Act, a public safety entity under the Act may be limited, by definition, to the entities referenced in the Communications Act definition of public safety services.
To aid our interpretation of the Act, we have examined how the Commission has interpreted this Communications Act definition. On July 21, 2011, the Commission issued an Order interpreting Section 337(f) in connection with permissible uses of the 763-768 MHz and 793-798 MHz public safety broadband spectrum, which is now a portion of the spectrum licensed to FirstNet.
(1) Entities supporting airport operations when “ensuring the routine safety of airline passengers, crews, and airport personnel and property in a complex air transportation environment.”
(2) Transportation departments in the design and maintenance of roadways, the installation and maintenance of traffic signals and signs, and other activities that affect the safety of motorists and passengers.
(3) City planning departments to ensure compliance with building and zoning codes intended to protect the safety of life and property.
(4) Entities protecting the safety of animals, homes, and city infrastructure, particularly in crisis situations.
We give deference to the conclusions reached by the Commission in its interpretation of Section 337(f)(1) to inform our interpretation of “public safety services” as defined in the Act. Thus, we preliminarily conclude that entities providing the services described in the Commission's Order, above, would qualify as public safety entities for purposes of the Act. We seek comment on this preliminary conclusion. We also seek comment on other entities and services that should so qualify.
Section 337(f)(1)(B)(ii) also provides that public safety services can be performed “by non-governmental organizations that are authorized by a governmental entity whose primary mission is the provision of such services.”
In order to understand which non-governmental entities under Section 337 would qualify as public safety entities, one must first identify the types of governmental entities whose primary mission is the provision of public safety services, as these entities can, in turn, authorize non-governmental organizations to provide public safety services under Section 337(f)(1)(b)(ii). Section 337(f) of the Communications Act refers to such entities as “a governmental entity whose primary mission is the provision of [public safety] services.”
Section 6001(27) of the Act states that public safety services are not only services defined in Section 337 of the Communications Act, but also are services provided by “emergency response providers” as that term is
Thus, under the Act, a public safety entity is also an entity performing the services performed by “emergency response providers.” The inclusion in the Act of the HSA definition arguably expands the list of potential public safety services beyond that provided in the definition in Section 337 of the Communications Act, in that the HSA definition does not include a “primary mission” limitation and specifically identifies “personnel” in addition to agencies and authorities as emergency response providers. The HSA definition thus raises the question as to whether a public safety “entity” under the Act can be a person in addition to an organization.
In reaching this preliminary conclusion, we also note that while the definition of public safety services under Section 337(f) of the Communications Act is limited to those services “the sole or principal purpose of which is to protect the safety of life, health, or property,” such a limitation is not present in the HSA definition, or in the definition of public safety entity in the Act itself. Thus, when read in totality, the Act does not limit the definition of public safety entity to those entities that solely, or even primarily, provide such services, given the HSA Section 2 component of the definition. Congress limited the definition of public safety entity in the Communications Act, but, given the incorporation of HSA Section 2 into the Act, we preliminarily conclude that Congress imposed no such limitation here. As a result, the Act does not appear to require any minimum amount of time that an entity must provide public safety services in order to qualify as a public safety entity under the Act. We thus preliminarily conclude that, so long as an entity performs a non
Finally, HSA Section 2 indicates that “emergency response providers” include not only “Federal, State, and local governmental and nongovernmental emergency public safety, fire, law enforcement, emergency response, emergency medical (including hospital emergency facilities) . . . personnel, agencies, and authorities” but also “
(1) Any Federal, State, and local governmental and nongovernmental emergency public safety, fire, law enforcement, emergency response, and emergency medical (including hospital emergency facilities) personnel, agencies, and authorities; and
(2) Personnel, agencies, and authorities providing support to Federal, State, and local governmental and nongovernmental emergency public safety, fire, law enforcement, emergency response, emergency medical (including hospital emergency facilities) personnel, agencies, and authorities.
We seek comments on these preliminary conclusions and on which specific personnel, agencies, and authorities might then qualify as “related” or providing support to the Federal, State, and local governmental and nongovernmental personnel, agencies, and authorities listed in the HSA definition.
As discussed above, the term “secondary user” is also expressly used in the Act to describe a particular category of FirstNet user. Although there is no express definition of secondary user in the Act, Section 6208(a)(2), which addresses covered leasing agreements with “secondary users,” could be interpreted to implicitly define a secondary user as one that “access[es] . . . network capacity on a secondary basis,” or, as Section 6208(a)(2) goes on to provide, “access[es] . . . network capacity on a secondary basis
In the context of the Act, the “secondary basis” is presumably “secondary” to use by public safety entities, which would be considered primary users. Because FirstNet believes certain public safety users will themselves ultimately be subject to prioritization and/or preemption by other public safety users, FirstNet does not believe the “secondary basis” referenced in the Act can be defined solely as those users subject to such prioritization or preemption. Indeed, certain public safety entities may, at times, be performing preemptable public safety services or preemptable non-public safety services.
The references to secondary users provided in Sections 6212 and 6302(g) also do not appear to be conclusive as to whether secondary users include users other than those that enter into covered leasing agreements, which is the only explicit arrangement identified within the Act describing a secondary use of the NPSBN.
A definition limiting secondary users to non-public safety use would be consistent with our preliminary approach, discussed in the previous section, regarding the definition of public safety user, whereby the definition of that term includes any entity that performs public safety services at any time in any non-
We also note that, in addition to the fee for leasing network capacity under a covered leasing agreement which can be charged under Section 6208(a)(2), the Act, under section 6208(a)(1), permits FirstNet to charge secondary users a network user fee for using or accessing the NPSBN.
As discussed above, we preliminarily conclude that Section 6208(a)(1) permits FirstNet to charge a fee to a category of user beyond public safety entities and secondary users. We seek comments on which potential users could fall into this category.
As previously discussed, FirstNet is permitted to assess or collect certain fees related to the services that it offers. Sections 6208 and 6302 specifically permit us to assess and collect: (1) Network user fees from users seeking access to or use of the NPSBN; (2) fees associated with covered leasing agreements; (3) fees related to the leasing of our network equipment and infrastructure; and (4) user fees from opt-out States that seek use of elements of our core network.
The Act does not define the word “consumer” or indicate whether the word is limited to individuals or includes organizations and businesses. In contrast, the Act does provide a specific, multi-pronged definition of public safety entity, as noted above. As a result of this contrast, we preliminarily conclude that regardless how “consumer” is defined, Section 6212 was not intended to limit potential types of public safety entities that may use or access the NPSBN for commercial telecommunications or information services.
In addition, under the rule of construction outlined in subsection 6212(b), nothing in Section 6212 is intended to prohibit FirstNet from entering into covered leasing agreements with secondary users, and thus we preliminarily conclude that Section 6212 at the very least does not act as a limitation on secondary users in the context of covered leasing agreements. We also preliminarily conclude that, given the definition of secondary user discussed above, Section 6212 was not intended to limit the pool of secondary users seeking access to or use of the network on a secondary basis. We seek comments on these preliminary conclusions.
Thus, we preliminarily conclude that a “consumer” under the Act is neither a public safety entity nor a secondary user. Further, given the express authorizations in Section 6302(f) for FirstNet to impose user fees on opt-out States, and in Section 6208(a)(3) to impose lease fees on entities that seek access to or use of equipment or infrastructure, we also preliminarily conclude that such States and entities are not intended to qualify as a consumer (which would otherwise disqualify them as a user subject to fee assessments) when seeking access to or use of the core network, and equipment and infrastructure, respectively. We also seek comments on the kinds of services that this provision is intended to preclude FirstNet from otherwise offering and the scope of the limitations imposed by the provision. For example, we note that we are expressly authorized to enter into covered leasing agreements that would presumably permit the secondary user involved to provide commercial services, including potentially telecommunications or information services, directly to consumers.
For purposes of interpreting the Act with respect to FirstNet's potential service offerings,
FirstNet interprets Section 6302(g)(1) to mean that States cannot offer commercial services to consumers and can only lease network capacity through a public-private partnership for the purposes of in-state construction, maintenance, operation and
Section 6206(b)(1)(B) requires FirstNet to issue “open, transparent, and competitive” RFPs.
FirstNet, however, is not expressly excluded from the applicability of the Federal Acquisition Regulation (“FAR”), codified in 48 CFR Parts 1-99. The FAR is the primary regulation for use by all Federal Executive agencies in their acquisition of supplies and services with appropriated funds. Assuming application of the FAR, we preliminarily conclude that in complying with the FAR in such instances, FirstNet will satisfy the requirements of Section 6206(b)(1)(B). The FAR provides that “the Federal Acquisition System will . . . promote competition . . . [and] conduct business with integrity, fairness, and openness.”
We also seek comments more generally on the appropriate interpretation of the “open, transparent, and competitive” standard of Section 6206(b)(1)(B) in this context, including how that standard should be interpreted in light of the Act's use of a “fair, transparent, and objective” standard in Section 6205(b)(1).
Section 6206(b)(1)(B) requires FirstNet to issue RFPs for the purposes of building, operating, and maintaining the network that use, without materially changing, the minimum technical requirements developed by the Interoperability Board.
Section 6206(b)(3) directs that FirstNet “shall require deployment phases with substantial
Although the Act does not define the term “rural,” we believe we must define this term to fulfill our duties with regard to the important rural coverage requirements in the Act.
Therefore, we preliminarily conclude that we should define “rural” as having the same meaning as “rural area” in Section 601(b)(3) of the Rural Electrification Act of 1936, as amended (“Rural Electrification Act”).
Further, FirstNet intends to use the proposed definition of “rural” for purposes of implementing the “substantial rural coverage milestones” as set forth in Section 6206(b)(3). We seek comments on how to interpret the terms “substantial rural coverage milestones” and how to implement this requirement. For example, we seek comments regarding whether the terms “substantial rural coverage” should be defined only in terms of geographic coverage, or whether other factors, such as population or the frequency of first responder activity in an area, should be included. In addition, we seek comments on whether we should define a separate term for a frontier or wilderness area that would bound the term rural in connection with provisions of the Act. For example, we seek comment on whether a population density below a five person per square mile or lower standard should be considered frontier, rather than rural, for purposes of the Act.
Finally, Section 6206(c)(1)(A)(ii), as discussed above, explains that FirstNet “shall develop . . . requests for proposals with appropriate . . . coverage areas, including coverage in rural and
The Act encourages FirstNet to consider leveraging existing infrastructure when “economically desirable.”
Section 6206(b)(1)(C) appears to relate to issuing RFPs referenced in 6206(b)(1)(B) and requires FirstNet to “
Section 6206(b)(3) states that with regard to FirstNet's issuing requests for proposals, “such
Section 6206(c)(3) states that FirstNet, in carrying out the requirements of subsection (b), which include, but are not limited to, issuing RFPs, “shall
We note, however, that, as discussed above in this
Each of these sections, as stated above, requires FirstNet to leverage existing infrastructure to the extent it is “economically desirable.” We seek comments on an appropriate definition of and approach to assessing what is “economically desirable,” and the factors that should be considered, and by whom, in each of the sections imposing the standard. For example, in weighing economic desirability with respect to the speed of rural deployment, we seek comments on how to balance costs with speed.
In addition, we seek comments on the distinctions between the various types of existing infrastructure referenced in the three sections: Commercial wireless infrastructure; commercial mobile providers; commercial infrastructure; other communications infrastructure; and Federal, State, tribal, or local infrastructure. For example, we seek comments on whether the term “commercial mobile provider” should exclude resellers or other non-facilities-
Section 6208(a) authorizes FirstNet to assess and collect three sets of fees notwithstanding Section 337 of the Communications Act.
Sections 6208(a)(1) and 6302(f) provide the authority and describe the circumstances under which FirstNet may assess and collect network user fees for access to and use of the NPSBN.
As previously discussed, Section 6208(a)(1) of the Act authorizes FirstNet to assess and collect a network user or subscription fee from each entity, including public safety entities and secondary users, that seeks access to or use of the NPSBN.
Section 6302(f) requires that a State choosing to build its own radio access network rather than participating in the FirstNet proposed network for that State, must pay any user fees associated with state use of elements of the core network.
In addition to user fees, FirstNet is able to charge fees for secondary use of network capacity. Section 6208(a)(2) provides for “lease fees” resulting from a public-private arrangement between FirstNet and a secondary user, which permits access to network capacity on a secondary basis for non-public safety services, including through “spectrum allocated to such” secondary user.
With regard to the specific definition of a CLA, we first note that the Act contemplates a “public-private arrangement,” and thus preliminarily conclude that the arrangement must be between FirstNet and a “private” entity, with that entity being the “secondary user” provided in the preamble to Section 6208(a)(2)(B).
The “arrangement” described in Section 6208(a)(2)(B) is one “to construct, manage, and operate the [NSPBN].”
Therefore, FirstNet's preliminary conclusion is that there is no minimum amount, other than a
For the same reasons as stated above, we preliminarily conclude that a secondary user is not required to
We preliminarily conclude that use of the word “permit” in the definition of CLA indicates that an absolute requirement, such as through use of the term “requires,” is not contemplated. Thus, we preliminarily conclude that the technical architecture of a CLA would, at a minimum, have to allow use as described in Section 6208(a)(2)(B)(i) and (B)(ii). For example, with respect to (B)(ii) and as discussed more fully below, local traffic of a secondary user not requiring long-haul transmission could be communicated locally without satisfying (B)(ii), and without violating the definition of a CLA overall.
We also preliminarily conclude that the reference to “network capacity” in item (B)(i) of the definition of CLA is a generic statement referring to the combination of spectrum and network elements, as defined by the Act and discussed in this
Section 6208(a)(2)(B)(i) permits private entities that enter into CLAs with FirstNet access to such network capacity “on a secondary basis for non-public safety services.”
With respect to item (B)(ii) of the definition, we preliminarily conclude that all or a portion of the FirstNet Band 14 spectrum can be allocated for secondary use by a CLA lessee because the phrase, “the spectrum allocated to such entity” does not appear to require any minimum amount of such spectrum to be allocated. This interpretation would provide FirstNet with maximum flexibility in marketing excess network capacity.
Further, according to item (B)(ii), the CLA lessee can use that spectrum to originate or terminate to or from a “long-haul” network utilized by the CLA lessee. Because the term “long-haul” network has less meaning in the context of information services, rather than regulated voice services, we preliminarily conclude that, without limitation, a “long-haul” network could be one that traverses traditional Local Access Transport Area boundaries, but other interpretations and more expansive boundaries are possible. We seek comments on this preliminary conclusion.
We also preliminarily conclude that the reference to “dark fiber” cannot literally be interpreted as such because, once transporting traffic, the fiber would no longer be “dark.” Thus, FirstNet preliminarily concludes that the reference should be interpreted to allow the covered lessee to transport such traffic on otherwise previously dark fiber facilities. We seek comments on this preliminary conclusion, and on any alternative interpretations requiring the use of dark fiber of a long network, or previously unused capacity on lit fiber of a long haul network.
Given the complexity of this provision, we seek comments on both our specific preliminary conclusions above as well as the provision generally, including any alternative interpretations, the potential policy goals underlying the provision's inclusion in the Act, the ramifications of alternative interpretations to the value of CLAs, and any technical impediments to implementing the above preliminary or alternative interpretations.
Section 6208(a)(3) provides for lease fees related to network equipment and infrastructure.
Section 6208(a)(3) defines the scope of eligible equipment or infrastructure for which FirstNet may charge a fee to include “
Any non-public oral presentation to FirstNet regarding the substance of this
Department of Defense.
Notice.
The Department of Defense is publishing this notice to announce an
Tuesday, October 21, 2014, from 8:30 a.m. to 5:00 p.m.
901 N. Stuart Street, Suite 200, Arlington, VA 22203.
Dr. Anne Andrews, SERDP Office, 4800 Mark Center Drive, Suite 17D08, Alexandria, VA 22350-3605; or by telephone at (571) 372-6565.
This meeting is being held under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C. Appendix, as amended), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), and 41 CFR 102-3.150. This notice is published in accordance with Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463).
Pursuant to 5 U.S.C. 552b and 41 CFR 102-3.140 through 102-3.165, and the availability of space, this meeting is open to the public. Seating is on a first-come basis.
The purpose of the October 21, 2014 meeting is to review new start research and development projects requesting Strategic Environmental Research and Development Program funds as required by the SERDP Statute, U.S. Code—Title 10, Subtitle A, Part IV, Chapter 172, § 2904. The full agenda follows:
Pursuant to 41 CFR 102-3.140, and section 10(a)(3) of the Federal Advisory Committee Act of 1972, the public or interested organizations may submit written statements to the Strategic Environmental Research and Development Program, Scientific Advisory Board. Written statements may be submitted to the committee at any time or in response to an approved meeting agenda.
All written statements shall be submitted to the Designated Federal Officer (DFO) for the Strategic Environmental Research and Development Program, Scientific Advisory Board. The DFO will ensure that the written statements are provided to the membership for their consideration. Contact information for the DFO can be obtained from the GSA's FACA Database at
Time is allotted at the close of each meeting day for the public to make comments. Oral comments are limited to 5 minutes per person.
Department of Defense.
Notice of meeting.
The Department of Defense is publishing this notice to announce the following Federal Advisory Committee meeting of the Judicial Proceedings since Fiscal Year 2012 Amendments Panel (“the Judicial Proceedings Panel” or “the Panel”). The meeting is open to the public.
A meeting of the Judicial Proceedings Panel will be held on Friday, October 10, 2014. The Public Session will begin at 8:45 a.m. and end at 5:00 p.m.
The Holiday Inn Arlington at Ballston, Glebe and Fairfax Ballrooms, 4610 N. Fairfax Drive, Arlington, Virginia 22203.
Ms. Julie Carson, Judicial Proceedings Panel, One Liberty Center, 875 N. Randolph Street, Suite 150, Arlington, VA 22203. Email:
This public meeting is being held under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C., Appendix, as amended), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), and 41 CFR 102-3.150.
U.S. Strategic Command, DoD.
Notice to amend a System of Records.
The U.S. Strategic Command is amending a system of records notice in its existing inventory of record systems subject to the Privacy Act of 1974, as amended. The system notice is FSTRATCOM 02, entitled “Joint Satellite Communications (SATCOM) Management Enterprise (JSME).” This system collects and maintains authorized users and points of contact for account management, internal housekeeping, access control, need-to-know determinations, and operational requirements for satellite communications.
Comments will be accepted on or before October 24, 2014. This proposed action will be effective the day following the end of the comment period unless comments are received which result in a contrary determination.
You may submit comments, identified by docket number and title, by any of the following methods:
*
*
Mr. Mike Vance, U.S. Strategic Command (USSTRATCOM) J663, 901 SAC Boulevard, Suite 3J11, Offutt Air Force Base, NE 68113-6020; telephone (402) 232-5527.
The U.S. Strategic Command systems of records notices subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended, have been published in the
Joint Satellite Communications (SATCOM) Management Enterprise (JSME) (June 20, 2012, 77 FR 37006)
Delete entry and replace with “PERMANENT. Transfer physical custody of electronic records to the National Archives for pre-accessioning 5 years after cutoff. Transfer legal custody of electronic records to the National Archives 25 years after cutoff, after declassification review.”
Office of Special Education and Rehabilitative Services (OSERS), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 3501
Interested persons are invited to submit comments on or before November 24, 2014.
Comments submitted in response to this notice should be submitted electronically through the Federal eRulemaking Portal at
For specific questions related to collection activities, please contact Ed West, 202-245-6145.
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
Office of Management (OM), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 3501
Interested persons are invited to submit comments on or before November 24, 2014.
Comments submitted in response to this notice should be submitted electronically through the Federal eRulemaking Portal at
For specific questions related to collection activities, please contact Elise Cook, 202-401-3769.
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
National Advisory Committee on Institutional Quality and Integrity (NACIQI), Office of Postsecondary Education, U.S. Department of Education.
Announcement of the time and location of a meeting.
This meeting notice is an update to the previous notice published in the
The NACIQI meeting will be held on December 11, 2014, from 8 a.m. to 5:30 p.m. at the Crowne Plaza National Airport, 1480 Crystal Drive, Arlington, VA 22202.
U.S. Department of Education, Office of Postsecondary Education, 1990 K Street NW., Room 8072, Washington, DC 20006.
Carol Griffiths, Executive Director, NACIQI, U.S. Department of Education, 1990 K Street NW., Room 8073, Washington, DC 20006-8129, telephone: (202) 219-7035, fax: (202) 502-7874, or email:
• The establishment and enforcement of the criteria for recognition of accrediting agencies or associations under Subpart 2, Part H, Title IV, of the HEA, as amended.
• The recognition of specific accrediting agencies or associations or a specific State approval agency.
• The preparation and publication of the list of nationally recognized accrediting agencies and associations.
• The eligibility and certification process for institutions of higher education under Title IV, of the HEA, together with recommendations for improvement in such process.
• The relationship between (1) accreditation of institutions of higher education and the certification and
• Any other advisory function relating to accreditation and institutional eligibility that the Secretary may prescribe.
You may also access documents of the Department published in the
20 U.S.C. 1011c.
Take notice that on September 2, 2014, Gulf Coast Synthetic Energy Center (Gulf Coast), LLC, 10877 Wilshire Boulevard, Suite 1000, Los Angeles, California 90024, filed in Docket No. CP14-546-000 an application pursuant to section 7(b) of the Natural Gas Act (NGA) requesting authorization to abandon its pipeline facilities located in Tensas and Concordia Parishes, Louisiana; and Adams County, Mississippi and its Part 157, Subpart F blanket certificate issued under Docket No. CP08-415-000, all as more fully set forth in the application which is on file with the Commission and open to public inspection. The filing may also be viewed on the web at
Any questions concerning this application may be directed to M. Benjamin Machlis, Attorney, Holland & Hart LLP, 222 South Main St., Suite 2200, Salt Lake City, UT 84101 at (801) 799-5800.
Specifically, Gulf Coast proposes to abandon approximately 17.83 miles of 6
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (FEIS) or EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS or EA.
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 stated 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 original and 7 copies of filings made with the Commission and must mail a copy to the applicant and to every other party in the proceeding. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.
However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commentors 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 commentors will not be required to serve copies of filed documents on all other parties. However, the non-party commentors 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
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
With respect to the proceeding in the above-captioned docket, the staff listed below from the Office of External Affairs are designated as non-decisional in deliberations by the Commission in this docket. Accordingly, pursuant to 18 CFR 385.2202 (2013), they will not serve as advisors to the Commission. Likewise, as non-decisional staff, pursuant to 18 CFR 385.2201 (2013), they are prohibited from communicating with advisory staff concerning any deliberations in this docket.
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:
a.
b.
c.
d. Licensee: San Diego County Water Authority.
e.
f.
g.
h. Licensee Contact: Mr. Carson Struthers, Contracts Manager, San Diego County Water Authority, 610 West 5
i.
j. Deadline for filing comments and protests is 30 days from the issuance of this notice by the Commission. Please file your submittal electronically via the Internet (eFiling) in lieu of paper. Please refer to the instructions on the Commission's Web site under
k.
l.
m. This notice is available for review and reproduction at the Commission in the Public Reference Room, Room 2A, 888 First Street NE., Washington, DC 20426. The filing may also be viewed on the Commission's Web site at
n. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.
o.
p.
q. Agency Comments—Federal, state, and local agencies are invited to file comments on the described proceeding. If any agency does not file comments within the time specified for filing comments, it will be presumed to have no comments.
Take notice that the Federal Energy Regulatory Commission (Commission), jointly with New York Public Service Commission, will hold a Commissioner-led technical conference on New York markets and infrastructure. The technical conference will take place on November 5, 2014 from approximately 9:30 a.m. to approximately 5:00 p.m. The conference will be held in the New York Institute of Technology Auditorium located at 1871 Broadway, between 61st and 62nd Streets, New York, NY 10023.
The purpose of the technical conference is to discuss issues of mutual interest and concern regarding the installed capacity market and energy infrastructure in New York. Specifically, this technical conference will provide an opportunity to review the role of New York's centralized capacity market in attracting investment and ensuring resource adequacy and reliability.
A supplemental notice will be issued prior to the technical conference with further details regarding the agenda and organization of the technical conference. Those interested in attending the technical conference are encouraged to register at the following Web page:
FERC conferences are accessible under section 508 of the Rehabilitation Act of 1973. For accessibility accommodations please send an email to
For more information about the technical conference, please contact:
On September 5, 2014, the New England Hydropower Company, LLC, filed an application for a preliminary permit, pursuant to section 4(f) of the Federal Power Act (FPA), proposing to study the feasibility of the Albion Dam Hydroelectric Project (Albion Project or project) to be located on Blackstone River, near Cumberland and Lincoln, Providence County, Rhode Island. The sole purpose of a preliminary permit, if issued, is to grant the permit holder priority to file a license application during the permit term. A preliminary permit does not authorize the permit holder to perform any land-disturbing activities or otherwise enter upon lands or waters owned by others without the owners' express permission.
The proposed project would consist of the following: (1) An existing 25-foot-high, 400-foot-long granite and stone masonry dam with a 300-foot-long stone masonry spillway; (2) an existing 55-acre impoundment with a normal storage capacity of 235 acre-feet at an operating elevation of about 87.5 feet national geodetic vertical datum; (3) a new 35-foot-long, 11.3-foot-wide, and 4-foot-deep intake canal; (4) two new 6-foot-high, 8-foot-wide hydraulically-powered sluice gates, with a new 6-foot-high, 9-foot-wide trashrack with 6-inch bar spacing; (5) a new 56-foot-long, 7.7-foot-wide Archimedes screw generator unit, with an installed capacity of 200 kilowatts; (6) a new 10-foot-high, 12-foot-long, 18-foot-wide concrete powerhouse containing the generator and a new gearbox and electrical controls; (7) a new above ground 480-foot-long, 13.8-kilovolt transmission line connecting the powerhouse to the distribution system owned by Narragansett Electric Company; and (8) appurtenant facilities. The estimated annual generation of the proposed Albion Project would be about 1,226 megawatt-hours. The existing Albion Dam and appurtenant works are owned by Rhode Island Department of Transportation.
The Commission strongly encourages electronic filing. Please file comments, motions to intervene, notices of intent, and competing applications using the Commission's eFiling system at
More information about this project, including a copy of the application, can be viewed or printed on the “eLibrary” link of Commission's Web site at
On September 5, 2014, the New England Hydropower Company, LLC, filed an application for a preliminary permit, pursuant to section 4(f) of the Federal Power Act (FPA), proposing to study the feasibility of the Ashton Dam Hydroelectric Project (Ashton Project or project) to be located on Blackstone River, near Cumberland, Providence County, Rhode Island. The sole purpose of a preliminary permit, if issued, is to grant the permit holder priority to file a license application during the permit term. A preliminary permit does not authorize the permit holder to perform any land-disturbing activities or otherwise enter upon lands or waters owned by others without the owners' express permission.
The proposed project would consist of the following: (1) An existing 20-foot-high, 400-foot-long masonry dam with a 250-foot-long main spillway and a 150-foot-long auxiliary spillway; (2) an existing 35-acre impoundment with a normal storage capacity of 112 acre-feet at an operating elevation of about 74.0 feet national geodetic vertical datum; (3) a new 100-foot-long, 28-foot-wide, and 6.5-foot-deep intake canal; (4) a new 7-foot-high, 13-foot-wide hydraulically-powered sluice gate, with a new 7-foot-high, 41-foot-wide trashrack with 6-inch bar spacing; (5) two new 32-foot-long, 13-foot-wide Archimedes screw generator units, with an installed capacity of 300 kilowatts; (6) a new 10-foot-high, 25.4-foot-long, 39-foot-wide concrete powerhouse containing the generator and a new gearbox and electrical controls; (7) a new above ground 830-foot-long, 13.8-kilovolt transmission line connecting the powerhouse to the distribution system owned by Narragansett Electric Company; and (8) appurtenant facilities. The estimated annual generation of the proposed Ashton Project would be about 1,613 megawatt-hours. The existing Ashton Dam and appurtenant works is owned by Rhode Island Department of Environmental Management.
The Commission strongly encourages electronic filing. Please file comments, motions to intervene, notices of intent, and competing applications using the Commission's eFiling system at
More information about this project, including a copy of the application, can be viewed or printed on the “eLibrary” link of Commission's Web site at
On September 16, 2014, the Commission issued an Order to Show Cause in Docket No. EL14-99-000, initiating a proceeding pursuant to section 206 of the Federal Power Act (FPA), 16 U.S.C. 824e (2012), directing ISO New England Inc. to either submit Tariff revisions providing for the review and potential mitigation of importers' offers prior to each annual Forward Capacity Auction or show cause why it should not be required to do so.
The refund effective date in Docket No. EL14-99-000, established pursuant to section 206(b) of the FPA, will be the date of publication of this notice in the
The Federal Energy Regulatory Commission (Commission) hereby gives notice that, pursuant to the November 15, 2012 Order Directing Further Conferences and Reports in Docket No. AD12-12-000,
According to the organizers of these meetings, they are open to all interested parties. Commission staff, consistent with the Commission's November 15, 2012 Order, plans to listen to these meetings as part of monitoring the progress being made within each region on natural gas and electric coordination activities. The meetings may discuss matters at issue in the above-captioned dockets.
The Federal Energy Regulatory Commission (Commission) hereby gives notice that members of the Commission's staff will attend the following meeting related to the Northern Tier Transmission Group's (NTTG) 2014-2015 regional transmission plan development:
The above-referenced meeting will be held at:
The above-referenced meeting is open to the public.
Further information may be found at:
The discussions at the meeting described above may address matters at issue in the following proceedings:
For more information, contact Michael Herbert, Office of Energy Policy and Innovation, Federal Energy Regulatory Commission at (202) 502-8929 or
Environmental Protection Agency (EPA).
Notice.
This notice announces EPA's order for amendments to terminate uses, voluntarily requested by the registrant and accepted by the Agency, of products containing pentachloronitrobenzene (PCNB), pursuant to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). This cancellation order follows a June 6, 2014
The amendments are effective September 24, 2014.
Jill Bloom, Pesticide Re-Evaluation Division (7508P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; telephone number: (703) 308-8019; email address:
This action is directed to the public in general, and may be of interest to a wide range of stakeholders including environmental, human health, and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action.
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2004-0202, is available at
This notice announces the amendments to terminate uses, as requested by the registrant, of products registered under FIFRA section 3. These registrations are listed in sequence by registration number in Table 1 of this unit.
Table 2 of this unit includes the name and address for the registrant of the products in Table 1. The company number corresponds to the first part of the EPA registration numbers of the products listed above in Table 1 of this unit.
During the public comment period provided, EPA received no comments in response to the June 6, 2014
Pursuant to FIFRA section 6(f), EPA hereby approves the requested amendments to terminate uses of the PCNB registrations identified in Table 1 of Unit II. Accordingly, the Agency hereby orders that the product registrations identified in Table 1 of Unit II. are amended to terminate the affected uses. The effective date of the amendments that are the subject of this notice is September 24, 2014. Any distribution, sale, or use of existing stocks of the products identified in Table 1 of Unit II. in a manner inconsistent with any of the provisions for disposition of existing stocks set forth in Unit VI. will be a violation of FIFRA.
Section 6(f)(1) of FIFRA provides that a registrant of a pesticide product may at any time request that any of its pesticide registrations be canceled or amended to terminate one or more uses. FIFRA further provides that, before acting on the request, EPA must publish a notice of receipt of any such request in the
Existing stocks are those stocks of registered pesticide products which are currently in the United States and which were packaged, labeled, and released for shipment prior to the effective date of the action. The existing stocks provision for the products subject to this order is as follows.
Upon publication of this order, the registrant is no longer permitted to sell or distribute the products listed in Table 1 of Unit II. of this Notice under the previously approved labeling (that is, labeling that includes the use sites for which the registrant has requested termination), except for export consistent with FIFRA section 17 or for proper disposal. The registrant will be permitted to relabel the products listed in Table 1 of Unit II. to conform with the requested use deletions as long as the registrant has verified that the products have been formulated from Technical PCNB that complies with the certified limits as amended on November 23, 2011 and June 13, 2012, and the registrant retains records demonstrating such compliance.
Use of existing stocks of products whose labels include the deleted uses is permitted until supplies are exhausted, provided that such use is consistent with the terms of the previously approved labeling on, or that accompanied, those products.
7 U.S.C. 136
Environmental Protection Agency (EPA).
Notice.
This notice announces EPA's approval of the State of New York's request to revise its EPA Administered Permit Programs: The National Pollutant
EPA's approval is effective September 24, 2014.
Karen Seeh, U.S. Environmental Protection Agency, Office of Environmental Information, Mail Stop 2823T, 1200 Pennsylvania Avenue NW., Washington, DC 20460, (202) 566-1175,
On October 13, 2005, the final Cross-Media Electronic Reporting Rule (CROMERR) was published in the
On July 11, 2014, the New York State Department of Environmental Conservation (NYSDEC) submitted an application titled “New York DEC Network Discharge Monitoring Report System (National NetDMR)” for revision/modification of its EPA-authorized Part 123 program under title 40 CFR. EPA reviewed NYSDEC's request to revise its EPA-authorized Part 123—EPA Administered Permit Programs: The National Pollutant Discharge Elimination System program and, based on this review, EPA determined that the application met the standards for approval of authorized program revision set out in 40 CFR part 3, subpart D. In accordance with 40 CFR 3.1000(d), this document of EPA's decision to approve New York's request to revise its Part 123—EPA Administered Permit Programs: The National Pollutant Discharge Elimination System program to allow electronic reporting under 40 CFR part 123 is being published in the
NYSDEC was notified of EPA's determination to approve its application with respect to the authorized program listed above.
Environmental Protection Agency.
Notice of Advisory Committee Meeting Teleconference Call.
Under the Federal Advisory Committee Act, Public Law 92-463, the Environmental Protection Agency (EPA) gives notice of a meeting of the National Advisory Committee (NAC) and Governmental Advisory Committee (GAC) to the U.S. Representative to the North American Commission for Environmental Cooperation (CEC). The National and Governmental Advisory Committees advise the EPA Administrator in her capacity as the U.S. Representative to the CEC Council. The Committees are authorized under Articles 17 and 18 of the North American Agreement on Environmental Cooperation (NAAEC), North American Free Trade Agreement Implementation Act, Public Law 103-182, and as directed by Executive Order 12915, entitled “Federal Implementation of the North American Agreement on Environmental Cooperation.” The NAC is composed of 14 members representing academia, environmental non-governmental organizations, and private industry. The GAC consists of 15 members representing state, local, and Tribal governments. The Committees are responsible for providing advice to the U.S. Representative on a wide range of strategic, scientific, technological, regulatory, and economic issues related to implementation and further elaboration of the NAAEC.
The purpose of this meeting is to provide advice on the Operational Plan of the Commission for Environmental Cooperation, traditional ecological knowledge, and to discuss other trade and environment issues in North America. The meeting will also include a public comment session. The agenda, meeting materials, and general information about NAC and GAC will be available at
The NAC/GAC will hold a public teleconference on October 23, 2014, from 1:00 p.m. to 5:30 p.m. Eastern Standard Time.
The meeting will be held at the U.S. EPA East Building, 1201 Constitution Avenue NW., Room 1132, Washington, DC 20004.
Oscar Carrillo, Designated Federal Officer,
Requests to make oral comments or to provide written comments to NAC/GAC should be sent to Oscar Carrillo at
Environmental Protection Agency.
Notice.
The Small Communities Advisory Subcommittee (SCAS) will meet via teleconference on Friday, October 10, 2014 at 11:00 a.m.-12:00 p.m. (ET). The Subcommittee will discuss recommendations regarding environmental issues affecting small communities, specifically agricultural issues and recommendations on Clean Water Act Waters of the U.S. Proposed Rule, as well as other environmental issues such as Clean Air Act Section 111(d), and other air quality issues. This is an open meeting and all interested persons are invited to participate. The Subcommittee will hear comments from the public between 11:05 a.m.-11:15 a.m. on October 10, 2014. Individuals or organizations wishing to address the Subcommittee will be allowed a maximum of five minutes to present their point of view. Also, written comments should be submitted electronically to
The Local Government Advisory Committee (LGAC) will meet via teleconference on Friday, October 10, 2014, 12:00 p.m.-1:30 p.m. (ET). The Committee will discuss recommendations of the subcommittee and LGAC workgroups including recommendations on Clean Water Act Waters of the U.S. and Clean Air Act Section 111(d) recommendations, as well as other issues important to local governments. This is an open meeting and all interested persons are invited to participate. The Committee will hear comments from the public between 12:00 p.m.-12:15 p.m. (ET) on Friday, October 10, 2014. Individuals or organizations wishing to address the Committee will be allowed a maximum of five minutes to present their point of view. Also, written comments should be submitted electronically to
EPA's Local Government Advisory Committee meetings will be held via teleconference. Meeting summaries will be available after the meeting online at
Local Government Advisory Committee (LGAC) contact Frances Eargle at (202) 564-3115 or email at
Information Services for Those with Disabilities: For information on access or services for individuals with disabilities, please contact Frances Eargle at (202) 564-3115 or
Environmental Protection Agency.
Notice of final decision.
Notice is hereby given by the U.S. Environmental Protection Agency (EPA or Agency) that modification of an exemption to the land disposal restrictions under the 1984 Hazardous and Solid Waste Amendments to the Resource Conservation and Recovery Act (RCRA) has been granted to Warner-Lambert Company (Warner-Lambert), a wholly-owned subsidiary of Pfizer, Inc., of Holland, Michigan.
This action is effective as of September 24, 2014.
Stephen Roy, Lead Petition Reviewer, EPA, Region 5, Water Division, Underground Injection Control Branch, WU-16J, Environmental Protection Agency, 77 W. Jackson Blvd., Chicago, Illinois 60604-3590; telephone number: (312) 886-6556; fax number (312) 692-2951; email address:
On April 30, 1998, EPA granted Warner-Lambert (owned by Parke-Davis Division of Warner-Lambert Company at the time) an exemption from the land disposal restrictions of the 1984 Hazardous and Solid Waste Amendments (63 FR 23786, April 30, 1998). In August 2008, Warner-Lambert submitted a request to modify the exemption to include wastes bearing four additional wastes codes. EPA received additional information on this topic in 2014.
After careful review of the material submitted, EPA has determined, as required by 40 CFR 148.20(f), that there is a reasonable degree of certainty that waste streams containing constituents designated by these codes will behave hydraulically and chemically similarly to wastes for which Warner-Lambert was granted an exemption, and will not migrate from the injection zone within 10,000 years.
A public notice of the proposed decision was issued on June 30, 2014. The public comment period expired on July 31, 2014. No comments were received. Therefore, EPA is issuing the final exemption modification as proposed.
As a result of this action and the April 30, 1998 exemption, Warner-Lambert may inject wastes bearing the RCRA waste codes D023, D024, D025 and D037 into its three injection wells in Holland, Michigan. This decision constitutes a final Agency action for which there is no administrative appeal. General conditions of this exemption are found at 40 CFR Part 148. The exemption granted to Warner-Lambert on April 30, 1998 included three conditions, all of which remain unchanged and in force.
Environmental Protection Agency (EPA).
Notice.
This notice announces the availability of EPA's draft human health and ecological risk assessments for the registration review of 2-EEEBC (debacarb) and isoxaben, and opens a public comment period on these documents. Registration review is EPA's periodic review of pesticide registrations to ensure that each pesticide continues to satisfy the statutory standard for registration, that is, the pesticide can perform its intended function without unreasonable adverse effects on human health or the environment. As part of the registration review process, the Agency has completed draft human health and ecological risk assessments, including an endangered species assessment, for all uses of the previously listed pesticide chemicals. After reviewing comments received during the public comment period, EPA will issue revised risk assessments, explain any changes to the draft risk assessments, and respond to comments and may request public input on risk mitigation before completing proposed registration review decisions for the previously listed pesticide chemicals. Through this program, EPA is ensuring that each pesticide's registration is based on current scientific and other knowledge, including its effects on human health and the environment.
Comments must be received on or before November 24, 2014.
Submit your comments, identified by docket identification (ID) number for the specific pesticide of interest provided in the table in Unit III.A., by one of the following methods:
•
•
•
This action is directed to the public in general, and may be of interest to a wide range of stakeholders including environmental, human health, farm worker, and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the Chemical Review Manager listed under
1.
2.
i. Identify the document by docket ID number and other identifying information (subject heading,
ii. Follow directions. The Agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.
iii. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.
iv. Describe any assumptions and provide any technical information and/or data that you used.
v. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.
vi. Provide specific examples to illustrate your concerns and suggest alternatives.
vii. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.
viii. Make sure to submit your comments by the comment period deadline identified.
3.
EPA is conducting its registration review of 2-EEEBC (debacarb), acephate, allethrins, chlorethoxyfos, coumaphos, daminozide, dimethoate, isoxaben, picaridin, and propoxur pursuant to section 3(g) of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the Procedural Regulations for Registration Review at 40 CFR part 155, subpart C. Section 3(g) of FIFRA provides, among other things, that the registrations of pesticides are to be reviewed every 15 years. Under FIFRA, a pesticide product may be registered or remain registered only if it meets the statutory standard for registration given in FIFRA section 3(c)(5). When used in accordance with widespread and commonly recognized practice, the pesticide product must
As directed by FIFRA section 3(g), EPA is reviewing the pesticide registrations for 2-EEEBC (debacarb) and isoxaben, to ensure that they continue to satisfy the FIFRA standard for registration—that is, that these pesticides can still be used without unreasonable adverse effects on human health or the environment.
Pursuant to 40 CFR 155.53(c), EPA is providing an opportunity, through this notice of availability, for interested parties to provide comments and input concerning the Agency's draft human health and ecological risk assessments for 2-EEEBC (debacarb) and isoxaben. Such comments and input could address, among other things, the Agency's risk assessment methodologies and assumptions, as applied to these draft risk assessments. The Agency will consider all comments received during the public comment period and make changes, as appropriate, to the draft human health and ecological risk assessments. EPA will then issue revised risk assessments, explain any changes to the draft risk assessments, and respond to comments. In the
1.
2.
3.
4.
• To ensure that EPA will consider data or information submitted, interested persons must submit the data or information during the comment period. The Agency may, at its discretion, consider data or information submitted at a later date.
• The data or information submitted must be presented in a legible and useable form. For example, an English translation must accompany any material that is not in English and a written transcript must accompany any information submitted as an audiographic or videographic record. Written material may be submitted in paper or electronic form.
• Submitters must clearly identify the source of any submitted data or information.
• Submitters may request the Agency to reconsider data or information that the Agency rejected in a previous review. However, submitters must explain why they believe the Agency should reconsider the data or information in the pesticide's registration review.
As provided in 40 CFR 155.58, the registration review docket for each pesticide case will remain publicly accessible through the duration of the registration review process; that is, until all actions required in the final decision on the registration review case have been completed.
7 U.S.C. 136
Environmental Protection Agency (EPA).
Notice.
EPA has granted emergency exemptions under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) for use of pesticides as
Lois Rossi, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2014-0335, is available at
EPA has granted emergency exemptions to the following State and Federal agencies. The emergency exemptions may take the following form: Crisis, public health, quarantine, or specific.
Under FIFRA section 18, EPA can authorize the use of a pesticide when emergency conditions exist. Authorizations (commonly called emergency exemptions) are granted to State and Federal agencies and are of four types:
1. A “specific exemption” authorizes use of a pesticide against specific pests on a limited acreage in a particular State. Most emergency exemptions are specific exemptions.
2. “Quarantine” and “public health” exemptions are emergency exemptions issued for quarantine or public health purposes. These are rarely requested.
3. A “crisis exemption” is initiated by a State or Federal agency (and is confirmed by EPA) when there is insufficient time to request and obtain EPA permission for use of a pesticide in an emergency.
EPA may deny an emergency exemption: If the State or Federal agency cannot demonstrate that an emergency exists, if the use poses unacceptable risks to the environment, or if EPA cannot reach a conclusion that the proposed pesticide use is likely to result in “a reasonable certainty of no harm” to human health, including exposure of residues of the pesticide to infants and children.
If the emergency use of the pesticide on a food or feed commodity would result in pesticide chemical residues, EPA establishes a time-limited tolerance meeting the “reasonable certainty of no harm standard” of the Federal Food, Drug, and Cosmetic Act (FFDCA).
In this document: EPA identifies the State or Federal agency granted the exemption, the type of exemption, the pesticide authorized and the pests, the crop or use for which authorized, and the duration of the exemption.
7 U.S.C. 136
Environmental Protection Agency (EPA).
Notice.
This notice announces the availability of EPA's proposed interim registration review decisions for public comment. Registration review is EPA's periodic review of pesticide registrations to ensure that each pesticide continues to satisfy the statutory standard for registration, that is, that the pesticide can perform its intended function without unreasonable adverse effects on human health or the environment. Through this program, EPA is ensuring that each pesticide's registration is based on current scientific and other knowledge, including its effects on human health and the environment.
Comments must be received on or before November 24, 2014.
Submit your comments, identified by docket identification (ID) number for the specific pesticide of interest provided in the table in Unit II.A., by one of the following methods:
•
•
•
Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at
This action is directed to the public in general, and may be of interest to a wide range of stakeholders including environmental, human health, farm worker, and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the Chemical Review Manager for the pesticide of interest identified in the table in Unit II.A.
1.
2.
i. Identify the document by docket ID number and other identifying information (subject heading,
ii. Follow directions. The Agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.
iii. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.
iv. Describe any assumptions and provide any technical information and/or data that you used.
v. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.
vi. Provide specific examples to illustrate your concerns and suggest alternatives.
vii. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.
viii. Make sure to submit your comments by the comment period deadline identified.
Pursuant to 40 CFR 155.58, this notice announces the availability of EPA's proposed interim registration review decisions for the pesticides shown in the table in this unit, and opens a 60-day public comment period on the proposed interim decisions.
The registration review docket for a pesticide includes earlier documents related to the registration review of the case. For example, the review typically opens with a summary document, containing a Preliminary Work Plan, for public comment. A final Work Plan is placed in the docket following public comment on the initial docket. The documents in the dockets describe EPA's rationales for conducting additional risk assessments, as well as the Agency's subsequent risk findings and consideration of possible risk mitigation measures. A proposed registration review decision will be supported by the rationales included in those documents. Following public comment on a proposed decision, the Agency will issue an interim registration review decision.
The registration review program is being conducted under congressionally mandated time frames, and EPA recognizes the need both to make timely decisions and to involve the public. Section 3(g) of FIFRA (7 U.S.C. 136a(g)) required EPA to establish by regulation procedures for reviewing pesticide registrations, originally with a goal of reviewing each pesticide's registration every 15 years to ensure that a pesticide continues to meet the FIFRA standard for registration. The Agency's final rule to implement this program was issued in August 2006 and became effective in October 2006, and appears at 40 CFR part 155, subpart C. The Pesticide Registration Improvement Act of 2003 (PRIA) was amended and extended in September 2007. FIFRA, as amended by PRIA in 2007, requires EPA to complete registration review decisions by October 1, 2022, for all pesticides registered as of October 1, 2007.
The registration review final rule at 40 CFR 155.58(a) provides for a minimum 60-day public comment period on all proposed registration review decisions. This comment period is intended to provide an opportunity for public input and a mechanism for initiating any necessary amendments to the proposed decision. All comments should be submitted using the methods in
The Agency will carefully consider all comments received by the closing date and will provide a “Response to Comments Memorandum” in the docket as appropriate. The final registration review decision will explain the effect that any comments had on the decision.
Background on the registration review program is provided at:
Section 3(g) of FIFRA (7 U.S.C. 136a(g)) and 40 CFR part 155, subpart C, provide authority for this action.
7 U.S.C. 136
Environmental Protection Agency (EPA).
Notice.
This notice announces EPA's order for the cancellations, voluntarily requested by the registrants and accepted by the Agency, of the products listed in Table 1 of Unit II., pursuant to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). This cancellation order follows an August 6, 2014
The cancellations are effective September 24, 2014.
John W. Pates, Jr., Pesticide Re-Evaluation Division (7508P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; telephone number: (703) 308-8195; email address:
This action is directed to the public in general, and may be of interest to a wide range of stakeholders including environmental, human health, and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action.
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2009-1017, is available at
This notice announces the cancellation, as requested by registrants, of products registered under FIFRA section 3. These registrations are listed in sequence by registration number in Table 1 of this unit.
Table 2 of this unit includes the names and addresses of record for all registrants of the products in Table 1 of this unit, in sequence by EPA company number. This number corresponds to the first part of the EPA registration numbers of the products listed in Table 1 of this unit.
During the public comment period provided, EPA received no comments in response to the August 6, 2014
Pursuant to FIFRA section 6(f), EPA hereby approves the requested cancellations of the registrations identified in Table 1 of Unit II. Accordingly, the Agency hereby orders that the product registrations identified in Table 1 of Unit II. are canceled. The effective date of the cancellations that are the subject of this notice is September 24, 2014. Any distribution, sale, or use of existing stocks of the products identified in Table 1 of Unit II. in a manner inconsistent with any of the provisions for disposition of existing stocks set forth in Unit VI. will be a violation of FIFRA.
Section 6(f)(1) of FIFRA provides that a registrant of a pesticide product may at any time request that any of its pesticide registrations be canceled or amended to terminate one or more uses. FIFRA further provides that, before acting on the request, EPA must publish a notice of receipt of any such request in the
Existing stocks are those stocks of registered pesticide products which are currently in the United States and which were packaged, labeled, and released for shipment prior to the effective date of the cancellation action. The existing stocks provisions for the products subject to this order are as follows.
The registrants may continue to sell and distribute existing stocks of products listed in Table 1 of Unit II. until September 24, 2015, which is 1 year after the publication of the Cancellation Order in the
7 U.S.C. 136
Environmental Protection Agency (EPA).
Notice; correction.
EPA issued a notice in the
John W. Pates, Jr., Pesticide Re-Evaluation Division (7508P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; telephone number: (703) 308-8195; email address:
The Agency included in the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2009-1017, is available at
FR Docs. 2014-18961 and 2014-12922 published in the
1. On pages 47456 and 32290, respectively, second column, under the heading B. For Products (007969-00057, 007969-00085, and 007969-00224), paragraph 1, sentences 3 and 4, correct “Thereafter, registrants, and persons other than registrants, are prohibited from selling or distributing existing stocks of products containing vinclozolin identified in Table 1 of Unit II., except for export consistent with FIFRA section 17 or for proper disposal. Existing stocks of products containing vinclozolin already in the hands of users can be used legally until such stocks are exhausted, provided that the use is consistent with the terms of the previously approved labeling on, or that accompanied, the cancelled products” to read “Thereafter, registrants are prohibited from selling and distributing existing stocks of products containing vinclozolin identified in Table 1 of Unit II., except for export consistent with FIFRA section 17 or for proper disposal. Persons other than registrants may sell, distribute, or use existing stocks of products listed in Table 1 of Unit II. until such stocks are exhausted, provided that such sale, distribution, or use is consistent with the terms of the previously approved labeling on, or that accompanied, the canceled products.”
7 U.S.C. 136
Environmental Protection Agency (EPA).
Notice.
This notice announces the availability of EPA's final registration review decisions. Registration review is EPA's periodic review of pesticide registrations to ensure that each pesticide continues to satisfy the statutory standard for registration, that is, that the pesticide can perform its intended function without causing unreasonable adverse effects on human health or the environment. Through this program, EPA is ensuring that each pesticide's registration is based on current scientific and other knowledge, including its effects on human health and the environment.
This action is directed to the public in general, and may be of interest to a wide range of stakeholders including environmental, human health, farm worker, and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action. If you have any questions regarding the applicability of this action to a particular entity, consult the pesticide specific contact person listed under
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2014-0651, is available at
Pursuant to 40 CFR 155.58(c), this notice announces the availability of EPA's final registration review decision for dioctyl sodium sulfosuccinate (Case 4029), polybutene resins (Case 4076), and undecylenic acid (Case 4095) and interim decisions for ancymidol (Case 3017), DEET (Case 0002), denatonium saccharide (Case 7625), and metofluthrin (Case 7445).
In addition to the final and interim registration review decision document, the registration review dockets for ancymidol, DEET, denatonium saccharide, dioctyl sodium sulfosuccinate, metofluthrin, polybutene resins, and undecylenic acid also include other relevant documents related to the registration review of these cases. The proposed registration review decisions or interim decisions were posted to the respective dockets and the public was invited to submit any comments or new information. EPA is addressing the comments or information received during the 60-day comment period in the discussion for each pesticide listed in this document, see Unit II. for the discussions.
Pursuant to 40 CFR 155.57, a registration review decision is the Agency's determination whether a pesticide meets, or does not meet, the standard for registration in FIFRA. EPA has considered Ancymidol, DEET, Denatonium Saccharide, Dioctyl Sodium Sulfosuccinate, Metofluthrin, Polybutene Resins, and Undecylenic Acid in light of the FIFRA standard for registration. The Ancymidol, DEET, Denatonium Saccharide, Dioctyl Sodium Sulfosuccinate, Metofluthrin, Polybutene Resins, and Undecylenic Acid Final or Interim Decision documents in the respective dockets describe the Agency's rationale for issuing a registration review final or interim decision for these pesticides.
Pursuant to 40 CFR 155.58(c), the registration review case docket for Ancymidol, DEET, Denatonium Saccharide, Dioctyl Sodium Sulfosuccinate, Metofluthrin, Polybutene Resins, and Undecylenic Acid will remain open until all actions required in the final decision have been completed.
Background on the registration review program is provided at:
Section 3(g) of FIFRA and 40 CFR part 155, subpart C, provide authority for this action.
7 U.S.C. 136
Environmental Protection Agency (EPA).
Notice.
With this document, EPA is opening the public comment period for several registration reviews. Registration review is EPA's periodic review of pesticide registrations to ensure that each pesticide continues to satisfy the statutory standard for registration, that is, the pesticide can perform its intended function without unreasonable adverse effects on human health or the environment. Registration review dockets contain information that will assist the public in understanding the types of information and issues that the Agency may consider during the course of registration reviews. Through this program, EPA is ensuring that each pesticide's registration is based on current scientific and other knowledge, including its effects on human health and the environment. This document also announces registration review case closures for 3 H-1,2 Dithiol-3-one,4,5,-dichloro- (RHY-86) (case 5033) and tepraloxydim (case 7257). In addition, this document announces the Agency's intent not to open registration review cases for mepanipyrim (case 7042) and vinclozolin (case 2740) because there are no longer any active registrations containing either of these chemicals. The two case closures and the Agency's intent not to open two registration review cases being announced herein are not open for public comment.
Comments must be received on or before November 24, 2014.
Submit your comments identified by the docket identification (ID) number for the specific pesticide of interest provided in the table in Unit III.A., by one of the following methods:
•
•
•
Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at
This action is directed to the public in general, and may be of interest to a wide range of stakeholders including environmental, human health, farmworker, and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action.
1.
2.
i. Identify the document by docket ID number and other identifying information (subject heading,
ii. Follow directions. The Agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.
iii. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.
iv. Describe any assumptions and provide any technical information and/or data that you used.
v. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.
vi. Provide specific examples to illustrate your concerns and suggest alternatives.
vii. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.
viii. Make sure to submit your comments by the comment period deadline identified.
3.
EPA is initiating its reviews of the pesticides identified in this document pursuant to section 3(g) of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the Procedural Regulations for Registration Review at 40 CFR part 155, subpart C. Section 3(g) of FIFRA provides, among other things, that the registrations of pesticides are to be reviewed every 15 years. Under FIFRA, a pesticide product may be registered or remain registered only if it meets the statutory standard for registration given in FIFRA section 3(c)(5). When used in accordance with widespread and commonly recognized practice, the pesticide product must perform its intended function without unreasonable adverse effects on the environment; that is, without any unreasonable risk to man or the environment, or a human dietary risk from residues that result from the use of a pesticide in or on food.
As directed by FIFRA section 3(g), EPA is reviewing the pesticide registrations identified in the table in this unit to assure that they continue to satisfy the FIFRA standard for registration—that is, they can still be used without unreasonable adverse effects on human health or the environment. A pesticide's registration review begins when the Agency establishes a docket for the pesticide's registration review case and opens the docket for public review and comment. At present, EPA is opening registration review dockets for the cases identified in the following table.
This notice also announces two case closures and the Agency's intent not to open a registration review case for two additional chemicals. The registration review case for 3 H-1,2 Dithiol-3-one,4,5-dichloro- (RYH-86) (case 5033) is being closed for non-payment of maintenance fees for the last two remaining registrations. The tepraloxydim (case 7257) registration review case is being closed because the last products were canceled in the
1.
• An overview of the registration review case status.
• A list of current product registrations and registrants.
•
•
• Risk assessments.
• Bibliographies concerning current registrations.
• Summaries of incident data.
• Any other pertinent data or information.
Each docket contains a document summarizing what the Agency currently knows about the pesticide case and a preliminary work plan for anticipated data and assessment needs. Additional documents provide more detailed information. During this public comment period, the Agency is asking that interested persons identify any additional information they believe the Agency should consider during the registration reviews of these pesticides. The Agency identifies in each docket the areas where public comment is specifically requested, though comment in any area is welcome.
2.
3.
• To ensure that EPA will consider data or information submitted, interested persons must submit the data or information during the comment period. The Agency may, at its discretion, consider data or information submitted at a later date.
• The data or information submitted must be presented in a legible and useable form. For example, an English translation must accompany any material that is not in English and a written transcript must accompany any information submitted as an audiographic or videographic record. Written material may be submitted in paper or electronic form.
• Submitters must clearly identify the source of any submitted data or information.
• Submitters may request the Agency to reconsider data or information that the Agency rejected in a previous review. However, submitters must explain why they believe the Agency
As provided in 40 CFR 155.58, the registration review docket for each pesticide case will remain publicly accessible through the duration of the registration review process; that is, until all actions required in the final decision on the registration review case have been completed.
7 U.S.C. 136
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The FCC may not conduct or sponsor a collection of information unless it displays a currently valid control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid Office of Management and Budget (OMB) control number.
Written PRA comments should be submitted on or before November 24, 2014. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Cathy Williams, FCC, via email
For additional information about the information collection, contact Cathy Williams at (202) 418-2918.
(1) The reasons why it is considered that such agreement is in the public interest;
(2) A statement that its application was not filed for the purpose of reaching or carrying out such agreement;
(3) A certification that neither the applicant nor its principals has received any money or other consideration in excess of the legitimate and prudent expenses of the applicant; Provided That this provision shall not apply to bona fide merger agreements;
(4) The exact nature and amount of any consideration paid or promised;
(5) An itemized accounting of the expenses for which it seeks reimbursement; and
(6) The terms of any oral agreement relating to the dismissal or withdrawal of its application.
(b) Whenever two or more conflicting applications for construction permits for broadcast stations pending before the FCC involve a determination of fair, efficient and equitable distribution of service pursuant to section 307(b) of the Communications Act, and an agreement is made to procure the withdrawal (by amendment to specify a different community or by dismissal pursuant to § 73.3568) of the only application or applications seeking the same facilities for one of the communities involved, all parties thereto shall file the joint request and affidavits specified in paragraph (a) of this section.
(1) If upon examination of the proposed agreement the FCC finds that withdrawal of one of the applications would unduly impede achievement of a fair, efficient and equitable distribution of radio service among the several States and communities, then the FCC shall order that further opportunity be afforded for other persons to apply for the facilities specified in the application or applications to be withdrawn before acting upon the pending request for approval of the agreement.
(2) Upon release of such order, any party proposing to withdraw its application shall cause to be published a notice of such proposed withdrawal at least twice a week for 2 consecutive weeks within the 3-week period immediately following release of the FCC's order, in a daily newspaper of general circulation published in the community in which it was proposed to locate the station. However, if there is no such daily newspaper published in the community, the notice shall be published as follows:
(i) If one or more weekly newspapers of general circulation are published in the community in which the station was proposed to be located, notice shall be published in such a weekly newspaper once a week for 3 consecutive weeks within the 4-week period immediately following the release of the FCC's order.
(ii) If no weekly newspaper of general circulation is published in the community in which the station was proposed to be located, notice shall be published at least twice a week for 2 consecutive weeks within the 3-week period immediately following the release of the FCC's order in the daily newspaper having the greatest general circulation in the community in which the station was proposed to be located.
(3) The notice shall state the name of the applicant; the location, frequency and power of the facilities proposed in the application; the location of the station or stations proposed in the applications with which it is in conflict; the fact that the applicant proposes to withdraw the application; and the date upon which the last day of publication shall take place.
(4) Such notice shall additionally include a statement that new applications for a broadcast station on the same frequency, in the same community, with substantially the same engineering characteristics and proposing to serve substantially the same service area as the application sought to be withdrawn, timely filed pursuant to the FCC's rules, or filed, in any event, within 30 days from the last date of publication of the notice (notwithstanding any provisions normally requiring earlier filing of a competing application), will be entitled to comparative consideration with other pending mutually exclusive affidavits.
(5) Within 7 days of the last day of publication of the notice, the applicant proposing to withdraw shall file a statement in triplicate with the FCC giving the dates on which the notice was published, the text of the notice and the name and location of the newspaper in which the notice was published.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The FCC may not conduct or sponsor a collection of information unless it displays a currently valid control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid Office of Management and Budget (OMB) control number.
Written PRA comments should be submitted on or before November 24, 2014. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Cathy Williams, FCC, via email
For additional information about the information collection, contact Cathy Williams at (202) 418-2918.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees. The FCC may not conduct or sponsor a collection of information unless it displays a currently valid control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid Office of Management and Budget (OMB) control number.
Written PRA comments should be submitted on or before November 24, 2014. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Submit your PRA comments to Benish Shah, Federal Communications Commission, via the Internet at
Benish Shah, Office of Managing Director, (202) 418-7866.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The FCC may not conduct or sponsor a collection of information unless it displays a currently valid control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid Office of Management and Budget (OMB) control number.
Written PRA comments should be submitted on or before November 24, 2014. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Submit your PRA comments to Nicholas A. Fraser, Office of Management and Budget, via fax at 202-395-5167 or via Internet at
Benish Shah, Office of Managing Director, (202) 418-7866.
Federal Communications Commission.
Notice.
The Commission announces the next meeting date, time, and agenda of its Consumer Advisory Committee (hereinafter the “Committee”). The purpose of the Committee is to make recommendations to the Commission regarding matters within the jurisdiction of the Commission and to facilitate the participation of all consumers in proceedings before the Commission.
October 20, 2014, 9:00 a.m. to 4:00 p.m.
Federal Communications Commission, 445 12th Street SW., Commission Meeting Room, TW-C305, Washington, DC 20554.
Scott Marshall, Consumer and Governmental Affairs Bureau, (202) 418-2809 (voice or Relay), or email
This is a summary of the Commission's document DA 14-1336, released September 17, 2014, announcing the agenda, date, and time of the Committee's next meeting.
At its October 20, 2014 meeting, the Committee is expected to consider a recommendation from its Disability Working Group regarding accessibility of the Lifeline program, and a recommendation from its Consumer Protection Working Group regarding mobile device security and privacy. The Committee may also consider other recommendations from its working groups, and may receive briefings from FCC staff and outside speakers on matters of interest to the Committee. A limited amount of time will be available on the agenda for comments from the public. The public may ask questions of presenters via the email address
Other reasonable accommodations for people with disabilities are available upon request. The request should include a detailed description of the accommodation needed and contact information. Please provide as much advance notice as possible; last minute requests will be accepted, but may not be possible to fill. To request an accommodation, send an email to
Federal Maritime Commission.
Notice.
The Federal Maritime Commission (Commission) is giving public notice that the agency has submitted to the Office of Management and Budget (OMB) for approval the continuing information collections (extensions with no changes) described in this notice. The public is invited to comment on the proposed information collections pursuant to the Paperwork Reduction Act of 1995.
Written comments must be submitted at the addresses below on or before October 24, 2014 to be assured of consideration.
Comments should be addressed to:
Copies of the submission(s) may be obtained by contacting Donna Lee on 202-523-5800 or email:
Pursuant to the Paperwork Reduction Act of 1995 (Pub. L. 104-13), the Commission invites the general public and other Federal agencies to comment on proposed information collections. On June 18, 2014, the Commission published a notice and request for comments in the
In response to this notice, comments and suggestions should address one or more of the following points: (1) The necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
The Commission hereby gives notice of the filing of the following agreements under the Shipping Act of 1984. Interested parties may submit comments on the agreements to the Secretary, Federal Maritime Commission, Washington, DC 20573, within twelve days of the date this notice appears in the
Board of Governors of the Federal Reserve System.
On June 15, 1984, the Office of Management and Budget (OMB) delegated to the Board of Governors of the Federal Reserve System (Board) its approval authority under the Paperwork Reduction Act (PRA), pursuant to 5 CFR 1320.16, to approve of and assign OMB control numbers to collection of information requests and requirements conducted or sponsored by the Board under conditions set forth in 5 CFR Part 1320 Appendix A.1. Board-approved collections of information are incorporated into the official OMB inventory of currently approved collections of information. Copies of the Paperwork Reduction Act Submission, supporting statements and approved collection of information instruments are placed into OMB's public docket files. The Federal Reserve may not conduct or sponsor, and the respondent is not required to respond to, an information collection that has been extended, revised, or implemented on or after October 1, 1995, unless it displays a currently valid OMB control number.
Comments must be submitted on or before November 24, 2014.
You may submit comments, identified by FR 2004, FR 2320, FR 2644, FR H-6, FR K-1, FR K-2, FR Y-3, FR Y-3N, FR Y-4, or FR Y-3F by any of the following methods:
• Agency Web site:
• Federal eRulemaking Portal:
• Email:
• FAX: (202) 452-3819 or (202) 452-3102.
• Mail: Robert deV. Frierson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW., Washington, DC 20551.
All public comments are available from the Board's Web site at
Additionally, commenters may send a copy of their comments to the OMB Desk Officer — Shagufta Ahmed — Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235 725 17th Street NW., Washington, DC 20503 or by fax to 202-395-6974.
A copy of the PRA OMB submission, including the proposed reporting form and instructions, supporting statement, and other documentation will be placed into OMB's public docket files, once approved. These documents will also be made available on the Federal Reserve Board's public Web site at:
Federal Reserve Board Acting Clearance Officer—John Schmidt—Office of the Chief Data Officer, Board of Governors of the Federal Reserve System, Washington, DC 20551 202-452-3829. Telecommunications Device for the Deaf (TDD) users may contact 202-263-4869, Board of Governors of the Federal Reserve System, Washington, DC 20551.
The following information collections, which are being handled under this delegated authority, have received initial Board approval and are hereby published for comment. At the end of the comment period, the proposed information collections, along with an analysis of comments and recommendations received, will be submitted to the Board for final approval under OMB delegated authority. Comments are invited on the following:
a. Whether the proposed collection of information is necessary for the proper performance of the Federal Reserve's functions; including whether the information has practical utility;
b. The accuracy of the Federal Reserve's estimate of the burden of the proposed information collection, 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 information collection on respondents, including through the use of automated collection techniques or other forms of information technology; and
e. Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information.
Proposals to approve under OMB delegated authority the extension for three years, with revision, of the following reports:
1.
1. Collect data on gross positions for floating rate Treasury securities.
2. Expand reporting of corporate securities data with additional maturity groupings for both investment grade and below investment grade debt securities.
3. Expand reporting of state and municipal government obligations data with additional maturity groupings.
Add a separate row in the securities financing section of the report form to cover financing activity for asset-backed securities (ABS) collateral.
Collect data on gross positions for floating rate Treasury securities.
Collecting data on gross positions for nominal Treasury securities on the FR 2004A and B is proposed to capture position and transaction data on the newly-issued floating rate Treasury notes. The FR 2004SI, SD, and WI would be modified to capture data on new issue and on-the-run floating rate Treasury notes. Separately capturing and disseminating these data would help promote transparency in this market. In an effort to minimize burden, all Treasury FRN activity, regardless of maturity, would be combined and reported on a single line on the FR 2004A, B, SI, SD, and WI.
Expanding the maturity categories on the FR 2004A and B for both investment grade and non-investment grade corporate bonds as well as for state and local government obligations is proposed to assist market participants and other data users in better understanding the shifts in holdings and transaction volumes across the investment-grade, high-yield, and municipal credit markets, as well as the inter-market dynamics between these asset classes.
A small expansion of securities financing data through the broadening of collateral asset classes to include asset-backed securities (previously reported under the classification “other”) is proposed on the FR 2004C. The changes in financing reporting, when used in conjunction with existing tri-party and general collateral financing (GCF) repurchase agreement data, would allow for a clearer understanding of activity in the repurchase agreement markets and how holding of these securities are financed by dealers.
The Federal Reserve proposes to add four new reporting forms to the FR 2004 series (FR 2004FA, FR 2004FB, FR 2004FC, and FR 2004FM) to collect detailed data on settlement fails to receive and fails to deliver as well as accumulated outright transaction and dollar roll volume in the Federal Agency and government sponsored enterprise (GSE) MBS to-be-announced (TBA) markets. Three of these new reporting forms would focus specifically on outstanding settlement fails monthly on the specific class settlement date across the full coupon stack for each of the respective TBA and pool settlement classes as follows:
(1) FR 2004FA—Class A, 30-year Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) MBS TBA for coupons:
○ <2.5%
○ 2.5%
○ 3.0%
○ 3.5%
○ 4.0%
○ 4.5%
○ 5.0%
○ 5.5%
○ 6.0%
○ >6.0%
(2) FR 2004FB—Class B, 15-year FNMA and FHLMC MBS TBA for coupons:
○ <2.0%
○ 2.0%
○ 2.5%
○ 3.0%
○ 3.5%
○ 4.0%
○ 4.5%
○ 5.0%
○ 5.5%
○ >5.5%
(3) FR 2004FC—Class C, 30-year Government National Mortgage Association (GNMA) for coupons:
○ <2.5%
○ 2.5%
○ 3.0%
○ 3.5%
○ 4.0%
○ 4.5%
○ 5.0%
○ 5.5%
○ 6.0%
○ >6.0%
The FR 2004FM would collect as of the last business day of each month detailed data on outstanding settlement fails across the full coupon stack for all three of the respective TBA settlement classes for that month's settlement cycle.
All four proposed forms would also collect total accumulated outright TBA and specified pool transaction and dollar roll volumes separately for each of the same MBS TBA and specified pool securities and across all respective coupon rates covered in the settlement fails section of the forms.
Given the unique forward trading and settlement characteristics of the MBS TBA markets, settlement fails would continue to be a focus of concern for market participants, as a high level of settlement fails can lead to increases in operational costs due to financing and settlement fail charges, as well as raise counterparty credit risk. It also absorbs capital through regulatory charges, leads to overall market inefficiencies, and increases overall systemic risk.
The collection and public dissemination of detailed data on settlement fails for specific Federal agency and GSE MBS benchmark securities would promote increased transparency to the public by providing sufficient granularity to identify those securities contributing most significantly to elevated or persistent levels of settlement fails. Collecting outstanding fails data at two separate dates each month offers several benefits including an ability to distinguish between fails due to operational issues such as miscommunication of pool terms, pool substitutions, and daisy chain fails due to pool sorting delays, from more persistent fails still outstanding at month end and unlikely to be settled until the next monthly class settlement date. Persistent fails are often the result of insufficient incentives for a dealer that is short securities to borrow the securities required to satisfy its obligations. Prior episodes of higher and protracted settlement fails seem to be closely related to low interest rate environments. These new data would allow market participants and the broader public to more precisely monitor the settlement dynamics of this important market, allowing for a broader understanding of market functioning and trading conditions, and more generally, about the formulation and implementation of monetary policy. It would also provide information on the critical role of primary dealers in intermediating dollar roll transactions and agency MBS financing to market
Publication of aggregate data of all new data items from the FR 2004A, B, C, and SI is proposed. The expansion of published aggregate statistics would improve market transparency across the affected markets. Publication of summary aggregate statistics on MBS TBA settlement fails from the FR 2004FA, FB, FC, and FM is also proposed with the format still to be determined.
The instructions for all report series would be revised to (1) cover all new proposed data items and maturity groupings, (2) to indicate the reporting rules for Treasury FRNs on the FR 2004C report and (3) cover the reporting rules and deadlines for the new monthly report forms on MBS TBA settlement fails and transaction volumes.
2.
The Federal Reserve proposes to split current data item 4.a(2), commercial real estate loans, into four data items and renumber current data items 4.a(1) and 4.a(3) as follows:
4.a(1) Construction, land development and other land loans,
4.a(2) Secured by farmland,
4.a(3)(a) Revolving, open-end loans secured by 1-4 residential properties and extended under lines of credit,
4.a(3)(b) Closed-end loans secured by 1-4 family residential properties,
4.a(4) Secured by multifamily (5 or more) residential properties, and
4.a(5) Secured by nonfarm nonresidential properties.
Commercial real estate loans have been collected from the largest banks since 1996 and from smaller institutions starting in 2004. While the total amount of commercial real estate loans (CRE) loans has been useful, experience during the financial crisis indicated that more timely information on the subcomponents of CRE loans is necessary. According to the H.8 data, CRE loans declined about $360 billion between early 2009 and mid-2012. Such loans started to recover during the second half of 2012; however not all CRE loan segments were improving at the same pace, as Call Report data later revealed. Specifically, construction and land development loans, generally considered to be the riskiest type of CRE loans, began declining a year earlier relative to other types of CRE loans and growth in this sector also picked up a year later. More timely data in these subcategories of CRE loans would help the Federal Reserve to closely monitor changes in CRE loans trends more quickly.
The Federal Reserve proposes to split item 4.d(2), other consumer loans, into the following data items:
4.d(2) Automobile loans and
4.d(3) Other consumer loans.
Automobile loans were added to the domestic Call Reports in March 2011 as a component of other consumer loans. According to Call Report data, automobile loans have accounted for over 60 percent of the other consumer loans category, with the remainder comprised of student loans and other loans for personal expenditures. Isolating automobile loans would help the Federal Reserve ascertain movements in consumer loans other than credit cards and would provide more timely information on the availability of credit in the automobile loan market.
The Federal Reserve proposes dividing data item 4.e, all other loans and leases, into the following two data items:
4.e Loans to nondepository financial institutions and
4.f All other loans and leases.
Current data item 4.f, allowance for loan and lease losses, would be renumbered as data item 4.g.
Loans to nondepository financial institutions were added to the domestic Call Reports in March 2010 in response to an increase in the number of transactions between banks and nonbank financial institutions. Although loans to nondepository financial institutions are only a small part of total loans—about 3.5 percent as of the fourth quarter of 2013—its share has been steadily increasing since 2010 and is the fastest-growing component of other loans. Specifically, according to the Call Reports, loans to nondepository financial institutions at commercial banks increased at an annual rate of 12 and 24 percent in 2012 and 2013, respectively. Collecting this subcomponent of all other loans would provide a measure of the degree of interconnectedness between banks and nonbanks and how it evolves over time. Banks' exposures to counterparties with whom they borrow and lend funds are potential conduits for the transmission of the effects resulting from nonbanks' financial distress or activities. Thus, this data item would be useful for the Financial Stability Oversight Council as well, as this group would be monitoring on an on-going basis the interconnectedness within the financial system.
The Federal Reserve proposes to add a subcomponent of memorandum item M.1, net unrealized gains (losses) on available-for-sale securities:
M.1 Net unrealized gains (losses) on available-for-sale securities;
M.1.a Net unrealized gains (losses) on available-for-sale U.S. Treasury securities and U.S. government agency obligations, mortgage-backed securities (included in item 2.a(1) and memoranda item 1 above).
Banks are instructed to report their held-to-maturity securities at amortized cost and their available-for-sale securities at fair value on the FR 2644 reporting form. Item M.1, net unrealized gains (losses) on available-for-sale securities, had been added to the FR 2416 reporting form as of October 2, 1996 and was retained on the single reporting form in July 2009. This data item allows the Federal Reserve to estimate the book value of banks' securities. Since the FR 2644 collects four categories of securities, internal estimates of growth in securities subcomponents allocate the unrealized gains (losses) adjustment only to the largest subcomponent of securities, namely item 2.a(1), U.S. Treasury and U.S. government agency securities, mortgage-backed securities. This approach worked fairly well as a way of estimating the book value of banks' securities before the last financial crisis, because up to that point the swings in fair value largely reflected interest rate changes that moved the value of all securities in the same direction. During the financial crisis period, some of the large changes in unrealized gains (losses) on available-for-sale securities were attributable to credit impairment rather than interest rate changes and observed in the subcomponents of other securities, “mortgage-backed securities (MBS) and non-MBS.” While efforts have been made to allocate the net unrealized gains (losses) across the four categories of securities collected, no entirely satisfactory method for the allocation of net unrealized gains (losses) across all types of securities currently exists. The addition of the unrealized gains (losses) on U.S. Treasury and agency securities, MBS on the revised FR 2644 form would improve the allocation of net gains (losses) on available-for-sale securities across the remaining three securities' categories, because changes in those categories are almost always related solely to interest rate changes.
The Federal Reserve proposes to collect subcomponents of data items 4.a(5), CRE loans secured by nonfarm nonresidential properties, and 4.c, commercial and industrial loans:
M.2.a Commercial real estate loans secured by nonfarm nonresidential properties with original amounts of $1,000,000 or less (included in data item 4.a(5)) and
M.2.b Commercial and industrial loans to U.S. addressees with original amounts of $1,000,000 or less (included in data item 4.c above).
There are no timely sources of information for loans made to small businesses. Small business lending (CRE loans secured by nonfarm nonresidential properties and commercial and industrial loans to U.S. addressees with original amounts of $1,000,000 or less) accounted for approximately 8 percent of total loans as of December 2013. There has been an increasing interest in the health of small business lending and the weekly collection of this data would help the Federal Reserve more closely monitor developments in this sector.
The Federal Reserve recommends deleting the following data items from the FR 2644 report:
5.a Derivatives with a positive fair value and
10.a Derivatives with a negative fair value.
In addition, the Federal Reserve proposes to stop collecting the following three memoranda items:
Outstanding principle balance of assets sold and securitized by the reporting bank with servicing retained or with recourse or other seller-provided credit enhancements:
M.2.a Real estate loans,
M.2.b Credit card loans and other revolving credit plans, and
M.2.c Other consumer loans.
Data item 5.a, derivatives with a positive fair value, is a subcomponent of item 5, trading assets. In addition to derivatives, trading assets include other, non-security items such as certificates of deposit held for trading and gold bullion and silver. However, derivatives with a positive fair value account for 90 percent of total trading assets for domestically chartered commercial banks and 95 percent for foreign-related institutions. Total trading assets can be safely used as a proxy for derivatives, as the preponderance of the movement in this item can be attributed to derivatives. Therefore, the Federal Reserve recommends deleting this data item from the FR 2644 report.
Data item 10.a, derivatives with a negative fair value, is a subcomponent of item 10, trading liabilities. Similar to item 5.a above, these derivatives account for a high percentage of trading liabilities: 70 percent for domestically chartered banks and 88 percent for foreign-related institutions. Since item 10.a. comprises such a large portion of the total, weekly changes are typically driven by changes in derivatives with a negative fair value. Therefore, the Federal Reserve recommends deleting this data item from the FR 2644 report.
Memorandum item 2.a, outstanding principle balance of assets sold and securitized by the reporting bank with servicing retained or with recourse or other seller-provided credit enhancements: real estate loans, was added on July 4, 2007, in an attempt to capture mortgage loans sold and securitized with servicing retained by weekly reporters. However, there have been several factors leading to a substantial decline in this item:
(1) Based on the Call Report instructions, sales to the government sponsored entities (GSEs) are not included in this item, even if the GSEs later securitize the loans. This peculiarity in the instructions understates the actual amount of real estate loans that have been sold and securitized.
(2) Upcoming changes to the regulatory capital treatment of mortgage servicing rights (MSRs) under Basel III have encouraged banks to sell their MSRs to nonbanks. The sale of the MSRs reduces securitized real estate loans since it voids the link that banks have to their off-balance sheet real estate loans. Thus, the off-balance-sheet loans have been declining in volume.
(3) Due to the virtually complete shutdown of private mortgage securitization markets, banks have been selling their newly originated loans only to the GSEs, leading to a run-off in the off-balance sheet loans through pay downs and maturities.
Securitized real estate loans were about $1.46 trillion at the time of the single report form, with 93 banks on the December 2009 Call Report submitting nonzero values for this item. As of the first quarter of 2014, data corrections, sales of MSRs, and pay downs have all lowered the level of securitized real estate loans more than one-half, to about $663 billion. Moreover, only 53 banks reported positive values for this line item at the end of the last quarter. In addition, the holdings of securitized real estate loans are heavily concentrated in a few banks which update their outstanding securitized amounts quarterly based on their Call Reports.
Memoranda items 2.b and 2.c, which correspond to outstanding principle balance of assets sold and securitized by the reporting bank with servicing retained or with recourse or other seller-provided credit enhancements: credit cards and other revolving credit plans and other consumer loans, respectively, were greatly affected by banks' implementation of Financial Accounting Standards (FAS) 166/167. Under these new accounting rules, banks brought most of their off-balance sheet consumer loans onto their books. In 2009, 20 banks with off-balance sheet credit card balances and 14 with off-balance sheet other consumer loans were reporting this item. As of March 2014, just four banks were reporting off-balance sheet credit card balances and ten banks holding off-balance sheet exposures for other consumer loans. In addition, these data are available from the Call Reports and a quarterly frequency for this much smaller amount of lending activity is now appropriate. Therefore, the Federal Reserve recommends deleting these data items from the FR 2644 report.
Proposal to approve under OMB delegated authority the extension for three years, without revision, of the following reports:
1.
2.
3.
4.
5.
Estimated average hours per response:
FR Y-3, Section 3(a)(1): 49 hours;
FR Y-3, Section 3(a)(3) and 3(a)(5): 59.5 hours;
FR Y-3N, Sections 3(a)(1), 3(a)(3), and 3(a)(5): 5 hours;
FR Y-4, complete notification: 12 hours;
FR Y-4, expedited notification: 5 hours; and
FR Y-4, post-consummation: 0.5 hours.
6.
The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than October 9, 2014.
A. Federal Reserve Bank of St. Louis (Yvonne Sparks, Community Development Officer) P.O. Box 442, St. Louis, Missouri 63166-2034:
1.
B. Federal Reserve Bank of Kansas City (Dennis Denney, Assistant Vice President) 1 Memorial Drive, Kansas City, Missouri 64198-0001:
1.
General Services Administration (GSA).
Notice; Correction.
GSA is issuing a correction to Information Collection 3090-0300; Implementation of Information Technology Security Provision, which was published in the
Ms. Dana Munson, Procurement Analyst, Office of Acquisition Policy, at (202) 357-9652 or via email at
GSA, published a document in the
In rule FR Doc. 2014-21706 published in the
On page 54723, in the first column, under the heading “A. Purpose”, correct “Clause 552.237-71” with “Clause 552.239-71”
Office of the Assistant Secretary for Preparedness and Response, Department of Health and Human Services.
Notice.
The U.S. Department of Health and Human Services (HHS), Office of the Assistant Secretary for Preparedness and Response (ASPR) intends to fund an unsolicited proposal submitted by the World Health Organization (WHO) to support work towards establishing a regulatory pathway at WHO for prequalification of medical countermeasures to be deployed internationally in an emergency, which includes supporting WHO and potential recipient countries to build regulatory capacity for the import, registration, and emergency use of medical countermeasures. The goals of this Cooperative Agreement are to: (1) Using smallpox vaccines as a case study, complete product review and prequalification of smallpox vaccines included in or pledged to the WHO Smallpox Vaccine Emergency Stockpile for emergency use; (2) Establish general regulatory pathways for emergency use authorization and/or a process for emergency prequalification of emergency medical countermeasures and; (3) Support potential recipient WHO member states in building capacities for the import, registration, and emergency use of medical countermeasures.
This Cooperative Agreement directly supports several federal initiatives focused on strengthening national and international health security, including HHS's ongoing work within the Global Health Security Initiative (GHSI) to develop an operational framework for the international deployment of medical countermeasures which contemplates the legal, regulatory, and logistical issues to be considered during such a deployment as noted in the 2013 GHSI Ministerial communique.
Please submit an inquiry via the ASPR Division of Grants Management at
The Division of International Health Security within the Office of Policy and Planning in ASPR is the program office for this award.
301 42 U.S.C. 241.
The Agency for Toxic Substances and Disease Registry (ATSDR) has submitted the following information collection request to the Office of Management and
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address any of the following: (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 agencies 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; (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 submission of responses; and (e) Assess information collection costs.
To request additional information on the proposed project or to obtain a copy of the information collection plan and instruments, call (404) 639-7570 or send an email to
The Agency for Toxic Substances and Disease Registry (ATSDR) is requesting a three-year generic clearance for the Assessment of Chemical Exposures (ACE) Investigations to assist state, regional, local, or tribal health departments after toxic substance spills or chemical incidents. ACE investigations are a component of the National Toxic Substance Incidents Program (NTSIP). The NTSIP was introduced in 2010 as a comprehensive agency approach to toxic substance incident surveillance, prevention, and response. This three-part program includes a proposal for state-based surveillance for toxic substance releases, a national database of toxic substance incidents combining data from many sources, and the ACE investigations.
The ACE Investigations focus on performing rapid epidemiological assessments to assist state, regional, local, or tribal health departments (the requesting agencies) to respond to or prepare for acute chemical releases. The main objectives for performing these rapid assessments are to:
1. Characterize exposure and acute health effects of respondents exposed to toxic substances from discrete, chemical releases and determine their health statuses;
2. identify needs (i.e. medical and basic) of those exposed during the releases to aid in planning interventions in the community;
3. assess the impact of the incidents on health services use and share lessons learned for use in hospital, local, and state planning for chemical incidents; and
4. identify cohorts that may be followed and assessed for persistent health effects resulting from acute releases.
Because each chemical incident is different, it is not possible to predict in advance exactly what type of and how many respondents will need to be consented and interviewed to effectively evaluate the incident. Respondents typically include, but are not limited to emergency responders such as police, fire, hazardous material technicians, emergency medical services, and personnel at hospitals where patients from the incident were treated. Incidents may occur at businesses or in the community setting; therefore, respondents may also include business owners, managers, workers, customers, community residents, pet owners, and those passing through the affected area.
Data will be collected by the multi-disciplinary ACE team consisting of staff from ATSDR, the Centers for Disease Control and Prevention (CDC), and the requesting agencies. ATSDR has developed a series of sample survey forms that can be quickly tailored in the field to collect data that will meet the goals of the investigation. They will be administered based on time permitted and urgency. For example, it is preferable to administer the general survey to as many respondents as possible. However, if there are time constraints, the shorter Rapid Response Registry form or the household survey may be administered instead. The individual surveys collect information about exposure, acute health effects, health services use, medical history, needs resulting from the incident, communication during the release, health impact on children and pets, and demographic data. Hospital personnel are asked about the surge, response and communication, decontamination, and lessons learned. Medical chart abstractions may also be done to collect more detailed patient information. Similarly, veterinary chart abstractions may be performed if data about the health effects experienced by pets is needed to supplement human data.
Depending on the situation, respondents may incur reporting burden during face-to-face interviews, telephone interviews, written surveys, mailed surveys, or on-line surveys. For ACE Investigations, respondents to surveys and interviews will incur reporting burden; the staff from state, local, or tribal health agencies, will incur recordkeeping burden if they work with ATSDR and CDC staff on medical and veterinary chart abstractions. In rare situations, an investigation might involve the collection and laboratory analysis of clinical specimens.
In the past, ACE investigations have been performed in response to requests for assistance from state, regional, local, or tribal health departments under OMB No. 0920-0008, which expired July 31, 2014. The number of participants surveyed ranged from 30-715, averaging about 250 participants per investigation. In the future, ATSDR anticipates up to four ACE investigations per year. Therefore, the total annualized estimated burden will be 589 hours per year.
Participation in ACE investigations is voluntary and there are no anticipated costs to respondents other than their time.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice.
The Centers for Disease Control and Prevention (CDC) located within the Department of Health and Human Services (HHS) is publishing the names of the Performance Review Board Members who are reviewing performance for Fiscal Year 2014.
Sharon O'Brien, Deputy Director, Executive and Scientific Resources Office, Human Capital and Resources Management Office, Centers for Disease Control and Prevention, 4770 Buford Highway, NE., Mailstop K-15, Atlanta, Georgia 30341, Telephone (770) 488-1781.
Title 5, U.S.C. 4314(c)(4) of the Civil Service Reform Act of 1978, Public Law 95-454, requires that the appointment of Performance Review Board Members be published in the
15 U.S.C. 3719.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the 2014 FDA Food Safety Challenge, a prize competition under the America COMPETES Reauthorization Act of 2010. The 2014 FDA Food Safety Challenge is an effort to advance breakthroughs in foodborne pathogen detection, specifically with the goal of accelerating the detection of
1. Phase I submission period: September 23 to November 9, 2014.
2. Phase II judging of submissions and selection of finalists: November 10, 2014, to January 6, 2015.
3. Phase III field accelerator, inclusive of finalist mentorship, boot camp, and demo day: January 8 to March 5, 2015.
4. Phase IV final judging: March 5 to March 11, 2015.
5. Winner(s) announced: March 12, 2015.
Chad P. Nelson, Office of Foods and Veterinary Medicine, Food and Drug Administration, 10903 New Hampshire Ave., Silver Spring, MD 20993, 301-796-4643.
While the American food supply is among the safest in the world, the Centers for Disease Control and Prevention (CDC) estimates that 1 in 6 Americans is sickened by foodborne illness annually, resulting in about 3,000 deaths each year. It is estimated that the overall negative economic impact of foodborne illness in the United States, including medical costs, quality-of-life losses, lost productivity, and lost-life expectancy, may be as high as $77 billion per year.
The 2014 FDA Food Safety Challenge is a call to scientists, academics, entrepreneurs, and innovators from all disciplines to submit concepts applying novel and/or advanced methodologies to foster revolutionary improvements in foodborne pathogen detection.
The statutory authority for this challenge competition is section 105 of the America COMPETES Reauthorization Act of 2010 (Pub. L. 111-358).
The primary goal of the challenge is to advance breakthroughs in foodborne pathogen detection, specifically to significantly accelerate detection of
The secondary goals of the challenge are:
• To bring new innovators to FDA's foodborne pathogen testing processes;
• To increase public awareness about food safety, foodborne pathogen testing, and FDA's role in those areas; and
• To promote open government and citizen participation to improve innovation in the Federal Government.
This challenge is designed to solicit breakthrough solutions from advanced scientific and research areas, such as, but not limited to metagenomics (or other next-generation sequencing methods), spectroscopy, application of nanotubes/nanotechnology, quantum detection methods, and electrical detection methods. Although concepts must specifically be able to address the detection of
To be eligible to win a prize under this challenge, an individual or entity:
• Must have entered a submission on
• Must have complied with all the requirements under this section.
• Must be (1) an individual or team of U.S. citizens or permanent residents of the United States each of whom are 18 years of age and over or (2) an entity incorporated in and maintaining a primary place of business in the United States. Foreign citizens can participate as employees of an entity that is properly incorporated in the United States and maintains a primary place of business in the United States.
• May not be a Federal entity or Federal employee acting within the scope of their employment. An individual or entity shall not be deemed ineligible because the individual or entity used Federal facilities or consulted with Federal employees during a competition if the facilities and employees are made available to all individuals and entities participating in the competition on an equitable basis.
Federal grantees may not use Federal funds to develop COMPETES Act challenge applications unless consistent with the purpose of their grant award. Federal contractors may not use Federal funds from a contract to develop COMPETES Act challenge applications or to fund efforts in support of a COMPETES Act challenge submission.
Employees of FDA, the U.S. Department of Agriculture's Food Safety and Inspection Service, the CDC, Luminary Labs, LLC, each of their affiliates, and/or any other individual or entity associated with the development, evaluation, or administration of the challenge as well as members of such persons' immediate families (spouses, children, siblings, parents), and persons living in the same household as such persons, whether or not related, are not eligible to participate in the challenge.
Entrants must agree to assume any and all risks and waive claims against the Federal Government and its related entities, except in the case of willful misconduct, for any injury, death, damage, or loss of property, revenue, or profits, whether direct, indirect, or consequential, arising from their participation in a competition, whether the injury, death, damage, or loss arises through negligence or otherwise.
Entrants must also agree to indemnify the Federal Government against third-party claims for damages arising from or related to competition activities.
Entrants are not required to obtain liability insurance or demonstrate financial responsibility in order to participate in the challenge.
By participating in the challenge, each entrant who works with pathogenic organisms such as
To register for the 2014 FDA Food Safety Challenge, participants can access
The total prize pool for the 2014 FDA Food Safety Challenge is $500,000. From the $500,000 prize pool, up to 5 finalists will be awarded $20,000 each following the open submission phase and judging of submissions. After the field accelerator phase and final
Prizes awarded under this competition will be paid by electronic funds transfer and may be subject to Federal income taxes. FDA will comply with the Internal Revenue Service withholding and reporting requirements, where applicable.
A panel of expert judges will select up to five finalist teams from the pool of eligible entries. These finalists will then refine their concepts during the field accelerator phase and will present the concept at demo day. The judging will be based and scored upon the judges' own discretion as to the quality of each entry according to the following finalist evaluation criteria, with equal weighting (i.e., 20 percent for each).
• Speed: Proposed reduction in time from unprepared food sample to verified pathogen to subtype/serovar level for
• Improved detection and path to impact: Strength of evidence, data, and/or argumentation regarding the application of submission's technique to create impactful acceleration and improvement of foodborne pathogen detection, inclusive of improvements in specificity and sensitivity for
• Applicability: Applicability of solution to FDA testing processes.
• Revolutionary: Whether the concept would be a revolutionary improvement over the FDA's current testing procedures with potential to make a major impact on food testing.
• Execution: Perceived ability of submitting team or individual to execute and develop their concept.
Winner selection criteria will include finalist evaluation criteria plus the following criterion: Demonstration of team's/individual's ability to effectively iterate and improve their concept over the course of the field accelerator phase.
FDA reserves the right to suspend, postpone, terminate, or otherwise modify the challenge, or any entrant's participation in the challenge, at any time at FDA's discretion.
Entrants retain ownership of their concepts, including any software, research, or other intellectual property that they develop in connection therewith, subject to the license granted to FDA to use publicly posted materials as set forth herein. By participating in the challenge, each entrant hereby irrevocably grants to FDA and Luminary Labs, LLC, a limited, non-exclusive, royalty free, worldwide license and right to reproduce, publicly perform, publicly display, and use the submission to the extent necessary to administer the challenge, and to publicly perform and publicly display the submission abstract, including, without limitation, for advertising and promotional purposes relating to the challenge.
Entrants retain all rights in the submission and any invention or work, including any software, submitted as part of the submission, subject to the following:
• A nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any such invention or work throughout the world, should the submission win; and
• A license in the submission or work submitted as part of the submission for the United States to use, disclose, reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, in any manner and for any purpose, and to have or permit others to do so, should the submission win.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of the guidance entitled “Custom Device Exemption.” FDA has developed this document to provide guidance to industry and FDA staff about implementation of the custom device exemption contained in the Food, Drug, and Cosmetic Act (the FD&C Act). The intent of this guidance is to define terms used in the custom device exemption, explain how to interpret the “five units per year of a particular device type” language contained in the FD&C Act, describe information that FDA proposes manufacturers should submit in the custom device annual report, and provide recommendations on how to submit an annual report for devices distributed under the custom device exemption.
Submit either electronic or written comments on this guidance at any time. General comments on Agency guidance documents are welcome at any time.
An electronic copy of the guidance document is available for download from the Internet. See the
Submit electronic comments on the guidance to
Division of Premarket and Labeling Compliance, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Silver Spring, MD 20993-0002, 301-796-5770,
The custom device exemption is set forth at section 520(b) of the FD&C Act (21 U.S.C. 360j(b)). A custom device is in a narrow category of devices for which, because of the rarity of a patient's medical condition or a physician's special need, compliance
Effective on July 9, 2012, the Food and Drug Administration Safety and Innovation Act (FDASIA) implemented changes to the custom device exemption contained in section 520(b) of the FD&C Act. The new provision amended the existing custom device exemption and introduced new concepts and procedures applicable to custom devices, addressing, among other things:
• Devices created or modified in order to comply with the order of an individual physician or dentist;
• the potential for multiple units of a device type not to exceed five units per year qualifying for the custom device exemption; and
• annual reporting requirements by the manufacturer to FDA about devices manufactured and distributed under section 520(b) of the FD&C Act.
Under FDASIA, devices that qualify for the custom device exemption were clarified to include no more than “five units per year of a particular device type” that otherwise meet all the requirements necessary to qualify for the custom device exemption. In this guidance, FDA interprets the five units in terms of five new custom devices per year (
The guidance defines terms used in the custom device exemption, explains how FDA plans to interpret the term “five units per year of a particular device type” set forth in section 520(b)(2)(B) of the FD&C Act, describes what information manufacturers should submit in a custom device annual report to FDA, and provides guidance on how to submit an annual report for devices distributed under the custom device exemption.
On January 14, 2014, FDA issued the draft guidance entitled “Custom Device Exemption” (Ref. 1). The Agency has reviewed the comments submitted for the draft guidance and has incorporated many of the recommendations in this final guidance.
This guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the Agency's current thinking on custom devices. It does not create or confer any rights for or on any person and does not operate to bind FDA or the public. An alternative approach may be used if such approach satisfies the requirements of the applicable statute and regulations.
Persons interested in obtaining a copy of the draft guidance may do so by using the Internet. A search capability for all Center for Devices and Radiological Health guidance documents is available at
Under the Paperwork Reduction Act of 1995 (the PRA) (44 U.S.C. 3501-3520), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This draft guidance also refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by OMB under the PRA (44 U.S.C. 3501-3520). The collections of information in 21 CFR 814, subparts B and E have been approved under OMB control number 0910-0231; the collections of information in 21 part 812 have been approved under OMB control number 0910-0078; the collections of information in 21 part 807, subpart E have been approved under OMB control number 0910-0120; and the collections of custom device annual reporting have been approved under OMB control number 0910-0767.
Interested persons may submit either electronic comments regarding this document to
The following reference has been placed on display in the Division of Dockets Management (see
1. The FDA draft guidance entitled “Custom Device Exemption,” available at
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of a draft guidance for industry (GFI #224) entitled “Draft Guidance for Industry, Bioequivalence: Blood Level Bioequivalence Study” (VICH GL52). This draft guidance has been developed for veterinary use by the International Cooperation on Harmonisation of Technical Requirements for Registration of Veterinary Medicinal Products (VICH). This draft VICH guidance document is intended to harmonize the data recommendations associated with in vivo blood level bioequivalence (BE) for veterinary pharmaceutical products.
Although you can comment on any guidance at any time (see 21 CFR 10.115(g)(5)), to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance, submit either electronic or written comments on the draft guidance by November 24, 2014.
Submit written requests for single copies of the guidance to the Communications Staff (HFV-12), Center for Veterinary Medicine, Food and Drug Administration, 7519 Standish Pl., Rockville, MD 20855. Send one self-addressed adhesive label to assist that office in processing your request. See the
Submit electronic comments on the draft guidance to
Marilyn Martinez, Center for Veterinary Medicine (HFV-100), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 240-402-0635,
FDA is announcing the availability of a draft guidance for industry (GFI #224) entitled “Draft Guidance for Industry, Bioequivalence: Blood Level Bioequivalence Study” (VICH GL52). In recent years, many important initiatives have been undertaken by regulatory authorities and industry associations to promote the international harmonization of regulatory requirements. FDA has participated in efforts to enhance harmonization and has expressed its commitment to seek scientifically based harmonized technical procedures for the development of pharmaceutical products. One of the goals of harmonization is to identify and then reduce differences in technical requirements for drug development among regulatory agencies in different countries.
FDA has actively participated in the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use for several years to develop harmonized technical requirements for the approval of human pharmaceutical and biological products among the European Union, Japan, and the United States. The VICH is a parallel initiative for veterinary medicinal products. The VICH is concerned with developing harmonized technical requirements for the approval of veterinary medicinal products in the European Union, Japan, and the United States, and includes input from both regulatory and industry representatives.
The VICH Steering Committee is composed of member representatives from the European Commission; European Medicines Evaluation Agency; European Federation of Animal Health; Committee on Veterinary Medicinal Products; FDA; U.S. Department of Agriculture; the Animal Health Institute; the Japanese Veterinary Pharmaceutical Association; the Japanese Association of Veterinary Biologics; and the Japanese Ministry of Agriculture, Forestry, and Fisheries.
Six observers are eligible to participate in the VICH Steering Committee: One representative from the government of Australia/New Zealand, one representative from the industry in Australia/New Zealand, one representative from the government of Canada, one representative from the industry of Canada, one representative from the government of South Africa, and one representative from the industry of South Africa. The VICH Secretariat, which coordinates the preparation of documentation, is provided by the International Federation for Animal Health (IFAH). An IFAH representative also participates in the VICH Steering Committee meetings.
The VICH Steering Committee held a meeting in November 2013 and agreed that the draft guidance document entitled “Draft Guidance for Industry, Bioequivalence: Blood Level Bioequivalence Study” (VICH GL52) should be made available for public comment. This draft VICH guidance document is intended to harmonize the data recommendations associated with in vivo blood level BE for veterinary pharmaceutical products. To meet this objective, the draft guidance addresses the following topics: A harmonized definition of BE, factors/variables that should be considered when developing scientifically sound blood level BE study designs, and information that should be included in a blood level BE study report.
FDA and the VICH Expert Working Group will consider comments about the draft guidance document.
This draft guidance, developed under the VICH process, has been revised to conform to FDA's good guidance practices regulation (21 CFR 10.115). For example, the document has been designated “guidance” rather than “guideline.” In addition, guidance documents must not include mandatory language such as “shall,” “must,” “require,” or “requirement,” unless FDA is using these words to describe a statutory or regulatory requirement.
The draft guidance, when finalized, will represent the Agency's current thinking on this topic. It does not create or confer any rights for or on any person and does not operate to bind FDA or the public. An alternative approach may be used if such approach satisfies the requirements of applicable statutes and regulations.
This draft guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Action of 1995 (44 U.S.C. 3501-3520). The collections of information in this draft guidance have been approved under OMB control numbers 0910-0032 and 0910-0669.
Interested persons may submit either electronic comments regarding this document to
Persons with access to the Internet may obtain the draft guidance at either
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), 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., 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.
Pursuant to section 10(a) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of a meeting of the Sickle Cell Disease Advisory Committee.
The meeting will be open to the public, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting.
Information is also available on the Institute's/Center's home page:
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of a meeting of the National Heart, Lung, and Blood Advisory Council.
The meeting will be open to the public as indicated below, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the 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.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when
In the interest of security, NIH has instituted stringent procedures for entrance onto the NIH campus. All visitor vehicles, including taxicabs, hotel, and airport shuttles will be inspected before being allowed on campus. Visitors will be asked to show one form of identification (for example, a government-issued photo ID, driver's license, or passport) and to state the purpose of their visit.
Information is also available on the Institute's/Center's home page:
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), 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.
Pursuant to section 10(a) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of a meeting of the Center for Scientific Review Advisory Council.
The meeting will be open to the public, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
Information is also available on the Institute's/Center's home page:
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App), 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., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable materials, 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.
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. App), 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., as amended. The contract proposals and the discussions could disclose confidential trade secrets or commercial property such as patentable materials, 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. App.), notice is hereby given of a meeting of the Board of Scientific Counselors, NHLBI.
The meeting will be closed to the public as indicated below in accordance with the provisions set forth in section 552b(c)(6), Title 5 U.S.C., as amended for the review, discussion, and evaluation of individual intramural programs and projects conducted by the NATIONAL HEART, LUNG, AND BLOOD INSTITUTE, including consideration of personnel qualifications and performance, and the competence of individual investigators, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
In the interest of security, NIH has instituted stringent procedures for entrance onto the NIH campus. All visitor vehicles, including taxicabs, hotel, and airport shuttles will be inspected before being allowed on campus. Visitors will be asked to show one
Information is also available on the Institute's/Center's home page:
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), 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., 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.
Periodically, the Substance Abuse and Mental Health Services Administration (SAMHSA) will publish a summary of information collection requests under OMB review, in compliance with the Paperwork Reduction Act (44 U.S.C. Chapter 35). To request a copy of these documents, call the SAMHSA Reports Clearance Officer on (240) 276-1243.
The Substance Abuse and Mental Health Services Administration's (SAMHSA) Center for Mental Health Services (CMHS) will conduct the multi-site evaluation of the Safe Schools/Healthy Students (SS/HS) state program. The data collected through the multi-site evaluation addresses three study components: (1) The planning, collaboration, and partnership study; (2) the implementation study; and (3) the workforce study.
The SS/HS state program funded grantees in seven states beginning in September 2013. Data will be collected from state/tribal administrators, Local Education Authorities (LEAs)/Districts, local program staff (e.g., school resource officers, teachers and administrators, and psychologists) and program partners (e.g., parents, representatives from the juvenile justice and mental health providers).
Data collection activities will include key informant interviews, and web-based surveys. The instruments to be used for data collection are as follows:
Data for all instruments will be collected annually with the exception of data for the state and District Collaboration Indicator Data Instrument which will be collected quarterly.
The key informant interview protocol will collect information on the service model, partnerships and interagency collaboration, program implementation fidelity, plan deviations, and state and local policy development at the state level. Interviews will also include questions to learn about opportunities that were provided for workforce training. Responses will be compared over time to assess positive development of the program model, emerging barriers and facilitators to implementation, and evolving solutions. On average, 14 state administrators will be interviewed annually and the duration of the interview is estimated to be one hour.
The purpose of these interviews is to identify, through the perspectives of LEA administrators and program partners their descriptions of SS/HS program activities. In particular, the degree to which critical SS/HS framework elements are operationalized, as well as the degree to which principles and strategies are acknowledged and integrated as part of the service processes. Topics include the provider's approach to service provision (sensitivity to health disparities, cultural competence), the coordination of services across the LEA and other local agencies, training of mental health workers, local policy and protocol development, and barriers/facilitators at the local level that influence the adoption, integration, and sustainability of SS/HS principles. Responses will be compared over time to assess positive development of the program model. It is anticipated that an average of 63 district administrators and program partners will participate in the interview each year and the interviews will be about one hour in duration.
The state administrator's survey will seek to understand the level of inter-professional collaboration among entities working at the state level to promote expanded school mental health. The survey will also capture perceptions of partnership functioning in terms of partner goals, resources, culture and values, and roles and responsibilities, as well as leadership and collaboration among partners as they impact (1) school and community partner engagement, (2) facilitators, (3) barriers, (4) shared decision-making, (5) partnership structure, and (6) sustainability. An average of 208 state administrators and program partners will complete the survey annually and it is estimated that completion will take 30 minutes.
The state administrator's survey will seek to understand the level of inter-professional collaboration among entities working at the district level to promote expanded school mental health. The survey will also capture perceptions of partnership functioning in terms of partner goals, resources, culture and values, and roles and responsibilities, as well as leadership and collaboration among partners as they impact (1) school and community partner engagement, (2) facilitators, (3) barriers, (4) shared decision-making, (5) partnership structure, and (6) sustainability. An average of 624 LEA district administrators and program partners will complete the survey annually and the time for completion is estimated to be 45 minutes.
The State Collaboration Indicator Data Instrument will gather data about the program activities that occur at the state level. By tracking these activities, it will be possible to determine the frequency with which administrators engage in SS/HS program related activities such as holding meetings, the number of persons who attend such meetings, whether and the frequency with which trainings and other support activities occur as well as the participants in such trainings. The instrument will also track whether and what type of resources are leveraged by program partners at the state level. One instrument will be completed by each state and it is estimated that it will take on average 1.5 hours to gather the data and complete the instrument.
The District Collaboration Indicator Data Instrument will gather data about the program activities that occur at the LEA/district level. By tracking these activities, it will be possible to determine the frequency with which LEA administrators and program partners at the district level hold meetings, the number of persons who attend such meetings, whether and the frequency with which trainings and other support activities occur, and the participants in such trainings. The instrument will also track whether and what type of resources are leveraged by program partners at the district level. One instrument will be completed by each of the 21 LEAs and it is estimated that it will take on average 1.5 hours to gather the data and complete the instrument.
The State and District Key Informant Interviews will be held with administrators and program partners at the state and LEA districts. The interviews will seek to gain an understanding of respondents' perspectives as these relate to the degree to which critical SS/HS framework elements are operationalized, as well as the degree to which mental health principles and strategies are acknowledged and integrated as part of the service processes. The interviews will also seek to gain an understanding of the types of services and supports that have been implemented as a result of the SS/HS program, children's access to mental health services, and the facilitators and barriers to program implementation. Interviews will also include questions to learn about the role workforce development opportunities played in program implementation. A total of 56 persons will be interviewed: 14 at the state/tribal level and 42 at the district level. Interviews will take on average one hour to complete.
School-Level Survey (Implementation Study): The school-level survey will be completed by persons who work within the schools that are participating in the SS/HS state program. The survey combines items from three surveys: The Evidence-Based Practice Attitude Scale (EBPAS) assesses mental health and social service provider attitudes toward adopting evidence-based practices. The Mental Health Service Integration Survey (MHSIS) assesses professional school mental health roles, service integration, and barriers and facilitators of mental health service integration in schools. The School Mental Health Quality Assessment Questionnaire (SMHQAQ) is a 40 item instrument divided into 10 domains that assess the integration of school mental health services delivered in schools. The 10 domains related to the 10 principles of expanded school mental health include: (1) Access to care; (2) Needs assessment; (3) Evidence-based practices; (4) Stakeholder involvement and feedback; (5) Quality assessment and improvement; (6) Continuum of care and referral processes; (7) Clinician training, support, and service delivery; (8) Competently addressing developmental, cultural, and personal differences; (9) Interdisciplinary collaboration and communication; and (10) Community coordination. The School Mental Health Capacity Instrument is a 27-item scale that assesses the capacity of schools to address the mental health needs of students. The schools can be rated along a continuum using the three individual subscales of intervention, early recognition & referral, or prevention & promotion. In addition, the total sum of all three scales provides an overall measure of capacity. The intervention subscale looks at training, protocols, and the designation of specific follow-up procedures for children referred for
Internet-based technology will be used for collecting data via Web-based surveys, and for data entry and management. The average annual respondent burden is estimated below.
Written comments and recommendations concerning the proposed information collection should be sent by October 24, 2014 to the SAMHSA Desk Officer at the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB). To ensure timely receipt of comments, and to avoid potential delays in OMB's receipt and processing of mail sent through the U.S. Postal Service, commenters are encouraged to submit their comments to OMB via email to:
National Protection and Programs Directorate, DHS.
60-day notice and request for comments; Revision of a currently approved collection: 1670-0013.
The Department of Homeland Security (DHS), National Protection and Programs Directorate (NPPD), Office of Infrastructure Protection (IP) will submit the following Information Collection Request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chapter 35).
Comments are encouraged and will be accepted until November 24, 2014. This process is conducted in accordance with 5 CFR 1320.1.
Written comments and questions about this Information Collection Request should be forwarded to DHS/NPPD/IP/Cheryl Fenoli, 245 Murray Lane SW., Mail Stop 0607, Arlington, VA 20598-0609. Emailed requests should go to Cheryl Fenoli,
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The Critical Infrastructure Private Sector Clearance Program (PSCP) sponsors
OMB is particularly interested in comments that:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
2. Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
3. Enhance the quality, utility, and clarity of the information to be collected; 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 submissions of responses.
Science and Technology Directorate, DHS.
30-day Notice and request for comment.
The Department of Homeland Security (DHS) invites the general public to comment on the data collection form for the DHS Science & Technology (S&T) First Responders Community of Practice (FRCoP): User Registration Page (DHS Form 10059 (9/09)). The FRCoP Web based tool collects profile information from first responders and select authorized non-first responder users to facilitate networking and formation of online communities. All users are required to authenticate prior to entering the site. In addition, the tool provides members the capability to create wikis, discussion threads, blogs, documents, etc., allowing them to enter and upload content in accordance with the site's Rules of Behavior. Members are able to participate in threaded discussions and comment on other members' content. The DHS S&T FRCoP program is responsible for providing a collaborative environment for the first responder community to share information, best practices, and lessons learned. Section 313 of the Homeland Security Act of 2002 (Pub. L. 107-296) established this requirement. The program would like to add one more field to the registration. The new field will be titled: Country of First Responder Affiliation. This notice and request for comments is required by the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chapter 35). This notice and request for comments is required by the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. chapter 35).
Comments are encouraged and will be accepted until October 24, 2014.
Interested persons are invited to submit comments, identified by docket number DHS-2012-0013, by one of the following methods:
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DHS FRCoP Contact Kathy Higgins (202) 254-2293 (Not a toll free number).
DHS S&T currently has approval to collect information utilizing the User Registration Form until October 31 2013 with OMB approval number 1640-0016. The User Registration Form will be available on the First Responders Community of Practice Web site found at [
The Department is committed to improving its information collection
DHS is particularly interested in comments that:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3) Suggest ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) Suggest 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, e.g., permitting electronic submissions of responses.
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Office of the Chief Information Officer, HUD.
Notice.
HUD has submitted the proposed information collection requirement described below to the Office of Management and Budget (OMB) for review, in accordance with the Paperwork Reduction Act. The purpose of this notice is to allow for an additional 30 days of public comment.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: HUD Desk Officer, Office of Management and Budget, New Executive Office Building, Washington, DC 20503; fax: 202-395-5806. Email:
Colette Pollard, Reports Management Officer, QDAM, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410; email at
This notice informs the public that HUD has submitted to OMB a request for approval of the information collection described in Section A.
The
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) The accuracy of the agency's estimate of the burden of the proposed collection of information;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology,
HUD encourages interested parties to submit comment in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35.
U.S. Geological Survey, Interior.
Notice of annual meeting: Audio conference.
Pursuant to Public Law 106-148, the NCGMP and NGGDPP Advisory Committee will hold an audio conference call on October 17, 2014, from 8 a.m.-5 p.m. Mountain Standard Time. The Advisory Committee, comprising representatives from Federal agencies, State agencies, academic institutions, and private companies, shall advise the Director of the U.S. Geological Survey on planning and implementation of the geologic mapping and data preservation programs.
The Committee will hear updates on progress of the NCGMP toward fulfilling the purposes of the National Geological Mapping Act of 1992, as well as updates on the NGGDPP toward fulfilling the purposes of the Energy Policy Act of 2005.
October 17, 2014, from 8 a.m.-5 p.m. Mountain Standard Time.
For the phone number and access code, please contact Michael Marketti, U.S. Geological Survey, Mail Stop 908, National Center, Reston, Virginia 20192, (703) 648-6976.
Meetings of the National Cooperative Geologic Mapping Program and National Geological and Geophysical Data Preservation Program Advisory Committee are open to the Public.
Bureau of Indian Affairs, Interior.
Notice of meeting.
In accordance with the Federal Advisory Committee Act, the Bureau of Indian Education (BIE) is announcing that the Advisory Board for Exceptional Children (Advisory Board) will hold its next meeting in Washington, DC. The purpose of the meeting is to meet the mandates of the Individuals with Disabilities Education Act of 2004 for Indian children with disabilities.
The Advisory Board will meet on Thursday, October 9, 2014, from 8:30 a.m.-4:30 p.m., and Friday, October 10, 2014, from 8:30 a.m.-4:30 p.m. Eastern Time.
The meetings of Thursday, October 9, 2014, and Friday, October 10, 2014, will be held at 1951 Constitution Avenue NW., Mailstop 312-SIB, Washington, DC 20240; telephone number (202) 208-6123.
Ms. Sue Bement, Designated Federal Official, Bureau of Indian Education, Albuquerque Service Center, Division of Performance and Accountability, 1011 Indian School Road NW., P.O. Box 1088, Suite 332, Albuquerque, New Mexico 87103; telephone number (505) 563-5274.
In accordance with the Federal Advisory Committee Act, BIE is announcing that the Advisory Board will hold its next meeting in Washington, DC. The Advisory Board was established to advise the Secretary of the Interior, through the Assistant Secretary—Indian Affairs, on the needs of Indian children with disabilities, as mandated by the Individuals with Disabilities Act of 2004 (20 U.S.C. 1400 et seq.). The meetings are open to the public.
The following items will be on the agenda:
• Discussion with Dr. Charles Roessel, BIE Director.
• Public Comment (via conference call, October 10, 2014, meeting only *).
• Report from Gloria Yepa, Supervisory Education Specialist, BIE Division of Performance and Accountability.
• Work on BIE Advisory Board Annual Report.
• Discussion and Approval of Charter and By-Laws.
• BIE Advisory Board—Advice and Recommendations.
Bureau of Land Management, Interior.
Notice.
The Assistant Secretary for Land and Minerals Management proposes to withdraw, subject to valid existing rights, on behalf of the Bureau of Land Management (BLM), 343.23 acres of public lands from location and entry under the United States mining laws, but not from leasing under the mineral or geothermal leasing laws, or disposal under the Materials Act of 1947, to protect and preserve the Split Rock/Devil's Gate interpretive sites. This notice segregates the lands from mining for up to 2 years while various studies and analyses are made to support a final decision on the withdrawal application.
Comments must be received on or before December 23, 2014.
Comments and meeting requests should be sent to the BLM Wyoming State Office, 5353 Yellowstone Road, Cheyenne, WY 82009.
Diane Schurman, BLM Wyoming State Office, 5353 Yellowstone Road, Cheyenne, WY 82009; telephone: 307-775-6189; email:
The BLM filed an application requesting the Assistant Secretary for Land and Minerals Management withdraw, subject to valid existing rights, the following described public lands from location and entry under the United States mining laws, but not from leasing under the mineral or geothermal leasing laws, or disposal under the Materials Act of 1947, to protect and preserve the Split Rock/Devil's Gate interpretive sites:
The areas described aggregate 343.23 acres, more or less, in Fremont and Natrona Counties.
The Assistant Secretary for Land and Minerals Management approved the BLM's petition/application. Therefore, the petition/application constitutes a withdrawal proposal of the Secretary of the Interior (43 CFR 2310.1-3(e)).
The purpose of the proposed withdrawal is to protect the unique archaeological, historical, geological, and recreational values as well as the Federal investment at the Split Rock and Devil's Gate Interpretive Sites.
The use of a right-of-way, interagency agreement, or cooperative agreement would not adequately constrain non-discretionary use of the land needed to provide the highest level of protection possible for the historic, cultural, aesthetic, and recreational values of the lands.
There are no suitable alternative sites as the described lands contain the resource values to be protected.
No additional water rights will be needed to fulfill the purpose of the requested withdrawal.
Records relating to the application may be examined by contacting the BLM at the above address and phone number.
For a period until December 23, 2014, all persons who wish to submit comments, suggestions or objections in connection with the proposed withdrawal application may present their views in writing to the BLM Wyoming State Director at the mailing address or email address noted above. All comments received will be considered before any recommendation concerning the proposed withdrawal is submitted to the Secretary of the Interior for final action.
Comments including names and street addresses of respondents, will be available for public review at the BLM Wyoming State Office, during regular business hours 8:00 a.m. to 4:30 p.m., Monday through Friday, except Federal holidays. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. Notice is hereby given that an opportunity for a public meeting is afforded in connection with the proposed withdrawal. All interested persons who desire a public meeting for the purpose of being heard on the proposed withdrawal must submit a written request to the BLM Wyoming State Director no later than December 23, 2014. If the authorized officer determines that a public meeting will be held, a notice of the time and place will be published in the
For a period until September 26, 2016, the lands will be segregated as specified above unless the application is denied or canceled or the withdrawal is approved prior to that date. Licenses, permits, cooperative agreements, or discretionary land use authorizations of a temporary nature which would not impact the site may be allowed with the approval of an authorized officer of the BLM during the segregative period. This application will be processed in accordance with the regulations set forth in 43 CFR 2310.3.
Bureau of Land Management, Interior.
Notice of realty action.
The Bureau of Land Management (BLM) proposes to sell a 5-acre public land parcel located in the southern portion of the Las Vegas Valley in Clark County, Nevada, under the authority of Section 203 of the Federal Land Policy and Management Act of 1976 (FLPMA), as amended, the BLM land sale conveyance regulations, and the Southern Nevada Public Land Management Act of 1998 (SNPLMA), as amended. The BLM proposes that the parcel be sold by direct sale to the Nevada Housing Division, a division of the State of Nevada, Department of Business and Industry, at less than the parcel's appraised fair market value (FMV) consistent with SNPLMA and applicable BLM policy.
Comments regarding the proposed sale must be received by the BLM on or before November 10, 2014. The sale would not be held prior to November 24, 2014.
Written comments concerning the proposed sale are to be sent to the BLM Las Vegas Field Office, Assistant Field Manager, Division of Lands, 4701 N. Torrey Pines Drive, Las Vegas, NV 89130.
Michelle Leiber at 702-515-5168, or email at
The Nevada Housing Division submitted a sale nomination application to the BLM for the proposed affordable housing project called Agate Avenue Senior
The area described contains 5 acres.
The parcel is identified as Clark County Assessor Parcel Number 177-20-601-011. A map delineating the parcel proposed for sale to the Nevada Housing Division is available for public review at the BLM Las Vegas Field Office or at the Web site
The parcel is located south of the intersection of Agate Avenue and Kimo Street within the Las Vegas Boulevard and Interstate 15 corridor south of Blue Diamond Road. The northern, southern, and western boundaries of the parcel abut developed residential and commercial properties and the eastern boundary abuts property that is under development for residential purposes. Access is provided by Agate Avenue located along the northern boundary of the parcel.
The parcel would be sold using the BLM's direct sale procedures (43 CFR 2711.3-3), and under such terms, covenants, or conditions as determined necessary by the BLM authorized officer pursuant to SNPLMA Section 7(b), and the Nevada Guidance Policy and Procedures for Affordable Housing Disposals (Nevada Guidance), approved on August 8, 2006.
Under SNPLMA Section 7(b), the BLM, in consultation with the Department of Housing and Urban Development (HUD), may make BLM-managed public lands available for affordable housing purposes in the State of Nevada at less than the appraised FMV. The amount administratively discounted from the FMV is set forth in the Nevada Guidance. For purposes of SNPLMA, housing is “affordable housing” if it serves low-income families as defined in Section 104 of the Cranston-Gonzales National Affordable Housing Act, 42 U.S.C. 12704. In the Cranston-Gonzales Act, the term “low-income families” means families whose incomes do not exceed 80 percent of the median income for the area as determined by HUD, or as otherwise adjusted by statute. The State of Nevada's proposed project would use 100 percent of the parcel to serve senior citizens, including seniors with special needs, with income at or below 60 percent of the area median income, which represents extremely low income based on the Nevada Guidance. The Agate Phase II Project will also give preference to qualifying Veteran households for at least 10 percent of the units.
The appraised FMV for the 5-acre parcel is $1,800,000. Under the Nevada Guidance, and after consultation with HUD, the BLM authorized officer has determined that discount percentages for the respective median income category would be administratively applied to the appraised FMV for the parcel to establish the price of the public land to be sold under these provisions. The FMV for this property would be discounted 95 percent resulting in a federally-approved sale price of $90,000 for this transaction, so long as the property is used for affordable housing purposes consistent with the covenants, terms and conditions described in the patent.
Consistent with the Nevada Guidance, the preferred method of sale is direct sale. Such method is appropriate when “a tract is identified for transfer to State or local government . . .” (43 CFR 2711.3-3(1)), which is the case for sales authorized under SNPLMA Section 7(b). The direct sale method is also supported when, “A tract is identified for sale that is an integral part of a project or public importance and speculative bidding would jeopardize a timely completion and economic viability of the project” (43 CFR 2711.3-3(2)), which is also the case here.
The Clark County, North Las Vegas, Boulder City, and Mesquite 2010-2014 HUD Consolidated Plan identified both rental housing serving low-income and extremely low-income households and housing for persons with special needs, including the elderly and frail elderly, as its top two priorities. The project being considered under this notice addressed those priorities. The consolidated plan identifies a significant housing need for elderly persons including those with special needs and physically disabled in southern Nevada. Since the SNPLMA was passed in 1998, the State of Nevada has invested considerable time and substantial resources in finding eligible properties for affordable housing projects. Consistent with the SNPLMA joint selection process, the Nevada Housing Division consulted with the BLM and Clark County concerning selection of this parcel for disposal for affordable housing purposes. According to the consolidated plan, the need for affordable housing is an issue of public importance and this tract of land would provide a key piece of a project meant to address that need.
The Nevada Housing Division's application includes a comprehensive plan for assessment and evaluation of the need for and the feasibility of this affordable housing project. As required by SNPLMA Section 7(b), HUD reviewed the Agate Phase II Project and provided the BLM its approval recommendation dated May 30, 2014. The HUD's recommendation confirmed that the Agate Phase II Project as proposed would use 100 percent of the parcel to serve senior citizens, including seniors with special needs, with income at or below 60 percent of the area median income. The HUD further confirmed that the Agate Phase II Project location and need are consistent with Section 7(b) of SNPLMA, the Cranston-Gonzales Act, and the 2010-2014 Clark County Consolidated Plan. The HUD conditioned its approval recommendation on two continuing requirements: (1) The Nevada Housing Division and Clark County, as appropriate, are to report the proposed Agate Phase II Project, including public and private funding sources, in HUD required documents and plans; and (2) Submittal by the Nevada Housing Division of the final disposition and development agreement (DDA) and final site plan to the BLM for review and concurrence in consultation with HUD. A DDA will be executed between the Nevada Housing Division and its co-developers, Ovation Development Corporation, and Accessible Space, Inc., to ensure that the terms and conditions for development of the project are consistent with the previously submitted comprehensive plan and other applicable regulations and procedures.
The parcel is within the disposal boundary identified by the U.S. Congress in the SNPLMA, and is in conformance with the BLM Las Vegas Resource Management Plan and decision LD-1, approved by Record of Decision on October 5, 1998. The parcel was also analyzed in the Las Vegas Valley Disposal Boundary Final Environmental Impact Statement and approved by Record of Decision on December 23, 2004. The BLM has completed a site-specific Determination of National Environmental Policy Act Adequacy (DNA) document number DOI-BLM-NV-S010-2014-0081-DNA for the sale. The parcel is not required for any Federal purpose. Consistent with 43 CFR 2711.3-1(d), a deposit of not less than 20 percent of the federally-approved sale price, as discounted consistent with the Nevada Guidance, must be submitted on or before 30 days
Failure to submit the deposit will result in forfeiture of the sale offer. The remainder of the sale price must be paid within 180 days following the date of the sale offer. Failure to pay the full price within the 180 days will disqualify the sale offer and cause the entire 20 percent deposit to be forfeited to the BLM, 43 CFR 2711.3-1(d) and 2711.3-3(d). No exceptions will be made. The BLM cannot accept the full sale price at any time following the expiration of the 180th day after the sale offer. Payment may be provided electronically through escrow by Electronic Fund Transfer (EFT), or in the form of a certified check, postal money order, bank draft, cashier's check, or any combination thereof, made payable in U.S. dollars to the order of the DOI, BLM. Arrangements for EFT through escrow to the BLM shall be made a minimum of 14 days prior to the date of payment. The patent would be issued following receipt of final payment, as appropriate.
If patented, the patent will include the following numbered terms, covenants, and conditions:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
No representation or warranty of any kind, express or implied, is given or will be given by the United States as to the title, the physical condition or the past, present, or potential uses of the land proposed for sale. However, to the extent required by law, such land is subject to the requirements of Section 120(h) of the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), as amended (42 U.S.C. 9620(h)).
If patented, title to the land will be subject to the following numbered reservations to the United States:
1. All minerals are reserved to the United States. Permittees, licensees, and lessees of the United States retain the right to prospect for, mine, and remove such leasable and saleable minerals owned by the United States under applicable law and any regulations that the Secretary of the Interior may prescribe, together with all necessary access and exit rights;
2. A right-of-way for ditches or canals constructed by the authority of the United States pursuant to the Act of August 30, 1890 (26 Stat. 391, 43 U.S.C. 945); and
3. A reversionary interest as further defined in the above terms, covenants, and conditions.
If patented, title to the land will be subject to:
1. Valid existing rights [of record], including, but not limited to those documented on the BLM public land records at the time of sale and as defined below;
2. A right-of-way for public county road (Agate Avenue) purposes reserved to Clark County, its successors and assigns, by right-of-way number N-59284, pursuant to Title V of the Act of October 21, 1976 (90 Stat. 2776; 43 U.S.C. 1761);
3. A right-of-way for sanitary sewer pipeline purposes reserved to the Clark County Water Reclamation District, its successors and assigns, by right-of-way number N-61105, pursuant to Title V of the Act of October 21, 1976 (90 Stat. 2776; 43 U.S.C. 1761); and
4. A right-of-way for water line purposes reserved to the Las Vegas Valley Water District, its successors and assigns, by right-of-way number N-61409, pursuant to Title V of the Act of October 21, 1976 (90 Stat. 2776; 43 U.S.C. 1761).
Pursuant to Section 4(c) of the SNPLMA, subject to valid existing rights, the subject land is withdrawn from location and entry under the mining laws and from operation under the mineral and geothermal leasing laws until Secretarial termination of the withdrawal or patenting of the land. Such withdrawal is documented under case file number N-66364, effective as of October 19, 1998. In addition, by operation of regulation 43 CFR 2711.1-2(d), through publication of this notice, the lands are segregated and not subject to appropriation under the public land laws, including the mining laws. Through either the withdrawal or the segregation, any subsequent application for an appropriative use will not be accepted, will not be considered as filed, and will be returned to the applicant.
Documents concerning the sale, appraisal, reservations, procedures, and conditions, and other environmental review are available for review at the BLM Las Vegas Field Office at the address in the
Any adverse comments regarding the proposed sale will be reviewed by the BLM Nevada State Director, or other authorized official of the Department of the Interior, who may sustain, vacate, or modify this realty action. In the absence of any adverse comments, this realty action will become the final determination of the Department of the Interior.
43 CFR 2711.1-2.
Bureau of Land Management, Interior.
Notice of realty action.
The Bureau of Land Management (BLM) is offering to sell a parcel of public land totaling 2.78 acres as a non-competitive direct sale at not less than the appraised fair market value (FMV) of $175,000, to the City of Oklahoma City. The sale is pursuant to Section 203 of the Federal Land Policy and Management Act of 1976 (FLPMA), and BLM regulations. In accordance with BLM regulations, the BLM authorized officer finds that the public interest would be best served by resolving the inadvertent unauthorized use of public lands by the City of Oklahoma City whose improvements occupy portions of the parcel in question through a direct sale to the City. Such a sale would also protect existing equities in the current use of the land.
Submit written comments to the BLM at the address below. The BLM must receive comments on or before November 10, 2014.
Bureau of Land Management, Field Manager, Oklahoma Field Office, 7906 E. 33rd Street, Suite 101, Tulsa, OK 74145.
Richard Fields, Assistant Field Manager, 918-621-4128 or email at
The BLM will conduct a direct sale for the following parcel of public land located at 3501 SW 15th Street, Oklahoma City, Oklahoma. The land is described as:
The area described contains 2.78 acres.
The parcel is a single triangular-shaped tract and is fully surrounded by private and city-owned land. The property has improvements such as a city street and a parking lot and landscaping to support the adjacent Dell Campus.
Upon publication of this Notice in the
The authority for the sale of public lands is found in Section 203 of FLPMA (43 U.S.C. 1713) and regulation 43 CFR 2710. In accordance with 43 CFR 2710.0-6(3)(iii) and 43 CFR 2711.3-3(5), the BLM authorized officer finds that a direct sale would be appropriate here because it would best serve the public interest by resolving the inadvertent unauthorized use of those lands by the City of Oklahoma City. A direct sale would also be consistent with the adjoining ownership pattern.
The parcel is not needed for any other Federal purpose, and it has been determined that the proposed action conforms to the 1994 BLM Oklahoma Resource Management Plan (RMP), goals, objectives, and management actions. The RMP provides for disposal to resolve longstanding instances of unauthorized use or occupancy through land sale if the disposal criteria are met. The parcel of land is difficult and uneconomic to manage as part of the public lands and meets the criteria for disposal from Federal ownership. The City of Oklahoma City occupied the proposed land and constructed a road and a landfill. According to soil-boring tests, the landfill did accept some trash at the site. The landfill activities took place between 1950 and the late 1970s. The site has since been remediated and redeveloped for other purposes by the City.
Federal law requires purchasers to be citizens of the United States; 18 years of age or older; and, in the case of corporations, to be subject to the laws of any State or of the United States; a State, State instrumentality or political subdivision authorized to hold property or an entity legally capable of conveying and holding lands or interest therein under the laws of the State of Oklahoma. The purchaser will be given 30 days from receipt of a written offer to submit a deposit of 30 percent of the FMV appraisal of the parcel and 180 days thereafter to submit the remainder of the full purchase price. Payment must be in the form of a certified check, postal money order, bank draft, or cashier's check made payable in U.S. dollars to the order of the U.S. Department of the Interior—BLM. The BLM will not accept any personal or business checks. Failure to meet conditions of this direct sale will void the sale and any funds received will be forfeited. If the balance of the purchase price is not received within the 180 days, the deposit shall be forfeited to the United States and the parcel withdrawn from sale.
The parcel is subject to limitations prescribed by law and regulation, and certain encumbrances in favor of third parties. Prior to patent issuance, a holder of any right-of-way within the sale parcels will be given the opportunity to amend the right-of-way for conversion to a new term, including perpetuity, if applicable, or conversion to an easement. The BLM will notify valid existing right-of-way holders of record of their ability to convert their compliant rights-of-way to perpetual rights-of-way or easement. In accordance with Federal regulations at 43 CFR 2807.15, once notified, each valid holder may apply for the conversion of their current authorization.
The patent, if issued, would be subject to the following terms and conditions, and reservations:
1. A reservation of a right-of-way for ditches and canals constructed by authority of the United States under of the Act of August 30, 1890, (43 U.S.C. 945);
2. A reservation of all minerals deposits in the land so patented, and to it, or persons authorized by it, the right to prospect for, mine, and remove such deposits from the same under applicable law and such regulations as the Secretary of the Interior may prescribe are reserved to the United States, together with all necessary access and exit rights;
3. The parcels are subject to valid existing rights; and
4. An appropriate indemnification clause protecting the United States from claims arising out of the lessees/patentee's use, occupancy, or occupation on the leased/patented lands.
Information concerning the sale, encumbrances of record, appraisals, reservations, procedures and conditions, and other environmental documents that may appear in the BLM public files for the proposed sale parcels are available for review during business hours, Monday through Friday, at the BLM Oklahoma Field Office, except during Federal holidays.
Comments received in electronic form, such as email or facsimile, will not be considered. Submit comments to the address in the
Any adverse comments regarding the proposed sale will be reviewed by the BLM State Director or other authorized official of the Department of the Interior, who may sustain, vacate, or modify this realty action in whole or in part. In the absence of timely filed objections, this realty action will become the final determination of the Department of the Interior.
43 CFR 2711.1-2(a)(c).
Bureau of Land Management, Interior.
Notice of realty action.
The Bureau of Land Management (BLM) has examined and found suitable for classification for lease and subsequent conveyance under the provisions of the Recreation and Public Purposes (R&PP) Act, as amended, approximately 5 acres of public land in San Juan County, New Mexico. The San Juan County Soil and Water Conservation District proposes to use the land for an office building, shop, parking, and outdoor educational classroom.
Interested parties may submit written comments regarding the proposed classification of the land, or lease and/or subsequent conveyance of the land, on or before November 10, 2014.
Written comments concerning this Notice should be addressed to: District Manager, BLM Farmington District Office, 6251 College Avenue, Farmington, NM 87401.
Vera Matthews, Realty Specialist, at the above address, by phone (505) 564-7724, or by email at
The following public land in San Juan County, New Mexico, has been examined and found suitable for classification, for lease and/or subsequent conveyance, to the San Juan County Soil and Water Conservation District under the provisions of the R&PP Act, as amended (43 U.S.C. 869
In accordance with the R&PP Act, the San Juan County Soil and Water District proposes to use the land for an office building, shop, parking and outdoor educational classroom. Additional detailed information pertaining to this application, plan of development, and site plans are contained in case file NMNM 127315 located in the BLM Farmington District Office at the above address. The above-described land is not needed for any Federal purpose. The lease and/or subsequent conveyance of the land to the San Juan County Soil and Water District, are consistent with the BLM Farmington Resource Management Plan, dated December 2003, and would be in the public's interest. The San Juan County Soil and Water District has not applied for more than the 640-acre annual limitation for public purposes other than recreation use and has submitted a statement in compliance with the regulation at 43 CFR 2741.4(b). The San Juan County Soil and Water District is a political subdivision of the State of New Mexico and is a qualified applicant under the R&PP Act.
The lease and subsequent conveyance, if and when issued, will be subject to the provisions of the R&PP Act and applicable regulations of the Secretary of the Interior and will contain the following reservations to the United States:
1. Provisions of the R&PP Act and to all applicable regulations of the Secretary of the Interior, including, but not limited to, the terms required by 43 CFR 2741.9.
2. A right-of-way for ditches and canals constructed by the authority of the United States, Act of August 30, 1890 (43 U.S.C. 945).
3. Lease and subsequent conveyance of the public land shall be subject to valid existing rights.
4. All minerals shall be reserved to the United States, together with the right to prospect for, mine, and remove such deposits from the same under applicable law and such regulations as the Secretary of the Interior may prescribe.
5. Right-of-way NMNM 111684 for road purposes granted to David McWilliams and Peggy McWilliams, their successors or assigns, pursuant to the Act of October 21, 1976 (43 U.S.C. 1761).
6. Right-of-way NMNM 125883 for fiber optic cable purposes granted to Qwest Corporation, its successors or assigns, pursuant to the Act of October 21, 1976 (43 U.S.C. 1761).
7. Right-of-way NMNM 015515 for oil and gas pipelines purposes granted to Enterprise Field Services, its successors or assigns, pursuant to the Act of February 25, 1920 (30 U.S.C. 185 sec. 28).
8. Oil and Gas Lease NMSF 078138 leased to Burlington Resources Oil and Gas Company, its successors or assigns, pursuant to the Act of February 25, 1920 (30 U.S.C. 226).
9. An appropriate indemnification clause protecting the United States from claims arising out of the lessee's/patentee's use, occupancy, or operations on the leased/patented lands. It will also contain any other terms and conditions deemed necessary and appropriate by the Authorized Officer.
10. Any other reservations that the Authorized Officer determines appropriate to ensure public access and proper management of Federal land and interests therein.
Subject to limitations prescribed by law and regulations, prior to conveyance, a holder of any right-of-way within the lease area may be given the opportunity to amend the right-of-way for conversion to a new term, including perpetuity, if applicable.
Detailed information concerning this proposed project, including, but not limited to documentation relating to compliance with applicable environmental and cultural resource laws, is available for review at the BLM Farmington District Office at the address above.
Upon publication of this notice in the
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that
Any adverse comments will be reviewed by the BLM New Mexico State Director, who may sustain, vacate, or modify this realty action. In the absence of any adverse comments, the classification of the land described in this notice will become effective on November 24, 2014. The land will not be available for lease and subsequent conveyance until after the classification becomes effective.
43 CFR 2741.5.
Bureau of Land Management, Interior.
Notice of temporary closure.
Notice is hereby given that the Bureau of Land Management (BLM), as authorized under the provisions of the Federal Land Policy and Management Act of 1976 and pursuant to BLM regulations, is enacting a 5-year temporary closure to the public of 5,683.37 acres in Red Rock Canyon National Conservation Area (NCA) due to the Carpenter 1 Fire, which occurred in July 2013. The closure is needed to address public safety and adjoining private property due to the potential for future downstream flooding from loss of vegetation and top soil until the area is stabilized and rehabilitated.
The temporary restriction and closure of the described public use is in effect 30 days after September 24, 2014 for 5 years.
Lauren Brown, Weeds Management Specialist and ESR Coordinator, 702-515-5295, email
The closure area includes both burned and unburned areas, as well as closing Harris Springs Road to the general public beginning at the intersection of State Route 157 proceeding northward for approximately 5 miles to the U.S. Forest Service (USFS) boundary. The size of the temporary closure is due to heavy rains, flooding, washouts, soil loss, and debris flow that occurred after the fire, generating more extensive damage to the burned and adjoining unburned areas. Pursuant to 43 CFR 8364.1, the time frame for the 5-year temporary closure is needed due to the extensive burn area of the Carpenter 1 Fire and subsequent heavy flooding, soil erosion, and loss of habitat and vegetation that is impacting both burned and unburned areas. The Carpenter 1 Fire burned approximately 27,881 acres in the Mt. Charleston Area outside of Las Vegas, Nevada. The majority of the fire (26,939 acres) occurred on the Springs Mountains National Recreation Area of the Humbolt-Toiyabe National Forest, with the balance of the burn occurring on the Red Rock Canyon NCA (853 acres) and private land (89 acres).
Post-fire efforts proposed by the BLM over the 5-year period will optimize stabilization of soils and rehabilitation.
The duration of the closure is also consistent with the USFS' temporary closure, which is for 5 years. The area affected by USFS' closure contains 5,683.37 acres in Clark County, Nevada.
The temporary closure order and information is posted at the BLM Southern Nevada District Office, and in areas off of State Route 157 and adjoining boundaries with the USFS. The public lands subject to the temporary closure are approximately 10 miles west of Las Vegas, NV, in the Harris Springs area of the Red Rock Canyon NCA, and are legally described as follows:
On December 17, 2013, the BLM signed a Decision Record to implement the temporary closure. The EA (DOI-BLM-NV-S020-2013-0012-EA) analyzed the alternatives to enact the temporary closure, and is available to the public on the District Web site at
Motorized vehicle use on Harris Springs Road off of State Route 157 is closed to the public during this period. This temporary closure applies to the public and all motorized vehicles, excluding:
(1) Any emergency or law enforcement vehicle or personnel for emergency or administrative purposes;
(2) BLM/USFS/NDOW vehicles/personnel;
(3) Anyone who is expressly authorized in writing by the BLM Field Manager of the Red Rock/Sloan Field Office or the Fire Management Officer, Southern Nevada District;
(4) Clark County Department of Public Works; and
(5) Affected residents who have prior existing rights to access their property.
If satisfactory rehabilitation is achieved prior to September 30, 2019, the temporary closure will be lifted.
43 CFR 8364.1.
Bureau of Land Management, Interior.
Notice.
The Bureau of Land Management (BLM) Las Cruces District Office is restricting recreational target shooting on approximately 290 acres of public land near the Prehistoric Trackways National Monument (Monument). The restriction is needed to ensure public safety near the Monument entrance which is the Permian Tracks Road in Doña Ana County, New Mexico.
Copies of this closure order and maps showing the location of the restriction are available from the BLM, Las Cruces District Office, 1800 Marquess Street, Las Cruces, NM 88005.
This restriction is effective on October 24, 2014 and shall remain in effect until a final decision is made in the Tri-County Resource Management Plan. During the temporary closure, the BLM will develop long-term resource management plans that will address public lands both inside and outside the Monument with public involvement.
David Wallace, Assistant District Manager, Multi-Resources Division, 1800 Marquess Street, Las Cruces, NM 88005; or call 575-525-4393. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 to contact the above individual during normal business hours. The FIRS is available 24 hours a day, 7 days a week, to leave a message or question with the above individual. You will receive a reply during normal business hours.
The recreational target shooting restriction includes public land along the Permian Tracks Road, which is the primary entrance to the Monument. Since designation of the Monument in 2009, the area has seen a significant increase in visitation from school children and the general public for guided hikes and museum field trips that focus on the paleontological resources. Documented near-misses between Monument visitors and bullets from recreational target shooting along the Permian Tracks Road are increasing.
Most of the surrounding public land is open for dispersed recreational target shooting. The restriction will remain in effect until a final decision is issued in the TriCounty Resource Management Plan.
The restrictions applicable to the closure are as follows:
1. The public land to be closed under this notice is described as:
The area described aggregates 290.00 acres.
Discharging of firearms for recreational target shooting is prohibited in this location.
2. This restriction does not affect the ability of local, State, or Federal officials in the performance of their duties in the area, including the discharge of firearms.
3. This Notice will be posted along the public roads where this restriction is in effect.
4. The following persons are exempt from this closure order:
a. Federal, State, or local law enforcement officers, while acting within the scope of their official duties.
b. Any person who is hunting in accordance with State law.
Violations of this closure are punishable by a fine not to exceed $1,000 and/or imprisonment not to exceed one year. These actions are taken to protect the public and BLM employee health and safety.
43 CFR 8364.1.
United States International Trade Commission.
Notice.
On September 15, 2014, the Department of Commerce published notice in the
Alan Treat (202-205-3426), Office of Industries, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436. Hearing-impaired individuals are advised that information on this matter can be obtained by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
This investigation is being terminated under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to section 201.10 of the Commission's rules (19 CFR 201.10).
By order of the Commission.
On September 16, 2014, the Department of Justice lodged a proposed consent decree with the United States District Court for the District of New Jersey in
The proposed consent decree would resolve the claims of the United States and the State of New Jersey Department of Environmental Protection and Administrator of the New Jersey Spill Compensation Fund for recovery of response costs and natural resource damages against D.S.C. of Newark Enterprises, Inc. (“DSC”) under section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) relating to releases of hazardous substances at the Cornell-Dubilier Electronics, Inc. Superfund Site in South Plainfield, New Jersey (“the Site”). The consent decree would also resolve the United States' claims under the Federal Debt Collection Procedures Act, to void certain transfers of assets that were made from DSC to its sole shareholder, Anthony A. Coraci (“Coraci”), to the extent necessary to satisfy DSC's debt to the United States.
The consent decree requires DSC and Coraci (“the Settling Defendants”) to pay $22.0 million to the United States and New Jersey, and 50% of the Settling Defendants' insurance recoveries in excess of $750,000, net of certain fees incurred to obtain the recoveries. The consent decree also requires DSC, the current owner of property at the Site, to continue to allow access to EPA to conduct response actions at the Site, to obtain an agreement from any transferee to allow such access, and to cooperate with respect to the filing of a deed notice, engineering controls, restrictions on use and alterations of the property, and monitoring requirements concerning the property at the Site. In return, the United States and New Jersey agree to resolve all past and future liability the Settling Defendants and specified related parties (“Related Parties”) may have for response costs and natural resource damages at the Site under section 107 of CERCLA. The United States further agrees not to sue or take administrative action against the Settling Defendants and Related Parties under section 7003 of the Resource Conservation and Recovery Act (“RCRA”), and the State further agrees not to sue or take administrative action against the Settling Defendants and Related Parties under the New Jersey Spill Compensation and Control Act or the Industrial Site Recovery Act, the common law of negligence, nuisance and/or strict liability, with regard to the Site. In addition, upon receipt of the payments required by the Settling Defendants, the United States and New Jersey agree to release the respective federal and state liens placed on DSC's property at the Site.
The publication of this notice opens a period for public comment on the consent decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
Under section 7003(d) of RCRA, a commenter may request an opportunity for a public meeting in the affected area.
During the public comment period, the consent decree may be examined and downloaded at this Justice Department Web site:
Please enclose a check or money order for $8.50 (25 cents per page reproduction cost) payable to the United States Treasury.
On September 18, 2014, the Department of Justice lodged a proposed Consent Decree with the United States District Court for the District of Hawaii in the lawsuit entitled
In this civil enforcement action under the federal Clean Water Act (“Act”), the United States alleges that the Hawaii Department of Transportation (“Defendant”), failed to comply with certain requirements of the Act by failing to comply with terms of the Hawaii National Pollutant Discharge Elimination System (“NPDES”) General Permit for municipal storm water discharges at Honolulu and Kalaeloa Barbers Point Harbors. The complaint further alleges that Defendant violated an administrative order issued by EPA in 2009 requiring correction of violations and deficiencies in Defendant's storm water management plans for the two harbors. The complaint seeks injunctive relief and civil penalties.
The proposed Consent Decree would resolve violations for certain provisions of the Act and the NPDES General Permit for municipal storm water discharges at Honolulu and Kalaeloa Barbers Point Harbors. The proposed Consent Decree requires Defendant to implement a comprehensive storm water management plan over the life of the Consent Decree and pay a civil penalty of $1.2 million.
The publication of this notice opens a period for public comment on the proposed Consent Decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
During the public comment period, the proposed Consent Decree may be examined and downloaded at this Justice Department Web site:
Please enclose a check or money order for $20.25 (25 cents per page reproduction cost) payable to the United States Treasury. Additional costs may be incurred for attachments.
On September 18, 2014, the Department of Justice lodged a proposed Consent Decree with the United States District Court for the Northern District of California in the lawsuit entitled
The United States of America brought claims on behalf of the United States Environmental Protection Agency under Sections 301 and 402 of the Clean Water Act, 33 U.S.C. 1251,
The United States alleges that the violations arose from Sims' industrial activities at the Port of Redwood City in Redwood City, California. The United States alleges that Sims allowed metal and other material to fall from its ship-loading conveyor directly into Redwood Creek. In addition, the Complaint alleges that Sims violated several requirements of its General Permit authorization for stormwater discharges associated with industrial activity. Sims encapsulated its ship-loading conveyor and came into compliance with the CWA in March 2012. It came into compliance with the General Permit in April 2013.
The proposed Consent Decree would require Sims to pay $189,500 in civil penalties for its violations, and to study and remediate contaminated sediments near the conveyor.
The publication of this notice opens a period for public comment on the proposed Consent Decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
During the public comment period, the proposed Consent Decree may be examined and downloaded at this Department of Justice Web site:
Notice.
The Department of Labor (DOL) is submitting the Employee Benefits Security Administration (EBSA) sponsored information collection request (ICR) titled, “Request for Assistance From the Department of Labor, Employee Benefits Security Administration” to the Office of Management and Budget (OMB) for review and approval for continued use, without change, in accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq. Public comments on the ICR are invited.
The OMB will consider all written comments that agency receives on or before October 24, 2014.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-EBSA, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Michel Smyth by telephone at 202-693-4129, TTY 202-693-8064, (these are not toll-free numbers) or by email at
44 U.S.C. 3507(a)(1)(D).
This ICR seeks to extend PRA authority for an information collection that provides the public a means to request for assistance from the EBSA. The EBSA assists employee benefit plan participants in understanding their rights, responsibilities, and benefits under employee benefit law and intervenes informally on participants' behalf with the plan sponsor in order to help them obtain health and retirement benefits that may have been inappropriately denied. Such informal intervention can avert the necessity for a formal investigation or a civil action. The EBSA maintains a toll-free telephone number through which inquirers can reach Benefits Advisors in ten Regional Offices. The EBSA has also made a request for assistance form available on its Web site for those wishing to obtain assistance in this manner.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection
OMB authorization for an ICR cannot be for more than three (3) years without renewal, and the current approval for this collection is scheduled to expire on September 30, 2014. The DOL seeks to extend PRA authorization for this information collection for three (3) more years, without any change to existing requirements. The DOL notes that existing information collection requirements submitted to the OMB receive a month-to-month extension while they undergo review. For additional substantive information about this ICR, see the related notice published in the
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
Petitions have been filed with the Secretary of Labor under Section 221(a) of the Trade Act of 1974 (“the Act”) and are identified in the Appendix to this notice. Upon receipt of these petitions, the Director of the Office of Trade Adjustment Assistance, Employment and Training Administration, has instituted investigations pursuant to Section 221(a) of the Act.
The purpose of each of the investigations is to determine whether the workers are eligible to apply for adjustment assistance under Title II, Chapter 2, of the Act. The investigations will further relate, as appropriate, to the determination of the date on which total or partial separations began or threatened to begin and the subdivision of the firm involved.
The petitioners or any other persons showing a substantial interest in the subject matter of the investigations may request a public hearing, provided such request is filed in writing with the Director, Office of Trade Adjustment Assistance, at the address shown below, not later than October 6, 2014.
Interested persons are invited to submit written comments regarding the subject matter of the investigations to the Director, Office of Trade Adjustment Assistance, at the address shown below, not later than October 6, 2014.
The petitions filed in this case are available for inspection at the Office of the Director, Office of Trade Adjustment Assistance, Employment and Training Administration, U.S. Department of Labor, Room N-5428, 200 Constitution Avenue NW., Washington, DC 20210.
Millennium Challenge Corporation.
Notice.
This report to Congress is provided in accordance with Section 608(b) of the Millennium Challenge Act of 2003, as amended, 22 U.S.C. 7707(b) (the “Act”).
In accordance with section 608(b)(1) of the Millennium Challenge Act of 2003 (the “Act”, 22 U.S.C. 7707(b)(1)), the Millennium Challenge Corporation (MCC) is submitting the following report. This report identifies the criteria and methodology that the Millennium Challenge Corporation (MCC) intends to use to determine which candidate countries may be eligible to be considered for assistance under the Act for FY 2015.
Under section 608 (c)(1) of the Act, MCC will, for a thirty-day period following publication, accept and consider public comment for purposes of determining eligible countries under section 607 of the Act (22 U.S.C. 7706).
This document explains how the Board of Directors (Board) of the Millennium Challenge Corporation (MCC) will identify, evaluate, and determine eligibility of countries for Millennium Challenge Account (MCA) assistance for fiscal year (FY) 2015. The statutory basis for this report is set forth in appendix A. Specifically, this document discusses:
As discussed in the August 2014 Report on Countries that are Candidates for Millennium Challenge Account Eligibility for Fiscal Year 2015 and Countries that Would be Candidates but for Legal Prohibitions (the “Candidate Country Report”), MCC evaluates all low-income countries (LICs) and lower-middle income countries (LMICs) countries as follows:
• For scorecard evaluation purposes for FY 2015, MCC defines LICs as those countries between $0 and $1985 GNI per capita, and LMICs as those countries between $1986 and $4125 GNI per capita.
• For funding purposes for FY 2015, MCC defines the poorest 75 countries as LICs, and the remaining countries up to the upper-middle income (UMIC) threshold of $4125 as LMICs.
Lists of all LICs and LMICs under scorecard evaluation are provided in appendix B, including which countries among them are statutorily prohibited from receiving U.S. assistance. The list using the “funding” definition appeared in the Candidate Country Report, which describes how funding categories work.
The Board looks at three legislatively mandated factors in its evaluation of any candidate country for compact eligibility: (1) Policy performance; (2) the opportunity to reduce poverty and generate economic growth; and (3) the availability of MCC funds.
Because of the importance of needing to evaluate a country's policy performance—and needing to do so in a comparable, cross-country way—the Board relies to the maximum extent possible upon the best-available objective and quantifiable indicators of policy performance. These indicators act as proxies of the country's commitment to good governance, as laid out in MCC's founding legislation. Comprised of 20 third-party indicators in the categories of “encouraging economic freedom,” “investing in people,” and “ruling justly,” MCC “scorecards” are created for all LICs and LMICs. To “pass” the indicators on the scorecard, the country must perform above the median among its income group (as defined above), except in the cases of inflation, political rights, civil liberties, and immunization rates (LMICs only), where minimum threshold scores have been established. In particular, the Board considers whether the country
• Passed at least 10 of the 20 indicators, with at least one in each category,
• passed the “Control of Corruption” indicator, and
• passed either the “Political Rights” or “Civil Liberties” indicator.
While satisfaction of all three aspects means a country is termed to have “passed” the scorecard, the Board also considers whether the country performed “substantially worse” in any one policy category than it does on the scorecard overall. Appendix C describes all 20 indicators, their definitions, what is required to “pass,” their source, and their relationship to the legislative criteria.
The 20 policy performance indicators are the predominant basis for determining which countries will be eligible for MCC assistance, and the Board expects a country to be passing its scorecard at the point the Board decides to select the country for either a first or second/subsequent compact. However, the Board also recognizes that even the best-available data has inherent challenges. For example, data gaps, real-time events versus data lags, the absence of narratives and nuanced detail, and other similar weaknesses affect each of these indicators. In such instances, the Board uses its judgment to interpret policy performance as measured by the scorecards. The Board may also consult other sources of information to further enhance its understanding of a given country's policy performance beyond the issues on the scorecard, which is especially useful given the unique perspective each Board member brings to the table (e.g., specific policy issues related to trade, civil society, other U.S. aid programs, financial sector performance, and security/foreign policy issues). The Board uses its judgment on how best to weigh such information in assessing overall policy performance.
The Board also consults other sources of qualitative and quantitative information to have a more detailed view of the opportunity to reduce poverty and generate economic growth in a country.
While the Board considers a range of other information sources depending on
• The control of corruption and rule of law;
• The state of democratic and human rights (especially of vulnerable groups
• The perspective of civil society on salient governance issues;
• The potential for the private sector (both local and foreign) to lead investment and growth;
• The levels of poverty within a country; and
• The country's institutional capacity.
Where applicable, the Board also considers MCC's own experience and ability to reduce poverty and generate economic growth in a given country—such as considering MCC's core skills versus the country's needs, capacity within MCC to work with a country, and the likelihood that MCC is seen by the country as a credible partner.
The goal in using this information is to have greater clarity regarding the likelihood that MCC investments will have an appreciable impact on reducing poverty and generating economic growth in a given country. The Board has used such information both to
The final factor that the Board must consider when evaluating countries is the funding available. The agency's allocation of its budget is constrained, and often specifically limited, by provisions in authorizing legislation and appropriations acts. MCC has a continuous pipeline of countries in compact development, compact implementation, and compact closure, as well as threshold programs. Consequently, the Board factors in the overall portfolio picture when making its selection decisions given the funding available for each of the agency's programs.
Sub-sections B and C describe how each of these three legislatively mandated factors are applied with regard to two selection situations facing the Board each December: Selection of countries for first compact eligibility and selection of countries for second/subsequent compact eligibility. Subsection D describes selection of countries for the threshold program.
When selecting countries for compacts, the Board looks at all three legislatively mandated aspects described in the previous section: (1) Policy performance, first and foremost as measured by the scorecards and bolstered through additional information as described in the previous section; (2) the opportunity to reduce poverty and generate economic growth, examined through the use of other supporting information, as described in the previous section; and (3) the funding available.
At a minimum, the Board looks to see that the country passes its scorecard. It also examines supporting evidence that the country's commitment to good governance is on a sound footing and on a positive trajectory, and that MCC has funding to support a meaningful compact with that country. Where applicable, previous threshold program information is also considered. The Board then weighs the information described above across each of the three dimensions.
The approach described above is then applied in any additional years of selection of a country to continue to develop a first compact, with the added benefit of having cumulative scorecards, cumulative records of policy performance, and other accumulated supporting information to determine the overall pattern of performance over the emerging multi-year trajectory.
Section 609(k) of the Millennium Challenge Act of 2003, as amended, specifically authorizes MCC to enter into “one or more subsequent Compacts.” MCC does not consider subsequent compact eligibility, however, before countries have completed their compact, or are within 18 months of completion, (e.g., a second compact if they have completed or are within 18 months of completing their first compact). Selection for subsequent compacts is not automatic and is intended only for countries that (1) exhibit successful performance on their previous compact; (2) exhibit improved scorecard policy performance during the partnership; and (3) exhibit a continued commitment to further their sector reform efforts in any subsequent partnership. As a result, the Board has an even higher standard when selecting countries for subsequent compacts.
To evaluate the degree of success of the previous compact, the Board looks to see if there is a clear evidence base of success within the budget and time limits of the compact, in particular by looking at three aspects:
(a) The degree to which there is evidence of strong political will and management capacity: Is the partnership characterized by the country ensuring that both policy reforms and the compact itself are both being implemented to the best ability that the country can deliver;
(b) The degree to which the country has exhibited a commitment and capacity to achieve program results: Are the financial and project results being achieved; to what degree is the country committing its own resources to ensure the compact is a success; to what extent is the private sector engaged (if relevant); and other compact-specific issues; and
(c) The degree to which the country has implemented the compact in accordance with MCC's core policies and standards: That is, is the country adhering to MCC's policies and procedures, including in critical areas such as remediating unresolved fraud and corruption/abuse or misuse of funds issues; procurement; and monitoring and evaluation.
Details on the specific types of information examined (and sources used) in each of the three areas are provided in appendix D. The overall sentiment is that the Board is looking for evidence that the previous compact will be completed or has been completed successfully, on time and on budget, and that there is a commitment to continued, robust reform going forward.
Beyond successful implementation of the previous compact, the Board expects the country to have improved its overall scorecard policy performance during the partnership and to pass the scorecard in the year of selection for the subsequent compact. The Board focuses on:
• The overall scorecard pass/fail rate over time, what this suggests about underlying policy performance, as well as an examination of the underlying reasons;
• The progress over time on policy areas measured by both hard-hurdle indicators—Control of Corruption, and Democratic Rights—including an examination of the underlying reasons; and
• Other indicator trajectories as deemed relevant by the Board.
In all cases, while the Board expects the country to be passing its scorecard, other sources of information are examined to understand the nuance and reasons behind scorecard or indicator performance over time, including any real-time updates, methodological changes within the indicators themselves, shifts in the relevant candidate pool, or alternative policy performance perspectives (such as gleaned through consultations with civil society and related stakeholders). Other sources of information are also consulted to look at policy performance over time in areas not covered by the scorecard but that are deemed important by the Board (such as trade, foreign policy concerns, etc.).
The Board expects that subsequent compacts will endeavor to tackle deeper policy reforms necessary to unlock an identified constraint to growth. Consequently, the Board considers its own experience during the previous compact in considering how committed the country is to reducing poverty and increasing economic growth, and therefore tries to gauge the country's commitment for further sector reform should it be selected for a subsequent compact. This includes:
• Assessing the country's delivery of policy reform during the previous compact (as described above);
• Assessing expectations of the country's ability and willingness to continue embarking on sector policy reform in a subsequent compact;
• Examining both other sources of information that describe the nature of the opportunity to reduce poverty and generate growth (as outlined in A.2 above), and the relative success of the previous compact overall, as already discussed; and
• Finally, considering how well funding can be leveraged for impact, given its experience in the previous compact.
Through this overall approach to subsequent compact selection, the Board applies the three legislatively mandated evaluation criteria (policy performance, the opportunity to reduce poverty and generate economic growth, and the funding available) in a way that rests critically on deeply assessing the previous partnership: from a compact success standpoint, a commitment to improved scorecard policy performance standpoint, and a commitment to continued sector policy reform standpoint. The Board then weighs all of the information described above in making its decision.
The approach described above is then applied in any additional years of selection to continue to develop the subsequent compact, with the added benefit of having even further detail on previous compact implementation, cumulative scorecards, cumulative records of policy performance, and other accumulated supporting information to determine the overall pattern of performance over the resulting multi-year trajectory.
The Board may also select countries to participate in the Threshold Program. The Threshold Program provides assistance to candidate countries that exhibit a significant commitment to meeting the eligibility criteria described in the previous sub-sections, but fail to meet such requirements. Specifically, in examining the policy performance, the opportunity to reduce poverty and generate economic growth, and the funding available, the Board will consider whether a country potentially eligible for threshold program assistance appears to be on a trajectory to becoming a viable contender for compact eligibility in the medium term.
This report to Congress is provided in accordance with section 608(b) of the Millennium Challenge Act of 2003, as amended, 22 U.S.C. 7707(b) (the Act).
Section 605 of the Act authorizes the provision of assistance to countries that enter into a Millennium Challenge Compact with the United States to support policies and programs that advance the progress of such countries in achieving lasting economic growth and poverty reduction. The Act requires MCC to take a number of steps in selecting countries for compact assistance for FY 2015 based on the countries' demonstrated commitment to just and democratic governance, economic freedom, and investing in their people, MCC's opportunity to reduce poverty and generate economic growth in the country, and the availability of funds. These steps include the submission of reports to the congressional committees specified in the Act and publication of information in the
1. The countries that are “candidate countries” for MCA assistance for FY 2015 based on per capita income levels and eligibility to receive assistance under U.S. law. (section 608(a) of the Act; 22 U.S.C. 7707(a));
2. The criteria and methodology that MCC's Board of Directors (Board) will use to measure and evaluate policy performance of the candidate countries consistent with the requirements of section 607 of the Act (22 U.S.C. 7706) in order to determine “eligible countries” from among the “candidate countries” (section 608(b) of the Act; 22 U.S.C. 7707(b)); and
3. The list of countries determined by the Board to be “eligible countries” for FY 2015, with justification for eligibility determination and selection for compact negotiation, including those eligible countries with which MCC will seek to enter into compacts (section 608(d) of the Act; 22 U.S.C. 7707(d)).
This report reflects the satisfaction of item #2 above.
Since MCC was created, it has relied on the World Bank's gross national income (GNI) per capita income data (Atlas method) and the historical ceiling for eligibility as set by the World Bank's International Development Association (IDA) to divide countries into two income categories for purposes of creating scorecards: LICs and LMICs. These categories are used to account for the income bias that occurs when countries with more per capita resources perform better than countries with fewer. Using the historical IDA eligibility ceiling for the scorecards ensures that the poorest countries compete with their income level peers and are not compared against countries with more resources to mobilize.
MCC will continue to use the traditional income categories for eligibility
• LICs are countries with GNI per capita below IDA's historical ceiling for eligibility ($1,985 for FY 2015); and
• LMICs, which are countries with GNI per capita above IDA's historical ceiling for eligibility but below the World Bank's upper middle income country threshold ($1,986-$4,125 for FY 2015).
The list of countries categorized as LICs and LMICs for the purpose of scorecard assessments can be found below.
• The poorest 75 countries are now considered LICs for the purposes of MCC funding. They are not limited by the 25 percent funding cap on LMICs.
• Countries with a GNI per capita above the poorest 75 but below the World Bank's upper middle income country threshold ($4,125 for FY 2015) are considered LMICs for the purposes of MCC funding. By law, no more than 25 percent of
The FY 2015 Candidate Country Report lists LICs and LMICs based on this new definition and outlines which countries are subject to the 25 percent funding cap.
The following indicators will be used to measure candidate countries' demonstrated commitment to the criteria found in section 607(b) of the Act. The indicators are intended to assess the degree to which the political and economic conditions in a country serve to promote broad-based sustainable economic growth and reduction of poverty and thus provide a sound environment for the use of MCA funds. The indicators are not goals in themselves; rather, they are proxy measures of policies that are linked to broad-based sustainable economic growth. The indicators were selected based on (i) their relationship to economic growth and poverty reduction; (ii) the number of countries they cover; (iii) transparency and availability; and (iv) relative soundness and objectivity. Where possible, the indicators are developed by independent sources. Listed below is a brief summary of the indicators (a detailed rationale for the adoption of these indicators can be found in the Public Guide to the Indicators on MCC's public Web site at
1. Political Rights: Independent experts rate countries on the prevalence of free and fair elections of officials with real power; the ability of citizens to form political parties that may compete fairly in elections; freedom from domination by the military, foreign powers, totalitarian parties, religious hierarchies and economic oligarchies; and the political rights of minority groups, among other things. Pass: Minimum score of 17 out of 40. Source: Freedom House
2. Civil Liberties: Independent experts rate countries on freedom of expression; association and organizational rights; rule of law and human rights; and personal autonomy and economic rights, among other things. Pass: Minimum score of 25 out of 60. Source: Freedom House
3. Freedom of Information: Measures the legal and practical steps taken by a government to enable or allow information to move freely through society; this includes measures of press freedom, national freedom of information laws, and the extent to which a county is filtering internet content or tools. Pass: Score must be above the median score for the income group. Source: Freedom House/FRINGE Special/Open Net Initiative
4. Government Effectiveness: An index of surveys and expert assessments that rate countries on the quality of public service provision; civil servants' competency and independence from political pressures; and the government's ability to plan and implement sound policies, among other things. Pass: Score must be above the median score for the income group. Source: Worldwide Governance Indicators (World Bank/Brookings)
5. Rule of Law: An index of surveys and expert assessments that rate countries on the extent to which the public has confidence in and abides by the rules of society; the incidence and impact of violent and nonviolent crime; the effectiveness, independence, and predictability of the judiciary; the protection of property rights; and the enforceability of contracts, among other things. Pass: Score must be above the median score for the income group. Source: Worldwide Governance Indicators (World Bank/Brookings)
6. Control of Corruption: An index of surveys and expert assessments that rate countries on: “grand corruption” in the political arena; the frequency of petty corruption; the effects of corruption on the business environment; and the tendency of elites to engage in “state capture,” among other things. Pass: Score must be above the median score for the income group. Source: Worldwide Governance Indicators (World Bank/Brookings)
1. Fiscal Policy: The overall budget balance divided by gross domestic product (GDP), averaged over a three-year period. The data for this measure comes primarily from IMF country reports or, where public IMF data are outdated or unavailable, are provided directly by the recipient government with input from U.S. missions in host countries. All data are cross-checked with the IMF's World Economic Outlook database to try to ensure consistency across countries and made publicly available. Pass: Score must be above the median score for the income group. Source: International Monetary Fund Country Reports, National Governments, and the International Monetary Fund's World Economic Outlook Database
2. Inflation: The most recent average annual change in consumer prices. Pass: Score must be 15% or less. Source: The International Monetary Fund's World Economic Outlook Database
3. Regulatory Quality: An index of surveys and expert assessments that rate countries on the burden of regulations on business; price controls; the government's role in the economy; and foreign investment regulation,
4. Trade Policy: A measure of a country's openness to international trade based on weighted average tariff rates and non-tariff barriers to trade. Pass: Score must be above the median score for the income group. Source: The Heritage Foundation
5. Gender in the Economy: An index that measures the extent to which laws provide men and women equal capacity to generate income or participate in the economy, including the capacity to access institutions, get a job, register a business, sign a contract, open a bank account, choose where to live, and to travel freely. Pass: Score must be above the median score for the income group. Source: International Finance Corporation
6. Land Rights and Access: An index that rates countries on the extent to which the institutional, legal, and market framework provide secure land tenure and equitable access to land in rural areas and the time and cost of property registration in urban and peri-urban areas. Pass: Score must be above the median score for the income group. Source: The International Fund for Agricultural Development and the International Finance Corporation
7. Access to Credit: An index that rates countries on rules and practices affecting the coverage, scope, and accessibility of credit information available through either a public credit registry or a private credit bureau; as well as legal rights in collateral laws and bankruptcy laws. Pass: Score must be above the median score for the income group. Source: International Finance Corporation
8. Business Start-Up: An index that rates countries on the time and cost of complying with all procedures officially required for an entrepreneur to start up and formally operate an industrial or commercial business. Pass: Score must be above the median score for the income group. Source: International Finance Corporation
1. Public Expenditure on Health: Total expenditures on health by government at all levels divided by GDP. Pass: Score must be above the median score for the income group. Source: The World Health Organization
2. Total Public Expenditure on Primary Education: Total expenditures on primary education by government at all levels divided by GDP. Pass: Score must be above the median score for the income group. Source: The United Nations Educational, Scientific and Cultural Organization and National Governments
3. Natural Resource Protection: Assesses whether countries are protecting up to 17 percent of all their biomes (
4. Immunization Rates: The average of DPT3 and measles immunization coverage rates for the most recent year available. Pass: Score must be above the median score for LICs, and 90% or higher for LMICs. Source: The World Health Organization and the United Nations Children's Fund
5. Girls Education:
a. Girls' Primary Completion Rate: The number of female students enrolled in the last grade of primary education minus repeaters divided by the population in the relevant age cohort (gross intake ratio in the last grade of primary). LICs are assessed on this indicator. Pass: Score must be above the median score for the income group. Source: United Nations Educational, Scientific and Cultural Organization
b. Girls Secondary Enrollment Education: The number of female pupils enrolled in lower secondary school, regardless of age, expressed as a percentage of the population of females in the theoretical age group for lower secondary education. LMICs will be assessed on this indicator instead of Girls Primary Completion Rates. Pass: Score must be above the median score for the income group. Source: United Nations Educational, Scientific and Cultural Organization
6. Child Health: An index made up of three indicators: (i) access to improved water, (ii) access to improved sanitation, and (iii) child (ages 1-4) mortality. Pass: Score must be above the median score for the income group. Source: The Center for International Earth Science Information Network and the Yale Center for Environmental Law and Policy
Within each policy category, the Act sets out a number of specific selection criteria. A set of objective and quantifiable policy indicators is used to inform eligibility decisions for MCA assistance and to measure the relative performance by candidate countries against these criteria. The Board's approach to determining eligibility ensures that performance against each of these criteria is assessed by at least one of the objective indicators. Most are addressed by multiple indicators. The specific indicators appear in parentheses next to the corresponding criterion set out in the Act.
(A) Promote political pluralism, equality and the rule of law (Political Rights, Civil Liberties, Rule of Law, and Gender in the Economy);
(B) respect human and civil rights, including the rights of people with disabilities (Political Rights, Civil Liberties, and Freedom of Information);
(C) protect private property rights (Civil Liberties, Regulatory Quality, Rule of Law, and Land Rights and Access);
(D) encourage transparency and accountability of government (Political Rights, Civil Liberties, Freedom of Information, Control of Corruption, Rule of Law, and Government Effectiveness); and
(E) combat corruption (Political Rights, Civil Liberties, Rule of Law, Freedom of Information, and Control of Corruption);
(A) Encourage citizens and firms to participate in global trade and international capital markets (Fiscal Policy, Inflation, Trade Policy, and Regulatory Quality);
(B) promote private sector growth (Inflation, Business Start-Up, Fiscal Policy, Land Rights and Access, Access to Credit, Gender in the Economy, and Regulatory Quality);
(C) strengthen market forces in the economy (Fiscal Policy, Inflation, Trade Policy, Business Start-Up, Land Rights and Access, Access to Credit, and Regulatory Quality); and
(D) respect worker rights, including the right to form labor unions (Civil Liberties and Gender in the Economy); and
(A) Promote broad-based primary education (Girls' Primary Completion Rate, Girls' Secondary Education Enrollment Rate, and Total Public Expenditure on Primary Education);
(B) strengthen and build capacity to provide quality public health and reduce child mortality (Immunization Rates, Public Expenditure on Health, and Child Health); and
(C) promote the protection of biodiversity and the transparent and sustainable management and use of natural resources (Natural Resource Protection).
MCC reporting and data in the following chart are used to assess compact performance of MCC partners nearing the end of compact implementation (
9:00 a.m. to 4:00 p.m., Thursday, October 16, 2014.
The offices of the Morris K. Udall and Stewart L. Udall Foundation, 130 South Scott Avenue, Tucson, AZ 85701.
This meeting of the Board of Trustees will be open to the public, unless it is necessary for the Board to consider items in executive session.
(1) Chair's Remarks and Appropriations Update; (2) Consent Agenda Approval, including the Minutes of the April 24, 2014, Board of Trustees Meeting, the Udall Center for Studies in Public Policy Workplan, and resolutions regarding Allocation of Funds to the Udall Center for Studies in Public Policy; Transfer of Funds to the Native Nations Institute for Leadership, Management, and Policy; and the Parks in Focus Fund, Inc., Bylaws; (3) Election of Secretary of the Board; (4) Election of Trustee to the Executive Committee; (5)
All agenda items except as noted below.
Executive Session to Discuss Internal Personnel Matters.
Philip J. Lemanski, Executive Director, 130 South Scott Avenue, Tucson, AZ 85701, (520) 901-8500.
National Science Foundation.
Notice of Permit Applications Received under the Antarctic Conservation Act of 1978, Public Law 95-541.
The National Science Foundation (NSF) is required to publish a notice of permit applications received to conduct activities regulated under the Antarctic Conservation Act of 1978. NSF has published regulations under the Antarctic Conservation Act at Title 45 Part 670 of the Code of Federal Regulations. This is the required notice of permit applications received.
Interested parties are invited to submit written data, comments, or views with respect to this permit application by October 24, 2014. This application may be inspected by interested parties at the Permit Office, address below.
Comments should be addressed to Permit Office, Room 755, Division of Polar Programs, National Science Foundation, 4201 Wilson Boulevard, Arlington, Virginia 22230.
Li Ling Hamady, ACA Permit Officer, at the above address or
The National Science Foundation, as directed by the Antarctic Conservation Act of 1978 (Pub. L. 95-541), as amended by the Antarctic Science, Tourism and Conservation Act of 1996, has developed regulations for the establishment of a permit system for various activities in Antarctica and designation of certain animals and certain geographic areas a requiring special protection. The regulations establish such a permit system to designate Antarctic Specially Protected Areas.
National Science Foundation.
Notice of permits issued under the Antarctic Conservation of 1978, Public Law 95-541.
The National Science Foundation (NSF) is required to publish notice of permits issued under the Antarctic Conservation Act of 1978. This is the required notice.
Li Ling Hamady, ACA Permit Officer, Division of Polar Programs, Rm. 755, National Science Foundation, 4201 Wilson Boulevard, Arlington, VA 22230. Or by email:
On August 8, 2014 the National Science Foundation published a notice in the
Nuclear Regulatory Commission.
Standard review plan-draft section revision; request for comment.
The U.S. Nuclear Regulatory Commission (NRC) is revising the following sections and soliciting public comment on the following sections in Chapter 13, “Conduct of Operations,” of NUREG-0800, “Standard Review Plan for the Review of Safety Analysis Reports for Nuclear Power Plants: LWR Edition,” Section 13.1.1, “Management and Technical Support Organization”; Section 13.1.2-13.1.3, “Operating Organization”; Section 13.2.1, “Reactor Operator Requalification Program; Reactor Operator Training”; Section 13.2.2, “Non-licensed Plant Staff Training”; Section 13.5.1.1, “Administrative Procedures—,General”; and Section 13.5.2.1, “Operating and Emergency Operating Procedures.”
Submit comments by November 24, 2014. Comments received after this date will be considered, if it is practical to do so, but the Commission is only able to ensure consideration only for comments received on or before this date.
You may submit comments by any of the following methods (unless this document describes a different method for submitting comments on a specific subject):
• Federal Rulemaking Web site: Go to
• Mail comments to: Cindy Bladey, Office of Administration, Mail Stop: 3WFN-06-44M, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001.
For additional direction on accessing information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Jonathan DeGange, Office of New Reactors, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-6992 or email to:
Please refer to Docket ID NRC-2014-0203 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this action by the following methods:
• Federal Rulemaking Web site: Go to
• NRC's Agencywide Documents Access and Management System (ADAMS):
You may obtain publicly-available documents online in the NRC Library at
• NRC's PDR: You may examine and purchase copies of public documents at the NRC's PDR, Room O1-F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852.
Please include Docket ID NRC-2014-0203 in the subject line of your comment submission, in order to ensure that the NRC is able to make your comment submission available to the public in this docket.
The NRC cautions you not to include identifying or contact information in comment submissions that you do not want to be publicly disclosed. The NRC will post all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submissions. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment submissions into ADAMS.
The ADAMS accession numbers for the current revisions, proposed draft revisions, and redline strikeouts comparing current revisions and the proposed revisions of individual sections are available in ADAMS under the following accession numbers:
The NRC seeks public comments on the proposed revision of Standard Review Plan (SRP) Sections 13.1.1, 13.1.2-13.1.3, 13.2.1, 13.2.2, 13.5.1.1, and 13.5.2.1. The changes to SRP Chapter 13 reflect the current staff reviews, methods and practices based on lessons learned from the NRC's reviews of design certification and combined license applications completed since the last revision of this chapter. The draft SRP sections, if finalized, would provide guidance to the staff for reviewing applications for a construction permit and an operating license under part 50 of Title 10 of the
Following the NRC staff's evaluation of public comments, the NRC intends to finalize the revised SRP Sections 13.1.1, 13.1.2-13.1.3, 13.2.1, 13.2.2, 13.5.1.1, and 13.5.2.1 in ADAMS and post the revised sections on the NRC's public Web site at
Issuance of the draft SRP sections, if finalized, would not constitute backfitting as defined in 10 CFR 50.109 (the Backfit Rule) or otherwise be inconsistent with the issue finality provisions in 10 CFR part 52. The NRC's position is based upon the following considerations.
1.
The SRP provides interim guidance to the staff on how to review an application for NRC regulatory approval in the form of licensing. Changes in internal staff guidance are not matters for which applicants or licensees are protected under 10 CFR 50.109 or issue finality provisions in 10 CFR part 52.
2.
Applicants and potential applicants are not, with certain exceptions, protected by either the Backfit Rule or any issue finality provisions under 10 CFR part 52. This is because neither the Backfit Rule nor the issue finality provisions under 10 CFR part 52—with certain exclusions discussed below—was intended to apply to every NRC's action which substantially changes the expectations of current and future applicants. The exceptions to the general principle are applicable whenever an applicant references a 10 CFR part 52 license (e.g., an early site permit) and/or NRC regulatory approval (e.g., a design certification rule) with specified issue finality provisions. The staff does not, at this time, intend to impose the positions represented in the draft SRP sections (if finalized) in a manner that is inconsistent with any issue finality provisions. If, in the future, the staff seeks to impose a position in the draft SRP sections (if finalized) in a manner which does not provide issue finality as described in the applicable issue finality provision, then the staff must address the criteria for avoiding issue finality as described in the applicable issue finality provision.
3.
The staff does not intend to impose or apply the positions described in the draft SRP sections to existing (already issued) licenses (
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Standard review plan—draft section revision; request for comment.
The U.S. Nuclear Regulatory Commission (NRC) is soliciting public comment on draft NUREG-0800, “Standard Review Plan for the Review of Safety Analysis Reports for Nuclear Power Plants: LWR Edition,” Section 17.5, “Quality Assurance Program Description—Design Certification, Early Site Permit and New License Applicants.”
Comments must be filed no later than November 24, 2014. Comments received after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received on or before this date.
You may submit comments by any of the following methods (unless this document describes a different method for submitting comments on a specific subject):
• Federal Rulemaking Web site: Go to
• Mail comments to: Cindy Bladey, Office of Administration, Mail Stop: 3WFN-06-44M, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001.
For additional direction on accessing information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Jonathan DeGange, Office of New Reactors, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-6992 or email to:
Please refer to Docket ID NRC-2014-0204 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document by any of the following methods:
• Federal Rulemaking Web site: Go to
• NRC's Agencywide Documents Access and Management System (ADAMS): You may access publicly available documents online in the NRC Library at
• NRC's PDR: You may examine and purchase copies of public documents at the NRC's PDR, Room O1-F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852.
Please include Docket ID NRC-2014-0204 in the subject line of your comment submission, in order to ensure that the NRC is able to make your comment submission available to the public in this docket.
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in you comment submission. The NRC will post all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment submissions into ADAMS.
The NRC is seeking public comment on the proposed revision to SRP Section 17.5. This section has been developed to assist the NRC's staff review Quality Assurance (QA) program descriptions under part 50 of Title 10 of the
Following the NRC staff's evaluation of public comments, the NRC intends to finalize SRP Section 17.5, Revision 1 in ADAMS and post it on the NRC's public Web site at
Issuance of this draft SRP, if finalized, would not constitute backfitting as defined in 10 CFR 50.109 (the Backfit Rule) or otherwise be inconsistent with the issue finality provisions in 10 CFR part 52. The NRC's position is based upon the following considerations:
1.
The SRP provides internal guidance to the NRC staff on how to review an application for NRC regulatory approval in the form of licensing. Changes in internal staff guidance are not matters for which either nuclear power plant applicants or licensees are protected under either the Backfit Rule or the issue finality provisions of 10 CFR part 52.
2.
The NRC staff does not intend to impose or apply the positions described in the draft SRP to existing licenses and regulatory approvals. Hence, the issuance of a final SRP—even if considered guidance within the purview of the issue finality provisions in 10 CFR part 52—would not need to be evaluated as if it were a backfit or as being inconsistent with issue finality provisions. If, in the future, the NRC staff seeks to impose a position in the SRP on holders of already issued licenses in a manner that does not provide issue finality as described in the applicable issue finality provision, then the staff must make the showing as set forth in the Backfit Rule or address the criteria for avoiding issue finality as described in the applicable issue finality provision.
3.
Applicants and potential applicants are not, with certain exceptions, protected by either the Backfit Rule or any issue finality provisions under 10 CFR part 52. Neither the Backfit Rule nor the issue finality provisions under 10 CFR part 52—with certain exclusions—were intended to apply to every NRC action that substantially changes the expectations of current and future applicants. The exceptions to the general principle are applicable whenever an applicant references a 10 CFR part 52 license (e.g., an early site permit) and/or NRC regulatory approval (e.g., a design certification rule) with specified issue finality provisions.
The NRC staff does not, at this time, intend to impose the positions represented in the draft SRP in a manner that is inconsistent with any issue finality provisions. If, in the future, the staff seeks to impose a position in the draft SRP in a manner that does not provide issue finality as described in the applicable issue finality provision, then the staff must address the criteria for avoiding issue finality as described in the applicable issue finality provision.
For the Nuclear Regulatory Commission.
On July 18, 2014, The NASDAQ Stock Market LLC (“Nasdaq” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to list and trade Shares of the Fund pursuant to Nasdaq Rule 5735, which governs the listing and trading of Managed Fund Shares on the Exchange. The Shares will be offered by First Trust Exchange-Traded Fund III (“Trust”), which was established as a Massachusetts business trust on January 9, 2008.
The Exchange has made the following representations and statements in describing the Fund and its principal investments, investments in derivatives and foreign currencies, and other investments and investment restrictions.
The investment objective of the Fund will be to seek maximum total return and current income. Under normal market conditions,
In implementing the Fund's investment strategy, the Sub-Adviser will seek to provide current income and enhance capital, while minimizing volatility. The Sub-Adviser will continually review fundamental economic and structural themes that impact long- and medium-term asset returns in emerging markets. The Sub-Adviser will also consider shorter-term market drivers such as valuations, liquidity conditions, and sentiment to determine the appropriate positioning of the Fund's investments. The Sub-Adviser will adjust the portfolio's country allocations, duration, and individual security positioning to reflect the most attractive opportunities on a continuous basis.
The Fund's exposure to any single country generally will be limited to 20% of the Fund's net assets (although this percentage may change from time to time in response to economic events). The percentage of Fund assets invested in a specific region, country, or issuer will change from time to time. The Fund intends, initially, to invest in Debt Instruments of issuers in the following countries: Brazil, Chile, Colombia, Hungary, Indonesia, Israel, Malaysia, Mexico, Nigeria, Peru, Philippines, Poland, Romania, Russia, South Africa, South Korea, Thailand, Turkey, and Uruguay. This list may change as market developments occur and may include additional issuers. The Fund will invest only in Debt Instruments that, at the time of purchase, are performing, and not in default or distressed; however, the Debt Instruments in which the Fund invests may become non-performing, distressed, or defaulted subsequent to purchase and the Fund may continue to hold such Debt Instruments. The Fund may invest in Debt Instruments of any credit quality,
Liquidity will be a substantial factor in the Fund's security selection process.
The Fund's investments in derivative instruments will be made in accordance with the 1940 Act and consistent with the Fund's investment objective and policies. Under normal market conditions, no more than 20% of the value of the Fund's net assets will be invested in derivative instruments. Derivatives are financial contracts whose value depends upon, or is derived from, the value of an underlying asset, reference rate, or index, and may relate to, among other things, interest rates, currencies, or currency exchange rates. The Fund may, but is not required to, use derivative instruments for risk management purposes or as part of its investment strategies. The Fund may invest in exchange-listed futures contracts,
The Fund will use derivative instruments primarily to hedge interest rate and foreign currency risk and to actively manage interest rate and foreign currency exposure. The Fund may also use derivative instruments to enhance returns, as a substitute for, or to gain exposure to, a position in an underlying asset, to reduce transaction costs, to maintain full market exposure (
The Fund will invest in foreign currencies and Debt Instruments denominated in foreign (non-U.S.) currencies, and will receive revenues in foreign currencies. In addition, the Fund may engage in foreign currency transactions on a spot (cash) basis and, as indicated above, enter into forward currency contracts.
The Fund will comply with the regulatory requirements of the Commission to maintain assets as “cover,” maintain segregated accounts, and/or make margin payments when it takes positions in derivative instruments involving obligations to third parties (
Under normal market conditions, the Fund will invest substantially all of its assets to meet its investment objective and, as described above, the Fund may invest in derivative instruments and foreign currencies. In addition, the Fund may invest its remaining assets as described below.
The Fund may invest up to 20% of its net assets in non-U.S. corporate bonds that are not included within the meaning of the term “Debt Instruments” (referred to as “Corporate Bonds”). The Fund will invest only in Corporate Bonds that the Adviser and/or the Sub-Adviser deems to be sufficiently liquid.
The Fund may invest up to 20% of its net assets in short-term debt securities (as described in the following paragraph) that are not included within the meaning of the term “Debt Instruments,”
Short-term debt securities are the following: (1) Fixed rate and floating rate U.S. government securities, including bills, notes, and bonds differing as to maturity and rates of interest, which are either issued or guaranteed by the U.S. Treasury or by U.S. government agencies or instrumentalities; (2) short-term securities issued or guaranteed by non-U.S. governments or by their agencies or instrumentalities;
The Fund may invest up to 20% of its net assets in the securities of money market funds (as noted above) and other exchange-traded funds (“ETFs”)
The Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), including Rule 144A securities deemed illiquid by the Adviser and/or the Sub-Adviser.
The Fund may not invest 25% or more of the value of its total assets in securities of issuers in any one industry. This restriction does not apply to (a) obligations issued or guaranteed by the U.S. government, its agencies, or instrumentalities, or (b) securities of other investment companies.
The Fund may purchase securities on a when-issued or other delayed delivery basis and may enter into reverse repurchase agreements. Reverse repurchase agreements will not be used by the Fund to enhance leverage.
The Fund will seek to qualify for treatment as a Regulated Investment Company under Subchapter M of the Internal Revenue Code of 1986, as amended.
After careful review, the Commission finds that the Exchange's proposal to list and trade the Shares is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange.
The Commission finds that the proposal to list and trade the Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the Act,
The Commission further believes that the proposal to list and trade the Shares is reasonably designed to promote fair disclosure of information that may be necessary to price the Shares appropriately and to prevent trading when a reasonable degree of transparency cannot be assured. The Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the Disclosed Portfolio will be made available to all market participants at the same time. Trading in Shares of the Fund will be halted under the conditions specified in Nasdaq Rules 4120 and 4121, including the trading pause provisions under Nasdaq Rules 4120(a)(11) and (12). Trading in the Shares may be halted because of market conditions or for reasons that, in the view of the
The Exchange represents that the Shares are deemed to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. In support of this proposal, the Exchange has made the following representations:
(1) The Shares will be subject to Rule 5735, which sets forth the initial and continued listing criteria applicable to Managed Fund Shares.
(2) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions.
(3) Trading in the Shares will be subject to the existing trading surveillances, administered by both Nasdaq and FINRA, on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws, and that these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares and the exchange-traded securities and instruments held by the Fund with other markets and other entities that are members of ISG, and FINRA may obtain trading information regarding trading in the Shares and the exchange-traded securities and instruments held by the Fund from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and the exchange-traded securities and instruments held by the Fund from markets and other entities that are members of ISG, which includes securities and futures exchanges, or with which the Exchange has in place a comprehensive surveillance sharing agreement. Moreover, FINRA, on behalf of the Exchange, will be able to access, as needed, trade information for certain fixed income securities held by the Fund reported to FINRA's Trade Reporting and Compliance Engine.
(4) Prior to the commencement of trading, the Exchange will inform its members in an Information Circular of the special characteristics and risks associated with trading the Shares. Specifically, the Information Circular will discuss the following: (a) the procedures for purchases and redemptions of Shares in creation units (and that Shares are not individually redeemable); (b) Nasdaq Rule 2111A, which imposes suitability obligations on Nasdaq members with respect to recommending transactions in the Shares to customers; (c) how and by whom information regarding the Intraday Indicative Value and Disclosed Portfolio is disseminated; (d) the risks involved in trading the Shares during the Pre-Market and Post-Market Sessions when an updated Intraday Indicative Value will not be calculated or publicly disseminated; (e) the requirement that members deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (f) trading information.
(5) For initial and continued listing, the Fund must be in compliance with Rule 10A-3 under the Act.
(6) The Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), including Rule 144A securities deemed illiquid by the Adviser and/or the Sub-Adviser. The Fund will monitor its portfolio liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained, and will consider taking appropriate steps in order to maintain adequate liquidity if, through a change in values, net assets, or other circumstances, more than 15% of the Fund's net assets are held in illiquid assets.
(7) Under normal market conditions, the Fund will invest at least 80% of its net assets (including investment borrowings) in Debt Instruments. The Fund will invest in Debt Instruments issued by at least 13 non-affiliated issuers. The Fund's exposure to any single country generally will be limited to 20% of the Fund's net assets (although this percentage may change from time to time in response to economic events). The Fund will invest
(8) Under normal market conditions, at least 80% of the Fund's net assets that are invested in Debt Instruments will be invested in Debt Instruments that are issued by issuers with outstanding debt of at least $200 million (or the foreign currency equivalent thereof).
(9) Under normal market conditions, no more than 20% of the value of the Fund's net assets will be invested in derivative instruments. The Fund's investments in derivative instruments will be made in accordance with the 1940 Act and consistent with the Fund's investment objective and policies. The Fund's investments in derivative instruments will not be used to seek to achieve a multiple or inverse multiple of an index.
(10) At least 90% of the Fund's net assets that are invested in exchange-traded derivative instruments will be invested in instruments that trade in markets that are members of ISG or are parties to a comprehensive surveillance sharing agreement with the Exchange.
(11) The Fund will seek, where possible, to use counterparties whose financial status is such that the risk of default is reduced. The Adviser and/or the Sub-Adviser will evaluate the creditworthiness of counterparties on an ongoing basis.
(12) At least 90% of the Fund's net assets that are invested in foreign currencies will be invested in currencies with a minimum average daily foreign exchange turnover of USD $1 billion as determined by the BIS Triennial Central Bank Survey.
(13) The Fund will comply with the regulatory requirements of the Commission to maintain assets as “cover,” maintain segregated accounts, and/or make margin payments when it takes positions in derivative instruments involving obligations to third parties (
(14) The Fund may invest up to 20% of its net assets in Corporate Bonds. Under normal market conditions, a Corporate Bond must have $200 million (or the foreign currency equivalent thereof) or more par amount outstanding and significant par value traded to be considered as an eligible investment. Although the Fund does not intend to do so, the Fund may invest up to 5% of its net assets in Corporate Bonds with less than $200 million (or the foreign currency equivalent thereof) par amount outstanding if (i) the Adviser and/or the Sub-Adviser deems such securities to be sufficiently liquid and (ii) such investment is deemed by the Adviser and/or the Sub-Adviser to be in the best interest of the Fund.
(15) The Fund intends to enter into repurchase agreements only with financial institutions and dealers believed by the Sub-Adviser to present minimal credit risks in accordance with criteria approved by the Trust Board. The Sub-Adviser will review and monitor the creditworthiness of such institutions. The Sub-Adviser will monitor the value of the collateral at the time the transaction is entered into and at all times during the term of the repurchase agreement.
(16) The ETFs in which the Fund will invest will be exchange-listed and trade in markets that are members of ISG or are parties to a comprehensive surveillance sharing agreement with the Exchange.
(17) Reverse repurchase agreements will not be used by the Fund to enhance leverage.
(18) A minimum of 100,000 Shares will be outstanding at the commencement of trading on the Exchange.
This approval order is based on all of the Exchange's representations, including those set forth above and in the Notice, and the Exchange's description of the Fund.
For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendment No. 1 thereto, is consistent with Section 6(b)(5) of the Act
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On June 11, 2014, The NASDAQ Stock Market LLC (“NASDAQ” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
“Paired Class Shares” would be issued by a trust on behalf of a fund, each a segregated series of the trust.
Each fund would engage in scheduled “regular distributions,” and also may engage in: (1) “special distributions,” which would be triggered when the Underlying Benchmark exceeds a fixed rate of change since the fund's prior regular or special distribution date or inception date in the case of the first such distribution (“prior distribution date”); and (2) “corrective distributions,” which would be triggered when the trading price of a Paired Class Share deviates by a specified amount from its Class Value per Share for a specified period of time. Immediately after each regular, special, and corrective distribution, the fund's Underlying Benchmark participation or exposure would be reset, and the fund's Class Value per Share for each of its classes would be set to equal the lowest Class Value per Share of the two classes of Paired Class Shares. To the extent any class of Paired Class Shares of a fund has a positive net income from income or gain on class assets, after deduction of class liabilities, on a regular or special distribution date as measured from the prior distribution date, such class of Paired Class Shares would receive a distribution in cash equal to such positive net income regardless as to whether such class is entitled to a regular or special distribution on such date.
Paired Class Shares would be structured with the objective of providing investors with exposure to changes in an Underlying Benchmark. The trust issuing Paired Class Shares on behalf of a fund would actively monitor deviations of trading price to Class Value per Share. To the extent there is a material and persistent deviation of a Paired Class Share trading price from such Paired Class Share's Class Value per Share according to pre-set thresholds, the trust issuing the Paired Class Shares would distribute to holders of each class shares of the opposing class, which would leave each holder with an equal number of Up Shares and Down Shares. According to the Exchange, as each holder would own both Up Shares and Down Shares, each holder could redeem their shares through an authorized participant (“Authorized Participant”)
The Exchange further states that, even if a corrective distribution is not triggered, the existence of a fund's corrective distribution feature would be expected to modify investor and Authorized Participant behavior to prevent persistent and material premium and discount conditions for Paired Class Shares from becoming locked. The Exchange states that regular and special distributions would have the effect of delivering changes in Class Value per Share to each class of the Paired Class Shares either directly through the distribution or indirectly through the dilution caused by the distribution.
With respect to creations and redemptions of Paired Class Shares, the procedures would be similar in nature to those for other exchange traded products. Paired Class Shares of a fund would be created and redeemed in specified aggregations of equal quantities of Up Shares and Down Shares
Proposed Rule 5713(a) indicates that NASDAQ would consider for trading, whether by listing or pursuant to unlisted trading privileges (“UTP”),
Proposed subsection (c) specifically states that the term “Paired Class Share” means a security: (1) That is issued by a trust on behalf of a fund as part of a pair of shares of opposing classes whose respective underlying values move in opposite directions as the value of the fund's Underlying Benchmark (which is defined in NASDAQ Rule 5713(e)) varies from its starting level, where one constituent of the pair is positively linked to the fund's Underlying Benchmark—Up Shares—and the other constituent is inversely linked to the fund's Underlying Benchmark—Down Shares; (2) that is issued in exchange for cash; (3) the issuance proceeds of which are invested and reinvested in highly rated short-term financial instruments that mature within 90 calendar days and that serve certain functions;
Proposed Rule 5713(d) provides that a fund may engage in scheduled regular distributions, special distributions that are automatically triggered upon the Underlying Benchmark exceeding a fixed rate of change since the prior distribution, and corrective distributions that are automatically triggered when the trading price of a Paired Class Share deviates by a specified amount from its underlying value for a specified period of time.
Proposed Rule 5713(e) states that NASDAQ may trade, either by listing or pursuant to UTP, Paired Class Shares whose values are based on an Underlying Benchmark whose value reflects the value of a Reference Asset. Each issue of Up Shares or Down Shares of a fund would be designated as a separate series and would be identified by a unique symbol.
Proposed Rule 5713(f) sets forth the initial and continued listing criteria. The Exchange proposes to adopt three initial listing requirements in Rule 5713(f)(i): (1) NASDAQ would establish a minimum number of Paired Class Shares for each fund required to be outstanding at the time of commencement of trading on NASDAQ; (2) NASDAQ would obtain a representation from the trust on behalf of each fund that the underlying value per share of each Up Share and Down Share would be calculated daily and that the underlying values and information about the assets of the fund would be made available to all market participants at the same time; and (3) if the Underlying Benchmark is maintained by a broker-dealer or investment advisor, the broker-dealer or investment advisor would be required to erect a “firewall” around the personnel who have access to information concerning changes and adjustments to the Underlying Benchmark.
Under proposed NASDAQ Rule 5713(f)(ii), NASDAQ would consider the suspension of trading in, or removal from listing of, a fund's Paired Class Shares under any of the following circumstances: (1) If, following the initial twelve-month period beginning upon the commencement of trading of the Paired Class Shares, (a) there are fewer than 50 record or beneficial holders of the fund's Up Shares or Down Shares for 30 or more consecutive trading days, (b) the fund has fewer than 50,000 Up Shares or 50,000 Down Shares issued and outstanding, or (c) the combined market value of all shares of a fund issued and outstanding is less than $1,000,000; (2) if the intraday level of the Underlying Benchmark, or a substitute or replacement Underlying Benchmark based on the same Reference Asset, is no longer calculated or available
Proposed Rule 5713(f)(ii) also provides that upon termination of a fund, Paired Class Shares issued in connection with the fund must be
Provisions relating to the term, trustee, and voting rights are set forth in proposed NASDAQ Rule 5713(f)(iii)-(v). Proposed subsection (f)(iii) states that the stated term of a fund shall be as stated in the fund's prospectus. However, a fund may be terminated under such earlier circumstances as may be specified in the prospectus. Proposed subsection (f)(iv) states that the trustee of a trust must be a trust company or banking institution having substantial capital and surplus and the experience and facilities for handling corporate trust business. In cases where, for any reason, an individual has been appointed as trustee, a qualified trust company or banking institution must be appointed co-trustee. In addition, no change is to be made in the trustee of a listed issue without prior notice to and approval of NASDAQ. Regarding voting rights, subsection (f)(v) states that such rights, if any, would be as set forth in the applicable fund's prospectus.
Proposed Rule 5713(g) sets forth a limitation of NASDAQ liability with respect to errors, omissions, or delays in calculating or disseminating any applicable Underlying Benchmark value, the underlying value of the fund and its Paired Class Shares, distribution values or any other information relating to the purchase, redemption, or trading of the Paired Class Shares.
With respect to the activity and disclosure of Market Maker accounts, proposed NASDAQ Rule 5713(h) states that an Exchange member must file with NASDAQ, in a manner prescribed by the Exchange, and keep current a list identifying all accounts for trading in the applicable securities or physical commodities included in (or options, futures, or options on futures on) the Reference Asset of the Underlying Benchmark of any Paired Class Shares (or any other derivatives based on the Reference Asset or based on any security or Reference Asset included in the Underlying Benchmark) that the registered Market Maker may have or over which it may exercise investment discretion. In addition, proposed NASDAQ Rule 5713(h)(i) prohibits registered Market Makers from trading in the applicable securities or physical commodities included in (or options, futures, or options on futures on) the Reference Asset of the Underlying Benchmark of any Paired Class Shares (or any other derivatives based on the Reference Asset or based on any security or Reference Asset included in the Underlying Benchmark) in an account in which the registered Market Maker, directly or indirectly, controls trading activities, or in which the registered Market Maker has a direct interest in the profits or losses thereof, which has not been reported to NASDAQ as required by this proposed Rule. Proposed Rule 5713(h)(ii) provides that, in addition to the existing obligations under NASDAQ rules regarding the production of books and records (
The Exchange also proposes six Commentaries to Rule 5713. Proposed Commentary .01 provides that members must provide all purchasers of newly issued Paired Class Shares a prospectus for the fund. Proposed Commentary .02 states that transactions in Paired Class Shares would occur during the trading hours specified in Rule 4120. Proposed Commentary .03 states that NASDAQ would file separate proposals under Section 19(b) of the Act before trading any new series of Paired Class Shares. Proposed Commentary .04 states that prior to a substitute or replacement Underlying Benchmark being selected for a fund, NASDAQ must file a related proposed rule change pursuant to Rule 19b-4 under the Act to continue trading the Paired Class Shares. Proposed Commentary .05 states that subsection 5713(f)(ii)(D), as discussed previously, is not applicable as a continuing listing standard if a fund's Paired Class Shares have been approved for listing and trading by the Commission under Section 19(b)(2) of the Act without the requirement that an estimate of the Intraday Indicative Value be made available on at least a 15-second delayed basis by a major market vendor during the time the Paired Class Shares trade on NASDAQ during the Regular Market Session. Lastly, proposed Commentary .06 states that NASDAQ would implement written surveillance procedures for trading the Paired Class Shares.
Additional details of proposed NASDAQ Rule 5713 can be found in the Notice and Exhibit 5 thereto.
The Exchange has made the following representations and statements in describing, among other things, the Funds, the corresponding Underlying Benchmarks, arbitrage, and distributions.
The Shares would be offered by the Trust, which is a Delaware statutory trust.
The Underlying Benchmark of each Fund, other than the AccuShares Spot CBOE VIX Fund (“VIX Fund”), would be constructed, calculated, and published by S&P® Dow Jones Indices LLC (“Index Provider”).
Each S&P GSCI Commodity Index would be constructed, calculated, and published by the Index Provider. The S&P GSCI Spot index (“S&P GSCI”), which would serve as the Underlying Benchmark for the AccuShares S&P GSCI Spot Fund, is an index on a production-weighted basket of currently 24 principal physical commodities that satisfy criteria established by the Index Provider. The commodities included in the S&P GSCI would be weighted, on a production basis, to reflect the relative significance (in the view of the Index Provider) of those commodities to the world economy. The referenced commodities within the S&P GSCI Agricultural and Livestock Spot Index (“S&P GSCI-AL”) and the S&P GSCI Industrial Metals Spot Index (“S&P GSCI-IN”) would each receive weightings that differ from the weightings they receive in the broader S&P GSCI.
The S&P GSCI Crude Oil Spot Index (“S&P GSCI-CL”), the S&P GSCI Brent Crude Oil Spot Index (“S&P GSCI-BR”), and the S&P GSCI Natural Gas Spot Index (“S&P GSCI-NG”) are single-commodity sub-indices of the S&P GSCI.
Each S&P GSCI Commodity Index would reflect only the daily settlement prices (“Daily Contract Reference Prices”) of commodities futures contracts that are the components of such index (“Designated Contracts”) on each business day. Each S&P GSCI Commodity Index would be based on the daily settlement prices of first nearby contract, except during the five-day “Roll Period” during which the “Roll Contract Expirations” shift to the next nearby contract and during which the weighting of the first nearby contract is decreased in favor of the next expiry contract 20 percent per day. Immediately following the Roll Period, the next expiry contract would be used for the index until the next following Roll Period. When shifting to a next nearby contract, contract quantities remain consistent, and relative values between the nearby and next nearby contracts could vary. The daily value of the S&P GSCI Commodity Indices, therefore, would be calculated solely based on the commodity production weightings assigned by the Index Provider of each Designated Contract, and of the Daily Contract Reference Prices of the nearby contract expiration of each Designated Contract, and it would not reflect any roll yield.
The quantity of each of the contracts included in the S&P GSCI Commodity Indices would be determined on the basis of a five-year average, referred to as the “world production average,” of the production quantity of the underlying commodity, as published by the United Nations Statistical Yearbook, the Industrial Commodity Statistics Yearbook, and other official sources. However, if a commodity is primarily a regional commodity—based on its production, use, pricing, transportation, or other factors—the Index Provider would calculate the weight of that commodity based on regional, rather than world, production data. At present, natural gas is the only commodity the weights of which are calculated on the basis of regional production data, with the relevant region defined as North America.
The Exchange states that a complete and current description of the eligibility criteria, weighting, and calculation methodologies the Index Provider would utilize in selecting commodities and Designated Contracts and their weights for an S&P GSCI Commodity Index can be found in the S&P GSCI Handbook, which is available at:
The Underlying Benchmark of the VIX Fund would be the VIX. The VIX is constructed by CBOE and calculated and published by the Index Provider. The VIX would seek to serve as a measure of the expected volatility of the S&P 500® total return stock index (“S&P 500 Index”). It is an up-to-the-minute market estimate of expected volatility, calculated by using real-time S&P 500 Index option (ticker: SPX) bid/ask quotes. The SPX is the Reference Asset of the VIX. Each business day, the VIX uses SPX options with at least eight days left to expiration and then weights them to yield a constant, 30-day measure of the expected volatility of the S&P 500 Index.
The VIX is based on real-time option prices, which reflect investors' consensus view of future expected stock market volatility. During periods of financial stress, which are often accompanied by steep market declines, SPX options prices—and the VIX—tend to rise. As expectations of large market moves subside, SPX option prices tend to decline, which in turn causes the VIX to decline.
The VIX is quoted in percentage points and translates, roughly, to the expected movement in the S&P 500 Index over the next 30-day period, which is then annualized. The VIX is based on the spot variation of its Reference Asset and, as such, does not
As is the case with Paired Class Shares generally, as discussed above, the Trust would issue Shares on behalf of a Fund in offsetting pairs, where one constituent of the pair, the Up Shares, is positively linked to the Fund's Underlying Benchmark and the other constituent, the Down Shares, is negatively linked to the Fund's Underlying Benchmark. Therefore, the Trust would only issue, distribute, maintain, and redeem equal quantities of Up Shares and Down Shares on behalf of a Fund at all times. The Trust would create and redeem Paired Class Shares on behalf of a Fund in Creation Units only for cash. Once created, a Fund's Paired Class Shares would trade independently of each other on the Exchange. As generally described above for all Paired Class Shares, the cash proceeds from the creation of Paired Class Shares by a Fund may be held by a Fund only in Eligible Assets that serve certain functions.
Each Fund would maintain its Eligible Assets in a separate custody account maintained by the Fund's Custodian that would be segregated from the assets of any other series of the Trust, the Custodian, or any other customer of the Custodian. If, on any date, there is cash on deposit in a Fund's custody account that is not required to make payments or to make distributions to shareholders, all such cash would be either held as cash or invested by the Investment Advisor, acting in accordance with the Investment Advisory Agreement and on behalf of the Fund, in cash bank deposits, Eligible Treasuries, or Eligible Repos.
Each Fund would invest its cash in Eligible Treasuries or Eligible Repos in order to generate income to pay its fees, expenses, and taxes and to generate income to shareholders from cash on deposit in the Fund that would not be immediately needed for other purposes pending a later net income distribution. Each Fund would hold a portion of its assets in Eligible Repos, because these agreements mature and convert to cash within one business day, which would make it possible for the Fund to have sufficient cash available on each business day to be able to effect any redemptions of its Creation Units.
Except on a distribution date on which such proceeds would be needed to effect redemptions or net income distributions or to distribute cash for regular and special distributions, the Investment Advisor, on behalf of the Fund, would reinvest on a daily basis the proceeds received upon the maturity of the Fund's Eligible Treasuries and Eligible Repos in Eligible Assets. The Investment Advisor would also invest in Eligible Assets all of a Fund's cash funds delivered to it in connection with each creation of the Fund's Creation Units. On the liquidation of a Fund, all of the proceeds of the Eligible Treasuries and Eligible Repos held by the Fund would be used to make final cash liquidating payments (less the fees, expenses, and taxes of the Fund not assumed by the Sponsor) to the Fund's shareholders. Upon any redemption of a Fund's Creation Units by an Authorized Participant, the cash of the Fund would be used to pay the proceeds of such redemption to the redeeming Authorized Participant.
With respect to the specific distributions applicable to the Funds, as more generally described above for all Paired Class Shares, each Fund would be expected to engage in four types of distributions as of certain distribution dates. The first type of distribution, regular distributions, would occur at regular intervals for each Fund. Regular distributions would generally occur as long as there has been a change in the level of the Underlying Benchmark (and, in the case of the VIX Fund, the Daily Amount) as of the distribution date since the prior distribution date. Secondly, each Fund would expect to make net income distributions on each regular or special distribution date to the shareholders of any class of such Fund whose class Net Investment Income is positive as of such distribution date.
The other two types of distributions would not be expected to occur regularly and are mechanisms intended to protect the interests of investors by providing them with the expected value of their Shares upon specified events. Thus, the third type, special distributions, would occur where the change in the Underlying Benchmark exceeds a specified percentage value since the prior distribution date but before the next regular distribution. The fourth type, corrective distributions, would occur only if the trading price of a class' Shares on the Exchange deviates for a specified length of time over a specified threshold amount from the Class Value per Share of such class.
An investor receiving distributions in pairs of Shares may: (1) Sell the Shares received for cash and maintain the proceeds in cash; (2) sell only the opposing class of Shares received and maintain proceeds in cash; or (3) sell only the opposing class of Shares received and reinvest the proceeds in the desired class of Shares to gain more economic exposure to the Underlying Benchmark.
The value of a distribution relating to each of a Fund's Up Shares (where such Shares are valued at their respective Class Values per Share) entitled to a distribution on a distribution date would be equal to the positive amount, if any, of the closing Class Value per Share of the Fund's Up Shares (after adjusting for any net income distribution) less the closing Class Value per Share of the Fund's Down Shares (after adjusting for any net income distribution).
The value of a distribution relating to each of a Fund's Down Shares (where such Shares are valued at their respective Class Values per Share) entitled to a distribution on a distribution date would be equal to the positive amount, if any, of the closing Class Value per Share of the Fund's Down Shares (after adjusting for any net income distribution) less the closing Class Value per Share of the Fund's Up Shares (after adjusting for any net income distribution).
Regular and special distributions would ordinarily be made in the form of cash during the first six months of trading in a Fund's Shares. Thereafter, each Fund would pay all or any part of any regular or special distribution in Paired Class Shares instead of cash where further cash distributions would adversely affect the liquidity of the market for the Fund's Shares
With respect to regular distributions, the information provided would consist of the schedule of distributions and associated distribution dates, and a notification, as of the record date for such regular distribution, on the Sponsor's Web site as to whether or not the regular distribution would occur. For regular distributions that occur on schedule, the Sponsor would cause a press release to be issued identifying the receiving class, the amount of cash, the amount of Paired Class Shares (if any), and any other information the Sponsor deems relevant regarding the distribution and post such information on the Sponsor's Web site. This information would also be contained in
With respect to special distributions, corrective distributions, and share splits, the information provided would include the relevant ex-, record, and payment dates for each such event and relevant data concerning each such event. These events would also be reported in press releases, on the Sponsor's Web site, and in current reports on Form 8-K as material events, as well as in the Fund's periodic reports. In addition, notice of net income distributions for each class of a Fund, if any, would also be included in the notifications of regular, special, and corrective distributions.
Additional details regarding the Trust, the Funds, and the Shares can be found in the Notice.
The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act
Pursuant to Section 19(b)(2)(B) of the Act,
The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal. In particular, the Commission invites the written views of interested persons concerning whether the proposal is consistent with Section 6(b)(5) or any other provision of the Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b-4, any request for an opportunity to make an oral presentation.
Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by October 15, 2014. Any person who wishes to file a rebuttal to any other person's submission must file that rebuttal by October 29, 2014.
The Commission asks that commenters address the sufficiency of the Exchange's statements in support of the proposal, which are set forth in the Notice,
1. As described above, the Exchange represents in the proposed rule change that Paired Class Shares would engage in three different types of distributions: regular, special, and corrective. According to the Exchange, market expectation of these distributions would cause the trading prices of Paired Class Shares to experience less-pronounced conditions of premium or discount to Class Value per Share. Further, according to the Exchange, corrective distributions would eliminate then-existing premiums or discounts and would prevent persistent and material premium and discount conditions for Paired Class Shares from becoming locked. What are commenters' views on the effect that the distributions would have on premiums and discounts between the trading price of the Paired Class Shares and their respective Class Value per Share? Do commenters agree with the Exchange's assertions? Why or why not?
2. What are commenters' views on whether retail investors and other market participants would be able to understand the Funds' redemption mechanics and the types and timing of distributions in which the Funds would engage? For example, do commenters believe that retail investors in one class of the two classes of shares could be reasonably expected to understand the practical implications of receiving, as a result of certain distributions, shares of the opposing class, which would leave the investor with an equal number of Up Shares and Down Shares, even though they started with only one class of the two classes of shares? Do commenters believe that retail investors could be reasonably expected to understand the actions they would have to take following such a distribution to reestablish the exposure to the index that they had prior to the distribution?
3. In the proposed rule change, the Exchange represents that each fund issuing Paired Class Shares would periodically reset its exposure to its Underlying Benchmark to avoid depleting all of the capital of one class of shares and to avoid “leverage drift.” What are commenters' views on whether retail investors and other market participants would be able to understand the effect of these “resets” on their investment in the Funds?
4. With respect to the trading of Paired Class Shares on the Exchange, do commenters believe that the Exchange's rules governing sales practices are adequately designed to ensure the suitability of recommendations regarding the Shares? Why or why not? If not, should the Exchange's rules governing sales practices be enhanced? If so, in what ways?
5. Although each of the Funds would be based on an index, none of the Funds would actually invest its portfolio assets in an effort to match or exceed the performance of its underlying index. Instead, each Fund would hold short-term government securities (and repurchase agreements on those securities) and would allocate the value of its portfolio between holders of Up Shares and holders of Down Shares, depending on changes in the underlying index. What are commenters' views with respect to whether retail investors will understand this aspect of the Funds, and what are commenters' views about whether it is appropriate for an exchange-traded product to be structured in this way?
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On July 21, 2014, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change SR-OCC-2014-16 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
OCC proposed to add an interpretation and policy concerning its administration of existing Article VI, Section 7(c) of the By-Laws and to implement price reasonableness checks in connection with the reporting of confirmed trades in standardized options and futures options to OCC by an exchange under Article VI, Section 7 and Rule 401. Article VI, Section 7(c) provides that an exchange may instruct OCC to disregard a confirmed trade previously reported to OCC for clearance and settlement under certain circumstances.
According to OCC, the Board of Directors and Risk Committee have been evaluating risk controls with respect to trades priced significantly away from current market prices and the risks they present to OCC.
According to OCC, earlier this year, a trade data entry parameter in OCC's systems that does not allow OCC to accept a trade having a premium price of more than $9,999.99 per contract prevented OCC from accepting erroneous trades that resulted from a trading algorithm error of a customer of a clearing member. If the systems parameter had not prevented OCC from accepting the trades, the settlement obligation for the clearing member for these trades alone could have exceeded $800 million. This amount would have been in addition to any other settlement obligation of the clearing member.
In light of the incident, and to promote the protection of OCC and clearing members from erroneous trades, OCC's Risk Committee directed
Under the proposed process, receipt of a trade that exceeds the premium price limit of $2,000 per contract will generate an automatic notice to alert OCC staff.
OCC will provide notice to market participants of the post-trade price reasonableness check process, and the process will be implemented upon regulatory approval. OCC believes this implementation timing is appropriate because OCC's Board instructed OCC to implement the post-trade risk control as quickly as practicable. OCC's decision to implement the process for price reasonableness checks and to set the premium price limit at the $2,000 level also necessitates related systems changes and conforming changes to certain policies and procedures. Conforming changes to affected policies and procedures include amending OCC's trade and position processing policy. Certain policies and procedures will also be updated to reflect aspects of the process for price reasonableness checks related to governance processes at OCC that are described in more detail below.
The premium level at which the price reasonableness review process is triggered will be subject to adjustment or suspension under certain conditions. OCC states that it will review the level on a quarterly basis for continued adequacy.
Section 19(b)(2)(C) of the Act
The Commission finds that the proposed rule change is consistent with Section 17A(b)(3)(F) of the Act,
In so doing, OCC's proposal is designed to protect investors from the costs of erroneous trades that have the potential to cause significant settlement obligations while, at the same time, balancing the need to protect investors from the likelihood that valid trades will be referred back to the exchanges.
Rule 17Ad-22(d)(4) of the Act
The Commission finds good cause, pursuant to Section 19(b)(2)(C)(iii) of the Act,
As discussed above, OCC filed Amendment No. 1 to clarify that OCC staff would include the 5% intrinsic value threshold in its review to identify which trades should be referred to exchanges for review. OCC also stated that it would review this threshold on a quarterly basis for continued adequacy and any adjustments to the threshold will be the subject of rule filing with the Commission. The 5% intrinsic value threshold should enhance the effectiveness of OCC's review process by reducing the likelihood that valid trades will be referred to the exchanges. Accordingly, given that OCC's proposal should decrease the likelihood that erroneous trades will be submitted to OCC by the exchanges, thereby reducing the risk presented to OCC and further facilitating the accurate clearance and settlement of securities transactions, the Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 1, on an accelerated basis.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-OCC-2014-16
On the basis of the foregoing, the Commission finds that the proposal is consistent with the requirements of the Act and in particular with the requirements of Section 17A of the Act
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On July 21, 2014, New York Stock Exchange LLC (“Exchange” or “NYSE”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
Section 19(b)(2) of the Act
The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the comments received. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to list and trade shares of the SPDR SSgA Global Managed Volatility ETF under NYSE Arca Equities Rule 8.600. The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to list and trade shares (“Shares”) of the following under NYSE Arca Equities Rule 8.600, which governs the listing and trading of Managed Fund Shares:
The Shares will be offered by SSgA Active ETF Trust (the “Trust”), which is organized as a Massachusetts business trust and is registered with the Commission as an open-end management investment company.
Commentary .06 to Rule 8.600 provides that, if the investment adviser to the investment company issuing Managed Fund Shares is affiliated with a broker-dealer, such investment adviser shall erect a “fire wall” between the investment adviser and the broker-dealer with respect to access to information concerning the composition and/or changes to such investment company portfolio. In addition, Commentary .06 further requires that personnel who make decisions on the open-end fund's portfolio composition must be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the open-end fund's portfolio.
According to the Registration Statement, the Fund will seek to provide competitive long-term returns while maintaining low long-term volatility relative to the broad global market. Under normal circumstances,
The Adviser will utilize a proprietary quantitative investment process to select a portfolio of exchange-listed and traded equity securities that the Adviser believes will exhibit low volatility and provide competitive long-term returns relative to the broad global market.
The Fund is intended to be managed in a “master-feeder” structure, under which the Fund will invest substantially all of its assets in a corresponding Portfolio (
The Adviser will manage the investments of the Portfolio. Under the master-feeder arrangement, and pursuant to the investment advisory agreement between the Adviser and the Trust, investment advisory fees charged at the Portfolio level will be deducted from the advisory fees charged at the Fund level. This arrangement avoids a “layering” of fees,
The exchange-listed and traded equity securities in which the Portfolio would be permitted to invest will be limited to: (1) equity securities that trade in markets that are members of the Intermarket Surveillance Group (“ISG”) or are parties to a comprehensive surveillance sharing agreement (“CSSA”) with the Exchange or, (2) “Actively-Traded Securities” as defined in Regulation M (“Reg M”) under the Act that are traded on U.S. and non-U.S. exchanges with last sale reporting.
The Portfolio and Fund do not intend to concentrate their investments in any particular industry. The Portfolio and Fund will look to the Global Industry Classification Standard (“GICS”) Level 3
The Portfolio may invest in exchange-traded preferred securities. Preferred securities pay fixed or adjustable rate dividends to investors, and have “preference” over common stock in the payment of dividends and the liquidation of a company's assets.
In certain situations or market conditions, in order to take temporary defensive positions, the Fund may (either directly or through the Portfolio) temporarily depart from its normal investment policies and strategies provided that the alternative is consistent with the Fund's investment objective and is in the best interest of the Fund. For example, the Fund may hold a higher than normal proportion of its assets in cash in times of extreme market stress.
According to the Registration Statement, in addition to the principal investments described above, the Portfolio may invest its remaining net assets in other investments, as described below. The investment practices of the Portfolio are the same in all material respects to those of the Fund.
The Portfolio may invest in U.S. Government obligations. U.S. Government obligations are a type of bond. U.S. Government obligations include securities issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities.
The Portfolio may purchase U.S. registered, dollar-denominated bonds of foreign corporations, governments, agencies and supra-national entities.
The Portfolio may invest in restricted securities. Restricted securities are securities that are not registered under the Securities Act, but which can be offered and sold to “qualified institutional buyers” under Rule 144A under the Securities Act. When Rule 144A restricted securities present an attractive investment opportunity and meet other selection criteria, the Portfolio may make such investments depending on the market that exists for the particular security. The Board has delegated the responsibility for determining the liquidity of Rule 144A restricted securities that the Portfolio may invest in to the Adviser.
The Portfolio may conduct foreign currency transactions on a spot (
The Portfolio may invest in exchange-traded products (“ETPs”), including exchange-traded funds (“ETFs”) registered under the 1940 Act; exchange traded commodity trusts; and exchange-traded notes (“ETNs”).
In addition, the Portfolio may invest in the securities of other investment companies, including money market funds and exchange-traded closed-end funds, subject to applicable limitations under Section 12(d)(1) of the 1940 Act.
The Portfolio may invest in exchange-traded shares of real estate investment trusts (“REITs”).
The Portfolio may invest in repurchase agreements with commercial banks, brokers or dealers to generate income from its excess cash balances and to invest securities lending cash collateral. A repurchase agreement is an agreement under which a fund acquires a financial instrument (
The Portfolio may enter into reverse repurchase agreements, which involve the sale of securities with an agreement to repurchase the securities at an agreed-upon price, date and interest payment and have the characteristics of borrowing. The securities purchased with the funds obtained from the agreement and securities collateralizing the agreement will have maturity dates no later than the repayment date. Generally the effect of such transactions is that a fund can recover all or most of the cash invested in the portfolio securities involved during the term of the reverse repurchase agreement, while in many cases a fund is able to keep some of the interest income associated with those securities.
In addition to repurchase agreements, the Portfolio may invest in short-term instruments, including money market instruments, (including money market funds advised by the Adviser), cash and cash equivalents, on an ongoing basis to provide liquidity or for other reasons. Money market instruments are generally short-term investments that may include but are not limited to: (i) Shares of money market funds; (ii) obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities (including government-sponsored enterprises); (iii) negotiable certificates of deposit (“CDs”), bankers' acceptances, fixed time deposits and other obligations of U.S. and foreign banks (including foreign branches) and similar institutions; (iv) commercial paper rated at the date of purchase “Prime-1” by Moody's or “A-1” by Standard & Poor's, or if unrated, of comparable quality as determined by the Adviser
According to the Registration Statement, the Portfolio and the Fund will be classified as a “non-diversified” investment company under the 1940 Act.
Although the Portfolio and Fund will be non-diversified for purposes of the 1940 Act, the Portfolio and Fund intend to maintain the required level of diversification and otherwise conduct its operations so as to qualify as a “regulated investment company” for purposes of the Internal Revenue Code of 1986.
The Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), including Rule 144A securities deemed illiquid by the Adviser.
Neither the Fund nor the Portfolio will invest in options, futures contracts or swaps agreements. The Fund's and Portfolio's investments will be consistent with its investment objective and will not be used to enhance leverage.
The Fund will calculate net asset value (“NAV”) using the NAV of the Portfolio. NAV per Share for the Fund will be computed by dividing the value of the net assets of the Portfolio (
In calculating the Portfolio's NAV, the Portfolio's investments will generally be valued using market valuations. A market valuation generally means a valuation (i) obtained from an exchange, a pricing service, or a major market maker (or dealer), (ii) based on a price quotation or other equivalent indication of value supplied by an exchange, a pricing service, or a major market maker (or dealer) or (iii) based on amortized cost. In the case of shares of other funds that are not traded on an exchange, a market valuation means such fund's published NAV per share. The Adviser may use various pricing services, or discontinue the use of any pricing service, as approved by the Board of the SSgA Master Trust from time to time. A price obtained from a pricing service based on such pricing service's valuation matrix may be considered a market valuation. Any assets or liabilities denominated in currencies other than the U.S. dollar will be converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more sources.
Common stocks and exchange-traded equity securities (including shares of preferred securities, ETPs, closed-end funds, QPTPs, REITs and Depositary
Securities of investment companies (other than ETFs registered under the 1940 Act), including affiliated funds, money market funds and closed-end funds, will be valued at NAV.
Unsponsored Depositary Receipts, which are traded in the OTC market, will be valued at the last reported sale price from the OTC Bulletin Board or OTC Link LLC on the valuation date.
Rule 144A securities, repurchase agreements and reverse repurchase agreements will generally be valued at bid prices received from independent pricing services as of the announced closing time for trading in such instruments. Spot currency transactions will generally be valued at bid prices received from independent pricing services converted into U.S. dollars at current market rates on the date of valuation. Foreign currency forwards normally will be valued on the basis of quotes obtained from broker-dealers or third party pricing services.
According to the Adviser, fixed income securities, including U.S. Government obligations, U.S. registered, dollar-denominated bonds of foreign corporations, governments, agencies and supra-national entities, and short-term instruments will generally be valued at bid prices received from independent pricing services as of the announced closing time for trading in fixed-income instruments in the respective market or exchange. In determining the value of a fixed income investment, pricing services determine valuations for normal institutional-size trading units of such securities using valuation models or matrix pricing, which incorporates yield and/or price with respect to bonds that are considered comparable in characteristics such as rating, interest rate and maturity date and quotations from securities dealers to determine current value.
Any assets or liabilities denominated in currencies other than the U.S. dollar will be converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more sources.
In the event that current market valuations are not readily available or such valuations do not reflect current market value, the SSgA Master Trust's procedures require the Pricing and Investment Committee
The NAV of Shares of the Fund will be determined once each business day, normally 4:00 p.m. Eastern time. Creation Unit sizes will be 50,000 Shares per Creation Unit. The Trust will issue and sell Shares of the Fund only in Creation Units on a continuous basis, without a sales load (but subject to transaction fees), at their NAV per Share next determined after receipt of an order, on any business day, in proper form pursuant to the terms of the authorized participant agreement.
The consideration for purchase of a Creation Unit of the Fund generally will consist of either (i) the in-kind deposit of a designated portfolio of securities held by the corresponding master fund (the “Deposit Securities”) per each Creation Unit and the Cash Component (defined below), computed as described below or (ii) the cash value of the Deposit Securities (“Deposit Cash”) and the “Cash Component,” computed as described below. When accepting purchases of Creation Units for cash, the Fund may incur additional costs associated with the acquisition of Deposit Securities that would otherwise be provided by an in-kind purchaser. Together, the Deposit Securities or Deposit Cash, as applicable, and the Cash Component constitute the “Fund Deposit,” which represents the minimum initial and subsequent investment amount for a Creation Unit of the Fund. The “Cash Component” is an amount equal to the difference between the NAV of the Shares (per Creation Unit) and the market value of the Deposit Securities or Deposit Cash, as applicable. If the Cash Component is a positive number (
The Custodian, through the National Securities Clearing Corporation (“NSCC”), will make available on each business day, immediately prior to the opening of business on the Exchange's Core Trading Session (9:30 a.m. Eastern time), the list of the names and the required number of shares of each Deposit Security or the required amount of Deposit Cash, as applicable, to be included in the current Fund Deposit (based on information at the end of the previous business day) for the Fund. Such Fund Deposit is subject to any applicable adjustments as described in the Registration Statement, in order to effect purchases of Creation Units of the Fund until such time as the next-announced composition of the Deposit Securities or the required amount of Deposit Cash, as applicable, is made available.
Shares may be redeemed only in Creation Units at their NAV next determined after receipt of a redemption request in proper form by the Fund through the Transfer Agent and only on a business day.
With respect to the Fund, the Custodian, through the NSCC, will make available immediately prior to the opening of business on the Exchange (9:30 a.m. Eastern time) on each business day, the list of the names and share quantities of the Fund's portfolio securities that will be applicable (subject to possible amendment or correction) to redemption requests
Redemption proceeds for a Creation Unit will be paid either in-kind or in cash or a combination thereof, as determined by the Trust. With respect to in-kind redemptions of the Fund, redemption proceeds for a Creation Unit will consist of Fund Securities as announced by the Custodian on the business day of the request for redemption received in proper form plus cash in an amount equal to the difference between the NAV of the Shares being redeemed, as next determined after a receipt of a request in proper form, and the value of the Fund Securities (the “Cash Redemption Amount”), less a fixed redemption transaction fee and any applicable additional variable charge as set forth in the Registration Statement. In the event that the Fund Securities have a value greater than the NAV of the Shares, a compensating cash payment equal to the differential will be required to be made by or through an authorized participant by the redeeming shareholder. Notwithstanding the foregoing, at the Trust's discretion, an authorized participant may receive the corresponding cash value of the securities in lieu of the in-kind securities value representing one or more Fund Securities.
The creation/redemption order cut-off time for the Fund is expected to be 4:00 p.m. Eastern time. On days when the Exchange closes earlier than normal, the Fund may require orders for Creation Units to be placed earlier in the day.
The Fund's Web site (
On a daily basis, the Fund will disclose for each portfolio security or other financial instrument of the Fund and of the Portfolio the following information on the Fund's Web site: ticker symbol (if applicable), name of security and financial instrument, number of shares and dollar value of financial instruments held in the portfolio, and percentage weighting of the security and financial instrument in the portfolio. The Web site information will be publicly available at no charge.
In addition, a basket composition file, which includes the security names and share quantities required to be delivered in exchange for the Fund's Shares, together with estimates and actual cash components, will be publicly disseminated daily prior to the opening of the NYSE via NSCC. The basket represents one Creation Unit of the Fund.
Investors can also obtain the Trust's Statement of Additional Information (“SAI”), the Fund's Shareholder Reports, and the Trust's Form N-CSR and Form N-SAR, filed twice a year. The Trust's SAI and Shareholder Reports are available free upon request from the Trust, and those documents and the Form N-CSR and Form N-SAR may be viewed on-screen or downloaded from the Commission's Web site at
With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Fund.
The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. Shares will trade on the NYSE Arca Marketplace from 4:00 a.m. to 8:00 p.m. Eastern time in accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late Trading Sessions). The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price variation (“MPV”) for quoting and entry of orders in equity securities traded on the NYSE Arca Marketplace is $0.01, with the exception of securities that are priced less than $1.00 for which the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing criteria under NYSE Arca Equities Rule 8.600. The Exchange represents that, for initial and/or continued listing, the Fund will be in compliance with Rule 10A-3
The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by the Financial Industry Regulatory Authority (“FINRA”) on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations.
FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares, ETPs and certain exchange-traded securities underlying the Shares with other markets and other entities that are members of the Intermarket Surveillance Group (“ISG”), and FINRA, on behalf of the Exchange, may obtain trading information regarding trading in the Shares, ETPs and certain exchange-traded securities underlying the Shares from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares, ETPs and certain exchange-traded securities underlying the Shares from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.
In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees.
The Commission requires that, in designing a new derivative securities product, the self-regulatory organization (“SRO”) determine that it has adequate information sharing procedures to detect and deter potential trading abuses.
However, the generic listing standards for ETFs based on foreign indexes in NYSE Arca Equities Rule 5.2(j)(3) (Investment Company Units), and for closed end funds holding foreign securities do not include specific CSSA requirements
The equity securities in which the Portfolio would be permitted to invest will be limited to: (1) Equity securities that trade in markets that are members of the ISG or are parties to a CSSA with the Exchange or, (2) Actively-Traded Securities as defined in Reg M that are traded on exchanges with last sale reporting.
As the global marketplace has evolved and become more interconnected, an issuer's securities may be traded on multiple markets. For example, thanks to harmonized European legislation, and especially the “Prospectus Directive” of the Markets in Financial Instruments Directive (“MiFID”),
Additionally, MiFID, introduced in 2007, contains a transaction reporting requirement, under which various markets and trading firms are required to submit transaction reports to an “Approved Reporting Mechanism”.
MiFID also makes it possible for any transferable security that has been admitted to trading on a regulated market of an “EU Member State” to be admitted to trading on other Member States' regulated markets or on any other trading venues. As a result, it is difficult to predict where the liquidity in any particular security will primarily reside. Moreover, the MiFID best execution requirement,
In addition, the Exchange believes that it is not necessary to its ability to detect and deter manipulation in Shares of the Fund for equity securities in which the Fund invests to be listed and traded on markets that are members of ISG or with which the Exchange has a CSSA, provided that such equity securities are Actively-Traded Securities. As the Commission noted in adopting Reg M, Actively-Traded Securities are less likely to be manipulated because the costs of such manipulation is high, aberrations in price are more likely to be discovered and quickly corrected, and generally are traded on market [sic] with high levels
As the Commission recognized in adopting Reg M, detection of manipulation of Actively-Traded Securities is aided substantially by the widespread coverage by analysts, news outlets, investors and other market participants around the world of these securities.
Further, as also noted by the Commission in adopting Reg M, because the costs associated with manipulating an Actively-Traded Security will be higher, the likelihood of manipulation of Actively-Traded Securities is low. This potential for improper activity in an Actively-Traded Security to be used to manipulate, or otherwise impact, trading in the Shares of the Fund is further diluted by the fact that a single Actively-Traded Security represents only part of the value of the Fund. This limited impact is guaranteed by diversification requirements applicable to the Fund in the Exchange's listing rules and the Internal Revenue Code, which requires certain diversification to qualify as a regulated investment company (“RIC”).
The Exchange also notes that other provisions of the securities laws encourage disparate treatment for active, large capitalization securities. In its no action letter
Permitting the Fund to invest in Actively-Traded Securities, even if they trade on markets that are not member of ISG, will allow investors to benefit from the Fund's portfolio managers' expertise as well as potentially reducing costs to shareholders. Investing directly in Actively-Traded Securities would, in many cases, be a less expensive alternative than other investments used by the Fund's portfolio managers when they are restricted to trading in markets that are members of ISG or with which the Exchange has a CSSA. For example, investing in international index ETFs
Prior to the commencement of trading, the Exchange will inform its Equity Trading Permit Holders in an Information Bulletin (“Bulletin”) of the special characteristics and risks associated with trading the Shares. Specifically, the Bulletin will discuss the following: (1) The procedures for purchases and redemptions of Shares in Creation Unit aggregations (and that Shares are not individually redeemable); (2) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence on its Equity Trading Permit Holders to learn the essential facts relating to every customer prior to trading the Shares; (3) the risks involved in trading the Shares during the Opening and Late Trading Sessions when an updated Portfolio Indicative Value will not be calculated or publicly disseminated; (4) how information regarding the Portfolio Indicative Value and the Disclosed Portfolio is disseminated; (5) the requirement that Equity Trading Permit Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information.
In addition, the Bulletin will reference that the Fund is subject to various fees and expenses described in the Registration Statement. The Bulletin will discuss any exemptive, no-action, and interpretive relief granted by the Commission from any rules under the Act. The Bulletin will also disclose that the NAV for the Shares will be calculated after 4:00 p.m. Eastern time each trading day.
The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5)
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Equities Rule 8.600. The Exchange has in place surveillance procedures that are adequate to properly monitor trading in the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. The Adviser has implemented a “fire wall” with respect to its affiliated broker-dealer regarding access to information concerning the composition and/or changes to the Fund's portfolio. In addition, the Trust's Pricing and Investment Committee has implemented procedures designed to prevent the use and dissemination of material, non-public information regarding the Portfolio and the Fund. FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares, ETPs and certain exchange-traded securities underlying the Shares with other markets and other entities that are members of the ISG, and FINRA, on behalf of the Exchange, may obtain trading information regarding trading in the Shares, ETPs and certain exchange-traded securities underlying the Shares from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares, ETPs and certain exchange-traded securities underlying the Shares from markets and other entities that are members of ISG or with which the Exchange has in place a CSSA. FINRA, on behalf of the Exchange, is able to access, as needed, trade information for certain fixed income securities held by the Fund reported to FINRA's TRACE. The Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), including Rule 144A securities deemed illiquid by the Adviser. The ETPs held by the Fund will be traded on U.S. national securities exchanges and will be subject to the rules of such exchanges, as approved by the Commission. Neither the Fund nor the Portfolio will invest in options, futures contracts or swaps agreements. The Fund's and Portfolio's investments will be consistent with its investment objective and will not be used to enhance leverage.
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the Disclosed Portfolio will be made available to all market participants at the same time. In addition, a large amount of information is publicly available regarding the Fund and the Shares, thereby promoting market transparency. The Fund's portfolio holdings will be disclosed on its Web site daily after the close of trading on the Exchange and prior to the opening of trading on the Exchange the following day. Moreover, the IOPV will be widely disseminated by one or more major market data vendors at least every 15 seconds during the Exchange's Core Trading Session. The exchange-listed and traded equity securities in which the Portfolio would be permitted to invest will be limited to: (1) Equity securities that trade in markets that are members of the ISG or are parties to a CSSA with the Exchange or, (2) Actively-Traded Securities as defined in Reg M that are traded on U.S. and non-U.S. exchanges with last sale reporting. On each business day, before commencement of trading in Shares in the Core Trading Session on the Exchange, the Fund will disclose on its Web site the Disclosed Portfolio that will form the basis for the Fund's calculation of NAV at the end of the business day. Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services, and quotation and last sale information will be available via the CTA high-speed line. The Web site for the Fund will include a form of the prospectus for the Fund and additional data relating to NAV and other applicable quantitative information. Moreover, prior to the commencement of trading, the Exchange will inform its Equity Trading Permit Holders in an Information Bulletin of the special characteristics and risks associated with trading the Shares. Trading in Shares of the Fund will be halted if the circuit breaker parameters in NYSE Arca Equities Rule 7.12 have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable, and trading in the Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), which sets forth circumstances under which Shares of the Fund may be halted. The intra-day, closing and settlement prices of the portfolio securities are also readily available from the national securities exchanges trading such securities, automated quotation systems, published or other public sources, or on-line information services such as Bloomberg or Reuters. In addition, as noted above, investors will have ready access to information regarding the Fund's holdings, the IOPV, the Disclosed Portfolio, and quotation and last sale information for the Shares.
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of actively-managed exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement. In addition, as noted above, investors will have ready access to information regarding the Fund's holdings, the IOPV, the Disclosed Portfolio, and quotation and last sale information for the Shares. The exchange-listed and traded equity securities in which the Portfolio would be permitted to invest will be limited to: (1) equity securities that trade in markets that are members of the ISG or are parties to a CSSA with the Exchange or, (2) Actively-Traded Securities as defined in Reg M that are traded on U.S. and non-U.S. exchanges with last sale reporting. The Exchange believes that the requirements described above applicable to non-U.S. equities, namely the requirements that non-U.S. equity securities be Actively-Traded Securities as defined in Reg M, and that they trade in markets with last sale reporting, will provide an additional choice for investors who desire exposure to non-U.S. equities by an issue of Managed Fund Shares greater than that currently permitted by Managed Fund Shares issues, while also providing for minimum liquidity thresholds relating to ADTV and public float.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change will facilitate the listing and trading of an actively-managed exchange-traded
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to the authority granted to the United States Small Business Administration (“SBA”) under Section 309 of the Small Business Investment Act of 1958, as amended and Section 107.1900 of the SBA Rules and Regulations, SBA by this notice declares null and void the license to function as a small business investment company under Small Business Investment Company License No. 05/05-0307 issued to NXT Capital SBIC, LP.
The Secretary of State's designation of “Countries of Particular Concern” for religious freedom violations.
Pursuant to section 408(a) of the International Religious Freedom Act of 1998 (Pub. L. 105-292), as amended (the Act), notice is hereby given that, on July 18, 2014, the Secretary of State, under authority delegated by the President, has designated each of the following as a “Country of Particular Concern” (CPC) under section 402(b) of the Act, for having engaged in or tolerated particularly severe violations of religious freedom: Burma, China, Eritrea, Iran, Democratic People's Republic of Korea, Saudi Arabia, Sudan, Turkmenistan, and Uzbekistan.
The Secretary simultaneously designated the following Presidential Actions for these CPCs:
For Burma, the existing ongoing arms embargo referenced in 22 CFR 126.1(a) pursuant to section 402(c)(5) of the Act;
For China, the existing ongoing restriction on exports to China of crime control and detection instruments and equipment, under the Foreign Relations Authorization Act of 1990 and 1991 (Public Law 101-246), pursuant to section 402(c)(5) of the Act;
For Eritrea, the existing ongoing arms embargo referenced in 22 CFR 126.1(a) pursuant to section 402(c)(5) of the Act;
For Iran, the existing ongoing travel restrictions based on serious human rights abuses under section 221(a)(1)(C) of the Iran Threat Reduction and Syria Human Rights Act of 2012, pursuant to section 402(c)(5) of the Act;
For North Korea, the existing ongoing restrictions to which North Korea is subject, pursuant to sections 402 and 409 of the Trade Act of 1974 (the Jackson-Vanik Amendment) pursuant to section 402(c)(5) of the Act;
For Saudi Arabia, a waiver as required in the “important national interest of
For Sudan, the restriction on making certain appropriated funds available for assistance to the Government of Sudan in the annual Department of State, Foreign Operations, and Related Programs Appropriations Act, currently set forth in section 7042(j) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2014 (Div. K, Pub. L. 113-76), and any provision of law that is the same or substantially the same as this provision, pursuant to section 402(c)(5) of the Act;
For Turkmenistan, a waiver as required in the “important national interest of the United States,” pursuant to section 407 of the Act; and
For Uzbekistan, a waiver as required in the “important national interest of the United States,” pursuant to section 407 of the Act.
The Office of the Assistant Legal Adviser for Private International Law, Department of State, hereby gives notice that the ACPIL ODR Study Group will hold a public meeting. The ACPIL ODR Study Group will meet to discuss the next session of the UNCITRAL ODR Working Group, scheduled for October 20-24, 2014 in Vienna. This is not a meeting of the full Advisory Committee.
The UNCITRAL ODR Working Group is charged with the development of legal instruments for resolving both business to business and business to consumer cross-border electronic commerce disputes. The Working Group is in the process of developing generic ODR procedural rules for resolution of cross-border electronic commerce disputes, along with separate legal instruments that may take the form of annexes such as guidelines for online dispute resolution providers and arbitrators. For the reports of the first eight sessions of the UNCITRAL ODR Working Group—December 13-17, 2010, in Vienna (A/CN.9/716); May 23-27, 2011, in New York (A/CN.9/721); Nov. 14-18, 2011, in Vienna (A/CN.9/739); May 21-25, 2012, in New York (A/CN.9/744); November 5-9, 2012, in Vienna (A/CN.9/762): May 20-24, 2013, in New York (A/CN.9/769); November 18-22, 2014, in Vienna (A/CN.9/795) and March 24-28, 2014, in New York (A/CN.9/801)—please follow the following link:
Department of State.
Notice.
This public notice provides information on how to apply for the DV-2016 Program.
The Congressionally-mandated Diversity Immigrant Visa Program is administered annually by the Department of State. Section 203(c) of the Immigration and Nationality Act (INA) provides for a class of immigrants known as “diversity immigrants,” from countries with historically low rates of immigration to the United States. For fiscal year 2016, 50,000 diversity visas (DVs) will be available. There is no cost to register for the DV Program.
Applicants who are selected in the lottery (“selectees”) must meet simple, but strict, eligibility requirements in order to qualify for a diversity visa. Selectees are chosen through a randomized computer drawing. Diversity visas are distributed among six geographic regions and no single country may receive more than seven percent of the available DVs in any one year.
For DV-2016, natives of the following countries are not eligible to apply, because more than 50,000 natives of these countries immigrated to the United States in the previous five years:
Bangladesh, Brazil, Canada, China (mainland-born), Colombia, Dominican Republic, Ecuador, El Salvador, Haiti, India, Jamaica, Mexico, Nigeria, Pakistan, Peru, Philippines, South Korea, United Kingdom (except Northern Ireland) and its dependent territories, and Vietnam.
Persons born in Hong Kong SAR, Macau SAR, and Taiwan are eligible.
Changes in eligibility this year: None.
• Was your spouse born in a country whose natives are eligible? If yes, you can claim your spouse's country of birth—provided that both you and your spouse are named on the selected entry, are issued diversity visas, and enter the United States simultaneously.
• Were you born in a country whose natives are ineligible, but in which neither of your parents was born or legally resident at the time of your birth? If yes, you may claim the country of birth of one of your parents if it is a country whose natives are eligible for the DV-2016 program. For more details on what this means, see the Frequently Asked Questions.
• A high school education or its equivalent, defined as successful completion of a 12-year course of formal elementary and secondary education;
or
• two years of work experience within the past five years in an occupation requiring at least two years of training or experience to perform. The U.S. Department of Labor's O*Net Online database will be used to determine qualifying work experience.
For more information about qualifying work experience for the principal DV applicant, see the Frequently Asked Questions.
Entries for the DV-2016 DV program must be submitted electronically at
Submit your Electronic Diversity Visa Entry Form (E-DV Entry Form or DS-5501), online at
You are strongly encouraged to complete the entry form yourself, without a “visa consultant,” “visa agent,” or other facilitator who offers to help. If somebody else helps you, you should be present when your entry is prepared so that you can provide the correct answers to the questions and retain the confirmation page and your unique confirmation number. It is extremely important that you retain your confirmation page and unique confirmation number. Without this information, you will not be able to access the online system that will inform you of the status of your entry. Think carefully if someone else offers to keep this information for you. You also should retain access to the email account listed in the E-DV. See the Frequently Asked Questions for more information about Diversity Visa scams.
After you submit a complete entry, you will see a confirmation screen containing your name and a unique confirmation number. Print this confirmation screen for your records. Starting May 5, 2015, you will be able to check the status of your entry by returning to
You must provide the following information to complete your E-DV entry:
1. Name—last/family name, first name, middle name—exactly as on your passport.
2. Birth date—day, month, year.
3. Gender—male or female.
4. City where you were born.
5. Country where you were born—Use the name of the country currently used for the place where you were born.
6. Country of eligibility for the DV Program—Your country of eligibility will normally be the same as your country of birth. Your country of eligibility is not related to where you live. If you were born in a country that is not eligible, please review the Frequently Asked Questions to see if there is another way you may be eligible.
7. Entrant photograph(s)—Recent photographs of yourself, your spouse, and all your children listed on your entry. See Submitting a Digital Photograph for compositional and technical specifications. You do not need to include a photograph for a spouse or child who is already a U.S. citizen or a Lawful Permanent Resident, but you will not be penalized if you do.
Group photographs will not be accepted; you must submit a photograph for each individual. Your entry may be disqualified or visa refused if the photographs are not recent, have been manipulated in any way, or do not meet the specifications explained below. See Submitting a Digital Photograph for more information.
8. Mailing Address—In Care Of
9. Country where you live today.
10. Phone number (optional).
11. Email address—An email address to which you have direct access. If your entry is selected and you respond to the notification of your selection through the
12. Highest level of education you have achieved, as of today: (1) Primary school only, (2) Some high school, no diploma, (3) High school diploma, (4) Vocational school, (5) Some university courses, (6) University degree, (7) Some graduate-level courses, (8) Master's degree, (9) Some doctoral-level courses, and (10) Doctorate. See the Frequently Asked Questions for more information about educational requirements.
13. Current marital status—Unmarried, married, divorced, widowed, or legally separated. Enter the name, date of birth, gender, city/town of birth, country of birth of your spouse, and a photograph of your spouse meeting the same technical specifications as your photo.
Failure to list your eligible spouse will result in disqualification of the principal applicant and refusal of all visas in the case at the time of the visa interview. You must list your spouse even if you plan to be divorced before you apply for a visa. A spouse who is already a U.S. citizen or a Lawful Permanent Resident will not require or be issued a DV visa, though you will not
14. Number of children—List the Name, date of birth, gender, city/town of birth, and country of birth for all living unmarried children under 21 years of age, regardless of whether or not they are living with you or intend to accompany or follow to join you should you immigrate to the United States. Submit individual photographs of each of your children using the same technical specifications as your own photograph.
• Be sure to include:
• All living natural children;
• all living children legally adopted by you; and,
• all living step-children who are unmarried and under the age of 21 on the date of your electronic entry, even if you are no longer legally married to the child's parent, and even if the child does not currently reside with you and/or will not immigrate with you.
Married children and children over the age of 21 are not eligible for the DV. However, the Child Status Protection Act protects children from “aging out” in certain circumstances. If your DV entry is made before your unmarried child turns 21, and the child turns 21 before visa issuance, he/she may be treated as though he/she were under 21 for visa-processing purposes.
A child who is already a U.S. citizen or a Lawful Permanent Resident is not eligible for a diversity visa, and you will not be penalized for either including or omitting such family members from your entry.
Failure to list all children who are eligible will result in disqualification of the principal applicant and refusal of all visas in the case at the time of the visa interview. See the Frequently Asked Questions for more information about family members.
See the Frequently Asked Questions for more information about completing your Electronic Entry for the DV-2016 Program.
Based on the allocations of available visas in each region and country, individuals will be randomly selected by computer from among qualified entries. All DV-2016 entrants will be required to go to the
If your entry is selected, you will be directed to a confirmation page that will provide further instructions, including information on fees connected with immigration to the United States.
If you are selected, in order to receive a DV to immigrate to the United States, you still must meet all eligibility requirements under U.S. law. These requirements may significantly increase the level of scrutiny required and time necessary for processing for natives of some countries listed in this notice including, but not limited to, countries identified as state sponsors of terrorism.
All processing of entries and issuance of DVs to selectees meeting eligibility requirements and their eligible family members must be completed by midnight on September 30, 2016. Under no circumstances can DVs be issued or adjustments approved after this date, nor can family members obtain DVs to follow-to-join the principal applicant in the United States after this date. See the Frequently Asked Questions for more information about the selection process.
You can take a new digital photograph or scan a photographic print with a digital scanner, as long as it meets the compositional and technical specifications listed below. Test your photos through the photo validation link on the E-DV Web site, which provides additional technical advice on photo composition and examples of acceptable and unacceptable photos.
Photographs must be in 24-bit color depth. If you are using a scanner, the settings must be for True Color or 24-bit color mode. See the additional scanning requirements below.
• Head Position: The subject must directly face the camera. The subject's head should not be tilted up, down, or to the side. The head height or facial region size (measured from the top of the head, including the hair, to the bottom of the chin) must be between 50 percent and 69 percent of the image's total height. The eye height (measured from the bottom of the image to the level of the eyes) should be between 56 percent and 69 percent of the image's height.
• Light-colored Background: The subject should be in front of a neutral, light-colored background.
• Focus: The photograph must be in focus.
• No Decorative Items: The subject must not wear sunglasses or other items that detract from the face.
• No Head Coverings or Hats: Head coverings or hats worn for religious beliefs are acceptable, but the head covering may not obscure any portion of the face. Tribal or other headgear not religious in nature may not be worn. Photographs of military, airline, or other personnel wearing hats will not be accepted.
• Taking a New Digital Image. If you take a new digital image, it must meet the following specifications:
Image File Format: The image must be in the Joint Photographic Experts Group (JPEG) format.
Image File Size; The maximum image file size is 240 kilobytes (240KB).
Image Resolution and Dimensions: Minimum acceptable dimensions are 600 pixels (width) x 600 pixels (height). Image pixel dimensions must be in a square aspect ratio (meaning the height must be equal to the width).
Image Color Depth: Image must be in color (24 bits per pixel). 24-bit black and white or 8-bit images will not be accepted.
• Scanning a Submitted Photograph. Before you scan a photographic print, make sure it meets the color and compositional specifications listed above. Scan the print using the following scanner specifications:
Scanner Resolution: Scanned at a resolution of at least 300 dots per inch (dpi).
Image File Format: The image must be in the Joint Photographic Experts Group (JPEG) format.
Image File Size: The maximum image file size is 240 kilobytes (240 KB).
Image Color Depth: 24-bit color. [Note that black and white, monochrome, or grayscale images will not be accepted.]
“Native” ordinarily means someone born in a particular country, regardless
Because a numerical limitation is placed on immigrants entering from a country or geographic region, each individual is “charged” to a country. Your chargeability” refers to the country whose limitation you count towards. Your country of eligibility will normally be the same as your country of birth. However, you may choose your country of eligibility as the country of birth of your spouse, or the country of birth of either of your parents if you were born in a country in which neither parent was born and in which the parents were not resident at the time of your birth. These are the only three ways to select your country of chargeability.
Listing an incorrect country of eligibility or chargeability (i.e., one to which you cannot establish a valid claim) may disqualify your entry.
There are two circumstances in which you still might be eligible to apply. First, if your derivative spouse was born in an eligible country, you may claim chargeability to that country. As your eligibility is based on your spouse, you will only be issued a DV-1 immigrant visa if your spouse is also eligible for and issued a DV-2 visa. Both of you must enter the United States together using your DVs. Similarly, your minor dependent child can be “charged” to a parent's country of birth.
Second, you can be “charged” to the country of birth of either of your parents as long as neither of your parents was born in or a resident of your country of birth at the time of your birth. People are not generally considered residents of a country in which they were not born or legally naturalized, if they were only visiting, studying in the country temporarily, or stationed temporarily for business or professional reasons on behalf of a company or government from a different country other than the one in which you were born.
If you claim alternate chargeability through either of the above, you must provide an explanation on the E-DV Entry Form, in question #6.
Listing an incorrect country of eligibility or chargeability (i.e., one to which you cannot establish a valid claim) may disqualify your entry.
DVs are intended to provide an immigration opportunity for persons who are not from “high admission” countries. The law defines “high admission countries” as those from which a total of 50,000 persons in the Family-Sponsored and Employment-Based visa categories immigrated to the United States during the previous five years. Each year, U.S. Citizenship and Immigration Services (USCIS) tallies the family and employment immigrant admission and adjustment of status figures for the previous five years to identify the countries that are considered “high admission” and whose natives will therefore be ineligible for the annual diversity visa program. Since this calculation is made annually, the list of countries whose natives are eligible or not eligible may change from one year to the next.
United States Citizenship and Immigration Services (USCIS) determines the regional DV limits for each year according to a formula specified in Section 203(c) of the INA. The number of visas that will eventually be issued to natives of each country will depend on the regional limits established, how many entrants come from each country, and how many of the selected entrants are found eligible for the visa. No more than seven percent of the total visas available can go to natives of any one country.
U.S. immigration law and regulations require that every DV entrant must have at least a high school education or its equivalent or have two years of work experience within the past five years in an occupation requiring at least two years of training or experience. A “high school education or equivalent” is defined as successful completion of a 12-year course of elementary and secondary education in the United States OR the successful completion in another country of a formal course of elementary and secondary education comparable to a high school education in the United States. Only formal courses of study meet this requirement; correspondence programs or equivalency certificates (such as the General Equivalency Diploma G.E.D.) are not acceptable. Documentary proof of education or work experience must be presented to the consular officer at the time of the visa interview.
If you do not meet the requirements for education or work experience, your entry will be disqualified at the time of your visa interview, and no visas will be issued to you or any of your family members.
The U.S. Department of Labor's (DOL) O*Net OnLine database will be used to determine qualifying work experience. The O*Net Online Database groups job experience into five “job zones.” While many occupations are listed on the DOL Web site, not all occupations qualify for the DV Program. To qualify for a DV on the basis of your work experience, you must have, within the past five years, two years of experience in an occupation that is designated as Job Zone 4 or 5, classified in a Specific Vocational Preparation (SVP) range of 7.0 or higher.
If you do not meet the requirements for education or work experience, your entry will be disqualified at the time of your visa interview, and no visas will be issued to you or any of your family members.
When you are in O*Net OnLine, follow these steps to find out if your occupation qualifies:
1. Under “Find Occupations” select “Job Family” from the pull down;
2. Browse by “Job Family”, make your selection, and click “GO”;
3. Click on the link for your specific occupation.
4. Select the tab “Job Zone” to find the designated Job Zone number and Specific Vocational Preparation (SVP) rating range.
As an example, select Aerospace Engineers. At the bottom of the Summary Report for Aerospace Engineers, under the Job Zone section, you will find the designated Job Zone 4, SVP Range, 7.0 to <8.0. Using this example, Aerospace Engineering is a qualifying occupation.
For additional information, see the Diversity Visa—List of Occupations Web page (
There is no minimum age to apply, but the requirement of a high school education or work experience for each principal applicant at the time of
The DV-2016 entry period will run from 12:00 p.m. (noon), Eastern Daylight Time (EST) (GMT-4), Wednesday, October 1, 2014, until 12:00 p.m. (noon), Eastern Standard Time (EDT) (GMT-5), Monday, November 3, 2014. Each year, millions of people submit entries. Holding the entry period on these dates ensures that selectees are notified in a timely manner and gives both the visa applicants and our embassies and consulates time to prepare and complete cases for visa issuance.
You are strongly encouraged to enter early during the registration period. Excessive demand at the end of the registration period may slow the system down. No entries will be accepted after noon EST Monday, November 3, 2014.
Yes, an applicant may be in the United States or in another country, and the entry may be submitted from anywhere.
Yes, the law allows only one entry by or for each person during each registration period. The Department of State uses sophisticated technology to detect multiple entries.
Yes, a husband and a wife may each submit one entry if each meets the eligibility requirements. If either spouse is selected, the other is entitled to apply as a derivative dependent.
Parents and siblings of the entrant are ineligible to receive DV visas as dependents, and should not be included in your entry.
If you list family members on your entry, they are not required to apply for a visa or to immigrate or travel with you. However, if you fail to include an eligible dependent on your original entry and later list them on your visa application forms, your case will be disqualified at the time of your visa interview and no visas will be issued to you or any of your family members. This only applies to those who were family members at the time the original application was submitted, not those acquired at a later date. Your spouse, if eligible to enter, may still submit a separate entry even though he or she is listed on your entry, as long as both entries include details on all dependents in your family (see FAQ #12 above).
You are encouraged to prepare and submit your own entry, but you may have someone submit the entry for you. Regardless of whether you submit your own entry, or an attorney, friend, relative, or someone else submits it on your behalf, only one entry may be submitted in your name. You, as the entrant, are responsible for ensuring that information in the entry is correct and complete; entries that are not correct or complete may be disqualified. Entrants should keep their own confirmation number so that they are able to independently check the status of their entry using Entrant Status Check at
Yes.
You can enter online during the registration period beginning at 12:00 p.m. (noon) Eastern Daylight Time (EDT) (GMT-4) on Wednesday, October 1, 2014, and ending at 12:00 p.m. (noon) Eastern Standard Time (EST) (GMT-5) on Monday, November 3, 2014.
No, you will not be able to save the form into another program for completion and submission later. The E-DV Entry Form is a Web form only. You must fill in the information and submit it while online.
No. The E-DV Entry Form is designed to be completed and submitted at one time. You will have sixty (60) minutes starting from when you download the form to complete and submit your entry through the E-DV Web site. If you exceed the sixty minute limit and have not electronically submitted your complete entry, any information already entered is discarded. The system deletes any partial entries so that they are not accidentally identified as duplicates of a later, complete entry. Read the DV instructions completely before you start to complete the form online, so that you know exactly what information you will need.
Yes, as long as the photograph meets the requirements in the instructions and is electronically submitted with, and at the same time as, the E-DV online entry. You must already have the scanned photograph file when you submit the entry online; it cannot be submitted separately from the online application. The entire entry (photograph and application together) can be submitted electronically from the United States or from overseas.
Yes. If your photo(s) did not meet the specifications, your entry will not be accepted by the E-DV Web site, so you will not receive a confirmation notice. However, given the unpredictable nature of the Internet, you may not receive the rejection notice
You should receive the confirmation notice immediately, including a confirmation number that you must record and keep. However, the unpredictable nature of the Internet can result in delays. You can hit the “Submit” button as many times as is necessary until a complete application is received and the confirmation notice sent. However, once you receive a confirmation notice, do not resubmit your information.
You must use your confirmation number to access the Entrant Status Check available on the E-DV Web site at
The Department of State will not contact you to tell you that you have been selected (see FAQ #23).
You may check the status of your DV-2016 entry through the Entrant Status Check on the E-DV Web site at
You must have your confirmation number to access Entrant Status Check. A tool is now available in Entrant Status Check (ESC) on the eDV Web site that will allow you to retrieve your confirmation number via the email address you registered with by entering certain personal information to confirm your identity.
U.S. Embassies and Consulates and the Kentucky Consular Center are unable to check your selection status for you or provide your confirmation number to you directly (other than through the ESC retrieval tool). The Department of State is NOT able to provide a list of those selected to continue the visa process.
The Department of State will not send you a notification letter. The U.S. government has never sent emails to notify individuals that they have been selected, and there are no plans to use email for this purpose for the DV-2016 program. If you are a selectee, you will only receive email communications regarding your visa appointment after you have responded to the notification instructions on Entrant Status Check. These emails will not contain information on the actual appointment date and time; they will simply tell you that appointment details are available and you must then access Entrant Status Check for details.
Only Internet sites that end with the “.gov” domain suffix are official U.S. government Web sites. Many other Web sites (e.g., with the suffixes “.com,” “.org,” or “.net”) provide immigration and visa-related information and services. The Department of State does not endorse, recommend, or sponsor any information or material on these other Web sites.
You may receive emails from websites trying to trick you into sending money or providing your personal information. You may be asked to pay for forms and information about immigration procedures, all which are available free on the Department of State Web site or through U.S. Embassy or Consulate Web sites. Additionally, organizations or Web sites may try to steal your money by charging fees for DV-related services. If you send money to one of these scams, you will likely never see it again. Also, do not send personal information to these Web sites, as it may be used for identity fraud/theft.
For DV-2016, 50,000 DV visas are available. Because it is likely that some of the first 50,000 persons who are selected will not qualify for visas or pursue their cases to visa issuance, more than 50,000 entries will be selected to ensure that all of the available DV visas are issued. However, this also means that there will not be a sufficient number of visas for all those who are initially selected
You can check the E-DV Web site's Entrant Status Check to see if you have been selected for further processing and your place on the list. Interviews for the DV-2016 program will begin in October 2015 for selectees who have submitted all pre-interview paperwork and other information as requested in the notification instructions. Selectees who provide all required information will be informed of their visa interview appointment through the E-DV Web site's Entrant Status Check four to six weeks before the scheduled interviews with U.S. consular officers at overseas posts.
Each month, visas will be issued to those applicants who are ready for issuance during that month, visa-number availability permitting. Once all of the 50,000 DV visas have been issued, the program will end. Visa numbers could be finished before September 2016. Selected applicants who wish to receive visas must be prepared to act promptly on their cases. Being randomly chosen as a selectee does not guarantee that you will receive a visa. Selection merely means that you are eligible to apply for a Diversity Visa, and if your rank number becomes eligible for final processing, potentially to be issued a Diversity Visa. Only 50,000 visas will be issued to such applicants.
Official notifications of selection will be made through Entrant Status Check, available starting May 5, 2015, through at least June 30, 2016, on the E-DV Web site
All entries received from each region are individually numbered, and at the end of the entry period, a computer will randomly select entries from among all the entries received for each geographic region. Within each region, the first entry randomly selected will be the first case registered; the second entry selected will be the second case registered, etc. All entries received within each region during the entry period will have an equal chance of being selected. When an entry has been selected, the entrant will be notified of his/her selection through the Entrant Status Check available starting May 5, 2015, on the E-DV Web site
Yes, provided you are otherwise eligible to adjust status under the terms of Section 245 of the INA, you may apply to USCIS for adjustment of status to permanent resident. You must ensure that USCIS can complete action on your case, including processing of any overseas spouse or children under 21 years of age, before September 30, 2016, since on that date your eligibility for the DV-2016 program expires. No visa numbers or adjustments of status for the DV-2016 program will be approved after midnight EDT on September 30, 2016, under any circumstances.
If you are selected in the DV-2016 program, you are entitled to apply for visa issuance only during U.S. Government Fiscal Year 2016, which spans from October 1, 2015, through September 30, 2016. Selectees are encouraged to apply for visas as early as possible, once their lottery rank numbers become eligible for further processing.
If a DV selectee dies at any point before he or she has traveled to the United States, the DV case is automatically terminated. Any derivative spouse and/or children of the deceased selectee will no longer be entitled to a DV visa. Any visas that were issued to them will be revoked.
If you are a randomly selected entrant, you will receive instructions for the DV visa application process through Entrant Status Check at
If you are selected and you are already present in the United States and plan to file for adjustment of status with USCIS, the instructions page accessible through Entrant Status Check at
No. Visa fees cannot be refunded. You must meet all qualifications for the visa as detailed in these instructions. If a consular officer determines you do not meet requirements for the visa, or you are otherwise ineligible for the DV under U.S. law, the officer cannot issue a visa and you will forfeit all fees paid.
DV applicants are subject to all grounds of ineligibility for immigrant visas specified in the Immigration and Nationality Act (INA). There are no special provisions for the waiver of any ground of visa ineligibility aside from those ordinarily provided in the Immigration and Nationality Act (INA), nor is there special processing for waiver requests. Some general waiver provisions for people with close relatives who are U.S. Citizens or Lawful Permanent Resident aliens may be available to DV applicants in some cases, but the time constraints in the DV program may make it difficult for applicants to benefit from such provisions.
Please visit the
By law, a maximum of 55,000 visas are available each year to eligible persons. However, in November 1997, the U.S. Congress passed the Nicaraguan Adjustment and Central American Relief Act (NACARA), which stipulates that beginning as early as DV-1999, and for as long as necessary, up to 5,000 of the 55,000 annually-allocated DVs will be made available for use under the NACARA program. The actual reduction
No. The U.S. government will not provide any of these services to you if you receive a visa through the DV program. If you are selected to apply for a DV, you will need to demonstrate that you will not become a public charge in the United States before being issued a visa. This evidence may be in the form of a combination of your personal assets, an Affidavit of Support (Form I-134) submitted by a relative or friend residing in the United States, an offer of employment from an employer in the United States, or other evidence.
The list below shows the countries whose natives are eligible for DV-2016, grouped by geographic region. Dependent areas overseas are included within the region of the governing country. The countries whose natives are not eligible for the DV-2016 program were identified by USCIS, according to the formula in Section 203(c) of the INA. The countries whose natives are not eligible for the DV program (because they are the principal source countries of Family-Sponsored and Employment-Based immigration or “high-admission” countries) are noted after the respective regional lists.
In Africa, natives of Nigeria are not eligible for this year's diversity program.
* Persons born in the areas administered prior to June 1967 by Israel, Jordan, Syria, and Egypt are chargeable, respectively, to Israel, Jordan, Syria, and Egypt. Persons born in the Gaza Strip are chargeable to Egypt; persons born in the West Bank are chargeable to Jordan; persons born in the Golan Heights are chargeable to Syria.
** Natives of the following Asia Region countries are not eligible for this year's diversity program: Bangladesh, China (mainland-born), India, Pakistan, South Korea, Philippines, and Vietnam. Hong Kong S.A.R. (Asia region), Macau S.A.R. (Europe region), and Taiwan (Asia region) do qualify and are listed here.
** Natives of the following European countries are not eligible for this year's DV program: Great Britain (United Kingdom). Great Britain (United Kingdom) includes the following dependent areas: Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Falkland Islands, Gibraltar, Montserrat, Pitcairn, St. Helena, and Turks and Caicos Islands. Note that for purposes of the diversity program only, Northern Ireland is treated separately; Northern Ireland does qualify and is listed among the qualifying areas. Macau S.A.R. does qualify and is listed above.
In North America, natives of Canada and Mexico are not eligible for this year's diversity program.
Countries in this region whose natives are not eligible for this year's diversity program: Brazil, Colombia, Dominican Republic, Ecuador, El Salvador, Haiti, Jamaica, Mexico, and Peru.
Surface Transportation Board.
Notice Tentatively Authorizing Finance Transaction.
Academy Express, L.L.C. (Academy Express), a motor carrier of passengers, has filed an application under 49 U.S.C. 14303 to acquire properties of Go Bus LLC (Go Bus) and its affiliate, MCIZ Corp. (MCIZ), both motor carriers of passengers.
Comments must be filed by November 10, 2014. Applicants may file a reply by November 24, 2014. If no comments are filed by November 10, 2014, this notice shall be effective on November 11, 2014
Send an original and 10 copies of any comments referring to Docket No. MCF 21059 to: Surface Transportation Board, 395 E Street SW., Washington, DC 20423-0001. In addition, send one copy of comments to Academy Express's representative: Fritz R. Kahn, Fritz R. Kahn, P.C., 1919 M Street NW., 7th Floor, Washington, DC 20036.
Valerie Quinn, (202) 245-0382. Federal Information Relay Service (FIRS) for the hearing impaired: (800) 877-8339.
The Tedesco Family ESB Trust directly controls the following noncarriers: Academy Bus, L.L.C. (Academy Bus);
Academy Express primarily provides charter bus and contract carrier services for associations or other groups in interstate commerce in the states of New York and New Jersey, and to a lesser extent in the District of Columbia, Virginia, Maryland, Pennsylvania, Connecticut, Rhode Island, and Massachusetts, and commuter line service between New Jersey and New York. Go Bus and MCIZ are primarily engaged in providing special and charter operations to and from places in the state of New York. Go Bus also provides regular-route service between New York, NY (New York City), and Cambridge and Newton, Mass., and commuter line service between Glen Cove, NY, and New York City. MCIZ, pursuant to a contract with the New York City Board of Education, provides transportation to students and teachers on day trips from and to places in New York for sports or other events.
According to Academy Express, Go Bus and MCIZ have decided to cease acting as motor carriers. Under the proposed transaction, Academy Express seeks to acquire the interstate and intrastate operating authorities of Go Bus, its customer lists, telephone numbers, Web sites, and trade name, as well as MCIZ's contract with the New York City Board of Education, its bus stop in New York City and its licenses for the two park-and-ride facilities in Nassau and Suffolk Counties, NY.
Under 49 U.S.C. 14303(b), the Board must approve and authorize a transaction that it finds consistent with the public interest, taking into consideration at least: (1) The effect of the proposed transaction on the adequacy of transportation to the public; (2) the total fixed charges that result; and (3) the interest of affected carrier employees. Academy Express has submitted information, as required by 49 CFR 1182.2, including the information to demonstrate that the proposed transaction is consistent with the public interest under 49 U.S.C. 14303(b), and a statement pursuant to 49 U.S.C. 14303(g) that the 12-month aggregate gross operating revenues of Academy Express exceeded $2 million.
With respect to the effect of the transaction on the adequacy of transportation to the public, Academy Express states that the proposed acquisition would benefit the patrons of Go Bus and MCIZ. According to Academy Express, passengers would be able to travel in newer, more comfortable, and better maintained buses, and would have more frequent service at a lower cost than was offered by Go Bus or MCIZ. Academy Express states that the proposed transaction would have little or no effect on competitive conditions in the special and charter bus markets. Academy Express states that it would compete with Greyhound Lines, Inc., Peter Pan Bus Lines, Inc., Martz Trailways, Magic Carpet Tours, and Majestic Tours, Inc., in providing service between New York City and Cambridge and Newton. Academy Express also states that it would compete with various services of the Metropolitan Transportation Authority in rendering service between Glen Cove and New York City, as well as in competing for the contract with the New York City Board of Education. Academy Express states that the proposed transaction would have no effect on total fixed charges. Further, Academy Express states that the transaction would have little or no effect upon Go Bus and MCIZ's employees, as the substantial majority of these employees would continue to be employed by the affiliate or other related entities of Go Bus, or may be offered employment with Academy Express.
On the basis of the application, the Board finds that the proposed acquisition of control is consistent with the public interest and should be tentatively approved and authorized. If any opposing comments are timely filed, this finding will be deemed vacated, and, unless a final decision can be made on the record as developed, a procedural schedule will be adopted to reconsider the application.
Academy Express's application and supplemental filing, as well as Board decisions and notices, are available on our Web site at
This decision will not significantly affect either the quality of the human environment or the conservation of energy resources.
1. The proposed transaction is approved and authorized, subject to the filing of opposing comments.
2. If opposing comments are timely filed, the findings made in this notice will be deemed as having been vacated.
3. This notice will be effective November 11, 2014, unless opposing comments are timely filed.
4. A copy of this decision will be served on: (1) The U.S. Department of Transportation, Federal Motor Carrier Safety Administration, 1200 New Jersey Avenue SE., Washington, DC 20590; (2) the U.S. Department of Justice, Antitrust Division, 10th Street & Pennsylvania Avenue NW., Washington, DC 20530; and (3) the U.S. Department of Transportation, Office of the General Counsel, 1200 New Jersey Avenue SE., Washington, DC 20590.
By the Board, Chairman Elliott, Vice Chairman Miller, and Commissioner Begeman.
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
In compliance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521), this notice announces that the Veterans Benefits Administration (VBA), Department of Veterans Affairs, will submit the collection of information abstracted below to the Office of Management and Budget (OMB) for review and comment. The PRA submission describes the nature of the information collection and its expected cost and burden; it includes the actual data collection instrument.
Comments must be submitted on or before October 24, 2014.
Submit written comments on the collection of information through
Crystal Rennie, Enterprise Records Service (005R1B), Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 632-7492 or email
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The
By direction of the Secretary.
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
In compliance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521), this notice announces that the Veterans Benefits Administration (VBA), Department of Veterans Affairs, will submit the collection of information abstracted below to the Office of Management and Budget (OMB) for review and comment. The PRA submission describes the nature of the information collection and its expected cost and burden; it includes the actual data collection instrument.
Comments must be submitted on or before October 24, 2014.
Submit written comments on the collection of information through
Crystal Rennie, Enterprise Records Service (005R1B), Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 632-7492 or email
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The
By direction of the Secretary.
Securities and Exchange Commission.
Final rule.
We are adopting significant revisions to Regulation AB and other rules governing the offering process, disclosure, and reporting for asset-backed securities (“ABS”). The final rules require that, with some exceptions, prospectuses for public offerings under the Securities Act of 1933 (“Securities Act”) and ongoing reports under the Securities Exchange Act of 1934 (“Exchange Act”) of asset-backed securities backed by real estate related assets, auto related assets, or backed by debt securities, including resecuritizations, contain specified asset-level information about each of the assets in the pool. The asset-level information is required to be provided according to specified standards and in a tagged data format using eXtensible Markup Language (“XML”). We also are adopting rules to revise filing deadlines for ABS offerings to provide investors with more time to consider transaction-specific information, including information about the pool assets. We are also adopting new registration forms tailored to ABS offerings. The final rules also repeal the credit ratings references in shelf eligibility criteria for ABS issuers and establish new shelf eligibility criteria.
Compliance Dates:
Rolaine S. Bancroft, Senior Special Counsel, Michelle M. Stasny, Special Counsel, M. Hughes Bates, Attorney-Advisor, or Kayla Florio, Attorney-Advisor, in the Office of Structured Finance at (202) 551-3850, Division of Corporation Finance, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-3628.
We are adopting amendments to Items 512
The Commission addressed the registration, disclosure, and reporting requirements for asset-backed securities in 2004 when it adopted new rules and amendments under the Securities Act and the Exchange Act.
In the 2010 ABS Proposing Release we noted that the financial crisis highlighted that investors and other participants in the securitization market did not have the necessary information and time to be able to fully assess the risks underlying asset-backed securities and did not value asset-backed securities properly or accurately. This lack of understanding and the extent to which it impacted the U.S. and global economy prompted us to revisit several aspects of our regulation of asset-backed securities.
In July 2010, subsequent to the 2010 ABS Proposing Release, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”),
In February 2014, the Commission re-opened the comment period
The financial crisis highlighted a number of concerns about the operation of our rules in the securitization market.
In addition, investors have expressed concern about a lack of time to analyze securitization transactions and make informed investment decisions.
Investors and others have also expressed concerns about other aspects of the securitization market, including concern about a lack of effective oversight by the principal officers of the ABS issuer.
Market participants have also expressed a desire for expanded disclosure about the assets underlying securitizations in order to conduct an analysis of the offering.
We are adopting significant revisions to the rules governing disclosure, reporting, registration, and the offering process for asset-backed securities. The revised rules are designed to address the problems discussed above and to enhance investor protection in the ABS market.
The final rules are intended to provide investors with timely and sufficient information, reduce the likelihood of undue reliance on credit ratings, and provide mechanisms to help to enforce the representations and warranties made about the underlying assets. These revisions are comprehensive and although they will impose new burdens on issuers, we believe they will protect investors and promote efficient capital formation. The rules cover the following areas:
• Securities Act and Exchange Act disclosures, including new requirements for certain asset classes to disclose standardized asset-level information;
• Revisions to the shelf offering process, eligibility criteria, and prospectus delivery requirements; and
• Several changes to the Asset-Backed Issuer Distribution Report on Form 10-D, the Annual Report on Form 10-K, and the Current Report on Form 8-K.
In addition, we are adopting clarifying, technical, and other changes to the current rules. Some of the rules we are adopting are designed to address and improve areas that we believe have the potential to raise issues similar to those highlighted in the financial crisis. Furthermore, some of the rules we are adopting respond to Sections 939A and 942(b) of the Dodd-Frank Act.
Investors, other market participants, academics, and policy makers have increasingly noted that asset-level information is essential to evaluating an asset-backed security.
We are adopting standardized asset-level disclosure requirements because we believe this information will allow an investor to better conduct his or her own evaluation of the ongoing credit quality of a particular asset, risk layering of assets, and overall risks in the pool underlying the ABS. In our discussion below, we refer to each individual asset-level disclosure requirement as an asset-level data point. The asset-level data will be provided at the time of the offering and on an ongoing basis. The disclosures are required to be provided in a standardized XML format, so that they are more useful to investors and markets. We have revised the required data points to address commenters' concerns about a variety of topics that we discuss further below, such as the availability of data, market practice, need for increased transparency and privacy concerns. While we are adopting asset-level disclosure requirements for ABS where the underlying assets consist of residential mortgages, commercial mortgages, auto loans, auto leases and resecuritizations of ABS that include these asset types, or of debt securities,
We have modified some of the proposed data points in response to comments. The new disclosure requirements include the following standardized data points:
• Data points about the payment stream related to a particular asset, such as the contractual terms, scheduled payment amounts, basis for interest rate calculations and whether and how payment terms change over time;
• Data points that allow for an analysis of the collateral related to the asset, such as the geographic location of the property, property valuation data and loan-to-value (“LTV”) ratio;
• Data points about the performance of each asset over time, for example, data about whether an obligor is making payments as scheduled; and
• Data points about the loss mitigation efforts by the servicer to collect amounts past due and the losses that may pass on to the investors.
We have also made modifications from the 2010 ABS Proposal in light of privacy concerns. As we discuss below, many commenters were concerned with the privacy implications of asset-level disclosure, particularly the risk that the information could be combined with other publicly available information to discover, or “re-identify,” the identities of the obligors in ABS pools, thereby revealing potentially sensitive personal and financial information about an obligor. In light of these concerns, we are omitting or modifying certain asset-level disclosures for RMBS and securities backed by auto loans and leases (collectively, “Auto ABS”) to reduce the potential risk that the obligors could be re-identified. We refer to this risk throughout the release as “re-identification risk”. Additionally, in response to commenters' suggestions, we have sought and obtained guidance from the Consumer Financial Protection Bureau (“CFPB”) on the application of the Fair Credit Reporting Act (“FCRA”)
We are also adopting other amendments to the prospectus disclosure requirements, which will require:
• A summary of statistical information about the pool of underlying assets in the prospectus summary;
• A description of the provisions in the transaction agreements about modification of the terms of the underlying assets;
• More explanatory language about the static pool disclosures and standardized delinquency presentation and, for static pool filings on Form 8-K, a new separate Form 8-K item and exhibit number;
• Expanded disclosure about transaction parties; and
• Filing of the transaction documents, by the date of the final prospectus, which is a clarification of the current rules.
ABS issuers have emphasized their desire to access the capital markets quickly through shelf registration. ABS shelf registration offers significant flexibility and timing benefits to issuers, but these interests must be balanced against investors' need for adequate information and time to make informed investment decisions. Investors have expressed concerns about not having adequate time to review the prospectus in order to make a well-informed investment decision, especially in an
As noted above, while we recognize that ABS issuers have expressed the desire to use shelf registration in order to access the capital markets quickly, we believe that the shelf eligibility requirements should be designed to help ensure a certain quality and character for asset-backed securities eligible for delayed shelf registrations given the speed of these offerings. Prior to today, one of the shelf eligibility requirements for offerings of asset-backed securities was that the securities were investment-grade securities—meaning that at least one of the nationally recognized statistical rating organizations (“NRSRO”) rated them in one of its generic rating categories that signifies investment grade and is typically one of the four highest categories. As noted above, the financial crisis revealed that credit rating agencies had generally not appropriately evaluated the credit risk of the securities and that some investors may have placed too much reliance on these ratings without conducting their own analysis.
• A certification by the chief executive officer;
• An asset review provision requiring review of the assets for compliance with the representations and warranties upon the occurrence of certain trigger events;
• A dispute resolution provision; and
• Disclosure of investors' requests to communicate.
We believe that these new shelf eligibility and offering requirements will reduce undue reliance on credit ratings and also help to ensure that ABS issued in shelf offerings are designed and prepared with more oversight and care that make them appropriate to be issued off a shelf, which we define as being “shelf appropriate” securities.
In the aftermath of the financial crisis, investors have expressed concern that ABS issuers were creating securitization transactions that could not support the scheduled payments due to investors.
We have made revisions to the certification in order to address commenters' concerns about the certification constituting a guarantee about future performance and possibly increased liability for certifiers. To address commenters' concerns about certifier liability, we have added a
We have noted investors' concerns about the effectiveness of contractual provisions related to the representations and warranties about the pool assets and the lack of responsiveness by sponsors and other parties to the transaction about potential breaches.
As demonstrated by events surrounding the financial crisis, investors have not only lacked an effective mechanism to identify potential breaches of the representations and warranties, they have also lacked a mechanism to require sponsors to address their repurchase requests in a timely manner.
The aftermath of the financial crisis has demonstrated that investors have also encountered difficulty in locating other investors in order to enforce rights collectively under the terms of the ABS transaction, especially those related to repurchase demands due to breaches of the representations and warranties.
We are also adopting various other changes to the procedures and forms related to shelf offerings substantially as proposed, with some changes in response to comments, including:
• Limiting registration of continuous ABS shelf offerings to “all or none offerings.”
• Eliminating Rule 415(a)(1)(vii) that provided shelf eligibility to certain investment-grade mortgage related securities regardless of the registration statement form.
• Permitting a pay-as-you-go registration fee alternative, allowing ABS issuers to pay registration fees at the time of filing the preliminary prospectus, as opposed to paying all registration fees upfront at the time of filing the registration statement.
• Creating new Forms SF-1 and SF-3 for ABS issuers that will replace the usage of current Forms S-1 and S-3 in order to delineate between ABS filers and corporate filers and to tailor requirements for ABS offerings.
• Eliminating the ABS investment-grade exemptive provision in Rule 15c2-8(b) so that a broker or dealer will be required to deliver a preliminary prospectus at least 48 hours before sending a confirmation of sale.
• Revising the current practice of providing a base prospectus and prospectus supplement for ABS issuers and instead requiring that a single prospectus be filed for each takedown (except that it would be permissible to highlight material changes from the preliminary prospectus in a separate supplement to the preliminary prospectus).
In addition to the prospectus disclosure changes and shelf requirements, we are also adopting other changes related to ABS. For example, we are adopting a revision to the prefunding exception provided in the definition of ABS, which will decrease the prefunding limit from 50% to 25% of the offering proceeds. Additionally, we are adopting several changes to Forms 10-D, 10-K and 8-K.
We are not adopting at this time, however, several rules that we proposed in the 2010 ABS Proposing Release or the 2011 ABS Re-Proposing Release. These proposals remain outstanding. They include:
• Requiring issuers to provide the same disclosure for Rule 144A offering as required for registered offerings;
• Making the general asset-level requirements applicable to all asset classes and asset-class specific requirements for equipment loans and leases, student loans, and floorplan financings;
• Requiring grouped-account disclosure for credit and charge card ABS;
• Filing of a waterfall computer program of the contractual cash flow provisions of the securities;
• Requiring the transaction documents, in substantially final form, be filed by the date the preliminary prospectus is required to be filed;
• Exempting ABS issuers from current requirements that the depositor's principal accounting officer or controller sign the registration statement and in lieu requiring an executive officer in charge of securitization sign the registration statement; and
• Revising when pool disclosure must be updated on Form 8-K.
We are mindful of the economic consequences and effects, including costs and benefits, of our rules, and we discuss them throughout this release when we explain the new rules that we are adopting. Further, Section 2(b) of the Securities Act
To assess these economic consequences, we are using as our baseline the ABS market as it exists at the end of 2013, including applicable rules adopted by the Commission but excluding the rules adopted herein. Because activity in the ABS market has changed due to the financial crisis, we will refer to market statistics that encompass the pre-crisis period, the crisis period, and the current period as appropriate in order to provide a more comprehensive picture of the ABS market. To the extent that certain amendments are mandated by statute, the economic analysis considers the consequences and effects that stem from statutory mandates, as well as those that are affected by the discretion we exercise in implementing the mandates. We provide a qualitative, and whenever possible quantitative, discussion of the costs, benefits, and the effects on efficiency, competition, and capital formation of individual rule provisions in the corresponding sections of the release. We anticipate, however, that the elements of the rules will interact with each other and also with other regulations to generate combined economic effects. Thus, it is appropriate to expand the analysis to include disparate elements of the rule. While we make every reasonable attempt to quantify the economic impact of the rules that we are adopting, we are unable to do so for several components of the new rules due to the lack of available data.
The new rules are designed to improve investor protections and promote a more efficient asset-backed market. The new transaction requirements for shelf eligibility should encourage ABS issuers to design and prepare ABS offerings with greater oversight and care and should incentivize issuers to provide investors with accurate and complete information at the time of the offering. It is these transactions that are appropriate to be offered to the public off a shelf without prior staff review. The new requirements for more asset-level information and more time for investors to review this information will provide more disclosure and greater transparency about the underlying assets. The effect of the increased disclosure on competition, efficiency, and capital formation will depend, in part, on the level of granularity and standardization of information currently available and disclosed. The remaining changes to Regulation AB that we are adopting are refinements to existing Regulation AB. We recognize that these new and amended rules that we are adopting may impose costs on asset-backed issuers, investors, servicers, and other transaction participants and may affect competition, efficiency, and capital formation. The effect of the refinements to existing Regulation AB will depend, in part, on issuers' current methods to comply with the existing rules. While we cannot predict or quantify precisely all effects the new rules will have on competition, efficiency, and capital formation, we believe that the rules we are adopting will improve the asset-backed securities market.
For many asset classes, the ABS market before the 2007-2009 financial crisis differed significantly from the one immediately after the crisis, and even from our baseline, the market that exists today, as illustrated in Figure 1. Private-label (non-U.S. agency) ABS issuers held $2.6 trillion in assets in 2004, which grew to $4.5 trillion in 2007, and declined to $1.63 trillion in 2013.
The number of sponsors in the registered ABS markets has undergone changes similar to the issuance activity described above. In 2004 there were 131 sponsors of registered ABS, while currently there are 61 sponsors of registered ABS.
Many factors contributed to the financial crisis, including some that involved mortgage-backed securities.
As described at the end of the previous section, during the financial crisis, many securitizations performed exceptionally poorly as investments. This has been attributed to the dual problems of moral hazard and asymmetric information.
At that time, many investors unduly relied upon the major credit rating agencies for credit analysis of these structures rather than conducting their own due diligence, and these agencies often failed to accurately evaluate and rate the securitization structures.
The rules we are adopting apply to private-label RMBS securitizations, and do not apply to Government Sponsored Entities (GSEs) such as Fannie Mae and Freddie Mac, whose principal and interest on issued securities is currently guaranteed, while the GSEs remain in conservatorship,
We note that the rules are intended to increase transparency about the potential risks in the ABS market through greater loan-level disclosure and to provide additional recourse for investors when issues arise, thus providing better tools for investors to evaluate their capital allocation decisions. These measures should lessen the risk of overreliance on credit ratings as investors will now be able to conduct their own due diligence using more transparent and fuller disclosures regarding the assets underlying a securitization. Disclosure of higher quality and more complete data regarding the loan characteristics of the underlying collateral should result in better capital allocation decisions, improved capital formation and, ultimately, lower capital costs by making the markets more informationally-efficient.
One key objective of the final rules is to eliminate the reliance on credit ratings in the determination of shelf eligibility of asset-backed securities. Replacing the investment-grade rating requirement for the purposes of shelf eligibility may result in securitizers finding it uneconomic or unnecessary to obtain credit ratings for their securitizations, thus lowering the demand for the services of third-party evaluators. The rules do not, however, preclude investors from utilizing credit ratings in their investment analysis and decision-making, and asset-backed securities issuers are not prohibited from having their offerings rated. Thus, if there is sufficient demand for ratings due to a perception of value in the ratings, then securitizers may continue to obtain ratings and credit rating agencies would suffer a relatively small decrease in the demand for their ratings services.
The rules we are adopting are designed to work with other regulations to provide additional disclosures, further align incentives in the securitization market, and restore confidence in the ABS market. Specifically, Section 941(b) of the Dodd-Frank Act requires regulations that mandate that certain securitizers have “skin in the game” through the retention of a meaningful risk exposure in securitizations (at least a 5% economic loss exposure).
In summary, the amendments to our regulations and forms for asset-backed securities are designed to enhance investor protection by reducing the likelihood of overreliance on ratings and increasing transparency to market participants.
We believe that these amendments will work together to also improve investors' willingness to invest in asset-backed securities and to help the recovery in the ABS market with attendant positive effects on informational and allocative efficiency, competition, and the level of capital formation. Enhanced ABS disclosures and the potential for improved pricing accuracy of the ABS market should ultimately benefit issuers in the form of a lower cost of capital and increased investor participation. We expect that increased transparency in the market and more certainty about the quality of underlying assets should result in lower required yields, and a larger number of investors should be willing to participate in the market because of reduced uncertainty and risk. This, in turn, would allow originators to conserve costly capital and to diversify credit risks among many investors. Further, we believe that credit risk transfer will result in greater efficiency in the lending decisions of originators, the lowering of credit costs, and ultimately greater capital availability through higher loan levels.
Asset-level disclosure requirements will provide information about underlying asset quality that was not consistently available to investors prior to these rules. The new rules also standardize the reporting of asset-level information, thus lowering the cost of acquiring information and search costs for investors. The disclosure and the reduction in search costs should directly increase the transparency of the market and, thus, the informational efficiency in pricing ABS, both in the primary and secondary markets. This should lead to increased investor participation and more efficient allocation of capital.
There are important benefits to issuers from heightened disclosures of a structured finance asset base. In the absence of adequate information about the quality of assets in the ABS structure, as was the case in the RMBS market leading up to the start of the financial crisis, the market for structured products may break down.
Another consequence of the final rules is the increase in availability of capital through the potential expansion of the set of ABS eligible for shelf registration. A larger set of ABS will be eligible for shelf registration if they meet the new shelf eligibility requirements, namely, non-investment grade ABS tranches that were not eligible before. This may result in greater credit availability to issuers of non-investment grade ABS that would have otherwise been difficult or more costly to obtain.
We recognize that the final rules may have direct and indirect economic impacts on various market participants. Importantly, as noted above, the market practices of participants are likely to evolve in response to the final rules. While we lack the ability to predict those effects with certainty, we qualitatively consider some of the potential effects of these rules by discussing the trade-offs various market participants may face when complying with these rules.
Most of the direct costs of these rules fall onto the sponsors of ABS, since they will initially bear any increased costs of compliance and implementation of the new requirements; however, there is some uncertainty surrounding who will ultimately bear these direct compliance costs. Depending on market conditions, the degree of competition at different levels of the securitization chain, and the availability of other forms of credit, the sponsors may attempt to pass some or all of these costs on to other market participants.
One way in which the sponsors may elect to pass costs to market participants is through lower returns paid to investors in securitizations. Promised returns to investors will typically depend on the costs of creating and maintaining the securitized credit structure, including new costs associated with compliance. If investors are willing to absorb some or all of these costs and yet still expect to receive an acceptable risk-adjusted return on their investment, then investor returns could be lower on these investments than in the past. How much of the higher costs sponsors can realistically pass through to investors will depend on the risk and return opportunities available from other similar investments in the market.
We also recognize that some of the new asset-level disclosure and shelf registration costs may be passed down the chain of securitization and ultimately to borrowers. In particular, and in the short term when new reporting and data handling systems have to be developed, borrowers may ultimately bear higher credit costs to compensate sponsors for these increased compliance costs. The ability to pass costs on to borrowers will be constrained by competition from lenders that do not securitize in the registered market. If the costs of compliance are significant, the competitive position of firms that are subject to the requirements of the final rules and that rely on securitization in the public market for funding, in particular through shelf registrations, could weaken relative to other financial firms that are not subject to these requirements, or that have other sources of funding.
If asset-backed issuers are unable to pass along their shelf registration costs as described above, and thus bear all or most of these new costs, then they might choose to avoid the shelf registration process by registering their ABS on Form SF-1 or they might choose to bypass registration altogether and issue through unregistered offerings instead to avoid the new shelf registration costs. Similarly, if asset-backed issuers are unable to pass along the costs incurred to provide asset-level disclosure (for those asset classes subject to it), then they may issue through unregistered offerings. Such actions could have the effect of reducing efficiency and could impede capital formation; however, there are reasons to believe that some investors may support the market for registered ABS despite additional costs. First, because the prospectus disclosure requirements are the same for both types of registered offerings, a shift from shelf-registration to non-shelf-registration may occur only due to the new shelf registration costs, and the shift would be constrained by the speed and convenience of shelf takedowns. Moreover, the reallocation of newly issued registered ABS between shelf- and non-shelf registration should not have a substantial effect on capital formation as long as new and existing issuers of registered ABS choose to or continue to choose to issue registered ABS (and accordingly provide the same disclosures). Second, not all investors satisfy the criteria of qualified institutional buyers (“QIBs”) under Rule 144A,
The enhancement of registered transactions could potentially reduce the degree to which credit is intermediated by banks.
One potential source of competition for private-label securitizers impacted by these rules is the GSEs in the mortgage market. As previously mentioned, the principal and interest on GSE-issued securities is currently guaranteed, while the GSEs are in conservatorship. Even upon resolution of their current status, their congressional charter and past government intervention will likely perpetuate a widely held view of an implicit federal guarantee of their securities.
The current federal guarantee of mortgage-backed securities issued by GSEs (and/or the market perception of an implicit guarantee) may explain why, among all the securitized asset categories impacted by the financial crisis, the private-label RMBS and CMBS have been the slowest to regain volume.
We are adopting a requirement for standardized asset-level disclosures for ABS where the underlying assets consist of residential mortgages, commercial mortgages, auto loans, auto leases, and resecuritizations of ABS that include these asset types or of debt securities. The disclosure is required to be provided in a standardized tagged XML format. We are also adopting many of the proposed refinements to other disclosure requirements. At this time, we are not adopting our proposal for other asset classes.
Prior to these amendments, the Commission had not historically required the disclosure of asset-level data. Instead, issuers were only required to provide information about the composition and characteristics of the asset pool, tailored to the asset type and asset pool involved for the particular offering.
Many investors and other participants in the securitization market did not previously have sufficient time and information to be able to understand the risks underlying the ABS and were not able to value the ABS accordingly.
Subsequent to the 2010 ABS Proposing Release, Congress passed the Dodd-Frank Act. Section 942(b) of the Dodd-Frank Act added Section 7(c) to the Securities Act, which requires, in relevant part, that the Commission adopt regulations requiring an issuer of
We received comments on the potential privacy implications of the proposed asset-level data requirements, including comments suggesting that the required asset-level information be provided by means other than public dissemination on the Commission's Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”).
To assess the economic consequences of these asset-level disclosure requirements, we are using as our baseline the ABS market as it existed at the end of 2013. Today, we note that for some types of ABS, issuers have begun or have continued to provide asset-level data. For instance, some registered RMBS issuers before the financial crisis provided asset-level disclosures, although the disclosures were not standardized. Since then, there have been a limited number of registered RMBS transactions. Those transactions have provided asset-level disclosures pursuant to recently developed industry standards.
We also note that prudential regulators in other jurisdictions require asset-level data about certain ABS in certain instances. For instance, the European Central Bank requires asset-level information for ABS accepted as collateral in the Eurosystem credit operations.
After considering the comments received, the ABS market and the availability and use of asset-level data regarding ABS as they exist today, we are adopting, with modifications, the proposed asset-level disclosure requirements for ABS where the underlying assets consist of residential mortgages, commercial mortgages, auto loans or auto leases, resecuritizations of ABS that include these asset types, or of debt securities.
As noted above, the proposed asset-level data requirements were to apply to all asset types, except ABS backed by credit cards, charge cards and stranded costs. For ABS backed by credit or charge card receivables, we proposed that issuers provide standardized grouped-account disclosures about the underlying asset pool instead of asset-level disclosures.
Asset-level information should provide investors with information that allows them to independently perform due diligence and make informed investment decisions; however, each asset class presents its own unique considerations. The response to our proposal was mixed, with some commenters supporting asset-level disclosure across asset classes and some commenters suggesting that alternative forms of disclosure were more appropriate for certain asset classes. We believe that the mix of information needed for analysis varies from asset class to asset class, and as we discuss in greater detail below, we have tailored the requirements for each asset class. While we are adopting requirements for only certain asset classes, we continue to consider the appropriate disclosure requirements for other asset classes and those proposals remain unchanged and outstanding.
To augment our current principles-based, pool-level disclosure requirements, we proposed to require that issuers disclose standardized asset-level information about the assets underlying the ABS at the time of offering and on an ongoing basis in Exchange Act reports.
Support for requiring asset-level disclosures varied across asset types, and in some cases, between issuers and investors. Some commenters, mainly investors, generally indicated broad support for asset-level disclosure across asset types.
In addition to comments indicating general support or opposition to the proposal, as discussed further below, we also received comments expressing more specific concerns about the proposal, such as the costs to provide the disclosures, the value of the disclosure to investors, the liability for errors in the data, individual privacy issues, the potential release of proprietary data, and whether asset-level disclosures were necessary to evaluate ABS involving certain asset classes.
Both investors and issuers noted that the disclosure requirements will impose costs and burdens on ABS issuers. Investors, however, also believed asset-level information is necessary to properly analyze ABS, and some investors believed that the concerns about the costs and burdens of providing such data may be exaggerated. For instance, the investor membership of one trade association acknowledged that requiring asset-level disclosures will impose costs and burdens on ABS issuers, but believed the information is a “necessary and key element of restoring investor confidence in the ABS markets.”
Several commenters did not support asset-level requirements for certain asset classes, noting that the value of the disclosures to investors or market participants may not justify the potential costs and burdens derived from the disclosures.
Commenters also raised concerns about liability for inaccuracies.
As noted above, some commenters did not support requiring asset-level disclosures for certain asset types. For example, several commenters, mainly
As noted above, the public availability of asset-level information has historically been limited. In the past, some transaction agreements for securitizations required issuers to provide investors with asset-level information, or information on each asset in the pool backing the securities.
At this time, we are adopting asset-level requirements for ABS where the underlying assets consist of residential mortgages, commercial mortgages, auto loans or leases, and resecuritizations of ABS, or of debt securities and we continue to consider whether asset-level disclosure would be useful to investors across other asset classes. Prior to the financial crisis, RMBS and CMBS had historically represented a large portion of the registered ABS market while Auto ABS represents a large portion of the current registered ABS market. Accordingly, these disclosures should benefit the largest number of investors, especially as greater numbers of RMBS and CMBS are issued. Although comments about the asset-level requirements for Auto ABS were mixed, with some opposing any asset-level requirements for Auto ABS, Auto ABS investors have indicated in comment letters that they believe that asset-level data will strengthen the Auto ABS market and make it more resilient over the long term.
The asset-level disclosure requirements for debt security ABS are relatively limited in scope and primarily consist of information that should be readily available to issuers. These disclosures, while consisting of only the basic characteristics of the debt security, will provide useful information to investors, such as the cash flows associated with the debt security, and identifiers, such as the SEC file number of the debt security. Using the SEC file number of the debt security, investors will be able to access other disclosures filed with the Commission about the debt security. No commenters specifically opposed these requirements.
We are also adopting asset-level disclosure requirements for resecuritization ABS. In an ABS resecuritization, the asset pool is comprised of one or more ABS. The new rules require disclosures about the ABS in the pool and, if the ABS in the asset pool is an RMBS, CMBS or Auto ABS, issuers are also required to provide asset-level disclosures about the assets underlying the ABS. We are requiring disclosures about the ABS being resecuritized for the same reasons we are requiring disclosure for debt security ABS, which is to provide investors with information about the ultimate source of cash flows of assets underlying the resecuritization. As a result, we believe investors in resecuritization ABS should derive the same benefits as investors in other ABS.
Under current requirements the securities being resecuritized must be registered or exempt from registration
We also believe the same benefits will accrue to investors in resecuritization ABS as to investors in RMBS, CMBS, Auto ABS or debt security ABS. Similar to a direct investment in an RMBS, CMBS, Auto ABS or debt security ABS, access to this information should provide further transparency about the assets underlying the security or securities underlying the resecuritization ABS. This additional information should allow investors to analyze the collateral supporting the security being resecuritized, the cash flows derived from each asset underlying the security being resecuritized, and the risk of each asset underlying the security being resecuritized.
We acknowledge commenters' concerns about other asset classes, which we think warrant further consideration. For instance, we continue to consider commenters' concerns about how asset-level disclosures should apply where there is lack of uniformity amongst the types of collateral or terms of the underlying contracts,
We also believe that, for most investors, the usefulness of asset-level data is generally limited unless the asset-level data requirements, which include the following components, are standardized: The definitions of each data point, the format for providing the asset-level data (e.g., XML), and the scope of the information required, such as what data is required about each obligor, the related collateral, and the cash flows related to each asset. We believe that standardizing the asset-level disclosures facilitates the ability to compare and analyze the underlying asset-level data of a particular asset pool as well as compare that pool to other recent ABS offerings involving similar assets.
The asset-level data required will, in general, include information about the credit quality of the obligor, the collateral related to each asset, the cash flows related to a particular asset, such as the terms, expected payment amounts, indices and whether and how payment terms change over time and the performance of each asset over the life of a security. This information should allow investors to better understand, analyze, and track the performance of ABS. We believe the final requirements we are adopting for RMBS, CMBS, Auto ABS, debt security ABS and resecuritizations will implement the requirements of Section 7(c) for these asset classes.
As noted above, we believe the usefulness of the asset-level information is further increased by our formatting requirements. We believe providing standardized data definitions and requiring the data to be in a machine-readable format will provide investors the ability to download the data into software tools that can promptly analyze the asset pool. While some investors may need to obtain the software or other tools needed to analyze the data, we believe such costs would be offset by a reduction or elimination of the costs investors would incur to convert non-machine-readable data into a format that makes analyzing it easier. As a result, this should reduce the time investors need to analyze the offering. We also believe requiring the data to be in a machine-readable format addresses concerns that investors will be overwhelmed by the granularity of the data, because investors can quickly extract the data most relevant to their analysis. Section 7(c) also requires that we set standards for the format of the data provided by issuers of an asset-backed security, which shall, to the extent feasible, facilitate the comparison of such data across securities in similar types of asset classes.
The requirements of standardized asset-level information in a machine-readable format coupled with, as we discuss in Section V.B.1.a Rule 424(h) and Rule 430D, more time to consider transaction-specific information provided through the new preliminary prospectus and three-day offering
Providing investors access to such information should reduce their cost of information gathering because they will not need to purchase the data from intermediaries or otherwise gather the information. Furthermore, requiring that a single entity, the issuer, provide the information rather than requiring each investor to collect it will reduce duplicative information-gathering efforts. Also, data accuracy may increase because issuers are incentivized to confirm the accuracy of the required asset-level disclosures provided in public filings.
Finally, we note that the public availability of standardized machine-readable data may encourage new entities to enter the ABS credit-analysis industry previously dominated by the top three largest NRSROs. This could increase competition in that industry and provide those investors who prefer not to analyze ABS themselves with more options when purchasing credit-risk assessments and reports from third parties. In addition, since asset-level information in standardized and machine-readable format will now be available, investors will have the ability to better assess the rating performance of NRSROs and other credit-analysis firms.
While we expect that the asset-level disclosure requirements we are adopting will generate the benefits described above, we also recognize that they will impose costs upon the issuers required to provide asset-level disclosures and on other market participants. We received only a few quantitative estimates of the potential costs to comply with the proposed asset-level disclosure requirements.
The asset-level disclosures, as commenters noted, will result in costs related to revising existing information systems to capture, store and report the data as required. These costs may be incurred by several parties along the securitization chain, including loan originators who pass the information to sponsors and ABS issuers who file the information with the Commission. As we describe later in the release, there could be significant start-up costs
We also note that sponsors and ABS issuers may pass the costs they incur to comply with the requirements on to investors in the form of lower promised returns and/or originators may pass their costs on to borrowers in the form of higher interest rates or fees. We note, however, that some of these costs may be offset by a reduction in other expenses. For example, investors who previously paid data aggregators for access to relevant information may no longer be required to purchase this data and, to the extent that they do, lower data collection costs on the part of the data aggregators may flow through to investors. Many of the data gathering costs that previously were borne by several data aggregators and/or investors would be performed by the sponsor, eliminating the potential duplication of effort. Thus, the net effect of the new rules could be a reduction in the aggregate data collection costs imposed on the entire market through more efficient dissemination of relevant information. As a result, in the aggregate, the increase of the costs to investors in the form of lower returns
The 2010 ABS Proposing Release noted that the proposed standard definitions for asset-level information for RMBS and CMBS were similar to, and in part based on, other standards that have been developed by the industry, such as those developed under the American Securitization Forum's (ASF) Project on Residential Securitization Transparency and Reporting (“Project RESTART”) or those developed by CRE Finance Council (CREFC). We continue to acknowledge that to the extent that there are differences between standards for asset-level information, additional costs would be imposed on issuers and servicers to reconcile differences between standards. Further, servicers may incur some costs in monitoring their compliance with servicing criteria and requirements under the servicing agreement given that periodic reports will now include asset-level information. As we discuss in more depth below in the discussions about the requirements applicable to each asset type, we have attempted to reduce burden and cost concerns by further aligning the disclosure requirements with industry standards where feasible. Further, as discussed below, we are providing for an extended implementation timeframe, which we also believe will reduce the burden of implementing the requirements.
To further minimize implementation costs, we also removed the “General” category. We incorporated the data points proposed under this category into each of the asset class-specific requirements in order to tailor the requirements for each asset class.
We also understand the asset-level data requirements may also affect other market participants. For instance, some investors may have used the services of data providers to obtain the type of data that will now be mandatory under the requirements we are adopting. As a result, these data providers may experience reduced demand for their data aggregation business as investors may no longer seek such services since these requirements may provide them access to similar data. We believe, however, that this concern is mitigated as these entities will also be able to access the publicly available data. As a result, these data providers may not need to gather this asset-level data from other sources, thereby reducing their costs to obtain the data. Further, third-party data providers have developed products to analyze and model the asset-level data. Since the asset-level data will be standardized it may increase the utility of their current products or allow them to develop new products, thus increasing demand for their data analysis business.
We note that commenters raised other concerns regarding the asset-level reporting requirements beyond the cost to implement the requirements. One concern, as noted above, is that the proposed asset-level data may result in the release of an originator's proprietary data.
Another concern that some commenters raised was the potential for securities law liability for inaccuracies in data points that require so-called “soft data.”
In addition to concerns about the accuracy of data points requiring soft data, some commenters expressed concern about potential liability cost for errors or inaccuracies in the responses provided to other data points. Assessing materiality for purposes of securities law liability for an error or inaccuracy in an individual data point would depend on a traditional analysis of the particular facts and circumstances.
Courts have analyzed materiality under Exchange Act Section 10(b) and Exchange Act Rule 10b-5, and Securities Act Sections 11 and 12(a)(2) in a similar fashion.
We considered several possible alternatives to the new asset-level requirements we are adopting. Some alternatives we considered to address various concerns, including re-identification risk, included: Requiring more pool-level data in lieu of asset-level data, grouped account data in lieu of asset-level data, allowing a “provide-or-explain” type regime, only defining the type of information to be provided and allowing the registrant or other market participants to define the asset-level information or the Web site approach.
We are concerned that these alternatives would be of limited benefit to investors, since they will not go far enough in providing them with information best suited to assessing the risk and return tradeoff presented by RMBS, CMBS, Auto ABS, debt security ABS and resecuritizations and to independently perform due diligence. Pool-level and grouped account data does not provide investors with the opportunity to develop the same level of understanding, because when loans or assets are aggregated into groups of information, certain characteristics of individual assets are lost. For example, investors may know how many loans fall in a particular loan-to-value range but may not know whether most loans are at the top, middle or bottom of that range.
As noted above, we also considered the alternative suggested by some commenters that we require asset-level disclosure generally but allow an issuer or an industry group to define the disclosures. We also considered a provide-or-explain type regime that would permit an issuer to omit any asset-level data point and provide an explanation as to why the data was not disclosed.
In addition to considering the alternatives we discussed above, we also considered adopting industry developed asset-level disclosure standards already in existence for RMBS and CMBS. We discuss in Section III.A.2.b.1 Residential Mortgage-Backed Securities and Section III.A.2.b.2 Commercial Mortgage-Backed Securities our consideration of adopting industry developed asset-level disclosure standards for these asset types.
Finally, as mentioned above, the final rules include several changes from the proposal. The changes are aimed at simplifying the requirements, addressing cost concerns and conforming our requirements, to the extent feasible, to other pre-existing asset-level disclosure templates. The discussions below address, for each asset type, the economic effects of the specific requirements, such as when the data is required and the types of
This section is divided into several parts. Each part discusses the specific requirements we are adopting today for RMBS, CMBS, Auto ABS, debt security ABS and resecuritizations and highlights, for each asset class, the significant changes from the proposal.
In the 2010 ABS Proposing Release, we proposed, between Schedule L and Schedule L-D, 74 general data points. We believed the proposed general item requirements captured basic characteristics of assets that would be useful to investors in ABS across asset types. As discussed below in Section III.B.2 The Scope of New Schedule AL, we have condensed the information previously proposed to be provided in either Schedule L or Schedule L-D into a single schedule, titled Schedule AL. Schedule AL enumerates all of the asset-level disclosures to be provided, if applicable, about the assets in the pool at securitization and on an ongoing basis.
We received a substantial number of comments directed at making technical changes to the data points and in some cases requesting we delete or add certain data points or that we change a data point to accommodate the characteristics of specified assets types.
To address comments that we revise data points to accommodate the characteristics of certain assets types, we integrated the proposed Item 1 General Requirements into the asset-specific requirements. This change permitted us to tailor the data points to each particular asset type and allowed us to further incorporate applicable industry standards. The data points we discuss below are incorporated into the rules for RMBS, CMBS, Auto ABS, debt security ABS and resecuritizations. In incorporating the proposed General Requirements into the requirements for each asset type, we are also making changes to the data points, based in large part on comments received, that we believe improve or clarify the disclosure, mitigate cost concerns and/or implement industry standards when we believe doing so would not materially diminish the value of the disclosures to investors.
We proposed that issuers provide a unique asset number for each asset that is applicable only to that asset and identify the source of the asset number.
We are adopting, as proposed, that issuers provide for each asset in the pool a unique asset number applicable only to that asset and the source of the number.
We proposed a data point that would disclose whether the loan or asset was an exception to defined or standardized underwriting criteria. The response to this data point was mixed. One commenter suggested that we correlate this data point with the then proposed Item 1111(a)(3) of Regulation AB that would have required disclosure on the underwriting of assets that deviate from the underwriting criteria disclosed in the prospectus.
In contrast, one commenter requested additional disclosure because some market participants use “exception” to refer to loans that are unacceptable under the underwriting guidelines (i.e. they do not comply with the underwriting guidelines and do not meet the “compensating factor” standard set out in the guidelines to otherwise allow the approval of such loans) and at other times market participants use the term “exception” to refer to loans that are acceptable under the underwriting guidelines because they demonstrated sufficient compensating factors. The commenter suggested we require disclosure on an asset-level basis of exceptions both with and without the presence of sufficient compensating factors, the compensating factors relied upon and the specific underwriting exception.
The proposed amendments to Item 1111(a)(3) were incorporated into Item 1111(a)(8) of Regulation AB which was added to Item 1111 of Regulation AB in early 2011.
In light of comments received and the subsequent adoption of Item 1111(a)(8), we are adopting this data point with modifications.
We acknowledge a commenter's position, which was provided prior to the adoption of Rule 193, that a substantial expenditure of time and resources would be required to enable issuers to provide the proposed disclosures. We anticipate that in order to provide the new disclosure, an issuer could rely, in part, on the review that is already required in order for an issuer to comply with Rule 193. Since issuers can rely, in part, on the review that is required under Rule 193, issuers should incur less cost to provide this disclosure than if Rule 193 had not been implemented. We acknowledge that the information gained through a Rule 193 review may not provide all of the information needed to provide the disclosures.
Although issuers will incur potential costs to provide this disclosure, investors should benefit from the insight these disclosures will provide about the originator's underwriting of the pool assets and the originator's ongoing underwriting practices. For instance, the disclosures should provide investors the ability to identify the particular assets in the pool that did not meet the disclosed underwriting standards. Investors can then analyze whether these assets alter the risk profile of the asset pool and monitor the performance of these particular assets. In addition, we believe this information will allow investors to compare, over time, the performance of assets that met the disclosed underwriting criteria against those assets that did not meet the disclosed underwriting criteria used to originate the assets. This should allow investors to better evaluate an originator's underwriting practices.
We proposed a data point to capture whether an asset had been repurchased from the pool.
One commenter suggested we clarify that the repurchase notice data point is intended to track whether a repurchase request has been made before the repurchase has been completed and add an option to indicate whether a repurchase request was made but the parties later agreed that a repurchase was not required.
The dealer and sponsor members of one commenter suggested we delete the data point identifying the name of the repurchaser because transaction documents will contain the name of the person obligated to make repurchases based on breaches of representations and warranties.
We are adopting this group of data points with revisions in response to comments to align the data points with other disclosures about asset repurchases now required pursuant to the Dodd-Frank Act. As one commenter noted, Rule 15Ga-1 was adopted subsequent to the 2010 ABS Proposing Release.
To address concerns about the costs to capture and report such data and to make the disclosure most useful and effective, we are aligning the data points to the type of demands that must be reported pursuant to Rule 15Ga-1. We believe this should minimize confusion, make the disclosures consistent with Rule 15Ga-1 disclosures, and help minimize costs because sponsors will already be required to capture such data to fulfill the disclosure requirements of Rule 15Ga-1. In particular, we are revising the titles and definitions of this group of data points in order to align them with the Rule 15Ga-1 disclosure requirements.
We are also adding a data point to capture the status of an asset that is subject to a demand to repurchase or replace for breach of representations and warranties.
Two commenters suggested that we include a new data point to require issuers to provide the amount paid to repurchase the loan or lease from an Auto ABS transaction.
We also are adopting data points that capture the name of the repurchaser
We proposed that the asset-level disclosures in a preliminary prospectus be provided, unless the data point specified otherwise, as of a recent practicable date, which we defined as the “measurement date.”
A commenter believed that the proposed measurement dates were appropriate
After considering comments received, we are adopting data points that require the disclosure of reporting period beginning and end dates in lieu of our proposal to require the measurement date and cut-off date.
We recognize that this approach may reduce benefits to investors to the extent that some of the information disclosed may be stale. We believe, however, that this change should serve to address concerns that the proposal would require data to be captured at times different than when it is normally captured and thus result in undue issuer costs. To further address those concerns, we also revised some data points to clarify the “as of” date of the data required. If the data required is typically captured at a time other than the end of a reporting period, such as at origination, we revised the data point to clarify the “as of” date of the data required.
We proposed that responses to the asset-level disclosure requirements be a date, number, text, or coded response. Consistent with the proposal, the final requirements we are adopting require responses as a date, a number, text, or a coded response. We received a number of comments that sought changes to the format of the information to be collected, the range of possible responses, or the data point's title or definition.
In the 2010 ABS Proposing Release, we also noted that situations may arise where an appropriate code for disclosure may not be currently available in the technical specifications. To accommodate those situations, the proposals provided a coded response for “not applicable,” “unknown” or “other” and many of the data points we are adopting include these potential responses. We noted in the proposing release that a response of “not applicable,” “unknown” or “other” would not be appropriate responses to a significant number of data points and that registrants should be mindful of their responsibilities to provide all of the disclosures required in the prospectus and other reports.
Each section below discusses, for each asset type for which asset-level disclosure is required, the proposal, comments and final requirements applicable to each asset class and the anticipated economic effects arising from the final requirements applicable to each asset class, including the likely costs and benefits of the requirements and their effect on efficiency, competition and capital formation. Each section also discusses changes made to each group of proposed data points, including the addition of data points to or deletion of data points from the proposed group of data points.
The proposal for RMBS included a total of 362 total data points between the 74 proposed general item requirements and the 288 data points specific to RMBS in proposed Schedules L and L-D. Based on the changes described below, the final requirements for RMBS, which are set forth in Item 1 of Schedule AL, include 270 data points. As noted in the 2010 ABS Proposing Release, we took into consideration standards that have been developed for the collection and/or presentation of asset-level data about residential mortgages. For instance, ASF had published an investor disclosure and reporting package for residential mortgage-backed securities. The package is part of the group's Project RESTART. This disclosure and reporting package includes standardized definitions for loan or asset-level information and a format for the presentation of the data to investors.
As stated in the 2010 ABS Proposing Release, in developing the proposal, the staff surveyed the definitions used for data collected by the organizations mentioned above, as well as other industry sources. The scope of the
In response to the proposal, issuers, trade associations, investors and others generally supported the Commission's effort to increase transparency in the RMBS market.
In addition to the concerns commenters raised with asset-level disclosure requirements that applied across asset classes, some commenters expressed concerns with certain proposed RMBS requirements. For instance, commenters were concerned with the granularity of some proposed data points,
After considering the comments received, we are adopting, as proposed, asset-level disclosures specific to RMBS, with some modification to individual data points, and the addition and deletion of some data points from the group of proposed data points, as described in more detail below. Under the final rules, issuers are required to disclose the information described in Item 1 of Schedule AL for each mortgage in the pool, as applicable.
We believe that the asset-level requirements we are adopting for RMBS will benefit investors and other market participants by providing them with a broader picture of the composition, characteristics and performance of pool assets, which we believe is critical to an investor's ability to make an informed investment decision about the securities. Further, while the requirements are granular, we believe the scope of the disclosures is consistent with the information that Fannie Mae and Freddie Mac require for each loan sold to them or that would likely be collected by participants in Project RESTART.
The format of the final asset-level requirements remains based, at least in part, on how information was presented under Project RESTART. In developing the final requirements, we considered, however, the different formats currently available for the presentation of asset-level data about residential mortgages. For instance, we note that since the 2010 ABS Proposing Release, Fannie Mae and Freddie Mac have begun receiving asset-level data prepared in accordance with MISMO data standards for each loan they purchase.
We are not persuaded, however, that our reporting requirements should follow the MISMO format. We believe that the format for the presentation of the asset-level data we are adopting is more investor-friendly, standardizes how the information is to be provided to investors and is easier to review. Also, the reporting package developed under ASF's Project RESTART was designed with the involvement of RMBS investors and issuers, which we believe provides some indication that issuers and investors support the disclosure and reporting of asset-level data about RMBS transactions based on that format. Furthermore, we note that since the Project RESTART standards were released, the few registered offerings of RMBS that have occurred have provided data based on the standards set under Project RESTART as part of their offering materials. We also believe this provides some indication that issuers and investors support this disclosure format. We also note that investors did not submit comment letters suggesting asset-level data for RMBS be presented in a MISMO format. Finally, we also considered that asset-level information being released by Fannie Mae and Freddie Mac does not appear to be presented in a MISMO format, although we note that the disclosures are likely compiled from asset-level information submitted to them that is in a MISMO format.
While some data points we are adopting have minor differences to comparable data definitions contained in MISMO's data dictionary, we believe that most data points we are adopting are consistent with the information included in the MISMO data dictionary.
We understand, however, that requiring data points that deviate from how issuers capture and store data may raise costs for both issuers and investors because issuers will need to create new systems or adjust their current systems to provide the data to satisfy our rules. In addition, investors will need to adjust their existing tools to read and analyze the newly required data. To further minimize the need to revise systems to provide the required data, we are revising data points to better align with MISMO data definitions. If a proposed data point and a MISMO data definition require the same or similar data and aligning to the MISMO data definition would not affect the value of the information or deviate from how information is reported under the requirements, we revised the proposed data point to better align with the MISMO data definition.
We also acknowledge that some disclosures we are requiring are not part of the MISMO data dictionary or provided to Fannie Mae and Freddie Mac. Many of these disclosures relate to the ongoing performance of pool assets. We are requiring these disclosures so that an investor may conduct his or her own evaluation of the risk and return profile of the pool assets at issuance and throughout the life of the investment.
We also considered the alternative of requiring asset-level data generally and allowing the industry to develop the reporting requirement. While issuers in recent RMBS offerings have been providing asset-level disclosure in line with the disclosure templates developed by Project RESTART, providing such data to investors in this format is not mandatory. As noted above, we believe that, unless asset-level disclosures are standardized across all issuers, the benefits of asset-level data is generally limited. We believe that, without requiring and standardizing the asset-level requirements, issuers may choose to not provide asset-level data to investors, provide it inconsistently, or provide it under differing standards. These alternatives would limit the ability for investors and market participants to cost-effectively compare and analyze offerings of RMBS.
Finally, we also received many comments directed at individual data points, many of which were seeking changes to the format of the information, the range of possible responses for a particular data point, or the data point's title or definition. Other commenters made suggestions on how we could make the data points better align with an industry standard. We also received comments suggesting that certain data points should not be required if the data is derivable from other required data points.
In addition to revising the data points to align with industry standards or to address comments received,
As noted below, proposed Schedules L and L-D contained identical or substantially identical data points, so by aggregating the schedules we are able to omit one of the identical or nearly identical data points.
Some commenters, however, suggested we expand the asset-level disclosures to include more data points than proposed.
We discuss below the significant comments we received about individual data points along with the revisions we have made in response to those comments.
The proposal included a group of data points that would require disclosure of information about the status of required payments. These data points would capture, both at the time of the offering and on an ongoing basis, current
One commenter suggested that we add, revise or delete data points in this group in order to align with servicing practices or to increase transparency.
The proposed data point titled “Number of days payment is past due” would have required disclosure, at the time of the offering, of the number of days between the scheduled payment date and the cut-off date if the obligor did not make the full scheduled payment. The proposed ongoing disclosure requirements included a similar data point, but required the number of days between the scheduled payment date and the reporting period end date, instead of the cut-off date. A commenter indicated the final requirements should omit the proposed data point because servicers currently track delinquencies in 30-day intervals, measured on a monthly basis, rather than number of days past due at any given date, including the reporting date, and because the cost to capture the proposed information is not justifiable.
We are not adopting, as a commenter suggested, the data point titled “Number of days payment is past due” because the proposed data point may have required data that differs from how data is captured.
The proposed data point titled “Current delinquency status” would have required that issuers disclose the number of days the obligor is delinquent at the time of the offering
We also proposed a data point titled “Current payment status” that would capture the number of payments the obligor is past due.
We proposed data points that would require disclosure, at the time of the offering, about the junior liens and senior liens that existed at origination. For loans with subordinate liens at origination, the combined balances of all subordinate loans would be required.
Comments on this group of data points varied. A few commenters requested that the data points capturing junior lien balances include an “if known” or similar qualifier to address concerns that originators may not always have knowledge of, or access to, balance information on loans not originated by them.
We are adopting the group of data points described above, but with revisions to address comments received.
We believe investors will benefit from ongoing disclosure about the aggregate balances of all known senior and junior lien(s) and, therefore, we are revising the data points to capture the most recent senior lien(s) and junior lien(s) balances.
We proposed a group of data points that would capture information related to the property, such as the property type, occupancy status, geographic locations and valuations.
We proposed to require that the location of the property by Metropolitan Statistical Area, Micropolitan Statistical Area or Metropolitan Division (collectively, “MSA”) be provided in lieu of zip code due to privacy concerns arising from providing the property's zip code.
As discussed below in response to the 2014 Re-Opening Release, several commenters stressed the importance of geography in assessing re-identification risk and recommended requiring issuers to identify assets by a broader geographic area to reduce the ability to re-identify.
We proposed a group of data points that would capture information about original property valuations.
One commenter stated that the data captured about property valuations was too granular and not relevant to an investor.
As discussed in Section III.A.3 Asset-Level Data and Individual Privacy Concerns below, we are concerned that providing data about original property valuations may increase re-identification risk; therefore, we are not adopting any of the proposed data points related to original property valuations. In particular, we are concerned that data about original property valuations could provide a close approximation of sales price, and thus raise the same re-identification concern as sales price. Although we are not adopting the proposed data points related to original property valuations, we are adopting other data points, such as Original loan amount and Original loan-to-value, which will provide investors with key information that they need to perform due diligence and make an informed investment decision.
We also proposed data points requiring disclosure about the most recent property value, if an additional property valuation was obtained after the original appraised property value.
We are adopting these data points, as proposed, with revisions to address comments received.
We also considered, as a commenter suggested, adopting data points to capture the lowest alternative property valuation obtained in the last six months by, in addition to the originator, the sponsor or its affiliates. We did not adopt these data points because we are not persuaded, at this time, that the potential benefits investors may receive from such information would justify the potential costs and burdens that may be associated with providing the data. If, however, alternative property valuations are obtained that reflect substantially lower valuations, an issuer should consider whether these valuations need to be disclosed or whether additional narrative disclosure is necessary so that the disclosure about property valuations is not misleading.
We proposed a group of asset-level data points that would provide data about an obligor's credit quality.
The comments we received on this group of data points varied. As discussed below, several commenters noted that some data points related to obligors may cause individual privacy concerns if linked to the obligor even if that information, like obligor credit score, was provided in ranges.
With respect to whether updated obligor information should be required, one commenter believed that servicers should provide updated borrower information whenever such information is obtained by the servicer.
We are eliminating certain data about obligor income based on comments received and in light of the recent adoption by the CFPB of the ability-to-repay requirements under the Truth in Lending Act or Regulation Z, which includes minimum standards for creditors to consider in making an ability-to-pay determination when underwriting a mortgage loan.
We are also adopting data points capturing the obligor credit score, modified from the proposal.
We proposed data points requiring information about the length of time the obligor and co-obligor have been employed.
We proposed a data point that would require disclosure of the number of months since any obligor was discharged from bankruptcy.
Another commenter stated, with respect to the data point capturing the number of months since an obligor has directly or indirectly been obligated on any loan that resulted in foreclosure, that its dealer and sponsor members believe that this data point should be limited to direct obligations, whereas its investor members believed that guaranteed or co-signed obligations should be included.
In response to privacy concerns, we are not adopting either proposed data point. Section III.A.3 Asset-Level Data and Individual Privacy Concerns below provides a discussion of these and other related data points that we are not adopting due to the potential re-identification risk. As noted below, if an obligor had experienced a past bankruptcy or foreclosure, we would expect that those events would have been considered in generating a credit score. Because we are requiring disclosure of an exact credit score, investors will receive information they need about past payment behavior to perform due diligence.
We proposed data points that would require at the time of securitization disclosure about the total DTI ratio used
One commenter suggested DTI ratio disclosure provided at origination include both front-end and back-end DTI ratios.
The data points we are adopting today require, as proposed and consistent with the comment received, front-end and back-end DTI ratios calculated during the loan origination process and at the time of any loan modification.
We made various changes to the group of data points capturing information about servicer advances. The proposal included information about the servicer's responsibility, if any, to advance principal or interest on a delinquent loan, the method of those advances, the outstanding cumulative balance advanced and how those advances were subsequently reimbursed. The requirements we are adopting today include the information proposed and described above, but also include the addition and deletion of some data points capturing advances to address comments received. We discuss immediately below the various changes to the group of data points capturing information about servicer advances.
The final rule includes a data point suggested by a commenter titled “Advancing method.”
We proposed a general disclosure data point that would require, if amounts were advanced by the servicer during the reporting period, the disclosure of the amount advanced.
In light of these comments, we have split the final data points into the following four categories: Principal advances, interest advances, taxes and insurance advances, and corporate advances. While one commenter recommended aggregating the principal advances and interest advances into one data point, the final rule includes data points capturing interest and principal advances separately since that is consistent with how other information that relates to principal and interest is captured in Schedule AL.
We agree with commenters that requiring disclosures about advances made by the servicer, the outstanding cumulative balance advanced and how those advances were subsequently reimbursed or addressed will provide investors insight into the payment status of a particular asset within the pool and the potential losses that may pass on to the trust. Therefore, in order to capture how these advances were reimbursed, the final rule includes additional data points that capture for these same categories of advances, the cumulative outstanding advanced amount or, if these advances were subsequently reimbursed, how they were reimbursed or resolved, such as through the obligor becoming current on payments, or being reimbursed at the time the loan was liquidated. Since this information is likely readily available to issuers, we believe the cost to provide this data should be low.
We have omitted from the final requirements, as a commenter recommended, proposed data points that would have required the disclosure of the amount of various expenses advanced and reimbursed, such as property inspection expenses, insurance premiums, attorney fees and property taxes paid for liquidated loans. Since the asset-level reporting requirements do not require that advances be reported in this fashion at each reporting period, we are uncertain at this time whether this level of granularity about outstanding advances at loan liquidation would be beneficial to
We proposed a group of data points that would capture information about modified loans. The responses to this group of data points would provide data about whether a loan has been modified, the modification terms and the loan characteristics that were modified. We received comments suggesting we add
We are adopting most of this group of proposed data points,
We also proposed a data point as part of the ongoing disclosure requirements that would require the issuer to specify, if the loan has been modified, the code that describes the type of action that has modified the loan terms.
We are adopting this data point because we believe this disclosure will allow investors to focus on what terms may have changed due to a modification, which should allow investors to quickly assess whether changes in the terms of an asset will affect future cash flows or the risk profile of the asset pool.
We proposed a data point titled “Loan modification effective date,” which is the date on which the most recent modification of the loan has gone into effect. A commenter suggested omitting this data point from the RMBS requirements because loan modifications are effective on the mortgage loan's next due date after entry.
Between Schedule L and Schedule L-D, we proposed 108 data points that relate specifically to CMBS. The data points we proposed to require in Schedule L and Schedule L-D were primarily based on the data template included in the CREFC Investor Reporting Package (“CREFC IRP”), current Regulation AB requirements, and staff review of current disclosure. We did not propose, however, to include every piece of information exactly as specified in the CREFC IRP for two reasons. First, some of the disclosures required by the CREFC IRP would have already been captured by proposed data points in the Item 1 General Requirements, and we believed that those data points would apply to all types of ABS. Second, we did not believe the level of detail in the CREFC IRP was necessary for investor analysis because we believed that the most important data for CMBS is data that relates to the loan term and the property.
The response to the proposal indicated a general preference for CREFC IRP in lieu of the proposed requirements.
For ongoing reporting, commenters indicated a preference for previously established industry standards in lieu of the proposal for several reasons.
After considering the comments we received, we are adopting a requirement that issuers of CMBS provide the disclosures contained under Item 2 of Schedule AL. We believe that investors and market participants should have access to information to assess the credit quality of the assets underlying a securitization transaction at inception and over the life of a security. While we recognize the current market practice is to include provisions in CMBS transactions that provide investors with asset-level data for each pool asset, we note that this market practice is not a mandatory requirement and is subject to change. As such, we believe the asset-level disclosure requirements that we are adopting will require a minimum level of standardized asset-level
The requirements that we are adopting contain several revisions from the proposal aimed at aligning our standards with the CREFC IRP. We reconsidered and are not adopting some data points that do not correspond to the CREFC IRP or are typically disclosed in Annex A because they are no longer necessary due to other changes we made, such as aggregating Schedules L and L-D, or because we are adding data points based on the CREFC IRP to capture the same or similar information.
Finally, we are adjusting the codes, titles, and definitions of many of the data points to make them largely comparable to the data definitions set in the CREFC IRP.
We also considered concerns raised by commenters as well as alternatives to the final rules. For instance, one commenter suggested that the proposed ongoing reporting requirement would add no value to investors since the industry standard is to make ongoing asset-level disclosures available earlier than when the proposal would require them.
We also considered the concerns raised by some commenters about requiring disclosure of proprietary information due to the sensitive nature of the entire data set.
We considered, as an alternative to the final rules, that issuers provide standardized asset-level disclosures based solely on an industry standard, such as the CREFC IRP. We are not persuaded that this alternative is appropriate because as market practices evolve the consistency of the data provided by each transaction may differ since there is no mandatory requirement that all transactions provide the same type of data. Therefore, we believe adopting a standardized set of asset-level disclosures helps ensure that investors and other market participants will always have access to a minimum set of asset-level disclosures, both at the time of the offering and on an ongoing basis. While we have tailored the asset-level disclosure requirements for each asset class, we also understand from comments received that certain commercial mortgages in a pool may have unique features and that the standardized set of requirements may not capture all of the unique attributes of a particular asset or pool due to the various types of commercial properties.
With respect to ongoing reporting, we are not adopting a commenter's suggestion that disclosures about alternatives evaluated related to a modification or disclosure of all terms related to a modification or assumption be provided. We believe this information would be difficult to capture in a standardized way, and we are uncertain, at this time, whether this information is best captured within these particular asset-level requirements. We are adopting as proposed, with revisions to address comments received, expanded disclosures about tenants. We discuss the comments received on tenant disclosures below. We are also requiring that asset-level disclosures be provided in XML. We discuss the requirement that asset-level disclosures be provided in XML in Section III.B.3 XML and the Asset Data File.
We proposed data points about the three largest tenants (based on square feet), including square feet leased by the tenant and lease expiration dates of the tenant. Several commenters suggested that we expand the scope of these disclosures.
We are adopting as proposed data points about the three largest tenants (based on square feet), including square feet leased by the tenant and lease expiration dates of the tenant.
Proposed Schedule L and Schedule L-D both included data points aimed at capturing valuation information on the properties underlying the commercial mortgages.
We are adopting, with some revisions, data points that capture the most recent appraisals or valuations available at the time of the securitization and on an ongoing basis.
Between Schedule L and Schedule L-D, we proposed 110 data points that relate to ABS backed by auto loans and 116 data points that relate to ABS backed by auto leases. These proposed data points were comprised of a combination of data points, some of which were proposed to apply to all
For Auto ABS, support for the proposal varied between issuers and investors. Many investors supported the asset-level model with certain modifications from the proposal.
Issuers typically commented that asset-level reporting was not necessary for Auto ABS because they claimed that the Auto ABS market continues to be robust and active despite no material changes to disclosure practices.
Issuer commenters generally noted that, if any data reporting was to be required, alternative models such as grouped account data, more robust pool-level reporting or some combination of the two would be sufficient.
As we developed the standards we are adopting today, we took into consideration how the proposed data points relate to how information is collected, tracked and reported in the Auto ABS marketplace, as well as how auto loans and leases differ from RMBS and CMBS, and how those differences impact the type of information available for collection and the utility of such information to investors. We also considered potential impacts on the automobile industry if Auto ABS sponsors pass down higher financing costs to consumers. After considering the comments received, we are adopting, as proposed, with some modification to individual data points and some reduction in the amount of data required to be provided, asset-level disclosures specific to Auto ABS. We did consider, as an alternative, whether asset-level reporting should be required in Auto ABS at all. We considered the legislative history of Section 942 of the Dodd-Frank Act, which was cited by commenters.
We believe that the requirements we are adopting for Auto ABS will provide a better picture of the composition and characteristics of the pool assets, which is critical to an investor's ability to make an informed investment decision about the securities. We have considered commenters' concerns that Auto ABS is, in many ways, different from RMBS and CMBS, including that Auto ABS generally fared better during the recent financial crisis. We do not believe, however, that the grouped account data model proposed by commenters would provide information in sufficient detail for investors to compare and evaluate various Auto ABS pools and structures. With asset-level data, users would not have to rely on pre-determined groupings of information, and instead would be able to compare and evaluate the underlying assets using the individual pieces of information they consider to be material.
While we are requiring that Auto ABS issuers provide asset-level data, we have significantly reduced the scope of the asset-level data required from the amount proposed. In doing so, we considered an estimate provided by several Auto ABS sponsors that, if we only adopted the data points proposed in their comment letter,
We are not adopting a significant number of data points where we agreed with commenters that the data point was not applicable to Auto ABS or where we are concerned that the benefits investors may receive from the disclosures may not justify the potential costs and burdens to issuers to provide the disclosures.
As with RMBS and CMBS, we believe that, unless the individual data points are standardized across all issuers of Auto ABS, the utility of asset-level data is generally limited. While commenters have pointed out several areas where there is a difference between how we have proposed that data be presented and how information is generally collected in Auto ABS,
We proposed a group of asset-level data points that would provide data about an obligor's credit quality.
We proposed ten obligor income data points (five for auto loans and five for auto leases) that would require issuers to provide responses to various data points that relate to the obligor's income.
We proposed data points that would require issuers to indicate the codes describing the extent to which the obligor's income and employment have been verified.
We proposed a total of eighteen co-obligor data points (nine for auto loans and nine for auto leases) that would require issuers to provide information about co-obligors such as credit score data
We proposed a group of data points that would capture information related to the terms of the loan or lease and payment activity, such as original and current loan or lease terms, interest rates, prepayments, interest paid-through dates and servicer advances. Taken together, the responses to these data points would provide insight into how the loan or lease has performed versus how it was intended to perform when originated. Commenters' response to this group of data points varied, with some commenters suggesting that some data points in this group were unnecessary or redundant and others advising that these data points provide valuable information about the loan or lease. We discuss below the significant comments we received about this group of data points and the revisions we have made to data points within this group.
We proposed data points that would require issuers to indicate original and current loan terms in months.
We proposed a data point that would require issuers to provide the rate of interest at the time of origination.
We proposed data points that would require issuers to provide the principal and interest payments that were scheduled to be collected for the reporting period
One commenter suggested we add a new “voluntary prepayment” data point.
We proposed a data point that would require issuers to specify the amount advanced by the servicer during the reporting period (if any such amounts were advanced).
We proposed a data point that would require issuers to indicate whether an asset was modified from its original terms during the reporting period.
We proposed several data points that only apply to ABS backed by auto leases that relate to information such as residual values, termination, wear and tear, mileage, sale proceeds, and extensions.
With respect to the residual value of the lease, we proposed several data points that require the issuer to provide the base and updated residual values of the vehicle and provide the source of such residual values.
We proposed that issuers of debt security ABS provide responses to the general data points enumerated in Item 1 of Schedule L and the nine data points specific to debt security ABS.
As noted above, under the final rule we are integrating the general item requirements into the requirements for each asset type. Therefore, under the final rule, issuers of debt security ABS are only required to provide the asset-level disclosures required under new Item 5 Debt Securities. After integrating the proposed general data points, the final requirements for debt security ABS have been reduced from 83 possible proposed data points to 60 data points.
Also, in response to comments received, we have revised the asset number data point to require a standard industry identifier assigned to the security be provided for each security, if such number is available. Public access to the responses to these data points and to the responses to other data points that require disclosure of the SEC file number and Central Index Key (“CIK”) number for the debt security will provide investors, including secondary market investors, access to more information about each debt security in the pool. As proposed, the final rules will require that issuers provide more standardized information to investors about the debt securities underlying the ABS. The disclosures we are adopting today require the title of the underlying security, origination date, the minimum denomination of the underlying security, the currency of the underlying security, the trustee, whether the security is callable, the frequency of payments that will be made on the security and whether an underlying security or agreement is interest bearing along with other basic characteristics of the debt securities. At a minimum, these asset-level disclosures will provide investors with
Public availability of all of the asset-level information we are requiring to be disclosed regarding debt security ABS should reduce the burden on investors, including secondary market investors, to obtain this information, which should reduce investors' costs of conducting their own independent analysis and, thereby, reduce their need to rely on credit ratings. In addition, we believe that having an issuer collect and report asset-level information will improve efficiency, since a single entity, as opposed to multiple investors, will incur the information gathering costs.
We recognize that although investors will benefit from receiving these asset-level disclosures, issuers will face an increase in information gathering and reporting costs, including costs related to system re-programming and technological investment. We recognize that the costs registrants may face will depend on the extent to which the information required to be disclosed is already available to issuers or will have to be newly collected, as well as the extent to which the information is already being disclosed to investors in some transactions. Although we are unable to estimate the magnitude of these costs with any precision, we believe the costs registrants will incur to provide the data should be nominal since the data that is required should already be readily available to registrants, especially since the asset-level disclosures required primarily relate to the performance of the security and the basic characteristics of the security, such as the title of the security, payment frequency, or whether it is callable. A description of each data point required for debt security ABS is provided in Item 5 of Schedule AL.
In a resecuritization, the asset pool is comprised of one or more ABS. We proposed that issuers of a resecuritization provide, at the time of the offering and on an ongoing basis, asset-level data for each ABS in the pool and for each asset underlying each ABS in the pool. Under the proposal, resecuritizations would provide the same data as required for debt security ABS for each ABS in the asset pool. In addition, issuers would provide asset-level data for the assets underlying each ABS in the asset pool in accordance with the asset-level disclosure applicable to that particular asset class.
We received several comments that expressed concern about the proposal. Some commenters expressed concern over the cost and burden to provide the asset-level disclosures for the assets underlying the securities in comparison to what they believed to be a limited benefit.
After considering the comments received, we are adopting the proposal with revisions. For each registered resecuritization, issuers must provide, at the time of the offering and on an ongoing basis for each ABS in the asset pool, the same disclosures that are required for debt security ABS. Therefore, information about the security, such as the title of the security, payment frequency, whether it is callable, the name of the trustee and the underlying SEC file number and CIK number is required.
We are adopting an exemption from the new requirement to provide asset-level disclosure about the underlying ABS if the underlying ABS was issued prior to the compliance date for the asset-level disclosure requirements. We noted concerns about the cost to provide the disclosures, whether the information would be available, securities law liability for information provided by third parties and the other concerns raised by commenters. We acknowledge that investors will not have access to asset-level data for the resecuritized ABS for some period of time. We do not believe that providing this exemption would negatively affect investors because the resecuritization will still be subject to existing disclosure requirements, including pool-level disclosure requirements and the exemption will be limited over time by the underlying ABS becoming subject to the asset-level disclosure requirements. We also note that there have been no registered resecuritization offerings in the last few years. Further, as noted above, existing Securities Act Rule 190 requires that all information about the underlying ABS be disclosed in accordance with our registration rules and forms.
The final requirement to provide asset-level data in the prospectus and in periodic reports will require that issuers provide more information to investors about resecuritizations than previously required. The asset-level disclosures about the ABS in the asset pool will provide investors, at a minimum, with the basic characteristics of a resecuritization. Further, by requiring disclosure of the SEC file number and CIK number for ABS being resecuritized, it will be easier for investors to locate more information about each resecuritized ABS. Public access to such information, including, when applicable, access to information about the assets underlying the ABS being resecuritized, should reduce investors' burden to obtain this information, and reduce their need to rely on credit ratings because investors will have access to the information in order to conduct their own independent analysis. In turn, this will allow for a more effective and efficient analysis of the offering and should help foster more efficient capital formation.
We do not agree with a commenter's view that there is a limited correlation between loan performance and bond performance and, as a result, there is little benefit from investors receiving asset-level data about the assets underlying the ABS being resecuritized. Specifically, the commenter believed that the asset-level data about the underlying ABS would not be useful because only certain classes of an ABS are resecuritized, and the loans backing a particular class are typically supported by the entire underlying loan pool, and therefore do not correlate to any specific classes of ABS. We disagree and believe that to determine the performance of any particular resecuritization, an understanding of each loan in the underlying loan pool is necessary in order to analyze how the underlying loans impact the cash flows to the resecuritization.
In addition, with respect to the availability of information, Section 942(a) of the Dodd-Frank Act eliminated the automatic suspension of the duty to file under Section 15(d) of the Exchange Act for ABS issuers and granted the Commission the authority to issue rules providing for the suspension or termination of such duty.
With respect to the cost and burden to provide the disclosures and concerns about securities law liability for information obtained from third parties, we believe the existing ability to reference third party information, in part, addresses these concerns. As is the case today, issuers may satisfy their disclosure requirements by referencing third-party reports if certain conditions are met.
While some commenters raised concerns about the cost to implement such requirements, commenters did not provide any quantitative cost estimates to comply with this requirement. Implementation of this requirement, even if a registrant can reference third-party filings, will require system re-programming and technological investment. In addition, registrants will incur a nominal cost to provide data about the securities being resecuritized. In general, the data about the securities, which track the debt security ABS requirements, should include data already readily available to issuers, especially since the requirements primarily include basic characteristics of the security, such as the title of the security, payment frequency, and whether it is callable. Registrants will incur a nominal cost to provide this data in the format requested. If asset-level data is required for the assets underlying the securities being resecuritized, registrants will, to the extent they cannot otherwise incorporate by reference or reference third-party filings, incur costs to obtain the data required about the assets underlying the securities being resecuritized or to convert data available to them into the required format. These costs were discussed earlier in the release in the context of complying with asset-level disclosure for RMBS, CMBS and Auto ABS. We believe such costs are appropriate because investors should receive information about the securities that will allow them to conduct their own independent analysis. In addition to the items noted above that mitigate cost concerns, we also believe the extended timeframe for compliance of 24 months lowers the overall burden placed on registrants and market participants and should provide ample time for registrants and market participants to assess the availability of the asset-level information required for resecuritizations and to put the information in the format required.
As we noted in the 2010 ABS Proposing Release and the 2011 ABS Re-Proposing Release and as the staff noted in the 2014 Staff Memorandum, we are sensitive to the possibility that certain asset-level disclosures may raise concerns about the underlying obligor's personal privacy. In particular, we noted that asset-level data points requiring disclosures about the geographic location of the obligor or the collateralized property, credit scores, income and debt may raise privacy concerns. We also noted, however, that information about credit scores, employment status and income would permit investors to perform better risk and return analysis of the underlying assets and therefore of the ABS.
In light of privacy concerns, we did not propose to require issuers to disclose an obligor's name, address or other identifying information, such as
The 2014 Staff Memorandum summarized the comments received related to potential privacy concerns and outlined an approach to address these concerns that would require issuers to make asset-level information available to investors and potential investors through an issuer-sponsored Web site rather than having issuers file on EDGAR and make all of the information, including potentially sensitive information, publicly available. Under the Web site approach, issuers could take steps to address potential privacy concerns associated with asset-level disclosures, including through restricting Web site access to potentially sensitive information. The Web site approach also would require issuers to file a copy of the information disclosed on a Web site with the Commission in a non-public filing to preserve the information and to enable the Commission to have a record of all asset-level information provided to investors. The prospectus would need to disclose the Web site address for the information, and the issuer would have to incorporate the Web site information by reference into the prospectus. In addition, issuers would be required to file asset-level information that does not raise potential privacy concerns on EDGAR in order to provide the public with access to some asset-level information.
In response to the 2010 ABS Proposal, several commenters noted that the asset-level requirements would raise privacy concerns.
Most commenters did not support the use of coded ranges, noting it would not address privacy concerns
We received few suggestions for alternative approaches to balancing individual privacy concerns and the needs of investors to have access to detailed financial information about obligors. Commenters suggested we work with other federal agencies to evaluate whether the proposed asset-level information was in fact anonymized
We also received suggestions that we should restrict access to or impose conditions on the use of sensitive data. For instance, a commenter suggested that we establish a central “registration system” where access to sensitive data is only made to persons who have independently established their identities as investors, rating agencies, data providers, investment banks or other categories of users while forbidding others to use the data or include the data in commercially distributed databases.
In light of the comments received raising individual privacy concerns and the requirements of new Section 7(c) of the Securities Act, we requested additional comment on privacy generally in the 2011 ABS Re-Proposing Release.
On February 25, 2014, we re-opened the comment period to permit interested persons to comment on the Web site approach described in the 2014 Staff Memorandum. Only a few commenters indicated support for the Web site approach.
Some commenters disagreed with the description in the 2014 Staff Memorandum of how issuer Web sites were being used at the time the 2014 Staff Memorandum was released.
Several commenters stated that additional information was necessary to fully assess the potential implications of the Web site approach. For instance, commenters requested clarity on the scope of asset-level disclosures that the Commission is considering adopting, what data would be disclosed on EDGAR and on the Web site, what type of restrictions on access would be reasonable and what information is “necessary” for investor due diligence.
A number of commenters responded to the 2014 Re-Opening Release by commenting generally on privacy concerns. Several commenters reiterated the re-identification concerns that were raised in response to the 2010 ABS Proposing Release and the 2011 ABS Re-Proposing Release.
Many commenters expressed particular concern with the disclosure of a property's geographic location because it, along with other data points, can be used with other public databases to match a property with a specific borrower.
Several commenters suggested various alternatives and modifications to the Web site approach. Three commenters suggested aggregating the asset-level data.
Another commenter suggested a central repository or “aggregated data warehouse” to house the asset-level data because such an approach would simplify enforcement of access policies, ensure consistent data formats and lower incentives to exclude certain users.
After considering the comments received related to privacy concerns and on the Web site approach, and our obligations under Section 7(c) of the Securities Act,
While we have considered the Web site approach described in the 2014 Staff Memorandum, as discussed below, we are not adopting this approach due to concerns about the practical difficulties and unintended consequences of limiting access to only investors and potential investors.
We continue to believe that the disclosure of data that relates to the credit risk of the obligor, such as an obligor's credit score, income, or employment history, would strengthen investors' risk analysis of ABS involving consumer assets.
Although we did not propose to require that an obligor's name, address, or other identifying information be disclosed, we are sensitive to the possibility that an obligor in an asset pool could be identified (now or in the future) due to the availability of the required disclosures (coupled with the XML requirement), the amount of data about obligors that is publicly available through other sources, and information about real estate transactions and other types of transactions that is available or that may become available in the future. In the event the obligor was re-identified, the information that would have been required by the proposal, even in ranges, might reveal information about the obligor's financial condition.
This issue is especially pronounced for securitizations backed by residential mortgages, as an obligor could potentially be re-identified using a combination of asset-level disclosures and real estate transaction data that is routinely disclosed by certain local governments.
In light of this concern, we are revising the proposed data set for RMBS as follows.
To further reduce the risk of re-identification, we are also omitting several data points that, while
Another step that we are taking to address commenters' concerns about re-identification risk is to omit the proposed income and debt data points. While we believe that income and debt information would strengthen an investor's risk analysis of ABS involving consumer assets,
We also are revising
Finally, in response to commenters' suggestions, we have obtained guidance from the CFPB on the application of the FCRA to the proposed disclosure requirements.
As discussed above, we have taken significant steps to reduce the re-identification risk associated with providing certain asset-level data while adhering to the statutory mandate in Section 7(c) to require disclosure of such information to the extent necessary
Re-identification risk can also increase the cost of capital due to obligor preferences. If an obligor is particularly sensitive to the possibility of re-identification, the obligor may prefer to transact with originators that offer additional methods for preserving anonymity, which could increase that obligor's cost of or access to capital. For example, if a loan agreement gives an obligor the ability to opt out of disclosure, thereby prohibiting the ability to securitize the loan where asset-level information would be disclosed, originators may pass costs on to the obligor. Originators could also bear some increased costs if, as a result of being unable to securitize the loan or sell it to the GSEs, the originator would hold the asset on its balance sheet, thus limiting its ability to redeploy capital to more productive or efficient uses. In addition, the risk of re-identification could limit an obligor's access to capital if the obligor is unable to obtain assurances, even at a higher cost, that his or her loan would not be securitized in a way that gives rise to a potential risk of re-identification. Ultimately, an obligor's sensitivity to re-identification risk could lead to a reduction in the number of loans available for securitization. This could, in turn, lead to a reduction in liquidity of ABS markets and a corresponding increase in cost of capital even for those loans that are otherwise securitized through registered offerings.
As discussed above, in considering how to modify the proposed disclosures to reduce the risk of re-identification, we considered the specific recommendations of commenters and current disclosure practices. Although we received various suggestions for reducing re-identification risk, commenters did not provide any data or analysis that quantified the likelihood of re-identification based on the proposed disclosures or their suggested approaches to addressing re-identification risk. Some commenters indicated that using less precise geographic identifiers would reduce the risk that an obligor could be re-identified.
To help confirm the effect of requiring less precise information, we performed an analysis of various modifications to the required data points. In particular, we have estimated the likelihood of isolating a unique mortgage in a sample pool of mortgage loans by considering different levels and combinations of precision for the geographic location of the property, sales price, and origination date. Our analysis examined mortgages collected from mortgage loan servicer providers and reported in the MBSData, LLC, dataset, which includes asset-level data for most of the mortgages securitized in the private-label RMBS market during the period from 2000 to 2012.
To provide a basis for comparison, we first considered the likelihood of identifying a unique loan using a 5-digit zip code for the property location, the exact sales price and the exact origination date. Approximately 76% of the 19.3 million loans analyzed are unique when these three characteristics are compared across all mortgages in the database. That is, these loans could be distinguished from all other loans with respect to geography, imputed sales price, and origination date, and they were originated in states for which there
We next considered the likelihood of identifying a unique loan using the required disclosures in the final rules. As discussed above, we are modifying the required geographic identifier from MSA, as proposed, to a 2-digit zip code and are requiring securitizers to report only the original amortization term, and remaining term to maturity, from which year and month of origination can be approximated, but not the precise origination or sales date.
These estimates, however, do not fully reflect the difficulty of actually re-identifying an underlying obligor.
Although the approach that we are adopting does not eliminate the possibility of obligor re-identification, we believe it strikes the appropriate balance between privacy and transparency. Some obligors may still be particularly sensitive to the possibility of re-identification and may seek originators that offer additional methods of preserving their anonymity. We do not, however, anticipate that this will have an adverse effect on the functioning of the private-label RMBS market or the cost of capital to the originators of mortgages and their obligors because of the relatively low likelihood of re-identification associated with the revised data points. Moreover, as noted above, asset-level information has been provided by issuers and third-party data providers for private-label RMBS (although not standardized), as well as by the GSEs and Ginnie Mae,
We acknowledge that further modification of certain data points could further reduce the risk of obligor re-identification. For example, several commenters emphasized the importance of geographic location in potentially re-identifying an underlying obligor.
To confirm our view, and the views of commenters,
Another approach we considered, although not specifically suggested by commenters, was an approach that rounds the loan amount, other loan balance-related data points, and monthly performance data points to further hinder potential obligor re-identification.
We considered several alternative approaches to disseminating asset-level data as potential means to address privacy concerns, including the Web site approach.
Commenters suggested a central repository or “aggregated data warehouse” to house the asset-level data because such an approach would simplify enforcement of access policies, ensure consistent data formats and lower incentives to exclude certain users.
As we note elsewhere, subsequent to the 2010 ABS Proposing Release, Congress adopted the Dodd-Frank Act. Section 942(b) of the Dodd-Frank Act added Section 7(c) to the Securities Act which requires the Commission to adopt regulations requiring an issuer of ABS to disclose, for each tranche or class of security, information regarding the assets backing that security. It specifies, in part, that in adopting regulations, the Commission shall require issuers of asset-backed securities, at a minimum, to disclose asset-level or loan-level data, if such data are necessary for investors to independently perform due diligence including—data having unique identifiers relating to loan brokers or originators; the nature and extent of the compensation of the broker or originator of the assets backing the security; and the amount of risk retention by the originator and the securitizer of such assets.
In the 2011 ABS Re-Proposing Release, we requested comment as to whether our 2010 ABS Proposals implemented Section 7(c) effectively and whether any changes or additions to the proposals would better implement Section 7(c). We discuss below the comments we received in response to the requests for comment regarding the requirements of Section 7(c).
Section 7(c)(2)(B) states, in part, that we require issuers of asset-backed securities, at a minimum, to disclose asset-level or loan-level data, if such data are necessary to independently perform due diligence. We requested comment in the 2011 ABS Re-Proposing Release whether the 2010 ABS Proposal implements Section 7(c) effectively. In response, two investors supported requiring asset-level disclosures for all asset types, except for credit cards.
We are adopting asset-level requirements for RMBS, CMBS, Auto ABS, debt security ABS, and resecuritizations. We prioritized these asset classes for various reasons that we discuss above.
Section 7(c)(2)(B)(i) requires the Commission to require disclosure of asset-level or loan-level data, including, but not limited to, data having unique identifiers relating to loan brokers or originators if such data are necessary for investors to independently perform due diligence. In the 2010 ABS Proposing Release, we proposed to require issuers to provide the originator's name for all asset types and, if the asset is a residential mortgage, the MERS number
In the 2011 ABS Re-proposing Release, we stated our belief that the proposal to require NMLS numbers would implement the requirements of Section 7(c) with respect to mortgages by requiring a numerical identifier for a loan broker.
For RMBS, we are adopting the requirement that issuers provide for ABS backed by residential mortgages the NMLS number of the loan originator company. As noted above, we are not adopting the requirement that issuers provide a unique broker identifier, (i.e., the NMLS number of the specific loan originator) because we are concerned this disclosure may increase re-identification risk.
We are unaware of unique identifiers for loan originators and, if applicable, brokers within the commercial mortgage, auto loan and lease, and debt security markets. We note the ongoing development of certain identifiers, but we are uncertain, at this time, especially due to the lack of response to our request for comment, whether a unique identifier for loan originators for these asset classes is necessary for investor due diligence. Therefore, at this time, we are not adopting unique identifiers for loan originators or brokers within the CMBS, Auto ABS or debt security markets.
In the 2010 ABS Proposing Release, we did not propose requiring asset-level disclosures of broker compensation or risk retention held by loan originators or securitizers. Section 942(b) of the Dodd-Frank Act, however, amended Section 7(c) of the Securities Act to require disclosure on an asset-level or loan-level basis with respect to the nature and extent of the compensation of the broker or originator of the assets backing the security and the amount of risk retention by the originator and the sponsor of such assets if these disclosures are necessary for investor due diligence. In the 2011 ABS Re-Proposing Release, we requested comment on whether these disclosures were necessary for investor due diligence.
We received few comments on these portions of Section 7(c) in response to our requests for comments. One commenter stated that disclosure of broker compensation was appropriate to require because it “is necessary for evaluating how the compensation structure associated with an asset—including possible conflicts of interest—might affect its quality.”
A CMBS issuer and a trade association did not believe that broker compensation disclosure in the prospectus would be useful to investors in performing due diligence on the assets in the pool.
We did not receive any comments from investors suggesting that disclosure of broker compensation is necessary for their due diligence. While the disclosure of broker compensation on an asset-level basis may provide some value to investors in assessing possible conflicts of interest, we are not persuaded at this time that such information is necessary for investors to independently conduct due diligence.
With respect to asset-level risk retention, we are not persuaded at this time that additional requirements relating to risk retention, on an asset-level basis, are needed for investors to independently conduct due diligence. A sponsor, however, will be required to provide information, on an aggregate basis, about its retained interest in a securitization transaction. As explained below, we are adopting amendments to Items 1104, 1108, and 1110 of Regulation AB that will require disclosure regarding the sponsor's, a servicer's, or a 20% originator's interest retained in the transaction, including the amount and nature of that interest.
This section, Section III.B.1, is divided into two parts covering when asset-level information must be provided. Section III.B.1.a discusses when asset-level disclosures are required at the time of the offering. Section III.B.1.b discusses the frequency with which the asset-level disclosures are required on an ongoing basis. Section III.B.2 discusses the scope of asset-level data required at the time of the offering and on an ongoing basis.
In the 2010 ABS Proposing Release, we proposed to require asset-level information of asset pool characteristics at the following times during the offering process:
• At the time the preliminary prospectus is filed.
• At the time the final prospectus is filed.
• With an Item 6.05 Form 8-K if the requirements of Item 6.05 were triggered.
Only one commenter responded to our proposal that the asset-level disclosures be required at the time of the offering. This commenter stated the proposal seemed to cover the period of offering sufficiently.
Under the final rule, as proposed, those issuers that are required to provide asset-level data must provide all of the required asset-level disclosures in a preliminary prospectus and the final prospectus. Requiring that asset-level disclosures be filed by the same time a preliminary prospectus is filed will provide investors more time to analyze the asset-level data in advance of an investment decision. We acknowledge that every time asset-level disclosures are filed issuers likely will incur filings costs and costs to verify the data. We believe the costs incurred to provide this information are justified in order to provide investors access to relevant data about the assets underlying the particular ABS offering in advance of their investment decision. In addition, we believe providing investors time to analyze the asset-level data may result in better pricing and therefore may improve allocative efficiency and facilitate capital formation. Compliance costs are minimized, to some extent, because if there has been no change to the asset-level information provided with the preliminary prospectus, then under current requirements, this information can be incorporated by reference into the final prospectus. This eliminates the costs associated with re-filing the information.
Under the proposal, an issuer would have been required to provide updated asset-level disclosures about the pool composition, including characteristics of new assets added to the pool, if an Item 6.05 Form 8-K was triggered.
We also proposed in the 2010 ABS Proposing Release to require ongoing asset-level disclosures. Under the proposal, asset-level disclosures would be required at the time of each Form 10-D, which under current requirements is within 15 days after each required distribution date on the ABS.
With respect to when and how frequently the ongoing asset-level disclosures should be provided, comments varied. One commenter recommended that the required disclosures be provided on the distribution date rather than 15 days thereafter.
With respect to how frequently the ongoing asset-level disclosures should be provided, comments varied. For instance, a few commenters suggested we require disclosure on the day of an “observable event,” or promptly thereafter.
The final rule requires, as proposed, that issuers provide the asset-level disclosures at the time of each Form 10-D. As discussed, however, in Section III.B.2 the scope of information required with each Form 10-D has changed to also include the same set of data points that were required in the prospectus. We are not persuaded by commenters' suggestions that the ongoing asset-level disclosures be provided quarterly, annually or monthly, because reporting at these times may be outside the time when such disclosures are normally collected. The requirement to file a Form 10-D is tied to the distribution date on the ABS, as specified in the governing documents for the securities. In effect, tying the asset-level disclosures to each Form 10-D filing aligns the frequency of the disclosures to the payment cycle (when data about the collections and distributions is captured) which should minimize the burdens and costs to issuers of collecting such information. For investors, receiving asset-level data tied to the payment cycle should allow them to conduct their own valuation and risk analysis of each asset in the pool at periods close in time to when the data is captured and other distribution information is already being reported. This should allow investors to understand, on an ongoing basis for the life of the investment, how the performance of any particular asset is affecting pool performance.
We also believe that only requiring asset-level disclosures on a quarterly or monthly basis may not provide investors with timely access to data about the performance of pool assets because it ties the reporting of asset-level disclosures to a timeframe that may be outside the payment cycle when the data is normally captured, which may increase costs or inhibit investors' ability to make timely and informed ongoing investment decisions. For instance, if asset-level reporting was required monthly, but the payment cycle occurred every six months, then requiring a filing on a monthly basis
We are also not persuaded that we should require reporting any time an “observable event” occurs with respect to a single asset because we do not believe that the benefits to investors of such a requirement would justify the costs to issuers of capturing and reporting data in a timeframe that falls outside when data is typically captured and reported. Reporting on an observable event basis could result in the issuer constantly updating the data. As noted above, we believe providing investors access to timely and relevant asset-level disclosures and minimizing costs to issuers is best achieved by requiring asset-level disclosures be provided with each Form 10-D, which means the disclosures will be provided in a timeframe that is in line with the payment cycle and when the data is typically captured.
The final rule also requires that the asset-level disclosures be provided for each asset that is in the pool at any point in time during the reporting period. Therefore, if a substitution occurred during the reporting period, then asset-level disclosures are required for both the loan added and the loan removed during the reporting period in which the change occurred. Providing investors with disclosure about assets that are added and removed will allow investors to understand the actual composition of the asset pool over the life of a security. This will benefit investors by allowing them to assess on an ongoing basis the current risk of the collateral pool and to compare the characteristics of the assets involved in a substitution. We recognize that this benefit to investors will result in increased reporting costs to sponsors and ABS issuers.
A commenter suggested the final rule include an instruction clarifying that the information reported for any particular reporting period may be information from a prior reporting period due to delays that can occur between the time when asset-level information is received and such information is ready to be reported.
Section III.B.1 discussed when asset-level disclosures are required at the time of offering and on an ongoing basis. This section discusses the scope of those required asset-level disclosures required at the time of the offering and on an ongoing basis.
As noted above, in the 2010 ABS Proposing Release, we proposed to add the prospectus disclosure requirements in new Item 1111(h) and new Schedule L to Regulation AB. We also proposed data points related to each asset. Proposed Schedule L focused, in general, on providing investors asset-level data about the credit quality of the obligor, the collateral related to each asset and the cash flows related to a particular asset, such as the terms, expected payment amounts, indices and whether and how payment terms change over time. Schedule L contained some data points capturing some loan performance data.
Under our proposed revisions to Item 6.05 of Form 8-K, we proposed that a new Schedule L be filed if any material pool characteristic of the actual asset pool at the time of issuance of the asset-backed securities differs by 1% or more from the description of the asset pool in the prospectus.
In the 2010 ABS Proposing Release, we also proposed ongoing disclosure requirements in Item 1121(d) and Schedule L-D. Proposed Schedule L-D
We received limited response to the request for comment on whether Schedule L and Schedule L-D data should be provided at any other time. Commenters generally indicated that the disclosures enumerated in Schedule L and Schedule L-D may be appropriate at other times than proposed. For instance, one investor stated that the same disclosures for all ABS sectors (other than CMBS) should be required for offering documents and ongoing reports.
In response to the questions asked in the 2011 ABS Re-Proposing Release about clarifying that a new Schedule L would be required with an Item 6.05 Form 8-K, an investor reiterated its earlier position that issuers should file a Schedule L at issuance and each month new assets are added to the collateral pool.
One commenter noted that current rules require that updated information about the characteristics of the collateral in the pool be provided with the Form 10-D, rather than in a Form 8-K.
After considering the comments received, we are adopting a rule, based on a commenter's suggestion that the same asset-level disclosures be provided, if applicable, at the time of the offering and on an ongoing basis. Therefore, we have condensed information previously proposed to be provided in either Schedule L or Schedule L-D into a single schedule, titled Schedule AL. Schedule AL in new Item 1125 of Regulation AB enumerates all of the asset-level disclosures to be provided, if applicable, about the assets in the pool at securitization and on an ongoing basis. The asset-level disclosures apply to each asset in the pool during the reporting period covered by Schedule AL.
We believe aggregating Schedule L and Schedule L-D into one unified schedule simplifies the new rules to the benefit of both issuers and investors. For investors, we believe a unified schedule will make it easier to understand the actual pool composition and the performance of the asset pool both at issuance and on an ongoing basis. We recognize that, in certain circumstances, the pool composition may continue to change even after the final prospectus is filed. As a result, the asset-level information provided with the final prospectus may not reflect the pool composition at closing.
Requiring that the asset-level information provided with the Form 10-D include information about the characteristics of each asset will make it easier to understand the actual pool composition at any point in time and, in particular, when the asset composition has changed through additions, substitutions or removal of assets.
Another benefit is that investors at the time of the offering will receive a more complete picture of any seasoned assets in the ABS pool, including the current performance of these assets. As we noted in the 2010 ABS Proposing Release, proposed Schedule L-D focused on whether an obligor is making payments as scheduled, the efforts by the servicer to collect amounts past due,
We recognize that the one schedule format may benefit issuers, but it may also result in some increased compliance costs. We believe that it may be easier to revise, amend and file one schedule than two separate schedules. Also, as discussed above, because we are not adopting the proposed requirement that an updated Schedule L be provided if an Item 6.05 is triggered, issuers will not need to bear the burden or cost of assessing whether an updated Schedule L is required if the requirements of Item 6.05 were triggered.
We also recognize that aggregating the data points proposed in Schedules L and L-D into one schedule may increase the number of data points that an issuer will need to respond to at the time of the offering and on an ongoing basis. We do not believe that this change increases the data issuers must collect about the assets beyond what was proposed as the unified schedule primarily consists of information proposed to be provided under Schedule L and Schedule L-D. Under the rule we are adopting, the issuer will be required, at the time of the offering, to provide all the information relating to the underwriting of the asset (e.g., terms of the asset, obligor characteristics determined at origination) and any applicable performance related information for the most recent reporting period. On an ongoing basis, the issuer will be required to provide the relevant ongoing performance information for the most recent reporting period and the underwriting information previously provided about the asset. Issuers may incur some increased filing costs compared to what they would have incurred under the proposal because they will be verifying and filing more data at each filing. Although we cannot quantify the increase in filing costs that issuers may incur, our qualitative assessment is that the increase will not be significant over what was proposed.
We considered, as an alternative, requiring information to be provided only about assets added to the pool during a reporting period. We believe asset-level information is most useful when it reflects all the assets actually in the pool. Therefore, we believe that current investors and potential secondary market investors should have access through the current Form 10-D to the asset-level information reflecting the assets in the pool at that time. Otherwise those parties may have to piece together various tables of information to construct the current pool. Piecing together various tables may lead to confusion and errors and, as a result, market participants may base their analysis on data that does not provide an accurate picture of the asset pool. Further, investors rather than issuers would bear the cost of piecing together the disclosures and having each investor doing so would create duplicative costs.
One investor commenter who supported the same asset-level disclosure in offering documents and in ongoing reports for most asset classes did not support this format for CMBS.
In the end, we believe this approach is reasonable despite the increased compliance costs, because this approach provides investors with access, both at the time of the offering and on an ongoing basis, to more data about the characteristics and performance of the pool assets. As a result, investors can evaluate the characteristics of the pool with the benefit of a more complete picture of the pool assets' characteristics and performance.
In the 2010 ABS Proposing Release, we proposed requiring that asset-level information be provided in XML. We believed that requiring the asset-level data file in XML, a machine-readable language, would allow users to download the data directly into spreadsheets and databases, analyze it using commercial off-the-shelf software, or use it within their own models in other software formats.
In response to the 2010 ABS Proposing Release, several commenters supported the use of XML to report loan-level data
As we note above, subsequent to the 2010 ABS Proposing Release, Congress adopted the Dodd-Frank Act. Section 942(b) of the Dodd-Frank Act added Section 7(c) to the Securities Act, which requires the Commission to set standards for the format of the data provided by issuers of an asset-backed security, which shall, to the extent feasible, facilitate the comparison of such data across securities in similar types of asset classes. We requested comment in the 2011 ABS Re-Proposing Release as to whether the proposed XML format was an adequate standard for the format of data that facilitated the comparison. We did not receive any comments suggesting that requiring that asset-level data be provided in XML did not, as it relates to data standardization, implement Section 7(c) effectively.
Instead, comments on the 2011 Re-Proposing Release reiterated concerns raised in prior comment letters. For instance, some commenters reiterated their belief that XML should not be required for CMBS at this time
After considering the comments received, we are adopting the proposed XML requirement. We believe requiring asset-level information in a standardized machine-readable format should lower the cost for investors of collecting data about ABS offerings and should allow data to be analyzed by investors and other end-users more quickly than if the data was provided in a non-machine readable format. For instance, if the asset-level data is made available to investors in a format that is not machine-readable, it would require the manual key-entry of the data into a format that allows statistical analysis and aggregation. Thus, investors seeking to gain a broad understanding of ABS offerings would either need to spend considerable time manually collecting the data and manually entering the data into a format that allows for analysis, thus increasing the time needed to analyze the data, or incur the cost of subscribing to a financial service provider that specializes in this data aggregation and comparison process. Further, manual entering of data can lead to errors, thereby reducing data accuracy and usefulness. Requiring companies to report asset-level data in a standardized machine-readable format, such as XML, should lower both the time and expense for each investor to access this data. Since asset-level disclosures will be tagged and can be immediately downloaded into a larger, more comprehensive database that may include data about other ABS offerings, investors will not need to manually enter the data or subscribe to a third-party data aggregator. With more information readily available in a usable format, investors may be able to better distinguish the merits of various investment choices, thereby allowing investors to better match their risk and return preferences with ABS issuances having the same risk and return profile. Thus, we expect that this reduction in the costs of accessing, collecting and analyzing information about the value of ABS will lead to better allocation of capital. We believe that the requirements we are adopting to require standardized asset-level disclosures in XML fulfill, for the asset types subject to these requirements, the requirement under the Dodd-Frank Act that we set a standard for the format of data that facilitates comparison across securities in similar types of assets.
We understand that some commenters expressed concerns regarding the burden and cost to implement the standard. We recognize that requiring asset-level disclosures in XML will result in substantial initial set-up costs to filers.
We also considered, as several commenters suggested, alternative formats to XML, such as PDF, CSV and XBRL. We do not believe PDF format is a suitable alternative because it is not a convenient medium for tabular structured data and it is not designed to convey machine-readable data. As explained above, the ability of investors to easily utilize the asset-level data required of issuers is crucial to its usefulness. We believe that the CSV format is not suitable either, since any given dataset reported will require more than a single set of uniformly structured
We understand that a situation may arise where an issuer would need to disclose other asset-level data not already defined in Schedule AL. To address this situation, we proposed to include a limited number of “blank” data tags in our XML schema to provide issuers with the ability to present additional asset-level data not required under the proposal.
We received some comments, which were mixed, on the blank tag proposal, but we did not receive any comments regarding the use of an Asset Related Document. With regard to the blank tag proposal, one commenter suggested that as long as the information in the blank data tag is clearly described, neither the number of blank data tags nor the information would add complexity to the requirements.
We continue to believe, given the possible variety of assets and structures for securitization and that business and reporting needs may evolve faster than changes can be made to the asset-level requirements, issuers should have the flexibility to provide asset-level data in addition to what is required by Schedule AL. For instance, we note that some commenters suggested we adopt data points that we had not proposed.
Under the final requirements, issuers can provide additional asset-level disclosures in an Asset Related Document and such Asset Related Document(s) must then disclose the tags, definitions, and formulas for each additional asset-level disclosure.
We proposed that the new Asset Data File be filed as an exhibit to certain filings. Therefore, we proposed changes to Item 601 of Regulation S-K, Rule 11 and 101 of Regulation S-T, and Form 8-K to accommodate the filing of Asset Data Files. We proposed to define the XML file required by Schedules L and L-D as an Asset Data File in Rule 11 to Regulation S-T and proposed corresponding changes to Rule 101 of Regulation S-T mandating electronic submission. For asset-level disclosures required at the time of the offering, we proposed, regardless of whether the issuer was registering the offering on Form SF-1 or SF-3, that the Asset Data File be filed as an exhibit to the appropriate Form 8-K (in the case of an offering) under proposed Item 6.06 of Form 8-K. Proposed Item 6.06 would have required that issuers file the Asset Data File as an exhibit to a Form 8-K on the same date a preliminary or final prospectus is filed or an Item 6.05 of Form 8-K is filed. The proposed requirement would have also required that any Asset Related Document be filed at the same time the Asset Data File is filed on EDGAR.
For ongoing reporting of asset-level disclosure, we proposed to require the Asset Data File and any Asset Related Document be filed with the appropriate Form 10-D. As noted above, we also proposed an additional exhibit, an Asset Related Document, for registrants to disclose the definitions or formulas of any additional asset-level data or to provide further explanatory disclosure regarding the Asset Data File.
We did not receive any comments with respect to the requirement of filing the Asset Data Files or Asset Related Documents with the Form 8-K (in the case of an offering) or with the Form 10-D (in the case of a periodic distribution report).
We are adopting new Form ABS-EE to facilitate the filing of the new Asset Data Files
We had proposed that the Asset Data Files and Asset Related Documents be filed with the Form 8-K because, in the case of a shelf offering, a Form 8-K is typically used to file other documents related to a registration statement. We had proposed filing the documents with Form 10-D to keep periodic disclosures on the same form. We believe, however, that requiring the information on a single Form ABS-EE will facilitate the filing of the Asset Data Files and Asset Related Documents because EDGAR programming for XML files can be specifically tailored for these types of documents, therefore simplifying filing obligations for issuers. Form ABS-EE will benefit investors by making it easier for users to run queries on EDGAR to locate these documents for download.
The fact that the disclosures are filed as exhibits does not impact the fact that the data contained in the Asset Data Files and the Asset Related Documents are disclosures that are part of a prospectus or a periodic report, as applicable.
We proposed to revise Rule 201 of Regulation S-T to include a self-executing temporary hardship exemption for filing the Asset Data File.
We did not receive any comments regarding our proposed self-executing temporary hardship exemption. We also did not receive any comments on the proposal to exclude Asset Data Files from the continuing hardship exemption under Rule 202 of Regulation S-T.
We are adopting, as proposed, a temporary hardship exemption. Under the requirement, if an issuer experiences unanticipated technical difficulties preventing the timely preparation and submission of an Asset Data File required to be filed on EDGAR, it may still be considered timely. For the Asset Data File, an issuer will still be considered timely if: The Asset Data File is posted on a Web site accessible to the public on the same day it was due to be filed on EDGAR; a Form ABS-EE is filed that identifies the Web site address where the file can be located; a legend is provided claiming the hardship exemption; and the Asset Data File is filed on EDGAR within six business days.
We are also excluding the Asset Data File, as proposed, from the continuing hardship exemption under Rule 202 of Regulation S-T. We continue to believe that a continuing hardship exemption is not appropriate with respect to the Asset Data File because the Asset Data File is an integral part of the prospectus and periodic reports. We also believe that for ABS issuers the information in machine-readable format is generally already collected and stored on a servicer's systems. Therefore, we do not believe it would be appropriate for issuers to receive a continuing hardship exemption for the Asset Data File. We believe all investors will benefit from receiving the disclosures specified in Schedule AL in a format that will allow them to effectively utilize the information.
We requested comment on whether there are other privacy issues that arise for issuers of ABS backed by foreign assets.
We have reviewed the requirements we are adopting against the requirements adopted by the European Central Bank
We are not persuaded, however, that the Commission should implement a regime that would recognize the asset-level data requirements developed by foreign authorities, for example the European Central Bank and the Bank of England, that are tailored to assets originated outside of the U.S. or a “provide-or-explain” type regime that would permit selective disclosure based upon foreign laws. We continue to believe, as for U.S. originated assets, the usefulness of asset-level data is generally limited unless the data is standardized. We believe adopting another disclosure regime for foreign asset ABS would reduce standardization and, thereby, the comparability of ABS backed by assets originated outside of the U.S. and ABS backed by assets originated within the U.S. Further, a provide-or-explain regime lowers the comparability of ABS pools comprised of assets originated outside the U.S. against each other as the scope of disclosures provided by each issuer for each ABS may differ depending on the privacy laws of the home jurisdiction of the issuer. We acknowledge that compliance challenges and increased costs for foreign market participants may arise; however, we believe U.S. investors should receive the same data about ABS backed by assets originated outside the U.S. as ABS backed by assets originated within the U.S. This approach is consistent with our approach for corporate issuers, under which foreign private issuers generally provide comparable information to U.S. issuers.
In the 2010 ABS Proposing Release, we noted that Item 1110(a) of Regulation AB, prior to the adoption of today's amendments, required identification of originators apart from the sponsor or its affiliates only if the originator has originated, or expects to originate, 10% or more of the pool assets. We noted that in situations where many of the pool assets have been purchased from originators other than the sponsor and each of these originators originated less than 10% of the pool assets that the requirement requires very little, if any, information about the originators. Therefore, we proposed to amend the item to require that an originator originating less than 10% of the pool assets would be required to be identified if the cumulative amount of originated assets by parties other than the sponsor or its affiliates comprises more than 10% of the total pool assets.
Comments on the proposal were focused on the scope of the requirement. Commenters argued that the rule should require disclosure identifying the originator of each asset without exception.
After considering the comments received, we are adopting the amendment to Item 1110(a) of Regulation AB, as proposed, with a slight modification to clarify the change that we are making to the existing requirement. Under the final rule that we are adopting, if the cumulative amount of originated assets by parties, other than the sponsor or its affiliates, comprises more than 10% of the total pool assets, then those originator(s) originating less than 10% of the pool assets will also be required to be identified in the prospectus. We continue to believe that where the sponsor securitizes assets of a group of originators that are not affiliated with the sponsor, more disclosure regarding the originators of the assets is needed. We believe investors will benefit from these disclosures because they will be
In the 2010 ABS Proposing Release, we noted that in the events arising out of the financial crisis, the financial condition of the party obligated to repurchase assets pursuant to the transaction agreement governing an asset securitization became increasingly important as to whether repayments on asset-backed securities would be made.
The response to the proposal was mixed with some commenters supporting the proposal,
After considering the comments received, we are adopting the amendments to Item 1104 and Item 1110, with some modification. We have revised the amendments so that the standard for when disclosure of financial information is required mirrors the existing standard for disclosures required about certain servicers.
We are adopting these amendments because we believe an investor's ABS investment decision includes consideration of obligations from certain parties to repurchase assets if there is a breach of the representations and warranties relating to those assets and the capacity of those parties to repurchase those assets. As evident from the crisis, the mere existence of a repurchase provision provides investors with little comfort as to the ability of the party obligated to repurchase assets for a breach of a representation or warranty.
We also note the concerns that some of these parties are private companies who may choose to exit the securitization market rather than provide financial disclosures. While we acknowledge this possibility, we believe that this information is material for investors in order to make an informed investment decision. Furthermore, we believe this concern is minimized, to some extent, because the requirement does not necessarily require financial statements, but only information about their financial condition similar to the type of disclosure required under current rules regarding financial information of certain servicers, some of which may be private companies. Where disclosure is required, the type and extent of information regarding certain originators' and sponsors' financial condition would depend upon the particular facts. We note that sponsors will typically conduct due diligence regarding the pool assets when purchasing assets to include in the ABS pool, including assessing the financial condition of originators that are obligated to repurchase or replace any asset for breach of a representation and warranty pursuant to the transaction agreements. We believe that when the trigger for disclosure of the financial information of sponsors and 20% originators is met, as outlined in the rule, investors should have the same information. We are mindful, however, of the costs that originators and sponsors would incur if we required audited financial information, especially for those originators and sponsors that have not previously been subject to an audit; therefore, we are not requiring that financial information included be audited.
In the 2010 ABS Proposing Release, we noted that existing Item 1103(a)(3)(i) of Regulation AB required disclosure of the classes of securities offered by the prospectus and any class of securities issued in the same transaction or residual or equity interests in the transaction that are not being offered by the prospectus.
Several commenters supported the proposed rule but recommended certain revisions.
Another commenter requested that we limit the retention disclosure requirements “to those required in any risk retention construct that may be included in the final rules.”
After considering the comments received, we are adopting the proposed revisions to Items 1104, 1108, and 1110 with some modifications.
We also acknowledge the concerns that the exact amount retained by these parties may not be known until closing and that these retention interests may and do often change during the period between the time of sale and closing.
The rules discussed in this section seek to provide ABS investors with greater information about the transaction parties to a securitization, thereby allowing them to make more informed investment decisions. First, investors will now be able to identify a potentially larger number of the originators of pool assets, which will improve their ability to compare the loan performance across originators and assess the relative stringency of these originators' underwriting standards as well as their historical performance. Second, at the time of an ABS offering, investors will now be able to better assess the ability of parties obligated to repurchase assets to actually fulfill those obligations. This will allow investors to more accurately assess the representations and warranties in the transaction agreements, since the enforceability of these depends on the ability of the obligated party to repurchase breached assets. Third, investors will now have information about the sponsor's, servicer's, or a 20% originator's interest retained in the transaction net of hedging. Investors have indicated that this information will be beneficial to them because the information will allow them to consider the incentives of the various parties involved in the securitization chain.
The costs of the revised rule will be borne primarily by issuers, who will be required to provide additional disclosure about the transaction parties to a securitization. The magnitude of the costs will depend on the extent to which issuers already gather the required information. For instance, on the one hand, issuers likely already obtain the identities of originators; therefore, providing that information should not impose significant additional costs. On the other hand, issuers may need to gather some additional information from third parties regarding the financial condition of an originator who originated 20% or more of the pool assets and is obligated to repurchase assets under the transaction agreements. As a result, issuers may incur costs to gather the financial data and then prepare and provide the required disclosure. However, we believe that the revised rule strikes the appropriate balance between the benefit of providing investors with useful information about the originators and the burden of requiring the identification of all originators, regardless of the amount they contributed to the pool.
Some commenters were concerned that disclosing the financial condition of a party obligated to repurchase assets may impose an indirect cost on investors, if investors misinterpret this disclosure and the existence of representations and warranties as the obligated parties providing credit or liquidity support to the transaction. In light of our other rules on disclosure of credit and liquidity support, we believe investors will see a clear distinction between the representations and warranties and any credit or liquidity support provided. Similarly, some commenters were concerned that the disclosure may be misleading to investors because the financial condition of the party may have changed between the time of the transaction when the disclosure was provided and the repurchase demand. We believe that investors will still benefit from the required information since it will allow investors to assess at the time of making their investment decision whether the entities that provided representations and warranties regarding the pool assets are, at least as an initial matter, financially capable of fulfilling their obligations.
In the 2010 ABS Proposing Release, we noted that a prospectus summary should briefly highlight the material terms of the transaction, including an overview of the material characteristics of the asset pool. We also noted our belief that the prospectus summaries provided in ABS prospectuses may not adequately highlight the material characteristics, including material risks, particular to the ABS being offered. Instead, these prospectus summaries often summarize types of information that are common to all securitizations of a particular asset class.
Comments on the proposal were mixed.
After considering comments received, we are adopting the proposed instruction with revisions. From our experience, the prospectus summaries often summarize types of information that are common to all securitizations of a particular asset class rather than the material characteristics of the particular ABS, such as statistics regarding whether the loans in the asset pool were originated under various underwriting or origination programs, whether loans were underwritten as exceptions to the underwriting or originations programs, or whether the loans in the pool have been modified.
The costs associated with this disclosure should be minimal as the issuer should already have this information, or be able to easily generate the information, in light of the more detailed disclosure required by other item requirements in Regulation AB. Furthermore, this is not a new requirement, but rather a clarification of our position on what should be provided in the prospectus summary. Finally, if this disclosure is not appropriate for a particular asset class, then existing Item 1103(a) addresses this concern by indicating that the disclosure is only required where applicable.
In the 2010 ABS Proposing Release, we proposed to replace Item 1108(c)(6) of Regulation AB with a more detailed and specific disclosure requirement in Item 1111.
We are adopting the final rule, as proposed. We continue to believe that the ability of the servicer to modify any terms, fees, and penalties and the effect of this ability on potential cash flows remains an important factor to investors. We believe that more granular data about this ability will enable investors to better assess the possibility of a potential change in the cash flows, which should, in turn, promote more efficient allocation of capital. To the extent issuers will be providing more detail than they previously provided, issuers' costs to provide the required disclosure will likely increase.
We also proposed to revise Item 1111(e) to require disclosure of whether a representation was included among the representations and warranties that no fraud has taken place in connection with the origination of the assets on the part of the originator or any party involved in the origination of the assets. In proposing this requirement, we believed that it was important that any fraud representation be highlighted to investors.
Several commenters were opposed to the proposed requirement.
After considering the comments we received, we are not adopting the proposed revisions to Item 1111(e). As one commenter noted, the absence of fraud may be an element of several representations and warranties concerning the pool assets and therefore is already adequately disclosed under the current requirements of Item 1111(e).
In the 2010 ABS Proposing Release, we noted that since the adoption of Regulation AB we have observed that static pool information provided by asset-backed issuers may vary greatly within the same asset class. Variations exist not only with the type or category of information disclosed but also with the manner in which it is disclosed. As a result, static pool information between different sponsors has not necessarily been comparable, which reduces its value to investors.
To address this problem, we proposed revisions to Item 1105 of Regulation AB
Commenters were generally supportive of these proposed rules
One commenter, supportive of the proposal to require a description of the methodology used in determining or calculating the characteristics, urged the Commission to require that the methodologies used by issuers be standardized to facilitate comparison of securities within the same asset class.
Several commenters provided differing views on whether the proposal to require a description of how the assets in the static pool differ from the pool assets underlying the securities being offered was necessary or helpful to investors. One commenter indicated that this disclosure is helpful in understanding “pool construction risk.”
With respect to requiring an issuer to explain why it did not provide static pool information or provided alternative information, one commenter interpreted this proposal as capable of being satisfied through summary disclosure stating that either the data are not available or that static pool disclosure is immaterial.
One commenter opposed requiring the graphical presentation of static pool information in addition to the proposed narrative description.
After considering the comments provided, we are adopting the requirements as proposed.
To aid issuers in understanding what the narrative disclosure would typically include, and as commenters noted, we provided an example in the 2010 ABS Proposing Release, as we have done in other releases, to illustrate the disclosure principle.
Second, we are adopting, as proposed, an amendment to require issuers to describe the methodology used in determining or calculating the characteristics and also to describe any terms or abbreviations used.
Third, we are requiring a description of how the assets in the static pool differ from the pool assets underlying the securities being offered.
Fourth, as proposed, the final rule states that the static pool information should be presented graphically if doing so would aid in understanding.
Finally, in addition to providing investors with a clear and brief introduction of the static pool data, we are also requiring issuers to provide disclosure in cases where an issuer does not include static pool information or includes disclosure that is intended to serve as alternative static pool information.
We believe that taken together the static pool disclosure requirements adopted will benefit investors by providing them with more clearly explained and more consistently presented information about static pools, thereby facilitating their understanding of how the performance of the static pools may or may not be indicative of how the current pool may perform. This will help investors make better informed investment decisions and lead to more efficient allocation of capital. The requirements will be costly to issuers to the extent that they require reformatting information such as in graphical format. We expect that these costs will be minimal because issuers can use off-the-shelf software to create the graphs. Issuers will also incur costs for analyzing prior pools as compared to the current offering, but these costs should not be significant since they will have all the necessary information.
We proposed to add an instruction to Item 1105(a)(3)(ii) of Regulation AB to require the static pool information related to delinquencies, losses, and prepayments be presented in accordance with the existing guidelines outlined in Item 1100(b)
Comments received on the proposed changes for amortizing asset pools were mixed. With respect to requiring that delinquencies, losses, and prepayments be presented in accordance with Item 1100(b), several commenters supported the proposal,
We are adopting the proposed rules for amortizing asset pools with modification in response to comments. We remain concerned that the inconsistent presentation of delinquencies, losses, and prepayments across issuers within the same asset class has resulted in a lack of clarity and comparability.
In addition to requiring that delinquencies, losses, and prepayments be presented in accordance with Item 1100(b) through no less than 120 days, we are amending Item 1105(a)(3)(iv) to require the graphical presentation of this information for amortizing asset pools. We acknowledge commenters' concern that the substantial quantitative data associated with some prior securitized pools could make graphical presentation of the data “unintelligible” and that investors may prefer actual data over graphs because they cannot ascertain the data from the graphs and they can take the tabular data and create their own graphs.
We proposed to permit issuers to file their static pool information required under Item 1105 of Regulation AB on EDGAR in Portable Document Format (“PDF”) as an official filing in lieu of, as currently required, including the information directly in the prospectus (or incorporating by reference) in ASCII or HTML format.
As is the case today, however, issuers can incorporate static pool information filed on a Form 8-K or as an exhibit to a Form 8-K by reference into a prospectus.
Commenters were generally opposed to our PDF proposal, favoring data formats other than PDF for static pool information. One commenter stated that PDF makes detailed analysis “difficult” and “time-consuming.”
Given commenters' concerns regarding the usability of static pool information in PDF, we are not adopting our proposal to permit issuers to file their static pool information in PDF as an official filing. This decision benefits investors because they will continue to receive static pool information in a more usable format compared to PDF. Issuers, however, will be precluded from taking advantage of any cost savings that could be achieved by filing the static pool information in PDF.
We are adopting the proposed rules to amend Form 8-K and Item 601 of Regulation S-K. We believe that these amendments will benefit investors in searching and locating the static pool information filed on EDGAR. Therefore, if the issuer wishes to incorporate static pool information by reference to a Form 8-K filing rather than to include it in the prospectus, then an issuer must file it under new Item 6.06 of Form 8-K. If the issuer files the static pool information as an exhibit to a Form 8-K to be incorporated into a prospectus, the issuer must file the static pool information as Exhibit 106. Under the final rule, issuers will be required to include a statement in the prospectus that the static pool information incorporated by reference is deemed to be a part of the prospectus and also identify the Form 8-K on which the static pool information was filed by including the CIK number, file number, exhibit number (if applicable) and the date on which the static pool information was filed. Investors will benefit by being able to more easily search and locate static pool information incorporated by reference into the prospectus, and the only cost issuers are likely to incur is to update their information systems to reflect the new Form 8-K item requirement and exhibit number, which we believe should be minimal.
We also proposed that the information should be filed with the Form 8-K on the same date that the preliminary prospectus is required to be filed.
Items 1112 and 1114 of Regulation AB require the disclosure of certain financial information regarding significant obligors of an asset pool and significant credit enhancement providers relating to a class of asset-backed securities. An instruction to Item 1112(b) provides that no financial information regarding a significant obligor is required if the obligations of the significant obligor, as they relate to the pool assets, are backed by the full faith and credit of a foreign government and the pool assets are securities that
We received only one comment on this proposal, which supported the proposal.
Securities Act shelf registration provides important timing and flexibility benefits to issuers. An issuer with an effective shelf registration statement can conduct delayed offerings “off the shelf” under Securities Act Rule 415 without staff action.
In the 2010 ABS Proposing Release, we proposed, among other things, new registration procedures, registration forms and shelf eligibility requirements for asset-backed security issuers. The 2010 ABS Proposals sought to address a number of concerns about the ABS offering process and ABS disclosures that were subsequently addressed in the Dodd-Frank Act, while others were not addressed by the Dodd-Frank Act. Two of the proposed shelf eligibility requirements—risk retention
The 2011 ABS Re-Proposals for ABS shelf registration eligibility were also part of several rule revisions we are considering in connection with Section 939A of the Dodd-Frank Act. Section 939A of the Dodd-Frank Act requires
Under existing rules, as with current offerings of other types of securities registered on Form S-3 and Form F-3, the shelf registration statement for an offering of ABS will often be effective weeks or months before a takedown is contemplated. The prospectus in an effective registration statement must describe, among other things, the type or category of assets to be securitized, the possible structural features of the transaction, and identification of the types or categories of securities that may be offered.
We also recognize that it is important for investor protection that, in addition to receiving adequate information to make an investment decision, ABS investors also have adequate time to analyze the information and the potential investment. For the most part, each ABS offering off of a shelf registration statement involves securities backed by different assets, so that, in essence, from an investor point of view, each offering requires a new investment analysis. Information about the underlying assets is an important piece of information for analyzing the ability of those assets to generate sufficient funds to make payments on the securities. Furthermore, some have noted the lack of time to review transaction-specific information as hindering investors' ability to conduct adequate analysis of the securities.
In the 2010 ABS Proposing Release, we proposed to require that an ABS issuer using a shelf registration statement on proposed Form SF-3 file a preliminary prospectus containing transaction-specific information at least five business days in advance of the first sale of securities in the offering. This requirement would allow investors additional time to analyze the specific structure, assets and contractual rights of each transaction. We proposed this requirement in response to investors' concerns that ABS issuers were not providing them enough time to review the transaction-specific information, which hindered their ability to conduct adequate analysis of the securities. We noted in the 2011 ABS Re-Proposal that the five business-day waiting period was also intended to reduce undue reliance on security ratings, thus part of our efforts to remove the prior investment-grade ratings requirement.
Comments received on this proposal were mixed. Several commenters supported the proposal that a preliminary prospectus be filed five business days in advance of the first sale.
MBA also requested that issuers, particularly CMBS issuers, also have the ability to update without restarting the five business-day period.
Other commenters opposed the five business-day waiting period
While we did not specifically request further comment on this topic in the 2011 ABS Re-Proposing Release, several commenters offered comment on the proposal. For the most part, commenters reiterated their suggestions from their comment letters on the 2010 ABS Proposing Release. Several commenters agreed that a preliminary prospectus should be provided to investors in advance.
As noted above, the proposal provided that a material change from the information provided in a preliminary prospectus, other than offering price, would require a new preliminary prospectus and therefore, a new five business-day waiting period. Some investor commenters supported the proposal to require a new waiting period for any material changes.
Some commenters, believing the five business-day waiting period after material changes was too long, suggested shorter periods.
Some commenters suggested that no additional waiting period after material changes may be necessary.
Commenters also requested that we provide additional clarity regarding the material changes to the preliminary prospectus that would trigger a new five business-day waiting period.
We also received comments on our proposal to permit omission of pricing information in the required preliminary prospectus. One commenter recommended that we define what is contemplated by the phrase “information dependent on pricing” and whether this would include only quantitative pricing terms, or whether it could also include other additional information that is typically determined at pricing (e.g., selection of a swap counterparty, weighted average life calculations, or, in the case of credit card master trusts, transaction size and minimum principal receivables balance requirements).
We did not receive comments on our proposed conforming revisions to the undertakings that are required by Item 512 of Regulation S-K
Under the final rule, with respect to any takedown of securities in a shelf offering of asset-backed securities where information is omitted from an effective registration statement in reliance on new Rule 430D, as discussed below, a form of prospectus meeting certain requirements must be filed with the Commission in accordance with the new Rule 424(h) preliminary prospectus at least three business days prior to the first sale of securities in the offering.
We recognize that the final rule will require issuers to provide information to investors earlier in the process than was often provided for ABS issued before the crisis. During the required waiting period, issuers may be exposed to the risk of changing market conditions because they may have to hold the underlying assets on their balance sheets (inventory risk), and the risk may have larger impact on small sponsors with smaller balance sheets. To assess the magnitude of this risk and the costs that it may impose on issuers, we
As noted above, comments received on the waiting period were mixed on the appropriate length of time for the initial waiting period before first sale with mostly investors supporting
Finally, while we have observed that post-crisis ABS issuers have provided investors with additional time, we are concerned that market practice could change in a heated market with many issuers possibly reverting to the practice of providing investors with insufficient time and causing investors to place undue reliance on ratings. Because of this concern and our belief that investors should conduct their own due diligence rather than unduly rely on ratings, we are mandating a waiting period of at least three-business days as part of our rules.
This revision will help to address cost and other concerns expressed by issuers and others about the proposed amount of waiting time after a material change and the concerns about filing an entirely new preliminary prospectus. It should reduce some commenters' concerns regarding exposure to market risk and unnecessary delay. We are concerned, however, that extensive material changes, even after an initial waiting period for the preliminary prospectus, could be difficult for investors to review in this shortened timeframe; therefore, we are requiring issuers to clearly delineate in a prospectus supplement what material information has changed and how the information has changed from the initial preliminary prospectus. We expect that the asset-level disclosure requirements that we are adopting, which will provide investors with standardized machine-readable data about the pool assets, will facilitate investors' ability to update their investment analysis quickly. As a result, we do not believe that investors will need as much time to review the supplement as they will need for their initial review of the preliminary prospectus.
Prior to the rules we are adopting, the framework for ABS shelf offerings, along with shelf offerings for other securities, was outlined in Rule 430B of the Securities Act. Rule 430B describes the type of information that primary shelf-eligible and automatic shelf issuers may omit from a base prospectus in a Rule 415 offering and include instead in a prospectus supplement, Exchange Act reports incorporated by reference, or a post-effective amendment, and addresses both the treatment of prospectuses filed pursuant to Rule 424(b) and effective date triggers for securities sold off the shelf registration statement.
New Rule 430D requires that, with respect to each offering, all the information previously omitted from the prospectus filed as part of an effective registration statement must be filed at least three business days in advance of the first sale of securities in the offering in accordance with new Rule 424(h), except for the omission of information with respect to the offering price, underwriting syndicate (including any material relationships between the registrant and underwriters not named therein), underwriting discounts or commissions, discounts or commissions to dealers, amount of proceeds or other matters dependent upon the offering price to the extent such information is unknown or not reasonably available to the issuer pursuant to Rule 409. The information required to be filed pursuant to Rule 424(h) includes, among other things, information about the specific asset pool that is backing the securities in the takedown and the structure of the transaction. As summarized above, commenters requested that we clarify what we mean by information with respect to the offering price. We note that new Rule 430D largely conforms to existing Rule 430B but is tailored to ABS shelf offerings; therefore, the type of information permitted to be omitted from a preliminary prospectus is the same as the information that Rule 430B permitted to be omitted from the base prospectus in a shelf offering prior to this rulemaking.
As we stated in the 2010 ABS Proposing Release, so long as a form of prospectus has been filed in accordance with Rule 430D,
To reflect the requirements under new Rule 424(h) and new Rule 430D, we are also adopting, as proposed, conforming revisions to the undertakings that are required by Item 512 of Regulation S-K
In order to delineate between ABS filers and corporate filers and, more importantly, to tailor requirements for ABS offerings, we proposed to add new
Several commenters specifically supported adopting new Forms SF-1 and SF-3 and none opposed.
We are adopting new Forms SF-1 and SF-3 for ABS offerings, which are largely based on existing Forms S-1 and S-3. ABS offerings that qualify for shelf registration will be registered on Form SF-3, and all other ABS offerings will be registered on Form SF-1. These new registration forms are tailored to ABS offerings and incorporate the offering and disclosure changes that we are adopting. The new forms will help in providing organizational clarity to our registration forms and their requirements.
In the 2010 ABS Proposing Release, we proposed revisions to both the registrant and the transaction shelf eligibility requirements for ABS issuers.
We believe the new transaction and registrant shelf eligibility requirements being adopted will continue to allow ABS issuers to access the market quickly by conducting delayed shelf offerings (rather than registering each offering on Form SF-1), while imposing conditions that we think are appropriate in light of the compressed timing and lack of staff review inherent in the shelf offering process. These new shelf eligibility conditions should encourage ABS issuers to design and prepare ABS offerings with greater oversight and care and, along with providing investors stronger enforcement mechanisms in the transaction agreements, should incentivize issuers to provide investors with accurate and complete information at the time of the offering. We believe that such transactions are appropriate for public offerings off a shelf without prior staff review.
The new transaction requirements for shelf offerings include:
• A certification filed at the time of each offering from a shelf registration statement, or takedown, by the chief executive officer of the depositor concerning the disclosure contained in the prospectus and the structure of the securitization;
• A provision in the underlying transaction agreements requiring review of the assets for compliance with the representations and warranties following a specific level of defaults and security holder action;
• A provision in the underlying transaction agreements requiring repurchase request dispute resolution; and
• A provision in the underlying transaction agreements to include in ongoing distribution reports on Form 10-D a request by an investor to communicate with other investors.
In both the 2010 ABS Proposing Release and the 2011 ABS Re-Proposing Release, we did not propose to change the other current ABS shelf offering transaction requirements related to the amount of delinquent assets in the asset pool and the residual values of leases.
As part of the 2010 ABS Proposing Release, we proposed to require a certification by the depositor's chief executive officer as a criterion for shelf eligibility.
• The executive officer has reviewed the prospectus and is familiar with the structure of the securitization, including without limitation the characteristics of the securitized assets underlying the offering, the terms of any internal credit enhancements, and the material terms of all contracts and other arrangements entered into to effect the securitization;
• Based on the executive officer's knowledge, the prospectus does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading;
• Based on the executive officer's knowledge, the prospectus and other information included in the registration statement of which it is a part, fairly present in all material respects the characteristics of the securitized assets underlying the offering described therein and the risks of ownership of the asset-backed securities described therein, including all credit enhancements and all risk factors relating to the securitized assets underlying the offering that would affect the cash flows sufficient to service payments on the asset-backed securities as described in the prospectus; and
• Based on the executive officer's knowledge, taking into account the characteristics of the securitized assets underlying the offering, the structure of the securitization, including internal credit enhancements, and any other material features of the transaction, in each instance, as described in the prospectus, the securitization is designed to produce, but is not guaranteed by the certification to produce, cash flows at times and in amounts sufficient to service expected payments on the asset-backed securities offered and sold pursuant to the registration statement.
In the 2011 ABS Re-Proposal, we stated, as we did when we proposed the certification for Exchange Act periodic reports, that a certification may cause these officials to review more carefully the disclosure, and in this case, the transaction, and to participate more extensively in the oversight of the transaction, which is intended to result in shelf-eligible ABS being of a higher quality than ABS structured without such oversight.
Comments on the certification requirement in the 2010 ABS Proposing Release were mixed. Some commenters supported our proposed certification by noting, among other things, that the certification would create accountability at the highest levels of an issuer's organization and more careful issuer review of the securitization.
In response to comments on the proposed certification, in the 2011 ABS Re-Proposing Release, we re-proposed the certification taking into account commenters' concerns and recommendations. Comments received on the re-proposed certification requirement were mixed. Several commenters generally supported the re-proposed certification for similar reasons as articulated in comments on the 2010 proposed certification.
Commenters provided differing views on the scope of the certification. Some commenters believed the certification should encompass both the structure of the transaction and the prospectus disclosure, as proposed.
Many commenters also offered alternative language or specific changes
After taking into consideration the comments we received and alternatives to the re-proposed certification, we are adopting as one of the transaction requirements for shelf eligibility that a certification about the disclosures contained in the prospectus and the structure of the securitization be provided by the chief executive officer of the depositor at the time of each takedown. We believe, as discussed more fully below, that requiring the chief executive officer to sign a certification at the time of each takedown will help to ensure that he or she is actively involved in the oversight of the transaction when the actual structuring occurs. We have made significant changes to the language of the certification to address commenters' concerns, which are described below.
The financial crisis revealed several failures of the ABS market. Some issuers of asset-backed securities were creating securitization transactions without considering whether the assets or the structuring of cash flows could support the scheduled distributions due to investors.
At the time of filing a shelf registration statement, the chief executive officer of the depositor, as well as the depositor's other principal officers, are required to sign the registration statement and are liable under Securities Act Section 11 for material misstatements or omissions in the registration statement, subject to a due diligence defense. As a result, signers of a registration statement are expected to satisfy themselves about the accuracy of disclosure at the time of effectiveness. The disclosure at the time of effectiveness of the shelf registration statement does not typically include transaction specific information because the shelf registration process permits a separation between the time of effectiveness and the time securities are offered in a takedown. Shelf takedowns sometimes occur long after the effectiveness of the registration statement, and the signers of a registration statement are not required to sign a prospectus supplement for a takedown. Thus, the process that an officer signing the registration statement would undertake at the time of shelf effectiveness might not necessarily be followed at the time of a takedown. At the time of a takedown, some of these officers may not have carefully reviewed the prospectus disclosures for the accuracy of the disclosures of the pool assets, cash flows, and other transaction features. We believe that investors' willingness to participate in ABS offerings may have suffered, in part, because of a belief by investors that sufficient attention may not have been devoted to the preparation of the disclosures in prospectuses, especially in asset classes characterized by the largest losses and due diligence failures.
Prior to today, a certification by the chief executive officer of the depositor has not been a requirement at the time of registered offerings of ABS. As part of the Sarbanes-Oxley Act (“SOX”) enacted in 2002, CEOs of operating companies are required to certify to the accuracy of the financial statements of their companies.
We believe, therefore, that because of the market failures described above and where the depositor is a limited purpose entity created by the sponsor for a particular securitization program, it is appropriate to condition shelf eligibility on a certification requirement that should result in a review of the disclosure at the time of a takedown similar to what would occur if the offering were being conducted at the time of effectiveness of the initial registration statement. As noted above, the shelf requirements and practices under the existing regulatory structure were not sufficient to address the failures in the market to provide accurate and full information to investors. An ABS offering most resembles an IPO,
The depositor's chief executive officer will need to certify to the characteristics of the asset pool, the payment and rights allocations, the distribution priorities and other structural features of the transaction. We note that because the chief executive officer could rely, in part, on the review that is already required in order for an issuer to comply with Securities Act Rule 193, much of the additional costs will relate to reviewing the securitization structure to have a reasonable basis to conclude that the expected cash flows are sufficient to service payments or distributions in accordance with their terms.
The final rules may also affect competition in the asset-backed securities market. For example, the requirement that the chief executive officer provide a certification concerning the disclosures contained in the prospectus and the structure of the securitization is based on the intent that the certification will strengthen oversight over the transaction. Prior to today, a certification by the chief executive officer has not been a requirement of public offerings of ABS. Just as every issuer in an IPO must go through a process to satisfy itself with the disclosure in a prospectus, ABS issuers must institute controls in order to provide the certification. The burden of the certification requirements will likely fall disproportionately on smaller-sized sponsors to the extent that there are direct fixed (i.e., non-scalable) costs related to administrative and legal expenses. This could ultimately result in smaller sponsors not registering their offerings on shelf (by registering their ABS on Form SF-1 instead), offering them through unregistered offerings, or quitting the securitization markets altogether, thereby reducing competition.
As noted above, commenters expressed concern that the certification could be interpreted as a guarantee of the future performance of the assets underlying the ABS. In an attempt to mitigate these costs and taking into account commenters' suggestions, we have revised the certification language to reflect that it is a statement of what is known by the certifier at the time of the offering and that he or she has a reasonable basis to conclude that the securitization is structured to produce, but the certification is not a guarantee that it will produce, expected cash flows at times and in amounts to service scheduled payments of interest and the ultimate repayment of principal on the securities (or other scheduled or required distributions on the securities, however denominated) in accordance with their terms as described in the prospectus.
When deciding whether to conduct a shelf offering, an issuer may consider the review and due diligence costs, the liability implications, and the reputational consequences to the chief executive officer of signing the certification. We believe that for securitizations of low-risk pool assets, simple structures, or structures used previously that have performed well in the past, issuers likely will conclude that the due diligence, liability, and reputation costs will be relatively low. For such securitizations these costs will likely be justified by the benefits of quick access to the capital markets, and these securitizations will continue to be offered off a shelf registration statement. On the other hand, for securitizations of high-risk assets and complex cash-flow structures, the expected costs of shelf offerings may increase. Issuers may choose not to use shelf registration because the chief executive officer may need to dedicate additional time to review the pool assets and the securitization structure in order to provide the assurances included in the certification. In addition, for such securitizations, the potential litigation risk to the chief executive officer may be higher, even when prudent measures are employed to structure an offering, thus further increasing the costs of shelf registration.
We also acknowledge a commenter's concern that certification is not a requirement for any other debt or equity offering and another commenter's opinion that the certification requirement will impose a barrier to new ABS issuance.
Other financial regulators, including foreign counterparts, have adopted similar rules designed to enhance accountability for the transaction structure. For example, the European Union adopted requirements that ABS issuers disclose in each prospectus that the securitized assets backing the issue have characteristics that demonstrate a capacity to produce funds to service any payments due and payable on the securities.
Therefore, while we recognize that the new shelf certification requirement introduces new costs to issuers, we believe that its net effect on capital formation in the ABS markets would be positive. The certification will help to ensure that the chief executive officer of the depositor is actively involved in the oversight of the transaction, and, as discussed above, along with the other shelf transaction requirements, it should encourage ABS issuers to design and prepare ABS offerings with greater oversight and care and should incentivize issuers to provide investors with accurate and complete information at the time of the offering. As a result, we believe that the certification may also improve investor perceptions about the accuracy and completeness of the disclosures, which may, in turn, help restore investors' willingness to invest and participate in the ABS markets. The impact of certification requirements in other contexts—in particular, certification requirements under the Sarbanes-Oxley Act—provides information about the potential consequences of certification in the securitization market.
The first paragraph of the final certification is substantially similar to the re-proposed text, with some modifications made in response to comments. The chief executive officer must make the following statement:
I have reviewed the prospectus relating to [title of all securities, the offer and sale of which are registered] (the “securities”) and am familiar with, in all material respects, the following: The characteristics of the securitized assets underlying the offering (the “securitized assets”), the structure of the securitization, and all material underlying transaction agreements as described in the prospectus;
As proposed, the certifier is required to certify that he or she has reviewed the prospectus and the necessary documents to make the certification. We believe that the chief executive officer should be sufficiently involved in overseeing the transaction and should review the prospectus and the documents necessary to make the certification. Several commenters suggested that we clarify that the chief executive officer may rely on senior officers under his or her supervision that are more familiar and involved with the structuring of the transaction in order to more accurately reflect the team-oriented nature of the transaction.
At the suggestion of commenters, we are adding defined terms for “securities” and “securitized assets” for purposes of the certification and incorporating those defined terms throughout the remainder of the certification to ease readability.
Commenters also requested that the paragraph be revised to make it more explicit that the certifier is responsible for knowing material aspects of the assets and the material underlying transaction agreements.
We have deleted “including without limitation” in response to commenters' suggestions that this language made the scope of the certification unclear.
Finally, under the re-proposed rule, the certifying officer could take into account only internal credit enhancements in making the certification.
In light of comments, under the final rule, the certifier is permitted to consider internal and external credit enhancement in providing the certification. We continue to believe, however, that the primary focus of the certification should be on the underlying assets rather than on any credit enhancement since, consistent with the Regulation AB definition of asset-backed security, the cash flows from the pool assets should primarily service distributions on the ABS.
We did not receive any comments suggesting specific changes to paragraph two and we continue to believe that it is appropriate to expect signers of a registration statement to satisfy themselves about the accuracy of the disclosure at the time of each takedown. The chief executive officer must make the following statement:
Based on my knowledge, the prospectus does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading;
The third paragraph of the final certification is substantially similar to the proposed text, with some modifications. The chief executive officer must make the following statement:
Based on my knowledge, the prospectus and other information included in the registration statement of which it is a part fairly present, in all material respects, the characteristics of the securitized assets, the structure of the securitization and the risks of ownership of the securities, including the risks relating to the securitized assets that would affect the cash flows available to service payments or distributions on the securities in accordance with their terms; and
Paragraph three requires a certification that the disclosures in the prospectus and other information in the registration statement are fairly presented.
In addition, paragraph three, as re-proposed, would have required that the certifier consider the risk factors relating to the securitized assets underlying the offering that would affect the cash flows sufficient to service payments on the asset-backed securities as described in the prospectus. Commenters requested that we revise our reference to “risk factors”
We have considered the comments received and are revising the language of the certification to replace the phrase “all risk factors” with “the risks relating to the securitized assets that would affect the cash flows available to service payments or distributions on the securities in accordance with their terms.” We agree with commenters that the disclosure related to the risks of the securitized assets is not limited to only the risk factor section of the prospectus and may be appropriately presented in other parts of the prospectus. Some commenters also believed that the certification with regard to material risks related to the securitized assets should be further qualified to include only those that would “adversely” affect the cash flows “available” to service payments on the ABS “in accordance with their terms.”
Paragraph four of the final certification has also been modified. As described below, we have also added a fifth paragraph to address concerns related to paragraph four. The chief executive officer must make the following statement:
Based on my knowledge, taking into account all material aspects of the characteristics of the securitized assets, the structure of the securitization, and the related risks as described in the prospectus, there is a reasonable basis to conclude that the securitization is structured to produce, but is not guaranteed by this certification to produce, expected cash flows at times and in amounts to service scheduled payments of interest and the ultimate repayment of principal on the securities (or other scheduled or required distributions on the securities, however denominated) in accordance with their terms as described in the prospectus.
We have made revisions to this paragraph similar to revisions made to paragraph one. First, commenters suggested that we add the word “material” because, in general, the paragraph should relate only to material information about the securitized assets, the structure of the securitization (as discussed below, which includes any credit enhancement) and the related risks of the offering.
We also received several detailed comments on the remaining text of paragraph four. Some commenters suggested that we replace the word “designed” with “structured” when certifying to the cash flows that will service payments on the securities.
Many commenters stressed that they were unsure what the “expected payments” would be with respect to any particular securitization, such as with pass-through certificates or more junior tranches of registered ABS. With respect to the issue of pass-through certificates, one commenter noted that “no fixed principal payments are required to be made.”
To address commenters' concerns with “expected payments,” we have revised paragraph four so that the certification relates to “expected cash flows at times and in amounts to service scheduled payments of interest and the ultimate repayment of principal on the securities (or other scheduled or required distributions on the securities, however denominated) in accordance with their terms as described in the prospectus.” We agree with commenters that certain ABS may not be required to produce fixed payments, as is the case with pass-through certificates, and that using the term “expected payments” may have caused confusion.
We also recognize that characterizing the cash flows as “sufficient” to service the payments or distributions may have inadvertently implied that there will always be adequate cash flows to service such payments or distributions regardless of whether the ABS is of a lower tranche or structured as a pass-through security. We have deleted the term “sufficient” to eliminate this possible confusion.
One commenter suggested inserting language to indicate that the certifying officer's statements are his or her “current beliefs” and that there may be future developments that would cause his or her opinion to change or result in the assets not generating sufficient cash flows.
As discussed above, some commenters expressed concern over potential increased liability with the certification. We acknowledge that the potential litigation risk to the chief executive officer may be higher, and we recognize that participants in securities offerings who make statements about those offerings can face liability for their statements, but we believe that possible additional risk to the certifier is justified where each takedown provides investors with offering information about the underlying assets and structure of the securities and recent market events persuade us that these were insufficient incentives for proper oversight over the transaction. In this regard, we also note that the certification is tied to the disclosure in the prospectus. For example, if the prospectus includes disclosure that the terms of the securities do not include any expectation (or limited expectation) that the structure will produce cash flows sufficient to make distributions, the certifier would nonetheless be able to sign the certification because the certification is based, in part, on the disclosure in the prospectus. In response to commenters' concerns about certifier liability,
The foregoing certifications are given subject to any and all defenses available to me under the federal securities laws, including any and all defenses available to an executive officer that signed the registration statement of which the prospectus referred to in this certification is part.
In the 2010 ABS Proposing Release, we had proposed that the depositor's chief executive officer sign the certification. We explained that the chief executive officer of the depositor is already responsible for the disclosure as a signer of the registration statement.
We received various comments on the appropriate party to sign the certification. One commenter supported the re-proposal to allow “the executive officer in charge of securitization” to sign the certification but suggested modifying it to require the signature of “
Commenters also provided comments as to why an executive officer would be
Similarly, some commenters explained why an executive officer might be unwilling to provide the certification. One commenter noted that depositors would be unable to effectively price for the possibility of liability under such a broad certification.
After considering the comments, the final rule requires that the certification be signed by the chief executive officer. We are not adopting the suggestion that the executive officer in charge of the securitization for the depositor sign the certification, as re-proposed, because we are not acting at this time on the proposal to revise the signature requirements for the registration statement. We believe that the certification should be signed by a signatory to the registration statement. Furthermore, we believe that having the chief executive officer as the sole signatory is appropriate for other policy reasons. Although we understand that the chief executive officer may not personally undertake credit analysis and that he or she will likely rely on the work of others to assist him or her with structuring the transaction and preparing the certification as noted by some commenters, we believe that the depositor's chief executive officer, as an officer of the depositor at the highest level, should be responsible for providing proper oversight over the transaction and thus should be held accountable for the structuring of the transaction and for the disclosure provided in the prospectus supplement. In that regard, we believe, as we did when we proposed the certification for Exchange Act periodic reports, that a certification should cause the chief executive officer to more carefully review the disclosure, and in this case, the transaction, and to participate more extensively in the oversight of each transaction.
The date of the certification, as proposed, is required to be as of the date of the final prospectus.
In the 2011 ABS Re-Proposing Release, we also requested comments on whether, in lieu of the requirement that the chief executive officer or executive officer in charge of the securitization of the depositor provide a certification, the Commission should allow an opinion to be provided by an “independent evaluator.”
In contrast, one commenter noted its opposition to allowing the use of an independent evaluator, stating that the certification, as proposed, may result in a more careful review of the disclosure and transaction by the issuer and ultimately higher-quality ABS in shelf offerings.
As reflected in the comments above, an independent evaluator alternative may provide benefits to investors and issuers. For issuers that conduct offerings on an infrequent basis, such an alternative may be less costly than implementing an infrastructure in order for the chief executive officer to conduct the review required by the certification. However, as one commenter noted with respect to RMBS, such issuers may encounter difficulty hiring a company that is willing to provide such services and sign the certification.
Investors have expressed concerns about the effectiveness of the contractual provisions related to the representations and warranties about the pool assets and the lack of responsiveness by sponsors about potential breaches.
To address this concern, we proposed in the 2011 ABS Re-Proposal as one of the transaction requirements for shelf eligibility, that the underlying transaction documents of an ABS include provisions requiring a review of the underlying assets of the ABS for compliance with the representations and warranties upon the occurrence of certain post-securitization trigger events. Specifically, we proposed that the transaction agreements require, at a minimum, a review of the underlying assets (1) when the credit enhancement requirements, as specified in the transaction documents, are not met, or (2) at the direction of investors pursuant to processes provided in the transaction agreement and disclosed in the prospectus.
Finally, we proposed to require certain provisions in the underlying transaction agreements that would help to resolve repurchase request disputes. We discuss the dispute resolution provision requirement below in Section V.B.3.a)(3) Dispute Resolution Provision because we are adopting it as a stand-alone shelf eligibility condition.
As noted above, studies have highlighted the extent of misrepresentations among securitized residential real estate loans in the 2000's; however, we are unable to quantify the extent to which enforcing representations and warranties was an issue during the crisis. While recently adopted Exchange Act Rule 15Ga-1 implementing Section 943 of the Dodd-Frank Act requires disclosure of fulfilled and unfulfilled repurchase request activity, as a practical matter, it does not address directly the enforceability of put-back provisions in the underlying transaction agreements. Further, the historical data provided by Rule 15Ga-1 is limited, as initially only those securitizers that issued ABS between January 1, 2009 and December 31, 2011 were required to report on Form ABS-15G demand and repurchase history that occurred during that same period.
Several commenters generally agreed that a review of assets for compliance with representations and warranties should be a shelf eligibility requirement.
Commenters provided varying comments on the appropriateness of the proposed review triggers. Several commenters suggested that a trigger for review should not be tied to credit enhancement, as proposed.
As part of the 2011 ABS Re-Proposal, we requested comments on certain aspects of the investor-directed trigger. For example, we requested comment on whether we should require that at least 5% of investors must first call for an investor vote on the question of whether to initiate a review before a vote occurs.
We also requested comment on whether, as an alternative to specifying voting procedures, it would be appropriate to specify certain maximum conditions, where the percentage of investors required to direct review could be no more than a certain percentage, such as 5%, 10%, or 25%. Commenters provided differing views on imposing maximum conditions. Several commenters suggested that 25% would be the appropriate percentage of investors that should agree to a review before one is required.
With respect to disclosing the report on the findings and conclusions of the review, several commenters recommended that we require a summary of the report instead of the proposed requirement that the full report be filed as an exhibit to Form 10-D because of privacy concerns or potential problems that the requirement would cause with workouts or modifications with delinquent borrowers.
We also received comments on the selection and appointment of the credit risk manager. Commenters, in general, opposed the proposal to require that the trustee appoint the credit risk manager. Commenters noted that the trustee would not be a suitable party to appoint the credit risk manager and would not be likely to accept the responsibility for appointing the credit risk manager.
With respect to the proposed prohibited affiliations between the credit risk manager and certain transaction parties, several commenters supported the proposal, although some commenters suggested that we not permit the credit risk manager to be affiliated with other additional transaction parties, such as the trustee or any investor.
Additionally, commenters provided comments about other aspects of the credit risk manager. For example, some commenters recommended that we revise the title “credit risk manager” as it may not properly describe its function.
We are adopting, as a second shelf eligibility requirement, that the underlying transaction agreements include provisions requiring a review of pool assets in certain situations for compliance with the representations and warranties made with regard to those assets. Under the final rule, the agreements must require a review, at a minimum, upon the occurrence of a two-pronged trigger based first upon the occurrence of a specified percentage of delinquencies in the pool and if the delinquency trigger is met, then upon direction of investors by vote. We have made modifications to the review triggers, discussed below, that we believe help to address some of the cost concerns expressed by commenters for asset classes that historically have seen a limited number of repurchase requests. Because we are unable to predict which asset classes may experience problems in the future, we believe that it is prudent to impose this requirement for all asset classes.
We have taken into consideration the array of comments received related to the triggers and potential costs, while at the same time balancing the need for stronger mechanisms to enforce underlying contract terms. As we noted above, most transaction agreements lack a specific mechanism for investors to not only identify potential assets that fail to comply with the representations and warranties made but also to resolve a question of whether noncompliance of the representations and warranties constitutes a breach of the contractual provisions. These problems have been compounded by the fact that investors typically cannot make repurchase requests directly, thus they have had to rely upon the trustees who have not enforced repurchase requests in most circumstances. We believe that adopting this shelf provision coupled with the new dispute resolution and investor communication shelf requirements should provide investors with effective tools to address the enforceability of repurchase obligations and help overcome collective action problems. In that regard, we see these shelf requirements working together to help investors enforce repurchase obligations. Our investor communication provision, discussed below, will help investors to communicate with each other in order to determine whether they should vote to direct a review of the assets and later
While we believe that this review requirement will enhance the enforceability of repurchase obligations, we acknowledge that it will also increase costs, particularly on investors, who will incur the expense of the reviews. A group of investors noted that despite the additional costs, increased investor protection will produce net economic benefits to investors.
We also recognize that our approach to require that a reviewer be engaged at the time of issuance, as opposed to when the above two triggers are met, will be more costly. For asset classes that rarely experience breaches of representations and warranties, the benefits of this shelf provision may be smaller than for other asset classes and thus there may be situations where the costs may be greater than the benefits. We believe, however, that for asset classes where the likelihood of investors using the review provision is low, the upfront retainer fee should also be low. We note also that the requirement that the reviewer be engaged at the time of issuance could potentially create incentive alignment issues. Because of this requirement, a reviewer could seek to be appointed to as many ABS transactions as possible, thus potentially creating an incentive to submit reports favorable to sponsors and win future business from them. This could potentially impact the quality and usefulness of the reports if the reviews are not—or are not perceived as being—objective.
As noted above, the 2011 ABS Re-Proposal specified two separate events, either of which would trigger a review of the underlying assets under the new shelf eligibility requirement. One proposed trigger would have required a review when the credit enhancement requirements of the transaction are not met. The other proposed trigger would have permitted investors to direct a review of the assets, pursuant to
Under the new shelf eligibility requirement, the pooling and servicing agreement, or other transaction agreement, must provide for a review of assets, at a minimum, upon the occurrence of a two-pronged trigger with the first prong being a percentage of delinquencies in the pool and the second prong being the direction of an investor vote, in each case as specified in the transaction agreements. Because these thresholds are negotiated by sponsors and investors in advance of the ABS issuance, and could vary by asset class, deal structure, or takedown, this approach allows the market to optimize and determine the most effective thresholds, subject to caps discussed below. In developing this two-prong trigger approach, we have attempted to balance some commenters' concerns about potentially unfounded claims by requiring that an objective threshold based on delinquencies first be met while protecting investors' ability to effectively direct a review at a time when rising delinquencies may begin to cause concern that the assets in the pool may not have met the representations and warranties made in the transaction documents.
Rather than tying the trigger to credit enhancement levels, we are adopting an objective trigger based on delinquencies.
We are not specifying the threshold amount of delinquencies that must first be reached, given the variety of thresholds that may be relevant and the differing approaches offered by commenters. For instance, we note that some ABS transactions include delinquent loans at the onset. Furthermore, the shelf eligibility requirements permit registration of offerings of ABS that include up to 20% of delinquent assets.
The final rule provides some specificity as to how the delinquency threshold must be calculated in order to provide clarity to issuers and consistency to investors across various transactions and assets classes, and to prevent possible mechanisms from reducing the effectiveness of the trigger. The delinquency prong requires that the delinquency threshold be calculated as a percentage of the aggregate dollar amount of delinquent assets in a given pool to the aggregate dollar amount of all the assets in that particular pool, measured as of the end of the reporting period in accordance with the issuer's reporting obligations. By requiring that the delinquency calculation be measured as a percentage of the aggregate dollar amount of all assets in the pool, the calculation will better reflect the magnitude of delinquencies, as compared to a delinquency calculation measured by counting only the number of delinquent assets without consideration of the delinquent assets' relative dollar values.
The underlying transaction documentation must include a provision that, after the delinquency threshold has been reached or exceeded, investors have the ability to vote to direct a review. In formulating the final rule, we considered whether an investor vote would be necessary given that the final rule would require an objective trigger first be satisfied. We appreciate the costs that will be incurred by the investors in connection with these reviews.
Under the final rule, if the transaction agreement includes a minimum investor demand percentage in order to trigger a vote on the question of whether to direct a review, then the maximum percentage of investors' interest in the pool required to initiate a vote may not be greater than 5% of the total investors' interest in the pool (i.e., interests that are not held by affiliates of the sponsor or servicer).
Under the proposed rule, the transaction parties would have been given significant flexibility in setting the voting requirements for the investor vote trigger. We are concerned, however, that the transaction parties could establish a high delinquency threshold and high investor vote threshold as noted by one commenter, thus making it difficult for investors to utilize this shelf provision.
We also recognize that the rule may complicate the voting process for investors in transactions that include assets consisting of previously issued ABS. In particular, when trigger conditions for a review are met in connection with the previously issued ABS, the trustee acting on behalf of the investors in the second securitization must vote since they are also investors in the first securitization via the resecuritization. To address this potential issue, each securitization will need to have clearly delineated voting rules and eligibility criteria in the event that some of its investors are through a resecuritization. It is hard for us to evaluate the extent to which this problem may affect the ABS markets because, over the past several years, there have been no registered resecuritizations of RMBS, CMBS, or Auto ABS.
The requirements of this shelf eligibility criterion are meant to be the minimum procedures that should be included in the transaction documents to provide investors with a means to trigger a review of the assets. We acknowledge that transaction parties have and may develop more specific and robust procedures for monitoring and reviewing assets that support the ABS.
We are also modifying the proposal to add some specificity regarding the scope of the review, since we have changed the objective trigger from being based on credit enhancement to one based on delinquencies and received varied comments regarding the appropriate scope for a review based on delinquencies.
As proposed, under the final rule, a report of the reviewer's findings and conclusions for all assets reviewed will be required to be provided to the trustee.
We proposed to require that any report of results provided to the trustee also be filed on periodic report Form 10-D. Commenters generally supported filing the reports on Form 10-D. Several commenters indicated, however, that privacy concerns may arise related to the information about the underlying loans if a full report is filed and recommended that we instead require summaries of the reports.
In response to comments received, we are not adopting the proposal to require that the trustee appoint the reviewer. We are requiring, instead, that the pooling and servicing agreement or other transaction agreement provide for the selection and appointment of the reviewer since we believe that the transaction parties should be able to agree on who should serve as the reviewer.
We are requiring, as proposed, disclosure in the prospectus of the name of the reviewer, its form of organization, the extent of its experience serving as a reviewer for ABS transactions involving similar pool assets, and the manner and amount in which the reviewer is compensated.
We are also adopting a requirement that prohibits the reviewer from being affiliated with certain transaction parties and from performing certain duties due to concerns over potential conflicts of interest. Under the final rule, the reviewer, at a minimum, cannot be affiliated with the sponsor, depositor, servicer, the trustee, or any of their affiliates.
As noted above, some commenters suggested, as an alternative, that we revert back to an approach proposed in the 2010 ABS Proposing Release. They recommended that we allow issuers of asset classes other than residential mortgages the option to choose between the 2011 ABS Re-Proposal to require review of the assets upon certain triggers being met or the 2010 ABS Proposal to allow for a third-party review opinion.
In the 2011 ABS Re-Proposal, along with the credit risk manager proposal, we proposed to require that underlying transaction documents include repurchase request dispute resolution procedures. As we have noted elsewhere, not only have investors lacked a mechanism to identify potential breaches of the representations and warranties, they have also lacked a mechanism to require sponsors to address their repurchase requests in a timely manner.
Commenters generally supported a dispute resolution process.
As a third transaction requirement for shelf registration, we are requiring, as proposed but with slight modification, that the underlying transaction documents include dispute resolution procedures for repurchase requests.
As we have discussed above, the shelf eligibility conditions that we are adopting are intended to help ensure that ABS shelf offerings have transactional safeguards and features that make securities appropriate to be issued off a shelf. We believe that the dispute resolution provision will provide a key procedural safeguard for investors to resolve disputes over repurchase requests in an effective and timely manner. We expect that the dispute resolution provision should generate efficiencies in the repurchase request process. We believe that, as a result of the asset review provision and the dispute provision, sponsors may have an increased incentive to carefully consider the characteristics of the assets underlying the securitization and to accurately disclose these characteristics at the time of the offering. We also believe that investors should benefit from reduced losses associated with nonperforming assets since, as a result of this new shelf requirement, sponsors will have less of an incentive to include nonperforming assets in the pool.
Under the new rule, the transaction agreements must provide that if an asset subject to a repurchase request pursuant to the terms of the transaction agreements is not resolved by the end of the 180-day period beginning when notice is received, then the party submitting such repurchase request will have the right to refer the matter, at its discretion, to either mediation or third-party arbitration, and the party obligated to repurchase or replace must agree to the selected resolution method.
We realize there are possible costs associated with setting the waiting period at 180 days before the party submitting the request has the right to refer the matter to mediation or arbitration. On the one hand, we recognize that there is the possibility that 180 days may not be long enough to come to a resolution due to numerous rebuttals in some situations, as noted by one commenter.
In addition, some commenters recommended that we require binding arbitration as the single form of dispute resolution. Because we believe that investors should have access to all options available to resolve a dispute, we are not requiring a specific form or process to resolve disputes. The final rule permits a demanding party to determine what form of dispute resolution is appropriate.
Finally, after considering the comments received, we are requiring that the transaction documents specify that if arbitration occurs, the arbitrator will determine the party responsible for paying the dispute resolution fees and in the case of mediation, the parties, with the assistance of the mediator, will mutually agree on the allocation of the expenses incurred. While some commenters recommended that the losing party should pay the expenses, we believe that letting the arbitrator or the parties in mediation determine who pays balances competing concerns. On the one hand, some commenters expressed concern about the possibility of investors using the dispute resolution process for frivolous disputes and therefore recommended that we require the transaction documents to specify that the losing party pays.
We recognize that the dispute resolution provision could result in increased costs for ABS issuers and investors. We believe that these costs will likely be similar to other securities industry dispute resolution costs, which typically include filing fees, hearing session fees, and other miscellaneous arbitrator or mediator expenses. According to FINRA, arbitration and mediation filing fees depend on the size of the claim and can be up to $500 for an amount in controversy over $100,000.
Because the dispute resolution provision is not limited strictly to repurchase requests connected with a review pursuant to the asset review provision, there is a possibility that frivolous repurchase requests could be made and thus subject to the dispute resolution process. As discussed above, under the final rule the requesting party could be responsible for paying the dispute resolution expenses based on a determination by the arbitrator (or if the parties mutually agree that the requesting party should incur these expenses in the case of mediation). This is intended to limit the number of potentially frivolous claims.
In the 2011 ABS Re-Proposing Release, we proposed, as a shelf eligibility requirement, a method for facilitating investor communication with other investors related to their rights under the terms of the ABS. In particular, the proposed rule would require that the transaction agreements contain a provision requiring the party responsible for filing the Form 10-D to include in ongoing distribution reports on Form 10-D any request received from an investor to communicate with other investors related to investors exercising their rights under the terms of the asset-backed security. The request to communicate would be required to include: the name of the investor making the request, the date the request was received, and a description of the method by which other investors may contact the requesting investor. As we discussed in the 2011 ABS Re-Proposing Release, investors have raised concerns about the inability to locate other investors in order to enforce rights contained in the transaction documents, such as those relating to the repurchase of underlying assets for breach of representations and warranties.
While we did not propose specific procedural requirements for verifying that the person requesting to communicate is a beneficial owner of the particular ABS, we proposed to include an instruction to limit investor verification requirements, if the underlying transaction agreements contain such procedures, to no more than the following: (1) If the investor is a record holder of the securities at the time of a request to communicate, then the investor would not have to provide verification of ownership because the person obligated to make the disclosure will have access to a list of record holders; and (2) if the investor is not the record holder of the securities at the time of the request to communicate, the person obligated to make the disclosure must receive a written statement from the record holder verifying that, at the time the request is submitted, the investor beneficially held the securities.
Many commenters were generally supportive of the concept to allow for mechanisms for investors to contact and communicate with each other.
Commenters suggested other methods to simplify the verification process. One commenter opposed the proposed instruction on how an investor's ownership of the securities is verified because most certificates are held through DTC, which may make it difficult and costly to determine who the ultimate holders are.
We are adopting, as proposed, a shelf eligibility requirement that an underlying transaction agreement include a provision to require the party responsible for making periodic filings on Form 10-D to include in the Form 10-D any request from an investor to communicate with other investors related to an investor's rights under the terms of the ABS that was received during the reporting period by the party responsible for making the Form 10-D filings.
In previous releases, we have recognized that in certain circumstances the Internet can present a cost-effective alternative or supplement to traditional disclosure methods. We considered whether a Web site or investor registry would be a more effective approach to facilitate investor communication, including consideration of the comments received supporting a Web site approach. While we appreciate some of the potential benefits that may be afforded by a Web site approach, such as faster dissemination of the notices and more robust communication capabilities as noted by some commenters,
We acknowledged in the 2011 ABS Re-Proposing Release that transaction parties might want to specify procedures in the underlying transaction agreements for verifying the identity of a beneficial owner in a particular ABS prior to including a notice in a Form 10-D. While we did not propose specific procedural requirements to be added to the agreements, we did propose to limit the extent of the verification procedures that the transaction parties could impose to verify investor ownership. As summarized above, several commenters consisting of issuers, investors, trustees, and trade associations suggested that the investor verification procedures should be easy and quick to perform and provided various recommendations for the Commission to consider.
Under the final rule, the disclosure in Form 10-D is required to include no more than the name of the investor making the request, the date the request was received, a statement to the effect that the party responsible for filing the Form 10-D has received a request from such investor, stating that such investor is interested in communicating with other investors about the possible exercise of rights under the transaction agreements, and a description of the method by which other investors may contact the requesting investor.
As proposed, we are also including an instruction to Item 1121(e) of Regulation AB to define the type of notices that are required to be on Form 10-D. The party responsible for filing the Form 10-D will be required to include disclosure of only those notices of an investor's desire to communicate where the communication relates to the investor exercising its rights under the terms of the ABS. Thus, the party responsible for filing is not required to disclose an investor's desire to communicate for other purposes, such as identifying potential customers or marketing efforts.
While we acknowledge that issuers will incur some cost to implement this provision, we believe, taken together with the new asset review provision, that the disclosure will benefit investors by helping them establish communication and overcome collective action problems. As a result, this requirement should help investors exercise their rights under the transaction agreements, including those that are required to be included in the transaction documents to comply with shelf eligibility requirements. We acknowledge that the rule will minimally increase the costs for the party responsible for making the periodic filings on Form 10-D since it will need to modify its existing information systems to receive investors' requests to communicate. However, this is a very low cost method to help distinguish shelf appropriate ABS offerings. The Form 10-D is an existing periodic report that provides investors with, among other things, distribution information and pool performance information for the distribution period. Given the nature and frequency of the Form 10-D, we believe that adding the investor communication request requirement to the Form 10-D is appropriate and beneficial to investors because it will facilitate the distribution of all investor information regarding the ABS in one place, at an expected time. Using an existing form will also limit the cost for issuers because a separate reporting mechanism will not be necessary. While we have sought to limit costs by using Form 10-D, we recognize for those issuers that currently offer investor registries or Web sites and decide to continue to offer those methods of communication that there will be additional costs.
In the 2010 ABS Proposing Release, we proposed new registrant requirements related to compliance with the proposed transaction requirements for shelf eligibility (i.e., risk retention, a third-party opinion provision in transaction agreements, an officer certification, and an undertaking to file ongoing Exchange Act reports).
In light of the changes to proposed amendments to the transaction requirements for shelf eligibility, we revised the proposed registrant requirements to make conforming changes in the 2011 ABS Re-Proposal. We re-proposed that to the extent the depositor, any issuing entity that was previously established by the depositor, or any affiliate of the depositor is or was at any time during the twelve month look-back period required to comply with the proposed transaction requirements of Form SF-3 with respect to a previous offering of asset-backed securities involving the same asset class then the registrant must meet certain registrant requirements at the time of filing the shelf registration statement. The re-proposed registrant requirements would require that such depositor, each such issuing entity, and any affiliate of the depositor must have timely filed all required certifications and all transaction agreements that contain the required provisions relating to the credit
In addition, we re-proposed to make the proposed separate registrant requirement that would have required the registrant to include disclosure in the registration statement stating the depositor has complied with the registrant requirements an instruction rather than a shelf eligibility registrant requirement.
Because we did not receive any comments on the revised registrant requirements for shelf eligibility, we are adopting the revised registrant requirements largely as re-proposed. Under the final rule, we are retaining the registrant requirement that was previously in Form S-3 relating to delinquent filings of the depositor or an affiliate of the depositor for purposes of new Form SF-3. Since registrants are already required to comply with this particular existing shelf registrant requirement, registrants should not incur additional compliance costs.
The final rule also requires that to the extent the depositor or any issuing entity that was previously established by the depositor, or any affiliate of the depositor is or was at any time during the twelve month look-back period required to comply with the transaction requirements of Form SF-3 with respect to a previous offering of asset-backed securities involving the same asset class, then such depositor, each such issuing entity, and any affiliate of the depositor, must have timely filed all required certifications and all transaction agreements that contain the required provisions relating to the asset review provision, dispute resolution, and investor communication.
We believe that connecting the registrant requirements to the transaction requirements of prior offerings by the depositor, or affiliates of the depositor, will incentivize the depositor to timely file all required transaction documents with the required provisions and the required certifications.
In addition, as proposed, we are including an instruction stating that the registrant must disclose in a prospectus that it has met the registrant requirements. We believe disclosure of compliance with the registrant requirements will provide a means for market participants (as well as the Commission and its staff) to better gauge compliance with the shelf eligibility conditions of Form SF-3.
As we noted in the 2010 ABS Proposing Release, Form S-3 eligibility is determined at the time of filing the registration statement and again at the time of updating the registration statement under Securities Act Section 10(a)(3) by filing audited financial statements.
We received only a few comments on our proposal. One commenter expressed concern that it is not possible for ABS issuers to fully verify compliance with the Exchange Act reporting registrant requirements as of 90 days after the end of the depositor's fiscal year end because there could be an unknown defect, latent or otherwise, in one or another of the relevant issuing entities' reports or reporting history.
Under the new rule, an ABS issuer with an effective shelf registration statement will be required to evaluate whether the depositor, any issuing entity previously established by the depositor or any affiliate of the depositor was required to report under Sections 13(a) or 15(d) of the Exchange Act during the previous twelve months for asset-backed securities involving the same asset class, have filed such reports on a timely basis. As noted above, one commenter expressed concern that ABS issuers would be unable to fully verify compliance with the Exchange Act reporting registrant requirements as of 90 days after fiscal year end due to an unknown defect in one or another of the relevant issuing entities' periodic reports or reporting history.
In the 2010 ABS Proposing Release, we also proposed to require that, for continued shelf eligibility, an ABS issuer would be required to conduct an evaluation at the end of the fiscal quarter prior to the takedown of whether the ABS issuer was in compliance with the proposed transaction requirements relating to risk retention, third-party opinions, the officer certification, and the undertaking to file ongoing reports. If the ABS issuer was not in compliance with the transaction requirements, then it could not utilize the registration statement or file a new registration statement on Form SF-3 until one year after the required filings were filed.
In the 2011 ABS Re-Proposal, we re-proposed this registrant requirement to require an annual evaluation of compliance with the transaction requirements of shelf registration rather than an evaluation on a quarterly basis as we had originally proposed. Therefore, notwithstanding that the registration statement may have been previously declared effective, in order for the registrant to conduct a takedown off an effective registration statement, an ABS issuer would be required to evaluate, as of 90 days after the end of the depositor's fiscal year end, whether it meets the registrant requirements. Under the 2011 ABS Re-Proposal, to the extent that the depositor or any issuing entity previously established by the depositor or any affiliate of the depositor, is or was at any time during the previous twelve months, required to comply with the proposed new transaction requirements related to the certification, credit risk manager and repurchase dispute resolution provisions, and investor communication provision, with respect to a previous offering of ABS involving the same asset class, such depositor and each issuing entity must have filed on a timely basis, at the required time for each takedown, all transaction agreements containing the provisions that are required by the proposed transaction requirements as well as all certifications.
In response to commenters' concerns that the one-year penalty for non-compliance with the transaction requirements was too extreme, we revised and re-proposed to allow depositors and issuing entities to cure any failure to file the required certification or transaction agreements with the required shelf provisions. Under the proposed cure mechanism, the depositor or any issuing entity would be deemed to have met the registrant requirements, for purposes of Form SF-3, 90 days after the date all required filings were made.
Commenters recommended that we reduce the waiting period after curing the deficiency. Some commenters requested that the waiting period after curing the deficiency be reduced to 30 days.
The final rule includes a registrant requirement that requires an annual evaluation of compliance with the transaction requirements of shelf registration, as re-proposed in the 2011 ABS Re-Proposing Release. Under the final rule, notwithstanding that the registration statement may have been previously declared effective, in order to conduct a takedown off an effective shelf registration statement, an ABS issuer would be required to evaluate, as of 90 days after the end of the depositor's fiscal year end, whether it meets the registrant requirements, which is the same look-back period for the ABS issuer as the compliance evaluation for Exchange Act reporting described above.
Under the final rule, a depositor and issuing entity may cure the deficiency if it subsequently files the information that was required. After a waiting period, it will be permitted to continue to use its shelf registration statement.
Because the issuer can cure the deficiency while it continues to use the shelf and before the required annual evaluation, the issuer can avoid being out of the market. For example, a depositor with a December 31 fiscal year end has an effective shelf registration statement and on March 30 of Year 1, it evaluates compliance with all registrant requirements under new Rule 401(g) (90 days after the last fiscal year end) and determines that it is in compliance. The depositor then offers ABS but does not timely file the required transaction agreements that should have been filed on June 20 of Year 1. The depositor would be able to continue to use its existing shelf until it is required to perform the annual evaluation required by new Rule 401(g), on March 30 of Year 2. After March 30 of Year 2 and until June 20 of Year 2 (one year after the agreements should have been filed), the depositor would not be able to offer ABS off of the shelf registration statement, and would not be permitted to file a new shelf registration statement. However, if the depositor had cured the deficiency by filing the agreements on July 1 of Year 1, under the final rule, a new registration statement could be filed 90 days after July 1 of Year 1 (or September 29 of Year 1), instead of waiting until June 20 of Year 2 (when it otherwise would meet the twelve month timely filing requirement). In that case, at the time of the next annual evaluation for the registration statement on March 30 of Year 2, the depositor would be deemed to have met the registrant requirements because it would have cured the deficiency more than 90 days earlier on July 1 of Year 1, and thus the depositor could continue to use its existing shelf registration statement.
Our approach is designed to strike a balance between encouraging issuers' compliance with the shelf transaction requirements and commenters' concerns that the one-year time out period in the 2010 ABS Proposals was too long. Also, as discussed above, we received comments that 90 days was still too long and that a 30 or 45 day waiting period would be more appropriate.
We are not adopting another commenter's suggestion that the loss of shelf eligibility not be automatic and that issuers should instead be allowed to explain and be penalized at the staff's discretion.
We believe that the annual shelf eligibility compliance check will benefit investors because it will encourage issuers to file their transaction documents in connection with prior offerings at the required time and therefore enhance informed investment decisions. We acknowledge that the annual evaluations of compliance with the transaction requirements will impose additional costs on ABS issuers in the form of systems needed to examine compliance with the filing requirements. However, we believe that these costs should be minimal because issuers should already have, in most instances, systems designed to ensure that the transaction agreements are being filed timely in accordance with rules under the Securities Act.
In the 2010 ABS Proposing Release, we had proposed to amend Rule 415 to limit the registration of continuous offerings for ABS offerings to “all or none” offerings. In an “all or none” offering, the transaction is completed only if all of the securities are sold. In contrast, in a “best-efforts” or “mini-max” offering, a variable amount of securities may be sold by the issuer. In those latter cases, because the size of the offering would be unknown, investors would not have the transaction-specific information and, in particular, would not know the specific assets to be included in the transaction. Thus, information about the asset pool required by Item 1111 of Regulation AB, either in its existing form or as amended today, could not be complied with.
Only one commenter commented on the proposal to limit the use of continuous offerings on shelf to “all or none” offerings.
We are adopting the rule as proposed. The new rule will provide ABS investors in continuous ABS offerings with information about all relevant pool assets and would close a potential gap in our regulations for ABS offerings. Under the final rule, the continuous offering must be commenced promptly and must be made on the condition that all of the consideration paid for such security will be promptly refunded to the purchaser unless (A) all of the securities being offered are sold at a specified price within a specified time, and (B) the total amount due to the seller is received by the seller by a specified date.
As one commenter noted, in some ABS offerings, all or a portion of one or more classes of ABS that are offered for sale to investors through one or more underwriters may initially be retained by the depositor or sold to one or more of its affiliates.
This rule will be beneficial to investors in continuous offerings by ensuring that the information they receive is about all pool assets underlying the asset-backed securities they purchase. While ABS offerings are typically not conducted as a continuous offering, we believe that it is important for us to close a potential gap in our regulations for ABS offerings so that ABS investors receive this material information when making an investment decision—irrespective of the type of public offering. We acknowledge that restricting continuous offerings to “all or none” limits issuers' choice and may potentially impose costs on those issuers that would have preferred to conduct the offering on a best efforts basis. However, we also note that the staff is not aware of any prior public offering of ABS that was conducted on a continuous offering—either as “all or none” or best efforts—and therefore we expect these costs to be minimal. For similar reasons, we do not believe that the amended rule will have an impact
In the 2010 ABS Proposing Release, we proposed to require that offerings of mortgage related securities be eligible for shelf registration on a delayed basis only if, like other asset-backed securities, they meet the registrant and transaction requirements for shelf registration. Under the proposal, delayed shelf offerings of mortgage related securities could be registered only on new Form SF-3, and accordingly, must meet the eligibility requirements of Form SF-3. We proposed eliminating the provision in Rule 415 that permits the registration of “mortgage related securities,” as that term is defined in Section 3(a)(41) of the Exchange Act, for shelf offerings without regard to form eligibility requirements. This was a provision that was added to Rule 415 contemporaneous with the enactment of SMMEA.
One commenter agreed that mortgage related securities should be held to the same standards as other asset-backed securities.
We are revising Rule 415 as proposed. The change requires that mortgage related securities meet all criteria for eligibility for shelf registration on new Form SF-3. We believe that mortgage related securities should meet all the requirements we are adopting in order to be eligible for shelf registration on a delayed basis since these securities present the same complexities and concerns as other asset-backed securities. If we continue to allow issuers of mortgage related securities to offer securities on a delayed basis off the shelf without regard to the shelf eligibility requirements, we would effectively allow mortgage related securities issuers to circumvent the requirements we are adopting.
We believe that the amendment to Rule 415 adopted today will result in consistent and fair treatment of all asset-backed securities, regardless of the nature of the underlying pool assets. We believe that the impact of this rule on competition and capital formation will be minimal since most, if not all, issuers of mortgage related securities have met the shelf eligibility requirements and conducted offerings off shelf registration statements.
Except for securities issued under master trust structures, shelf-eligible ABS issuers generally are not reporting issuers at the time of issuance. Under Exchange Act Rule 15c2-8(b),
In light of recent economic events and to make this rule consistent with our other proposed revisions, in the 2010 ABS Proposing Release, we proposed to eliminate this exception so that a broker or dealer would be required to deliver a preliminary prospectus at least 48 hours before sending a confirmation of sale for all offerings of asset-backed securities, including those involving master trusts. Because each pool of assets in an ABS offering is unique, we believe that an ABS offering is akin to an IPO, and therefore we believe the 48-hour preliminary prospectus delivery requirement in Rule 15c2-8(b) should apply. Even with subsequent offerings of a master trust, the offerings are more similar to an IPO given that the mix of assets changes and is different for each offering. Additionally, requiring that a broker or dealer provide an investor with a preliminary prospectus at least 48 hours before sending a confirmation of sale should be feasible and made easier to implement as a result of our proposal that a form of preliminary prospectus be filed with the Commission at least three business days in advance of the first sale in a shelf offering.
Commenters generally supported the proposal.
We are eliminating the exception in Rule 15c2-8(b) for shelf-eligible asset-backed securities from the 48-hour preliminary prospectus delivery requirement as proposed.
The adoption of today's amendment will benefit investors by allowing them more time to consider the characteristics of the offering. We recognize that this benefit may be lower for investors in ABS structured as master trusts, because such offerings are issued from an existing issuing entity, which would have previously disclosed much of the information to be provided in the 48-hour preliminary prospectus. Nonetheless, such investors should benefit from having additional time to consider information about the new assets that is not provided in Exchange Act reports. The cost of today's amendment will be borne by issuers, who will have to prepare and provide to investors the preliminary prospectus. These costs will likely be small as a result of our other new rule requiring that a preliminary prospectus be filed with the Commission at least five days in advance of the first sale.
We considered one commenter's suggestion to provide for an “access equals delivery” model akin to final prospectuses.
We are also adopting, as proposed, a correcting amendment to Rule 15c2-8(j). Paragraph (j) states that the terms “preliminary prospectus” and “final prospectus” include terms that are defined in Rule 434.
We proposed to eliminate the current practice in shelf ABS offerings of providing a base prospectus and prospectus supplement by requiring the filing of a form of prospectus at the time of effectiveness of the Form SF-3 and a single prospectus for each takedown. As we noted in the 2010 ABS Proposing Release, we are concerned that the base and supplement format has resulted in unwieldy documents with excessive and inapplicable disclosure that is not useful to investors.
Several commenters supported
With respect to our proposal to limit each shelf registration statement to one
After considering the comments provided, we are adopting the rule regarding presentation of disclosure in prospectuses as proposed so that issuers must file a form of prospectus at the time of effectiveness of Form SF-3 and file a single prospectus for each takedown.
We are also adopting our proposed limitation of one asset class per registration statement with one clarification in response to comments.
We proposed to restrict the ability of ABS issuers to add information about new structural features or credit enhancements by filing a prospectus under Rule 424(b).
Commenters were generally supportive of our proposal to codify the requirement of a post-effective amendment for new structural features or credit enhancements.
After considering the comments, we are adopting, as proposed, new Securities Act Rule 430D(d)(2), which codifies a longstanding position of the Commission that an ABS issuer must file a post-effective amendment to the registration statement when it wants to add information about new structural features or credit enhancements that were not described as contemplated in the base prospectus of an effective registration statement. As noted above, one commenter stated that the term “structural features” was too vague to use as a trigger for a post-effective amendment and was concerned that the term could be interpreted to trigger a post-effective amendment for minor structural adjustments that would not have required a post-effective amendment under the existing standard.
We believe that codification of our existing position will provide issuers with clarity about how the rules work. It will also help to ensure that the staff has the opportunity to review these new structural features or credit enhancements that would be contemplated for future offerings. Because this rule is simply a codification of our existing position, we believe that the new rule will result in no material increase in costs and will be neutral in terms of its impact on competition, efficiency, and capital formation.
To alleviate some of the burden of managing multiple registration statements among ABS issuers, we proposed to allow, but not require, ABS issuers eligible to use Form SF-3 to pay filing fees as securities are offered off a shelf registration statement, commonly known as “pay-as-you-go.”
Several trade associations agreed that the proposal would be a helpful change.
We are adopting, as proposed, revisions to our rules to permit ABS issuers to pay registration fees as securities are offered off a registration statement as opposed to paying all registration fees upfront at the time of filing a registration statement on Form SF-3. As proposed, under the new rule, a dollar amount or a specific number of securities is not required to be included in the calculation of the registration fee table in the registration statement, unless a fee based on an amount of securities is paid at the time of filing.
Under the final rule, as proposed, the triggering event for a fee payment will be the filing of an initial preliminary prospectus.
We proposed to codify several staff positions relating to the registration of asset-backed securities.
We proposed to amend Rule 190
Several commenters supported the proposal to codify the staff's position in Rule 190 and Rule 457 under the Securities Act.
Item 12(b) of Form S-3 requires that the registrant incorporate by reference all subsequently filed Exchange Act reports prior to the termination of the offering. In the 2004 ABS Adopting Release, we explained that Item 12(b) of Form S-3 is required for asset-backed issuers only “if applicable.”
To simplify our rules, we proposed to codify the staff's position that an issuer of asset-backed securities may modify the incorporation by reference language included in the registration statement to provide that only the current reports on Form 8-K subsequently filed by the registrant prior to the termination of the offering shall be deemed to be incorporated by reference into the registration statement.
Several commenters supported the proposal, and no commenters opposed it.
After consideration of the comments, we are adopting the proposed codification of the staff's position regarding incorporation by reference of subsequently filed periodic reports in Form SF-3. Thus, under Item 10(d) of Form SF-3, the prospectus shall provide a statement regarding the incorporation by reference of Exchange Act reports prior to the termination of the offering pursuant to one of the following two ways. The registrant may state that all reports subsequently filed by the registrant pursuant to Sections 13(a), 13(c), or 15(d) of the Exchange Act prior to the termination of the offering shall be deemed to be incorporated by reference into the prospectus. In the alternative, the registrant may state that all current reports on Form 8-K subsequently filed by the registrant
We believe that the codification of these staff positions will simplify our rules by making our staff's positions more transparent and readily available to the public. Because these codifications are consistent with current practice of issuers, we do not believe that they will pose a cost to either issuers or investors.
Item 1100(f) of Regulation AB allows ABS issuers to file agreements or other documents as exhibits on Form 8-K and, in the case of offerings off a shelf registration statement, incorporate the exhibits by reference instead of filing a post-effective amendment. In the 2010 ABS Proposing Release, we noted our belief that the information in the transaction agreements and other documents provide important information on the terms of the transactions, representations and warranties about the assets, servicing terms, and many other rights that would be material to an investor. In the staff's experience with the filing of these documents, some ABS issuers have delayed filing such material agreements with the Commission until several days or even weeks after the offering of securities off a shelf registration statement. We also noted that investors have expressed concerns regarding the timeliness of information in ABS offerings, including the timeliness of the filing of these documents.
Comments on the re-proposed amendments to Item 1100(f) of Regulation AB were mixed with mostly investors supporting the amendments
On the other hand, some investors believed that the transaction documents
In the 2011 ABS Re-Proposing Release, we also requested comment on whether we should require issuers to file as an exhibit a copy of the representations, warranties, remedies, and exceptions marked to show how it compares to industry-developed model provisions. The comments that we received on our request for comment as to filing exhibits marked to industry-developed models were mixed with investors supporting the proposal
After considering the comments received, we are adopting the requirement, as proposed in the 2010 ABS Proposing Release, to clarify existing exhibit filing requirements by making explicit that the exhibits filed with respect to an ABS offering, registered on new Form SF-3, must be on file and made part of the registration statement at the latest by the date the final prospectus is filed. We believe that this revision should address the problem that we noted above about some issuers delaying their filing of the transaction agreements with the Commission until several days and, in some cases, even weeks after a shelf offering of the securities. We also note that ABS shelf offerings were designed to mirror non-shelf offerings in terms of filing the exhibits and final prospectuses. Because all exhibits to Form SF-1 must be filed by the time of effectiveness, we believe that all transaction agreements for shelf offerings filed as exhibits should be filed and made part of the shelf registration statement by the time of the final prospectus.
We are not adopting at this time, however, the part of the proposal to require the transaction documents be filed, in substantially final form, and made part of the registration statement by the date the preliminary prospectus is required to be filed. We continue to consider the balance between investors' interest in having access to the transaction documents earlier and the costs and difficulties with requiring issuers to provide the transaction documents in substantially final form by the time of the preliminary prospectus. Also, in light of the new disclosure requirements that must be provided at the time of the preliminary prospectus, as well as the certification by the issuer that the prospectus must fairly present information about the transaction, including the structure of the transaction, we believe further consideration is warranted. Therefore, the proposal to require the transaction documents be filed, in substantially final form, and made part of the registration statement by the date of the preliminary prospectus is required to be filed remains outstanding and unchanged.
In light of the comments received, we are also not adopting any requirements that investors be provided with blacklines of how the issuer's representations and warranties compare against the industry-developed model provisions or blacklines of how the transaction documents compare to the transaction documents from prior transactions or from prior versions of the transaction documents filed for the current transaction. While we believe that these types of marked documents could be an important tool for the identification of discrete or material changes between original and revised documents, we acknowledge commenters' concerns that there is no consistent industry standard at this time nor a clear identity of what other agreements to use as a comparison. We also believe, at this time, that most investors should have the capacity to produce documents marked to show differences from prior documents.
As part of our effort to provide more timely and detailed disclosure regarding the pool assets to investors, we proposed revisions to the Regulation AB definition of an asset-backed security.
In the 2010 ABS Proposing Release, we proposed to amend the “discrete pool of assets” exceptions to the current definition of “asset-backed security” by amending:
(i) The master trust exception to exclude securities that are backed by
(ii) the revolving period exception to reduce the permissible duration of the revolving period for securities backed by non-revolving assets from three years to one year; and
(iii) the prefunding exception to decrease the prefunding limit from 50% to 10% of the offering proceeds or, in the case of master trusts, from 50% to 10% of the principal balance of the total asset pool.
We were concerned that pools that are not sufficiently developed at the time of an offering to fit within the ABS disclosure regime may, nonetheless, qualify for ABS treatment, which may result in investors not receiving appropriate information about the securities being offered.
While some commenters provided specific comments, several commenters provided general comments on the proposal to change the definition of asset-backed security. One commenter noted that the changes to the definition would not prohibit public issuances of ABS with larger prefunding accounts and revolving periods, and noted that such offerings would be governed by the more extensive disclosure requirements of Form S-1.
One commenter supported the proposal to exclude securities that are backed by assets that arise in non-revolving accounts.
However, other commenters opposed the proposal to limit the exception to master trusts backed by revolving accounts.
Some commenters noted that the master trust structure is commonly used to securitize mortgages in the United Kingdom and that the proposed rule would result in those mortgage master trusts no longer being eligible for shelf registration.
Although an investor commenter supported the proposal relating to reducing the revolving period for non-revolving assets (e.g., auto loans and equipment loans), the commenter acknowledged that concerns about lack of information about new collateral additions to the pool would be mitigated if the issuer would be required to file loan-level information at issuance and each month that new assets are added to the collateral pool.
Several commenters opposed the proposal.
Certain investor members of one commenter were supportive of the proposal to decrease the prefunding limitation.
Issuer members of one commenter noted that the greater the limits on prefunding, the more expensive the carrying costs for originators and, potentially, the higher the borrowing rates for consumers and small businesses.
Lastly, one student loan issuer believed that the proposed 10% limitation on prefunding should not apply to FFELP loans (or other asset types) that are homogenous in nature.
We are adopting the prefunding limitation in the definition of asset-backed security, as proposed, with some modification. The new rule decreases the prefunding limit from 50% to 25% (instead of 10%, as proposed) of offering proceeds or, in the case of master trusts, the principal balance of the total asset pool. The new rule is based on suggestions from several commenters that 25% would be an appropriate restriction, in part, because it is consistent with prefunding standards under ERISA.
We believe that this reduction will result in the asset pool being more developed at the time of the offering, which will provide investors with more appropriate information about the securities being offered. We recognize, however, that the rule could impose higher carrying costs on originators and, in turn, potentially higher borrowing rates for consumers and small businesses. We believe that our final rule balances the need to provide investors with more appropriate information and these cost concerns by raising the prefunding period limit from the proposed 10% to 25% of the offering proceeds (or principal balance of the total assets for master trusts).
We are not adopting the revision to the master trust exception to exclude securities that are backed by assets that arise in non-revolving accounts because we are persuaded by commenters' concerns that it would eliminate the use of shelf for certain master trusts. The cost of not adopting this revision today is the possibility that more ABS issuers of non-revolving assets will utilize master trust structures, which will result in investors lacking access to information about all pool assets before making an investment decision. This concern is mitigated, to some extent, by the adoption of initial and ongoing asset-level disclosure requirements for some asset classes.
We are also not adopting the proposal to revise the revolving period exception that would reduce the permissible duration of the revolving period for securities backed by non-revolving assets from three years to one year due to comments received. An investor commenter noted, for example, that receiving updated asset-level information about the pool's assets on an ongoing basis would mitigate concerns regarding the duration of the revolving period.
In the 2004 ABS Adopting Release, we stated that delinquency disclosures required in the Form 10-D under Item 1121(a)(9) were based on materiality
We received several comment letters that provided differing views on the proposal. One commenter stated that it would not object to the proposal because it would “provide clarity and consistency in reporting.”
We are adopting a revised requirement in light of comments received. The final instruction to Item 1121(a)(9) requires delinquency disclosures included in the Form 10-D to be presented in accordance with Item 1100(b) with respect to presenting delinquencies in 30- or 31-day increments. In response to commenters' concerns that requiring such granular presentation through charge-off is too long a time period, we have modified the proposed instruction to require such presentation through no less than 120 days. We believe that this revised time period helps to address commenters' concerns about the cost and burden of having to track and report this information in a more granular manner for a longer period of time while still providing investors with a more comprehensive picture of delinquencies and losses in a uniform manner across asset classes. We also note that the revised time period is consistent with the new asset-level data requirement for presentation of delinquencies and losses in RMBS.
In the 2010 ABS Proposing Release, we proposed several revisions to Exchange Act Form 10-D or to the requirements governing the disclosures to be provided with the Form 10-D.
To assist investors in monitoring the sponsor's interest in the securities, we proposed to add a new item to Form 8-K to require the filing of a Form 8-K for any material change in the sponsor's interest in the securities. Under the proposal, the report on Form 8-K would be required to include disclosure of the amount of change in interest and a description of the sponsor's resulting interest in the transaction.
We received a mixed response to the proposal with some commenters supporting the proposal
Some commenters who opposed the proposal suggested it was too broad and should be limited to the monitoring of a sponsor's retention of risk that is required as a condition of shelf eligibility, law, or regulation.
We also received several comments seeking revisions to the proposal. For instance, some commenters suggested that, if we adopt the rule, it should not include the reporting of changes that arise as a result of organic changes in the sponsor's interest in securities, such as pool assets converting into cash in accordance with their terms or, in the case of revolving pool assets, fluctuating account balances based on credit line usage or those arising as a result of payments made on other securities issued by the issuing entity.
(c) Final Rule and Economic Analysis of the Final Rule
We are adopting the proposed requirement that disclosure be provided regarding material changes in a sponsor's interest in the ABS transaction with some modification. Instead of providing a description in a Form 8-K as proposed, we are requiring that if there has been a material change in the sponsor's interest during the period covered by the Form 10-D, then a description of the material change must be provided in the Form 10-D for that reporting period. We agree with the commenters that suggested this approach because it would permit issuers to avoid monitoring of changes in retained interest to meet the current reporting requirements of Form 8-K, thus minimizing costs.
The Form 10-K report of an asset-backed issuer is required to contain, among other things, an assessment of compliance with servicing criteria that is set forth in Item 1122 of Regulation AB by each party participating in the servicing function.
One commenter supported the proposed requirement that the body of the annual report indicate whether an instance of noncompliance identified under Item 1122 involved the servicing of the assets backing the asset-backed securities covered in the particular Form 10-K report,
The commenter, who supported the proposed requirement, noted that such information is, in fact, already being reported in annual reports on Form 10-K.
One commenter supported requiring the disclosure of any steps taken to remedy a material instance of noncompliance previously identified by an asserting party for the activities made on a platform level.
After considering the comments received, we are adopting a requirement that disclosure be provided in the body of the annual report as to whether the identified material instance of noncompliance pursuant to Item 1122 was determined to have involved the servicing of the assets backing the asset-backed securities covered in the particular Form 10-K report.
We understand that some commenters are concerned that requiring issuers to disclose a reported instance of noncompliance involving assets backing the ABS covered by the 10-K report may impose an indirect cost to investors if investors draw the incorrect conclusion that in the absence of such disclosure, the reported instance of
We are also adopting, as proposed, the requirement to disclose any steps taken to remedy a material instance of noncompliance for activities made on a platform level in the body of the annual report. While we note one commenter's recommendation that such disclosure be provided as part of the servicer's management assessment of compliance rather than in the body of the Form 10-K, we continue to believe that the issuer is ultimately responsible for the disclosure provided in the Form 10-K and therefore should be assessing the information provided by the servicers in their reports, including considering whether the information provided by the servicers in their reports at the platform level applies to the transaction for which the 10-K is filed.
Finally, in the 2010 ABS Proposing Release, we noted the staff's belief that the application of Item 1108(b)(2), which requires a detailed discussion in the prospectus of the servicer's experience in, and procedures for, the servicing function it will perform in the current transaction for assets of the type included in the current transaction, has not been consistent among issuers.
We also proposed to codify certain staff positions issued by the Division of Corporation Finance relating to the servicer's assessment requirement, with some modification. The first staff interpretation that we proposed to codify related to aggregation and conveyance of information between a servicer and another party (who may also be a servicer for purposes of the servicer's assessment requirement).
We also proposed to codify in an instruction to Item 1122 staff interpretations relating to the scope of the Item 1122 servicer's assessment. In a publicly available telephone interpretation the staff explained, among other things, that the platform for reporting purposes should not be artificially designed, but rather, it should mirror the actual servicer practices of the servicer.
We received general support for the proposed codifications from several commenters
In the 2010 ABS Proposing Release, we noted that ABS offerings with a particular file number may be associated with a registration statement with a different file number and that Forms 8-K for ABS offerings may be filed under the depositor file number, making it difficult to track material for the related offering with only the information provided in the Form 8-K. To make it easier for interested parties to locate the depositor's registration statement and periodic reports associated with a particular offering and information related to the sponsor of the offering, we
Several commenters expressed general support for these proposals; no commenters opposed.
We are adopting these amendments, as proposed, given the benefits that they will provide as recognized by commenters. Furthermore, we do not believe that requiring this information on certain cover pages for ABS filings will be burdensome to issuers, nor did we receive any comments stating any cost concern.
In the 2010 ABS Proposing Release, we noted our belief that compliance dates should not extend past a year after adoption of the new rules, but we sought comment about feasible dates for implementation of the proposed amendments. We also acknowledged that the asset-level disclosure requirements may initially impose significant burdens on sponsors and originators as they adjust to the new requirements, including changes to how information relating to the pool assets is collected and disseminated to various parties along the chain of the securitization.
With respect to implementation of the overall proposals to revise Regulation AB, a majority of commenters expressed a need for a longer transition period. The commenters were generally concerned that the proposed rules would impose new substantial obligations on various industry parties, such as originators, sponsors, and other transaction parties that will require changes to operational procedures and infrastructures in order to meet the new disclosure requirements.
As noted above, several commenters suggested compliance timeframes that would extend past the proposed one-year transition period. One trade association suggested an implementation period of at least eighteen months
We understand that some of the requirements that we are adopting, including the asset-level disclosure requirements, will take time and resources in order to satisfy the new requirements. We also understand that issuers and market participants are working to implement many different regulations that have recently been adopted or may be adopted in the near future. We are therefore adopting a tiered approach. All new rules, except for asset-level disclosures require compliance within one year from the effective date of the rules. We believe that this time period provides a sufficient transition period for compliance. We believe that 12 months will allow the transaction parties to better manage the changes necessary to their systems and processes. Therefore, any registered offering of asset-backed securities commencing with an initial bona fide offer one year after the effective date of the rules and the asset-backed securities that are the subject of that offering must comply with the new rules and forms, except for asset-level disclosures. Consequently, after the one year transition period, ABS issuers seeking to conduct a shelf ABS offering must conduct such offering off of an effective Form SF-3 registration statement.
In addition, any Form 10-D or Form 10-K that is filed after one year after the effective date of the rules must include the information required by the new rules, except for asset-level disclosures.
We received substantial feedback with respect to the appropriate compliance dates for our requirements related to the asset-level disclosure requirements.
Commenters suggested varying timeframes for implementation. For instance, investor members of one group suggested that the transition period should not exceed one year from the date the final rules are published.
Some commenters also recommended allowing exemptions or “deferrals” from the reporting requirements for data that they were unable to start collecting within the implementation timeframe.
As we noted earlier, we believe that, in order for investors to have access to robust information concerning the pool assets, asset-level disclosure needs to be provided. We understand that some of the disclosures that we are requiring are not currently captured by originators or servicers and that it will take time and resources to reprogram systems and processes to capture the data and then report it in XML. We also understand that issuers and market participants are working to implement many different regulations that have recently been adopted. Therefore, we have decided to delay the compliance date for the asset-level disclosure requirements so that market participants will have ample time to prepare and satisfy the new requirements. In this regard, issuers will be required to provide asset-level information no later than two years after the effective date of the rules, which we believe is a reasonable implementation timeframe. We believe the extended timeframe will ultimately benefit investors because it will give issuers and market participants the time to plan for and implement appropriate reporting processes and more meaningful and relevant disclosure documents. In addition, as discussed in Section III.A.2.b.5 Resecuritizations, we are adopting an exemption for resecuritizations of ABS issued prior to two years after the effective date of the rules, the compliance date for the asset-level disclosure requirements.
We also understand that certain changes to issuers' and market participants' systems may not be able to occur until the final technical requirements are published in the EDGAR Filer Manual and EDGAR Technical Specification documents. In order to provide issuers and other filers time to make adjustments to their systems, we anticipate making a draft of the EDGAR Technical Specification documents
We also note that at least one commenter requested a test period. We believe that submissions may assist both the Commission and issuers with addressing unknown and unforeseeable issues that may arise with the submission of the asset-level disclosures.
We are not adopting a commenter's suggestion that we adopt a hardship exemption from the reporting requirements for those issuers that may be unable to start collecting by the implementation timeframe. We believe that our timeframe provides ample time for the necessary reprogramming of systems and processes to capture the information, including for smaller originators.
As discussed above, we are adopting different compliance periods for the new rules. Registrants must comply with new rules, forms, and disclosures other than the asset-level disclosure requirements no later than November 23, 2015. Offerings of asset-backed securities backed by RMBS, CMBS, Auto ABS, and debt securities (including resecuritizations) must comply with the asset-level disclosure requirements no later than November 23, 2016. Any Form 10-D or Form 10-K filed after November 23, 2015, must comply with the new rules and disclosures, except asset-level disclosures. If any provision of these rules, or the application thereof to any person or circumstance, is held to be invalid, such invalidity shall not affect other provisions or application of such provisions to other persons or circumstances that can be given effect without the invalid provision or application.
Certain provisions of the new rules and rule amendments contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
An agency may not conduct or sponsor, and a person is not required to comply with, a collection of information unless it displays a currently valid control number. The titles for the collections of information are:
(1) “Form S-1” (OMB Control No. 3235-0065);
(2) “Form S-3” (OMB Control No. 3235-0073);
(3) “Form 10-K” (OMB Control No. 3235-0063);
(4) “Form 10-D” (OMB Control No. 3235-0604);
(5) “Form 8-K” (OMB Control No. 3235-0060);
(6) “Regulation S-K” (OMB Control No. 3235-0071);
(7) “Regulation S-T” (OMB Control No. 3235-0424);
(8) “Form SF-1” (OMB Control No. 3235-0707);
(9) “Form SF-3” (OMB Control No. 3235-0690); and
(10) “Form ABS-EE” (OMB Control No. 3235-0706).
The forms listed in Nos. 1 through 7 were adopted under the Securities Act and the Exchange Act and set forth the disclosure requirements for registration statements and periodic and current reports filed with respect to asset-backed securities and other types of securities to inform investors. Regulation S-K, which includes the item requirements in Regulation AB, contains the requirements for disclosure that an issuer must provide in filings under both the Securities Act and the Exchange Act. Regulation S-T specifies the requirements that govern the submission of electronic documents.
The regulations and forms listed in Nos. 8 through 10 are new collections of information under the Securities Act and the Exchange Act. Form SF-1 and Form SF-3 represent the new registration forms for offerings of asset-backed securities, as defined in Item 1101(c) of Regulation AB. Form SF-3 represents the registration form for asset-backed offerings that meet certain shelf eligibility conditions and can be offered off a shelf under Rule 415. Form SF-1 represents the registration form for other asset-backed offerings. Form ABS-EE
The hours and costs associated with preparing disclosure, filing forms, and retaining records constitute reporting and cost burdens imposed by the collections of information. Compliance with the rule amendments is mandatory. Responses to the information collection will not be kept confidential, and there is no mandatory retention period for the information disclosed.
In the 2010 ABS Proposing Release and the 2011 ABS Re-Proposing Release, we requested comment on the PRA analysis. While many commenters provided qualitative comments on the possible costs of the proposed rules and amendments, we received limited quantitative comments on our PRA analysis. The only quantitative comment we received on asset-level disclosure came from a commenter representing a group of Auto ABS sponsors. This commenter estimated that, if we adopted each of the Auto ABS data points originally proposed, the average costs and employee hours per sponsor necessary to comply with the asset-level requirements would be approximately $2 million and 12,000 hours, respectively.
We received only one comment letter with quantitative comments on the additional burden to complete Form SF-3.
Qualitative comments that we received generally noted that the new data collection requirements will impose additional burdens on issuers and sponsors. For example, we received several qualitative comments noting that the proposal would likely impose burdens on sponsors by requiring them
We considered all of the comments we received, as we considered how to quantify and possibly mitigate the burdens that could potentially be imposed by the new requirements. In order to address commenters' concerns about the asset-level requirements for Auto ABS, we have significantly reduced the scope of the asset-level data required from the proposal.
For the new shelf eligibility criteria, we have made several changes to address cost concerns—for example, we revised the certification to indicate that the certification is not a guarantee about the future performance of the assets and have clarified that the certifying officer has any and all defenses available under the securities laws. We also note, in response to one commenter's concern discussed above,
We acknowledge that the asset review provision will impose an upfront cost on the transaction since we are requiring that the reviewer be named in the prospectus. We believe, however, that most of the costs will be incurred in connection with reviews, which will occur during the life of the securitization only if the triggering events have been met. Consequently, if the reviewer does not perform any reviews, then the costs will be limited to the retainer fee. Recognizing that the bulk of the cost will be incurred with the actual reviews, we have attempted to reduce the burden of ongoing compliance with this shelf transaction requirement by requiring that a delinquency threshold must first be reached or exceeded before investors will be able to vote for a review. Disclosure is required in a Form 10-D only if a review is triggered.
We do not agree with a commenter that the dispute resolution provision could exceed the 100 burden hour estimate to collect the information. Under the final rules, a dispute resolution provision is required in the pooling and servicing agreement and disclosure of that provision is required in the prospectus. We acknowledge that additional costs may be incurred as a result of the number of hours that will be expended by certain personnel, including counsel, to come to a resolution if a dispute occurs. Because we are not requiring additional disclosures about the dispute resolution provision, we are not increasing our burden estimates. Accordingly, while we recognize that the new shelf conditions will impose additional costs on issuers, these costs are not primarily disclosure or record keeping burdens. Thus, we do not believe that we need to increase the 100 burden hour estimate to complete and file Form SF-3.
We have also made a number of changes in response to more general qualitative comments in an effort to avoid potential unintended consequences and reduce potential additional costs or burdens identified by commenters. For example, for the asset-level requirements, we have attempted to reduce burden and cost concerns by aligning the requirements with industry standards where feasible. We have also revised how we are calculating the burden hours and costs for data collection to more accurately reflect how data will be captured and organized in the industry, as described by commenters. Further, we are providing for an extended implementation timeframe, which we also believe will reduce the burden of implementing the requirements.
Our PRA burden estimate for each of the existing collections of information, except for Form 10-D, are based on an average of the time and cost incurred by all types of public companies, not just asset-backed issuers, to prepare a particular collection of information. Form 10-D is a form that is prepared and filed only by asset-backed issuers. In 2004, we codified requirements for asset-backed issuers in these regulations and forms, recognizing that the information relevant to asset-backed securities differs substantially from that relevant to other securities.
Our PRA burden estimates for the new rules and rule amendments are based on information that we receive on entities assigned to Standard Industrial Classification Code 6189, the code used for asset-backed securities, as well as information from outside data sources.
The asset-level reporting requirement that we are adopting for issuances of certain ABS is a new collection of information.
Our estimates in the 2010 ABS Proposing Release were based on the costs to provide the required data at the time of securitization and on an ongoing basis. We estimated that each unique
Some comments on the asset-level proposal suggested that sponsors would incur substantial costs to capture the required data and to provide it in the format requested.
To address concerns about the costs to provide the data, we revised our calculation of the estimated number of burden hours a sponsor may incur to acknowledge that a sponsor may need to revise its existing systems or procedures for each required data point. The burden estimate in the proposal assumed that approximately two percent of the proposed asset-level data points would require a sponsor to adjust its existing systems and procedures for capturing and reporting data. For each data point that required the sponsor to adjust its existing systems and procedures, a sponsor would expend at least 18 minutes per adjustment for each asset in the pool. We have revised our estimate to assume that before the first filing of asset-level information a sponsor will need to adjust its existing systems and procedures in some way for each required data point in order to provide the response to the data point based on our definitions and that each adjustment will require ten hours.
The burden estimate in the proposal for the initial filing of asset-level data included ten hours to tag and file the data with the Commission.
After a sponsor has made an initial filing of asset-level data, we estimate that each subsequent filing of asset-level data will take approximately 10 hours to prepare, review, tag and file the information. Based on the number of offerings after the first filing of asset-level data
Our current PRA burden estimate for Form S-3 is 136,392 annual burden hours. This estimate is based on the assumption that most disclosures required of the issuer are incorporated by reference from separately filed Exchange Act reports. However, because an Exchange Act reporting history is not a condition for Form S-3 eligibility for ABS, asset-backed issuers using Form S-3 often must present all of the relevant disclosure in the registration statement rather than incorporate relevant disclosure by reference. Thus, our current burden estimate for asset-backed issuers using Form S-3 under existing requirements is similar to our current burden estimate for asset-backed issuers using Form S-1. During 2004 through 2013, we received an average of 71 Form S-3 filings annually related to asset-backed securities.
Under the rules that we are adopting, we are moving the requirements for asset-backed issuers into new forms that will be used solely to register offerings of asset-backed securities. New Form SF-3 is the ABS equivalent of existing Form S-3. For purposes of our calculations, we estimate that the provisions relating to shelf eligibility will cause a 5% movement in the number of filers (i.e., a decrease of four registration statements) out of the shelf system due to the new requirements, which include the certification, the asset review provision, the dispute resolution provision, the investor communications provision, and the annual evaluations of compliance with timely Exchange Act reporting and timely filing of the transaction agreements and the related certifications.
In 2004, we estimated that an asset-backed issuer, under the 2004 amendments to Form S-3, would take an average of 1,250 hours to prepare a Form S-3 to register ABS.
We are also adopting additional disclosure requirements that will impose some additional costs to asset-backed issuers with respect to registration statements, which we have included as part of our burden estimate for Form SF-3. We do not believe, however, that the shelf eligibility requirements that we are adopting will substantially increase the burden hours
We estimate that the incremental burden for asset-backed issuers to complete the additional disclosure requirements for Form SF-3, prepare the information, and file it with the Commission will be 100 burden hours per response on Form SF-3. As a result, we estimate that each Form SF-3 will take approximately 1,380 hours to complete and file.
New Form SF-1 is the ABS equivalent of existing Form S-1. As noted above, for purposes of our calculation, we estimate that the new requirements for shelf eligibility and new shelf procedures will cause some movement in the number of filers from the shelf system to the non-shelf system. For purposes of the PRA, we estimate four asset-backed issuers will move from the shelf system to the non-shelf system of Form SF-1.
For ABS filings on Form S-1, we have used the same estimate of burden per response that we used for Form S-3, because the disclosures in both filings are similar.
The ongoing periodic and current reporting requirements applicable to operating companies differ substantially from the reporting that is most relevant to investors in asset-backed securities. For asset-backed issuers, in addition to a specified set of Form 10-K disclosure items, the issuer must file a servicer compliance statement, a servicer's assessment of compliance with servicing criteria, and an attestation of an independent public accountant as exhibits to the Form 10-K. In 2004, we estimated that 120 hours would be needed to complete and file a Form 10-K for an asset-backed issuer. We believe that our revisions related to the disclosure requirements for material instances of noncompliance will cause an increase in the number of hours incurred to prepare, review, and file Form 10-K by five hours. We estimate that, for Exchange Act reports, 75% of the burden of preparation is carried by the company internally and that 25% of the burden is carried by outside professionals retained by the registrant at an average rate of $400 per hour. We also estimate that 1,046 Form 10-K filings for asset-backed issuers are filed per year, based on the average number of Forms 10-K filed over the period 2004-2013. Therefore, we estimate for PRA purposes that the increase in total annual number of hours to prepare, review, and file Form 10-K for asset-backed issuers will be 5,230 hours.
In 2004, we adopted Form 10-D as a new form for only asset-backed issuers. This form is filed within 15 days of each required distribution date on the asset-backed securities, as specified in the governing documents for such securities. The form contains periodic distribution and pool performance information.
In 2004, we estimated that it would take 30 hours to complete and file Form 10-D.
Our current PRA estimate for Form 8-K is based on the use of the report to disclose the occurrence of certain defined reportable events, some of which are applicable to asset-backed securities. In the 2010 ABS Proposing Release, we noted three portions of the proposal which would cause an increase in the number of reports on Form 8-K for ABS issuers; however, we are not adopting any of those proposed requirements.
Regulation S-K, which includes the item requirements in Regulation AB, contains the requirements for disclosure that an issuer must provide in filings under both the Securities Act and the Exchange Act. As noted above, Regulation S-T contains the requirements that govern the electronic submission of documents.
The new rules and rule amendments that we are adopting will result in revisions to Regulation S-K and Regulation S-T. The collection of information requirements, however, are reflected in the burden hours estimated for the various Securities Act and Exchange Act forms related to asset-backed issuers. The rules in Regulation S-K and Regulation S-T do not impose any separate burden. Consistent with historical practice, we have retained an estimate of one burden hour each to Regulation S-T and Regulation S-K for administrative convenience.
The table below illustrates the changes in annual compliance burden in the collection of information in hours and costs for existing reports and registration statements and for the new registration statements and forms for asset-backed issuers. Bracketed numbers indicate a decrease in the estimate.
In Part XIV of the 2010 ABS Proposing Release and Part IX of the 2011 ABS Re-Proposing Release, we certified pursuant to 5 U.S.C. 605(b) that the new rules contained in this release would not have a significant economic impact on a substantial number of small entities. One commenter provided comments in response to the Commission's request for written comments regarding this certification.
We are adopting the new rules, forms and amendments contained in this document under the authority set forth in Sections 5, 6, 7, 8, 10, 19(a) and 28 of the Securities Act, Sections 12, 13, 15, 23(a), 35A and 36 of the Exchange Act, and Section 319 of the Trust Indenture Act.
Advertising, Reporting and recordkeeping requirements, Securities.
Reporting and recordkeeping requirements, Securities.
For the reasons set out above, Title 17, Chapter II of the Code of Federal Regulations is amended as follows:
15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 777iii, 77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78j-3,78
The additions read as follows:
(a) * * *
(5) * * *
(iii) If the registrant is relying on § 230.430D of this chapter:
(A) Each prospectus filed by the registrant pursuant to § 230.424(b)(3) and (h) of this chapter shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to § 230.424(b)(2), (b)(5), or (b)(7) of this chapter as part of a registration statement in reliance on § 230.430D of this chapter relating to an offering made pursuant to § 230.415(a)(1)(vii) or (a)(1)(xii) of this chapter for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 (15 U.S.C. 77j(a)) shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in § 230.430D of this chapter, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial
(7) If the registrant is relying on § 230.430D of this chapter, with respect to any offering of securities registered on Form SF-3 (§ 239.45 of this chapter), to file the information previously omitted from the prospectus filed as part of an effective registration statement in accordance with § 230.424(h) and § 230.430D of this chapter.
The additions read as follows:
(a) * * *
(b) * * *
(36)
I [identify the certifying individual] certify as of [the date of the final prospectus under § 230.424 of this chapter] that:
1. I have reviewed the prospectus relating to [title of all securities, the offer and sale of which are registered] (the “securities”) and am familiar with, in all material respects, the following: The characteristics of the securitized assets underlying the offering (the “securitized assets”), the structure of the securitization, and all material underlying transaction agreements as described in the prospectus;
2. Based on my knowledge, the prospectus does not contain any untrue statement of a material fact or omit to
3. Based on my knowledge, the prospectus and other information included in the registration statement of which it is a part fairly present, in all material respects, the characteristics of the securitized assets, the structure of the securitization and the risks of ownership of the securities, including the risks relating to the securitized assets that would affect the cash flows available to service payments or distributions on the securities in accordance with their terms; and
4. Based on my knowledge, taking into account all material aspects of the characteristics of the securitized assets, the structure of the securitization, and the related risks as described in the prospectus, there is a reasonable basis to conclude that the securitization is structured to produce, but is not guaranteed by this certification to produce, expected cash flows at times and in amounts to service scheduled payments of interest and the ultimate repayment of principal on the securities (or other scheduled or required distributions on the securities, however denominated) in accordance with their terms as described in the prospectus.
5. The foregoing certifications are given subject to any and all defenses available to me under the federal securities laws, including any and all defenses available to an executive officer that signed the registration statement of which the prospectus referred to in this certification is part.
[Signature]
[Title]
The certification must be signed by the chief executive officer of the depositor, as required by General Instruction I.B.1.(a) of Form SF-3.
(102)
(103)
(104) [Reserved].
(105) [Reserved]
(106)
The revisions read as follows:
(c)
(f)
The addition reads as follows:
(m)
(a) * * * Such identifying information should include a Central Index Key number for the depositor and the issuing entity, and if applicable, the sponsor.
(a) * * *
(2) * * *
The additions read as follows:
(f) If the sponsor is required to repurchase or replace any asset for breach of a representation and warranty pursuant to the transaction agreements, provide information regarding the sponsor's financial condition to the extent that there is a material risk that the effect on its ability to comply with the provisions in the transaction agreements relating to the repurchase obligations for those assets resulting from such financial condition could have a material impact on pool
(g) Describe any interest that the sponsor, or any affiliate of the sponsor, has retained in the transaction, including the amount and nature of that interest. Disclose any hedge (security specific or portfolio) materially related to the credit risk of the securities that was entered into by the sponsor or, if known, by an affiliate of the sponsor to offset the risk position held.
The additions and revisions read as follows:
Describe the static pool information presented. Provide appropriate introductory and explanatory information to introduce the characteristics, the methodology used in determining or calculating the characteristics and any terms or abbreviations used. Include a description of how the static pool differs from the pool underlying the securities being offered, such as the extent to which the pool underlying the securities being offered was originated with the same or differing underwriting criteria, loan terms, and risk tolerances than the static pools presented. In addition to a narrative description, the static pool information should be presented graphically if doing so would aid in understanding.
(a) * * *
(3) * * *
(ii) Present delinquency, cumulative loss and prepayment data for each prior securitized pool or vintage origination year, as applicable, over the life of the prior securitized pool or vintage origination year. The most recent periodic increment for the data must be as of a date no later than 135 days after the date of first use of the prospectus.
(iv) Provide graphical illustration of delinquencies, prepayments and losses for each prior securitized pool or by vintage origination year regarding originations or purchases by the sponsor, as applicable for that asset type.
(c) If the information that would otherwise be required by paragraph (a)(1), (a)(2) or (b) of this section is not material, but alternative static pool information would provide material disclosure, provide such alternative information instead. Similarly, information contemplated by paragraph (a)(1), (a)(2) or (b) of this section regarding a party or parties other than the sponsor may be provided in addition to or in lieu of such information regarding the sponsor if appropriate to provide material disclosure. In addition, provide other explanatory disclosure, including why alternative disclosure is being provided and explain the absence of any static pool information contemplated by paragraph (a)(1), (a)(2) or (b) of this section, as applicable.
The addition reads as follows:
(e) Describe any interest that the servicer, or any affiliate of the servicer, has retained in the transaction, including the amount and nature of that interest. Disclose any hedge (security specific or portfolio) materially related to the credit risk of the securities that was entered into by the servicer or, if known, by an affiliate of the servicer to offset the risk position held.
The revision and addition read as follows:
(a)
(b)
(1) State the asset representations reviewer's name and describe its form of organization.
(2) Describe to what extent the asset representations reviewer has had prior experience serving as an asset representations reviewer for asset-backed securities transactions involving similar pool assets.
(3) Describe the asset representations reviewer's duties and responsibilities regarding the asset-backed securities under the governing documents and under applicable law. In addition, describe any actions required of the asset representations reviewer, including whether notices are required to investors, rating agencies or other third parties, and any required percentage of a class or classes of asset-backed securities that is needed to require the asset representations reviewer to take action.
(4) Disclose the manner and amount in which the asset representations reviewer is compensated.
(5) Describe any limitations on the asset representations reviewer's liability under the transaction agreements regarding the asset-backed securities transaction.
(6) Describe any indemnification provisions that entitle the asset representations reviewer to be indemnified from the cash flow that otherwise would be used to pay holders of the asset-backed securities.
(7) Describe any contractual provisions or understandings regarding the asset representations reviewer's removal, replacement or resignation, as well as how the expenses associated with changing from one asset representations reviewer to another asset representations reviewer will be paid.
The additions read as follows:
(a) * * * Also identify any originator(s) originating less than 10% of the pool assets if the cumulative amount originated by parties other than the sponsor or its affiliates is more than 10% of the pool assets.
(b) * * *
(3) Describe any interest that the originator, or any affiliate of the originator, has retained in the transaction, including the amount and nature of that interest. Disclose any hedge (security specific or portfolio) materially related to the credit risk of the securities that was entered into by the originator or, if known, by an affiliate of the originator to offset the risk position held.
(c) For any originator identified under paragraph (b) of this section, if such originator is required to repurchase or replace a pool asset for breach of a representation and warranty pursuant to the transaction agreements, provide information regarding the originator's financial condition to the extent that there is a material risk that the effect on its ability to comply with the provisions in the transaction agreements relating to the repurchase obligations for those assets resulting from such financial condition could have a material impact on pool performance or performance of the asset-backed securities.
The revision and addition read as follows:
(e)
(1)
(2)
(h)
(2) File the disclosures as an Asset Data File (as defined in § 232.11 of this chapter) in the format required by the EDGAR Filer Manual. See § 232.301 of this chapter.
(3) File the Asset Data File as an exhibit to Form ABS-EE (§ 249.1401 of this chapter) in accordance with Item 601(b)(102) of Regulation S-K (§ 229.601(b)(102)).
(4) A registrant may provide additional explanatory disclosure related to an Asset Data File by filing an asset related document as an exhibit to Form ABS-EE (§ 249.1401 of this chapter) in accordance with Item 601(b)(103) of Regulation S-K (§ 229.601(b)(103)).
(5) A registrant may provide other asset-level information in addition to the information required by Schedule AL (§ 229.1125) by filing an asset related document as an exhibit to Form ABS-EE (§ 249.1401 of this chapter) in accordance with Item 601(b)(103) of Regulation S-K (§ 229.601(b)(103)). The asset related document(s) must contain the definitions and formulas for each additional data point and the related tagged data and may contain explanatory disclosure about each additional data point.
The addition reads as follows:
(a) * * *
(7) * * *
(i) Describe how the delinquency threshold that triggers a review by the asset representations reviewer was determined to be appropriate. In describing the appropriateness of such delinquency threshold, compare such delinquency threshold against the delinquencies disclosed for prior securitized pools of the sponsor for that asset type in accordance with Item 1105 of Regulation AB (§ 229.1105).
(ii) [Reserved]
(a) * * *
(7) Asset representations reviewer.
The revision and additions read as follows:
(a) * * *
(9) * * * Present historical delinquency and loss information in accordance with Item 1100(b) of this Regulation AB (§ 229.1100(b)) through no less than 120 days.
(d)
(i) A description of the event(s) that triggered the review during the distribution period; and
(ii) If the asset representations reviewer provided to the trustee during the distribution period a report of the findings and conclusions of the review, a summary of the report.
(2)
(e)
The revision and additions read as follows:
(c) * * * (1) If any party's report on assessment of compliance with servicing criteria required by paragraph (a) of this section, or related registered public accounting firm attestation report required by paragraph (b) of this section, identifies any material instance of noncompliance with the servicing criteria, identify the material instance of noncompliance in the report on Form 10-K (§ 249.310 of this chapter). Also disclose whether the identified instance was determined to have involved the servicing of the assets backing the asset-backed securities covered in this Form 10-K report.
(2) Discuss any steps taken to remedy a material instance of noncompliance previously identified by an asserting party for its activities with respect to asset-backed securities transactions taken as a whole involving such party and that are backed by the same asset type backing the asset-backed securities.
(d) * * *
(1) * * *
(v) Aggregation of information, as applicable, is mathematically accurate and the information conveyed accurately reflects the information.
Provide information about any material change in the sponsor's, or an affiliate's, interest in the securities resulting from the purchase, sale or other acquisition or disposition of the securities by the sponsor, or an affiliate, during the period covered by the report. Describe the change, including the amount of change and the sponsor's, or the affiliate's, resulting interest in the transaction after the change.
(a) The following definitions apply to the terms used in this schedule unless otherwise specified:
(b) As required by Item 1111(h) (§ 229.1111(h)), provide asset-level information for each asset or security in the pool in the manner specified in Appendix to § 229.1125.
Item 1. Residential mortgages. If the asset pool includes residential mortgages, provide the following data and the data under Item 1 for each loan in the asset pool:
(a)
(2) Asset number. Provide the unique ID number of the asset.
(3) Asset group number. For structures with multiple collateral groups, indicate the collateral group number in which the asset falls.
(b)
(2) Reporting period end date. Specify the ending date of the reporting period.
(c)
(2) Originator. Identify the name of the entity that originated the loan.
(3) Original loan amount. Indicate the amount of the loan at the time the loan was originated.
(4) Original loan maturity date. Indicate the month and year in which the final payment on the loan is scheduled to be made at the time the loan was originated.
(5) Original amortization term. Indicate the number of months that would have been required to retire the mortgage loan through regular payments, as determined at the origination date of the loan. In the case of an interest-only loan, the original amortization term is the original term to maturity (other than in the case of a balloon loan). In the case of a balloon loan, the original amortization term is the number of months used to calculate the principal and interest payment due each month (other than the balloon payment).
(6) Original interest rate. Provide the rate of interest at the time the loan was originated.
(7) Accrual type. Provide the code that describes the method used to calculate interest on the loan.
(8) Original interest rate type. Indicate whether the interest rate on the loan is fixed, adjustable, step or other.
(9) Original interest only term. Indicate the number of months in which the obligor is permitted to pay only interest on the loan beginning from when the loan was originated.
(10) Underwriting indicator. Indicate whether the loan or asset met the criteria for the first level of solicitation, credit-granting or underwriting criteria used to originate the pool asset.
(11) Original lien position. Indicate the code that describes the priority of the lien against the subject property at the time the loan was originated.
(12) Information related to junior liens. If the loan is a first mortgage with subordinate liens, provide the following additional information for each non-first mortgage if obtained or available:
(i) Most recent junior loan balance. Provide the most recent combined balance of any subordinate liens.
(ii) Date of most recent junior loan balance. Provide the date of the most recent junior loan balance.
(13) Information related to non-first mortgages. For non-first mortgages, provide the following information if obtained or available:
(i) Most recent senior loan amount. Provide the total amount of the balances of all associated senior loans.
(ii) Date of most recent senior loan amount. Provide the date(s) of the most recent senior loan amount.
(iii) Loan type of most senior lien. Indicate the code that describes the loan type of the first mortgage.
(iv) Hybrid period of most senior lien. For non-first mortgages where the associated first mortgage is a hybrid ARM, provide the number of months remaining in the initial fixed interest rate period for the first mortgage.
(v) Negative amortization limit of most senior lien. For non-first mortgages where the associated first mortgage features negative amortization, indicate the negative amortization limit of the mortgage as a percentage of the original unpaid principal balance.
(vi) Origination date of most senior lien. Provide the origination date of the associated first mortgage.
(14) Prepayment penalty indicator. Indicate yes or no as to whether the loan includes a penalty charged to the obligor in the event of a prepayment.
(15) Negative amortization indicator. Indicate yes or no as to whether the loan allows negative amortization.
(16) Modification indicator. Indicate yes or no as to whether the loan has been modified from its original terms.
(17) Number of modifications. Provide the number of times that the loan has been modified.
(18) Mortgage insurance requirement indicator. Indicate yes or no as to whether mortgage insurance is or was required as a condition for originating the loan.
(19) Balloon indicator. Indicate yes or no as to whether the loan documents require a lump-sum to fully pay off the loan.
(20) Covered/High cost loan indicator. Indicate yes, no or unknown as to whether as of the end of the reporting period the loan is categorized as “high cost,” “higher priced” or “covered” according to applicable federal, state or local statutes, ordinances or regulations.
(21) Servicer-placed hazard insurance. Indicate yes, no or unknown as to whether as of the end of the reporting period the hazard insurance on the property is servicer-placed.
(22) Refinance cash-out amount. For any refinance loan that is a cash-out refinance provide the amount the obligor received after all other loans to be paid by the mortgage proceeds have been satisfied. For any refinance loan that is a no-cash-out refinance provide the result of the following calculation: [NEW LOAN AMOUNT]−[PAID OFF FIRST MORTGAGE LOAN AMOUNT]−[PAID OFF SECOND MORTGAGE LOAN AMOUNT]−[CLOSING COSTS].
(23) Total origination and discount points. Provide the amount paid to the lender to increase the lender's effective yield and, in the case of discount points, to reduce the interest rate paid by the obligor.
(24) Broker. Indicate yes or no as to whether a broker originated or was involved in the origination of the loan.
(25) Channel. Specify the code that describes the source from which the issuer obtained the loan.
(26) NMLS company number. Specify the National Mortgage License System (NMLS) registration number of the company that originated the loan.
(27) Buy down period. Indicate the total number of months during which any buy down is in effect, representing the accumulation of all buy down periods.
(28) Loan delinquency advance days count. Indicate the number of days after which a servicer can stop advancing funds on a delinquent loan.
(29) Information related to ARMs. If the loan is an ARM, provide the following additional information:
(i) Original ARM Index. Specify the code that describes the type and source of index to be used to determine the interest rate at each adjustment.
(ii) ARM Margin. Indicate the number of percentage points that is added to the index value to establish the new interest rate at each interest rate adjustment date.
(iii) Fully indexed interest rate. Indicate the fully indexed interest rate to which the obligor was underwritten.
(iv) Initial fixed rate period for hybrid ARM. If the interest rate is initially fixed for a period of time, indicate the number of months between the first payment date of the loan and the first interest rate adjustment date.
(v) Initial interest rate decrease. Indicate the maximum percentage by which the interest rate may decrease at the first interest rate adjustment date.
(vi) Initial interest rate increase. Indicate the maximum percentage by which the interest rate may increase at the first interest rate adjustment date.
(vii) Index look-back. Provide the number of days prior to an interest rate effective date used to determine the appropriate index rate.
(viii) Subsequent interest rate reset period. Indicate the number of months between subsequent rate adjustments.
(ix) Lifetime rate ceiling. Indicate the percentage of the maximum interest rate that can be in effect during the life of the loan.
(x) Lifetime rate floor. Indicate the percentage of the minimum interest rate that can be in effect during the life of the loan.
(xi) Subsequent interest rate decrease. Provide the maximum number of percentage points by which the interest rate may decrease at each rate adjustment date after the initial adjustment.
(xii) Subsequent interest rate increase. Provide the maximum number of percentage points by which the interest rate may increase at each rate adjustment date after the initial adjustment.
(xiii) Subsequent payment reset period. Indicate the number of months between payment adjustments after the first interest rate adjustment date.
(xiv) ARM round indicator. Indicate the code that describes whether an adjusted interest rate is rounded to the next higher adjustable rate mortgage round factor, to the next lower round factor, or to the nearest round factor.
(xv) ARM round percentage. Indicate the percentage to which an adjusted interest rate is to be rounded.
(xvi) Option ARM indicator. Indicate yes or no as to whether the loan is an option ARM.
(xvii) Payment method after recast. Specify the code that describes the means of computing the lowest monthly payment available to the obligor after recast.
(xviii) Initial minimum payment. Provide the amount of the initial minimum payment the obligor is permitted to make.
(xix) Convertible indicator. Indicate yes or no as to whether the obligor of the loan has an option to convert an adjustable interest rate to a fixed interest rate during a specified conversion window.
(xx) HELOC indicator. Indicate yes or no as to whether the loan is a home equity line of credit (HELOC).
(xxi) HELOC draw period. Indicate the original maximum number of months from the month the loan was originated during
(30) Information related to prepayment penalties. If the obligor is subject to prepayment penalties, provide the following additional information:
(i) Prepayment penalty calculation. Specify the code that describes the method for calculating the prepayment penalty for the loan.
(ii) Prepayment penalty type. Specify the code that describes the type of prepayment penalty.
(iii) Prepayment penalty total term. Provide the total number of months after the origination of the loan that the prepayment penalty may be in effect.
(iv) Prepayment penalty hard term. For hybrid prepayment penalties, provide the number of months after the origination of the loan during which a “hard” prepayment penalty applies.
(31) Information related to negative amortization. If the loan allows for negative amortization, provide the following additional information:
(i) Negative amortization limit. Specify the maximum amount of negative amortization that is allowed before recalculating a fully amortizing payment based on the new loan balance.
(ii) Initial negative amortization recast period. Indicate the number of months after the origination of the loan that negative amortization is allowed.
(iii) Subsequent negative amortization recast period. Indicate the number of months after which the payment is required to recast after the first amortization recast period.
(iv) Negative amortization balance amount. Provide the amount of the negative amortization balance accumulated as of the end of the reporting period.
(v) Initial fixed payment period. Indicate the number of months after the origination of the loan during which the payment is fixed.
(vi) Initial periodic payment cap. Indicate the maximum percentage by which a payment can increase in the first amortization recast period.
(vii) Subsequent periodic payment cap. Indicate the maximum percentage by which a payment can increase in one amortization recast period after the initial cap.
(viii) Initial minimum payment reset period. Provide the maximum number of months after the origination of the loan that an obligor can initially pay the minimum payment before a new minimum payment is determined.
(ix) Subsequent minimum payment reset period. Provide the maximum number of months after the initial period an obligor can pay the minimum payment before a new minimum payment is determined.
(x) Minimum payment. Provide the amount of the minimum payment due during the reporting period.
(d)
(2) Occupancy status. Specify the code that describes the property occupancy status at the time the loan was originated.
(3) Most recent occupancy status. If a property inspection has been performed after the loan is originated, provide the code that describes the manner in which the property is occupied.
(4) Property type. Specify the code that describes the type of property that secures the loan.
(5) Most recent property value. If an additional property valuation was obtained by any transaction party or its affiliates after the original appraised property value, provide the most recent property value obtained.
(6) Most recent property valuation type. Specify the code that describes the method by which the most recent property value was reported.
(7) Most recent property valuation date. Specify the date on which the most recent property value was reported.
(8) Most recent AVM model name. Provide the code indicating the name of the AVM model if an AVM was used to determine the most recent property value.
(9) Most recent AVM confidence score. If an additional AVM was obtained by any transaction party or its affiliates after the original valuation, provide the confidence score presented on the most recent AVM report.
(10) Original combined loan-to-value. Provide the ratio obtained by dividing the amount of all known outstanding mortgage liens on a property at origination by the lesser of the original appraised property value or the sales price.
(11) Original loan-to-value. Provide the ratio obtained by dividing the amount of the original mortgage loan at origination by the lesser of the original appraised property value or the sales price.
(e)
(2) Original obligor credit score. Provide the standardized credit score of the obligor used to evaluate the obligor during the loan origination process.
(3) Original obligor credit score type. Specify the type of the standardized credit score used to evaluate the obligor during the loan origination process.
(4) Most recent obligor credit score. If an additional credit score was obtained by any transaction party or its affiliates after the original credit score, provide the most recently obtained standardized credit score of the obligor.
(5) Most recent obligor credit score type. Specify the type of the most recently obtained standardized credit score of the obligor.
(6) Date of most recent obligor credit score. Provide the date of the most recently obtained standardized credit score of the obligor.
(7) Obligor income verification level. Indicate the code describing the extent to which the obligor's income was verified during the loan origination process.
(8) 4506—T Indicator. Indicate yes or no whether a Transcript of Tax Return (received pursuant to the filing of IRS Form 4506-T) was obtained and considered.
(9) Originator front-end debt-to-income (DTI). Provide the front-end DTI ratio used by the originator to qualify the loan.
(10) Originator back-end DTI. Provide the back-end DTI ratio used by the originator to qualify the loan.
(11) Obligor employment verification. Indicate the code describing the extent to which the obligor's employment was verified during the loan origination process.
(12) Length of employment—obligor. Indicate whether the obligor was employed by its current employer for greater than 24 months at the time the loan was originated.
(13) Obligor asset verification. Indicate the code describing the extent to which the obligor's assets used to qualify the loan was verified during the loan origination process.
(14) Original pledged assets. If the obligor(s) pledged financial assets to the lender instead of making a down payment, provide the total value of assets pledged as collateral for the loan at the time of origination.
(15) Qualification method. Specify the code that describes the type of mortgage payment used to qualify the obligor for the loan.
(f)
(1) Mortgage insurance company name. Provide the name of the entity providing mortgage insurance for the loan.
(2) Mortgage insurance coverage. Indicate the total percentage of the original loan balance that is covered by mortgage insurance.
(3) Pool insurance company. Provide the name of the pool insurance provider.
(4) Pool insurance stop loss percent. Provide the aggregate amount that the pool insurance company will pay, calculated as a percentage of the pool balance.
(5) Mortgage insurance coverage plan type. Specify the code that describes the coverage category of the mortgage insurance applicable to the loan.
(g)
(2) Remaining term to maturity. Indicate the number of months from the end of the reporting period to the loan maturity date.
(3) Modification indicator—reporting period. Indicate yes or no whether the asset was modified during the reporting period.
(4) Next payment due date. For loans that have not been paid off, indicate the next payment due date.
(5) Advancing method. Specify the code that indicates a servicer's responsibility for advancing principal or interest on delinquent loans.
(6) Servicing advance methodology. Indicate the code that describes the manner in which principal and/or interest are advanced by the servicer.
(7) Stop principal and interest advance date. Provide the first payment due date for
(8) Reporting period beginning loan balance. Indicate the outstanding principal balance of the loan as of the beginning of the reporting period.
(9) Reporting period beginning scheduled loan balance. Indicate the scheduled principal balance of the loan as of the beginning of the reporting period.
(10) Next reporting period payment amount due. Indicate the total payment due to be collected in the next reporting period.
(11) Reporting period interest rate. Indicate the interest rate in effect during the reporting period.
(12) Next interest rate. For loans that have not been paid off, indicate the interest rate that is in effect for the next reporting period.
(13) Servicing fee—percentage. If the servicing fee is based on a percentage, provide the percentage used to calculate the aggregate servicing fee.
(14) Servicing fee—flat-fee. If the servicing fee is based on a flat-fee amount, indicate the monthly servicing fee paid to all servicers.
(15) Other assessed but uncollected servicer fees. Provide the cumulative amount of late charges and other fees that have been assessed by the servicer, but not paid by the obligor.
(16) Other loan-level servicing fee(s) retained by the servicer. Provide the amount of all other fees earned by loan administrators during the reporting period that reduced the amount of funds remitted to the issuing entity (including subservicing, master servicing, trustee fees, etc.).
(17) Scheduled interest amount. Indicate the interest payment amount that was scheduled to be collected during the reporting period.
(18) Other interest adjustments. Indicate any unscheduled interest adjustments during the reporting period.
(19) Scheduled principal amount. Indicate the principal payment amount that was scheduled to be collected during the reporting period.
(20) Other principal adjustments. Indicate any other amounts that caused the principal balance of the loan to be decreased or increased during the reporting period.
(21) Reporting period ending actual balance. Indicate the actual balance of the loan as of the end of the reporting period.
(22) Reporting period ending scheduled balance. Indicate the scheduled principal balance of the loan as of the end of the reporting period.
(23) Reporting period scheduled payment amount. Indicate the total payment amount that was scheduled to be collected during the reporting period (including all fees and escrows).
(24) Total actual amount paid. Indicate the total payment (including all escrows) paid to the servicer during the reporting period.
(25) Actual interest collected. Indicate the gross amount of interest collected during the reporting period, whether or not from the obligor.
(26) Actual principal collected. Indicate the amount of principal collected during the reporting period, whether or not from the obligor.
(27) Actual other amounts collected. Indicate the total of any amounts, other than principal and interest, collected during the reporting period, whether or not from the obligor.
(28) Paid through date. Provide the date the loan's scheduled principal and interest is paid through as of the end of the reporting period.
(29) Interest paid through date. Provide the date through which interest is paid with the payment received during the reporting period, which is the effective date from which interest will be calculated for the application of the next payment.
(30) Paid-in-full amount. Provide the scheduled loan “paid-in-full” amount (principal) (do not include the current month's scheduled principal). Applies to all liquidations and loan payoffs.
(31) Information related to servicer advances.
(i) Servicer advanced amount—principal. Provide the total amount the servicer advanced for the reporting period for due but unpaid principal on the loan.
(ii) Servicer advanced amounts repaid—principal. Provide the total amount of any payments made by the obligor during the reporting period that was applied to outstanding advances of due but unpaid principal on the loan.
(iii) Servicer advances cumulative—principal. Provide the outstanding cumulative amount of principal advances made by the servicer as of the end of the reporting period, including amounts advanced for the reporting period.
(iv) Servicer advanced amount—interest. Provide the total amount the servicer advanced for the reporting period for due but unpaid interest on the loan.
(v) Servicer advanced amounts repaid—interest. Provide the total amount of any payments made by the obligor during the reporting period that was applied to outstanding advances of due but unpaid interest on the loan.
(vi) Servicer advances cumulative—interest. Provide the outstanding cumulative amount of interest advances made by the servicer as of the end of the reporting period, including amounts advanced for the reporting period.
(vii) Servicer advanced amount—taxes and insurance. Provide the total amount the servicer advanced for the reporting period for due but unpaid property tax and insurance payments (escrow amounts).
(viii) Servicer advanced amount repaid—taxes and insurance. Provide the total amount of any payment made by the obligor during the reporting period that was applied to outstanding advances of due but unpaid escrow amounts.
(ix) Servicer advances cumulative—taxes and insurance. Provide the outstanding cumulative amount of escrow advances made by the servicer as of the end of the reporting period, including amounts advanced for the reporting period.
(x) Servicer advanced amount—corporate. Provide the total amount the servicer advanced for property inspection and preservation expenses for the reporting period.
(xi) Servicer advanced amount repaid—corporate. Provide the total amount of any payments made by the obligor during the reporting period that was applied to outstanding corporate advances.
(xii) Servicer advances cumulative—corporate. Provide the outstanding cumulative amount of corporate advances made by the servicer as of the end of the reporting period, including amounts advanced for the reporting period.
(32) Zero balance loans. If the loan balance was reduced to zero during the reporting period, provide the following additional information about the loan.
(i) Zero balance effective date. Provide the date on which the loan balance was reduced to zero.
(ii) Zero balance code. Provide the code that indicates the reason the loan's balance was reduced to zero.
(33) Most recent 12-month pay history. Provide the string that indicates the payment status per month listed from oldest to most recent.
(34) Number of payments past due. Indicate the number of payments the obligor is past due as of the end of the reporting period.
(35) Information related to activity on ARM loans. If the loan is an ARM, provide the following additional information.
(i) Rate at next reset. Provide the interest rate that will be used to determine the next scheduled interest payment, if known.
(ii) Next payment change date. Provide the next date that the amount of scheduled principal and/or interest is scheduled to change.
(iii) Next interest rate change date. Provide the next scheduled date on which the interest rate is scheduled to change.
(iv) Payment at next reset. Provide the principal and interest payment due after the next scheduled interest rate change, if known.
(v) Exercised ARM conversion option indicator. Indicate yes or no whether the obligor exercised an option to convert an ARM loan to a fixed interest rate loan during the reporting period.
(h)
(2) Most recent servicing transfer received date. If a loan's servicing has been transferred, provide the effective date of the most recent servicing transfer.
(3) Master servicer. Provide the name of the entity that served as master servicer during the reporting period, if applicable.
(4) Special servicer. Provide the name of the entity that served as special servicer during the reporting period, if applicable.
(5) Subservicer. Provide the name of the entity that served as a subservicer during the reporting period, if applicable.
(i)
(1) Status of asset subject to demand. Indicate the code that describes the status of the repurchase or replacement demand as of the end of the reporting period.
(2) Repurchase amount. Provide the amount paid to repurchase the loan from the pool.
(3) Demand resolution date. Indicate the date the loan repurchase or replacement demand was resolved.
(4) Repurchaser. Specify the name of the repurchaser.
(5) Repurchase or replacement reason. Indicate the code that describes the reason for the repurchase or replacement.
(j)
(1) Charged-off principal amount. Specify the total amount of uncollected principal charged off.
(2) Charged-off interest amount. Specify the total amount of uncollected interest charged off.
(k) [Reserved]
(l)
(m)
(1) Most recent loan modification event type. Specify the code that describes the most recent action that has resulted in a change or changes to the loan note terms.
(2) Effective date of the most recent loan modification. Provide the date on which the most recent modification of the loan has gone into effect.
(3) Post-modification maturity date. Provide the loan's maturity date as of the modification effective payment date.
(4) Post-modification interest rate type. Indicate whether the interest rate type on the loan after the modification is fixed, adjustable, step, or other.
(5) Post-modification amortization type. Indicate the amortization type after modification.
(6) Post-modification interest rate. Provide the interest rate in effect as of the modification effective payment date.
(7) Post-modification first payment date. Indicate the date of the first payment due after the loan modification.
(8) Post-modification loan balance. Provide the loan balance as of the modification effective payment date as reported on the modification documents.
(9) Post-modification principal and interest payment. Provide total principal and interest payment amount as of the modification effective payment date.
(10) Total capitalized amount. Provide the amount added to the principal balance of the loan due to the modification.
(11) Income verification indicator (at modification). Indicate yes or no whether a Transcript of Tax Return (received pursuant to the filing of IRS Form 4506-T) was obtained and considered during the loan modification process.
(12) Modification front-end DTI. Provide the front-end DTI ratio used to qualify the modification.
(13) Modification back-end DTI. Provide the back-end DTI ratio used to qualify the modification.
(14) Total deferred amount. Provide the deferred amount that is non-interest bearing.
(15) Forgiven principal amount (cumulative). Provide the total amount of all principal balance reductions as a result of loan modifications over the life of the loan.
(16) Forgiven principal amount (reporting period). Provide the total principal balance reduction as a result of a loan modification during the reporting period.
(17) Forgiven interest amount (cumulative). Provide the total amount of all interest forgiven as a result of loan modifications over the life of the loan.
(18) Forgiven interest amount (reporting period). Provide the total gross interest forgiven as a result of a loan modification during the reporting period.
(19) Actual ending balance—total debt owed. For a loan with principal forbearance, provide the sum of the actual ending balance field plus the principal deferred amount. For all other loans, provide the actual ending balance.
(20) Scheduled ending balance—total debt owed. For a loan with principal forbearance, provide the sum of the scheduled ending balance field plus the deferred amount. For all other loans, provide the scheduled ending balance.
(21) Information related to ARM loan modifications. If the loan was an ARM before and after the most recent modification, provide the following additional information:
(i) Post-modification ARM indicator. Indicate whether the loan's existing ARM parameters have changed per the modification agreement.
(ii) Post-modification ARM index. Specify the code that describes the index on which an adjustable interest rate is based as of the modification effective payment date.
(iii) Post-modification margin. Provide the margin as of the modification effective payment date. The margin is the number of percentage points added to the index to establish the new rate.
(iv) Post-modification interest reset period (if changed). Provide the number of months of the interest reset period of the loan as of the modification effective payment date.
(v) Post-modification next reset date. Provide the next interest reset date as of the modification effective payment date.
(vi) Post-modification index lookback. Provide the number of days prior to an interest rate effective date used to determine the appropriate index rate as of the modification effective payment date.
(vii) Post-modification ARM round indicator. Indicate the code that describes whether an adjusted interest rate is rounded to the next higher adjustable rate mortgage round factor, to the next lower round factor, or to the nearest round factor as of the modification effective payment date.
(viii) Post-modification ARM round percentage. Indicate the percentage to which an adjusted interest rate is to be rounded as of the modification effective payment date.
(ix) Post-modification initial minimum payment. Provide the amount of the initial minimum payment the obligor is permitted to make as of the modification effective payment date.
(x) Post-modification next payment adjustment date. Provide the due date on which the next payment adjustment is scheduled to occur for an ARM loan per the modification agreement.
(xi) Post-modification ARM payment recast frequency. Provide the payment recast frequency of the loan (in months) per the modification agreement.
(xii) Post-modification lifetime rate floor. Provide the minimum rate of interest that may be applied to an adjustable rate loan over the course of the loan's life as of the modification effective payment date.
(xiii) Post-modification lifetime rate ceiling. Provide the maximum rate of interest that may be applied to an adjustable rate loan over the course of the loan's life as of the modification effective payment date.
(xiv) Post-modification initial interest rate increase. Indicate the maximum percentage by which the interest rate may increase at the first interest rate adjustment date after the loan modification.
(xv) Post-modification initial interest rate decrease. Provide the maximum percentage by which the interest rate may adjust downward on the first interest rate adjustment date after the loan modification.
(xvi) Post-modification subsequent interest rate increase. Provide the maximum number of percentage points by which the rate may increase at each rate adjustment date after the initial rate adjustment as of the modification effective payment date.
(xvii) Post-modification subsequent interest rate decrease. Provide the maximum number of percentage points by which the interest rate may decrease at each rate adjustment date after the initial adjustment as of the modification effective payment date.
(xviii) Post-modification payment cap. Provide the percentage value by which a payment may increase or decrease in one period as of the modification effective payment date.
(xix) Post-modification payment method after recast. Specify the code that describes the means of computing the lowest monthly payment available to the obligor after recast as of the modification effective payment date.
(xx) Post-modification ARM interest rate teaser period. Provide the duration in months that the teaser interest rate is in effect as of the modification effective payment date.
(xxi) Post-modification payment teaser period. Provide the duration in months that the teaser payment is in effect as of the modification effective payment date.
(xxii) Post-modification ARM negative amortization indicator. Indicate yes or no whether a negative amortization feature is
(xxiii) Post-modification ARM negative amortization cap. Provide the maximum percentage of negative amortization allowed on the loan as of the modification effective payment date.
(22) Information related to loan modifications involving interest-only periods. If the loan terms for the most recent loan modification include an interest only period, provide the following additional information:
(i) Post-modification interest-only term. Provide the number of months of the interest-only period from the modification effective payment date.
(ii) Post-modification interest-only last payment date. Provide the date of the last interest-only payment as of the modification effective payment date.
(23) Post-modification balloon payment amount. Provide the new balloon payment amount due at maturity as a result of the loan modification, not including deferred amounts.
(24) Information related to step loans. If the loans terms for the most recent loan modification agreement call for the interest rate to step up over time, provide the following additional information:
(i) Post-modification interest rate step indicator. Indicate whether the terms of the modification agreement call for the interest rate to step up over time.
(ii) Post-modification step interest rate. Provide the rate(s) that will apply at each change date as stated in the loan modification agreement. All rates must be provided, not just the first change rate, unless there is only a single change date.
(iii) Post-modification step date. Provide the date(s) at which the next rate and/or payment change will occur per the loan modification agreement. All dates must be provided, not just the first change, unless there is only a single change date.
(iv) Post-modification—step principal and interest. Provide the principal and interest payment(s) that will apply at each change date as stated in the loan modification agreement. All payments must be provided, not just the first change payment, unless there is only a single change date.
(v) Post-modification—number of steps. Provide the total number of step rate adjustments under the step agreement.
(vi) Post-modification maximum future rate under step agreement. Provide the maximum interest rate to which the loan will step up.
(vii) Post-modification date of maximum rate under step agreement. Provide the date on which the maximum interest rate will be reached.
(25) Non-interest bearing principal deferred amount (cumulative). Provide the total amount of principal deferred (or forborne) by the modification that is not subject to interest accrual.
(26) Non-interest bearing principal deferred amount (reporting period). Provide the total amount of principal deferred by the modification that is not subject to interest accrual.
(27) Recovery of deferred principal (reporting period). Provide the amount of deferred principal collected from the obligor during the reporting period.
(28) Non-interest bearing deferred paid-in-full amount. If the loan had a principal forbearance and was paid in full or liquidated, provide the amount paid towards the amount of the principal forbearance.
(29) Non-interest bearing deferred interest and fees amount (reporting period). Provide the total amount of interest and expenses deferred by the modification that is not subject to interest accrual during the reporting period.
(30) Non-interest bearing deferred interest and fees amount (cumulative). Provide the total amount of interest and expenses deferred by the modification that is not subject to interest accrual.
(31) Recovery of deferred interest and fees (reporting period). Provide the amount of deferred interest and fees collected during the reporting period.
(n)
(1) Most recent forbearance plan or trial modification start date. Provide the date on which a payment change pursuant to the most recent forbearance plan or trial modification started.
(2) Most recent forbearance plan or trial modification scheduled end date. Provide the date on which a payment change pursuant to the most recent forbearance plan or trial modification is scheduled to end.
(3) Most recent trial modification violated date. Provide the date on which the obligor ceased complying with the terms of the most recent trial modification.
(o)
(1) Most recent repayment plan start date. Provide the date on which the most recent repayment plan started.
(2) Most recent repayment plan scheduled end date. Provide the date on which the most recent repayment plan is scheduled to end.
(3) Most recent repayment plan violated date. Provide the date on which the obligor ceased complying with the terms of the most recent repayment plan.
(p)
(1) Short sale accepted offer amount. Provide the amount accepted for a pending short sale.
(2) [Reserved]
(q)
(1) Most recent loss mitigation exit date. Provide the date on which the servicer deemed the most recent loss mitigation effort to have ended.
(2) Most recent loss mitigation exit code. Indicate the code that describes the reason the most recent loss mitigation effort ended.
(r)
(1) Attorney referral date. Provide the date on which the loan was referred to a foreclosure attorney.
(2) Foreclosure delay reason. Indicate the code that describes the reason for delay within the foreclosure process.
(3) Foreclosure exit date. If the loan exited foreclosure during the reporting period, provide the date on which the loan exited foreclosure.
(4) Foreclosure exit reason. If the loan exited foreclosure during the reporting period, indicate the code that describes the reason the foreclosure proceeding ended.
(5) NOI Date. If a notice of intent (NOI) has been sent, provide the date on which the servicer sent the NOI correspondence to the obligor informing the obligor of the acceleration of the loan and pending initiation of foreclosure action.
(s)
(1) Most recent accepted REO offer amount. If an REO offer has been accepted, provide the amount accepted for the REO sale.
(2) Most recent accepted REO offer date. If an REO offer has been accepted, provide the date on which the REO sale amount was accepted.
(3) Gross liquidation proceeds. If the REO sale has closed, provide the gross amount due to the issuing entity as reported on Line 420 of the HUD-1 settlement statement.
(4) Net sales proceeds. If the REO sale has closed, provide the net proceeds received from the escrow closing (before servicer reimbursement).
(5) Reporting period loss amount passed to issuing entity. Provide the cumulative loss amount passed through to the issuing entity during the reporting period, including subsequent loss adjustments and any forgiven principal as a result of a modification that was passed through to the issuing entity.
(6) Cumulative total loss amount passed to issuing entity. Provide the loss amount passed through to the issuing entity to date, including any forgiven principal as a result of a modification that was passed through to the issuing entity.
(7) Subsequent recovery amount. Provide the reporting period amount recovered subsequent to the initial gain/loss recognized at the time of liquidation.
(8) Eviction indicator. Indicate whether an eviction process has begun.
(9) REO exit date. If the loan exited REO during the reporting period, provide the date on which the loan exited REO status.
(10) REO exit reason. If the loan exited REO during the reporting period, indicate the code that describes the reason the loan exited REO status.
(t)
(1) Information related to loss claims.
(i) UPB at liquidation. Provide the actual unpaid principal balance (UPB) at the time of liquidation.
(ii) Servicing fees claimed. Provide the amount of accrued servicing fees claimed at time of servicer reimbursement after liquidation.
(iii) Servicer advanced amounts reimbursed—principal. Provide the total amount of unpaid principal advances made by the servicer that were reimbursed to the servicer.
(iv) Servicer advanced amounts reimbursed—interest. Provide the total amount of unpaid interest advances made by the servicer that were reimbursed to the servicer.
(v) Servicer advanced amount reimbursed—taxes and insurance. Provide the total amount of any unpaid escrow amounts advanced by the servicer that were reimbursed to the servicer.
(vi) Servicer advanced amount reimbursed—corporate. Provide the total amount of any outstanding advances of property inspection and preservation expenses made by the servicer that were reimbursed to the servicer.
(vii) REO management fees. If the loan is in REO, provide the total amount of REO management fees (including auction fees) paid over the life of the loan.
(viii) Cash for keys/cash for deed. Provide the total amount paid to the obligor or tenants in exchange for vacating the property, or the payment to the obligor to accelerate a deed-in-lieu process or complete a redemption period.
(ix) Performance incentive fees. Provide the total amount paid to the servicer in exchange for carrying out a deed-in-lieu or short sale or similar activities.
(2) [Reserved]
(u)
(1) MI claim filed date. Provide the date on which the servicer filed an MI claim.
(2) MI claim amount. Provide the amount of the MI claim filed by the servicer.
(3) MI claim paid date. If the MI claim has been paid, provide the date on which the MI company paid the MI claim.
(4) MI claim paid amount. If the MI claim has been decided, provide the amount of the claim paid by the MI company.
(5) MI claim denied/rescinded date. If the MI claim has been denied or rescinded, provide the final MI denial date after all servicer appeals.
(6) Marketable title transferred date. If the deed for the property has been conveyed to the MI company, provide the date of actual title conveyance to the MI company.
(v)
(2) Reporting action code. Further indicate the code that defines the default/delinquent status of the loan.
Item 2. Commercial mortgages. If the asset pool includes commercial mortgages, provide the following data for each loan in the asset pool:
(a)
(2) Asset number. Provide the unique ID number of the asset.
(3) Group ID. Indicate the alpha-numeric code assigned to each loan group within a securitization.
(b)
(2) Reporting period end date. Specify the ending date of the reporting period.
(c)
(2) Origination date. Provide the date the loan was originated.
(3) Original loan amount. Indicate the amount of the loan at the time the loan was originated.
(4) Original loan term. Indicate the term of the loan in months at the time the loan was originated.
(5) Maturity date. Indicate the date the final scheduled payment is due per the loan documents.
(6) Original amortization term. Indicate the number of months that would have been required to retire the loan through regular payments, as determined at the origination date of the loan.
(7) Original interest rate. Provide the rate of interest at the time the loan was originated.
(8) Interest rate at securitization. Indicate the annual gross interest rate used to calculate interest for the loan as of securitization.
(9) Interest accrual method. Provide the code that indicates the “number of days” convention used to calculate interest.
(10) Original interest rate type. Indicate whether the interest rate on the loan is fixed, adjustable, step or other.
(11) Original interest-only term. Indicate the number of months in which the obligor is permitted to pay only interest on the loan.
(12) First loan payment due date. Provide the date on which the borrower must pay the first full interest and/or principal payment due on the mortgage in accordance with the loan documents.
(13) Underwriting indicator. Indicate whether the loan or asset met the criteria for the first level of solicitation, credit-granting or underwriting criteria used to originate the pool asset.
(14) Lien position at securitization. Indicate the code that describes the lien position for the loan as of securitization.
(15) Loan structure. Indicate the code that describes the type of loan structure including the seniority of participated mortgage loan components. The code relates to the loan within the securitization.
(16) Payment type. Indicate the code that describes the type or method of payment for a loan.
(17) Periodic principal and interest payment at securitization. Provide the total amount of principal and interest due on the loan in effect as of securitization.
(18) Scheduled principal balance at securitization. Indicate the outstanding scheduled principal balance of the loan as of securitization.
(19) Payment frequency. Indicate the code that describes the frequency mortgage loan payments are required to be made.
(20) Number of properties at securitization. Provide the number of properties which serve as mortgage collateral for the loan as of securitization.
(21) Number of properties. Provide the number of properties which serve as mortgage collateral for the loan as of the end of the reporting period.
(22) Grace days allowed. Provide the number of days after a mortgage payment is due in which the lender will not require a late payment charge in accordance with the loan documents. Does not include penalties associated with default interest.
(23) Interest only indicator. Indicate yes or no whether this is a loan for which scheduled interest only is payable, whether for a temporary basis or until the full loan balance is due.
(24) Balloon indicator. Indicate yes or no whether the loan documents require a lump-sum payment of principal at maturity.
(25) Prepayment premium indicator. Indicate yes or no whether the obligor is subject to prepayment penalties.
(26) Negative amortization indicator. Indicate yes or no whether negative amortization (interest shortage) amounts are permitted to be added back to the unpaid principal balance of the loan if monthly payments should fall below the true amortized amount.
(27) Modification indicator. Indicate yes or no whether the loan has been modified from its original terms.
(28) Information related to ARMs. If the loan is an ARM, provide the following additional information for each loan:
(i) ARM index. Specify the code that describes the index on which an adjustable interest rate is based.
(ii) First rate adjustment date. Provide the date on which the first interest rate adjustment becomes effective (subsequent to loan securitization).
(iii) First payment adjustment date. Provide the date on which the first adjustment to the regular payment amount becomes effective (after securitization).
(iv) ARM margin. Indicate the spread added to the index of an ARM loan to determine the interest rate at securitization.
(v) Lifetime rate cap. Indicate the maximum interest rate that can be in effect during the life of the loan.
(vi) Lifetime rate floor. Indicate the minimum interest rate that can be in effect during the life of the loan.
(vii) Periodic rate increase limit. Provide the maximum amount the interest rate can increase from any period to the next.
(viii) Periodic rate decrease limit. Provide the maximum amount the interest rate can decrease from any period to the next.
(ix) Periodic pay adjustment maximum amount. Provide the maximum amount the principal and interest constant can increase or decrease on any adjustment date.
(x) Periodic pay adjustment maximum percentage. Provide the maximum percentage amount the payment can increase or decrease from any period to the next.
(xi) Rate reset frequency. Indicate the code describing the frequency which the periodic mortgage rate is reset due to an adjustment in the ARM index.
(xii) Pay reset frequency. Indicate the code describing the frequency which the periodic mortgage payment will be adjusted.
(xiii) Index look back in days. Provide the number of days prior to an interest rate adjustment effective date used to determine the appropriate index rate.
(29) Information related to prepayment penalties. If the obligor is subject to prepayment penalties, provide the following additional information for each loan:
(i) Prepayment lock-out end date. Provide the effective date after which the lender allows prepayment of a loan.
(ii) Yield maintenance end date. Provide the date after which yield maintenance prepayment penalties are no longer effective.
(iii) Prepayment premium end date. Provide the effective date after which prepayment premiums are no longer effective.
(30) Information related to negative amortization. If the loan allows for negative amortization, provide the following additional information for each loan:
(i) Maximum negative amortization allowed (% of original balance). Provide the maximum percentage of the original loan balance that can be added to the original loan balance as the result of negative amortization.
(ii) Maximum negative amortization allowed. Provide the maximum amount of the original loan balance that can be added to the original loan balance as the result of negative amortization.
(iii) Negative amortization/deferred interest capitalized amount. Indicate the amount for the reporting period that was capitalized (added to) the principal balance.
(iv) Deferred interest—cumulative. Indicate the cumulative deferred interest for the reporting period and prior reporting cycles net of any deferred interest collected.
(v) Deferred interest collected. Indicate the amount of deferred interest collected during the reporting period.
(d)
(1) Property name. Provide the name of the property which serves as mortgage collateral. If the property has been defeased, then populate with “defeased.”
(2) Property address. Specify the address of the property which serves as mortgage collateral. If multiple properties, then print “various.” If the property has been defeased then leave field empty. For substituted properties, populate with the new property information.
(3) Property city. Specify the city name where the property which serves as mortgage collateral is located. If the property has been defeased, then leave field empty.
(4) Property state. Indicate the two character abbreviated code representing the state in which the property which serves as mortgage collateral is located.
(5) Property zip code. Indicate the zip (or postal) code for the property which serves as mortgage collateral.
(6) Property county. Indicate the county in which the property which serves as mortgage collateral is located.
(7) Property type. Indicate the code that describes how the property is being used.
(8) Net rentable square feet. Provide the net rentable square feet area of the property.
(9) Net rentable square feet at securitization. Provide the net rentable square feet area of the property as determined at the time the property is contributed to the pool as collateral.
(10) Number of units/beds/rooms. If the property type is multifamily, self-storage, healthcare, lodging or mobile home park, provide the number of units/beds/rooms of the property.
(11) Number of units/beds/rooms at securitization. If the property type is multifamily, self-storage, healthcare, lodging or mobile home park, provide the number of units/beds/rooms of the property at securitization.
(12) Year built. Provide the year that the property was built.
(13) Year last renovated. Provide the year that the last major renovation/new construction was completed on the property.
(14) Valuation amount at securitization. Provide the valuation amount of the property as of the valuation date at securitization.
(15) Valuation source at securitization. Specify the code that identifies the source of the property valuation.
(16) Valuation date at securitization. Provide the date the valuation amount at securitization was determined.
(17) Most recent value. If an additional property valuation was obtained by any transaction party or its affiliates after the valuation obtained at securitization, provide the most recent valuation amount.
(18) Most recent valuation date. Provide the date of the most recent valuation.
(19) Most recent valuation source. Specify the code that identifies the source of the most recent property valuation.
(20) Physical occupancy at securitization. Provide the percentage of rentable space occupied by tenants.
(21) Most recent physical occupancy. Provide the most recent available percentage of rentable space occupied by tenants.
(22) Property status. Provide the code that describes the status of the property.
(23) Defeasance option start date. Provide the date when the defeasance option becomes available.
(24) Defeasance status. Provide the code that indicates if a loan has or is able to be defeased.
(25) Largest tenant.
(i) Largest tenant. Identify the tenant that leases the largest square feet of the property based on the most recent annual lease rollover review.
(ii) Square feet of largest tenant. Provide total number of square feet leased by the largest tenant based on the most recent annual lease rollover review.
(iii) Date of lease expiration of largest tenant. Provide the date of lease expiration for the largest tenant.
(26) Second largest tenant.
(i) Second largest tenant. Identify the tenant that leases the second largest square feet of the property based on the most recent annual lease rollover review.
(ii) Square feet of second largest tenant. Provide the total number of square feet leased by the second largest tenant based on the most recent annual lease rollover review.
(iii) Date of lease expiration of second largest tenant. Provide the date of lease expiration for the second largest tenant.
(27) Third largest tenant.
(i) Third largest tenant. Identify the tenant that leases the third largest square feet of the property based on the most recent annual lease rollover review.
(ii) Square feet of third largest tenant. Provide the total number square feet leased by the third largest tenant based on the most recent annual lease rollover review.
(iii) Date of lease expiration of third largest tenant. Provide the date of lease expiration for the third largest tenant.
(28) Financial information related to the property. Provide the following information as of the most recent date available:
(i) Date of financials as of securitization. Provide the date of the operating statement for the property used to underwrite the loan.
(ii) Most recent financial as of start date. Specify the first date of the period for the most recent, hard copy operating statement (e.g., year-to-date or trailing 12 months).
(iii) Most recent financial as of end date. Specify the last day of the period for the most recent, hard copy operating statement (e.g., year-to-date or trailing 12 months).
(iv) Revenue at securitization. Provide the total underwritten revenue amount from all sources for a property as of securitization.
(v) Most recent revenue. Provide the total revenues for the most recent operating statement reported.
(vi) Operating expenses at securitization. Provide the total underwritten operating expenses as of securitization. Include real estate taxes, insurance, management fees, utilities, and repairs and maintenance. Exclude capital expenditures, tenant improvements, and leasing commissions.
(vii) Operating expenses. Provide the total operating expenses for the most recent operating statement. Include real estate taxes, insurance, management fees, utilities, and repairs and maintenance. Exclude capital expenditures, tenant improvements, and leasing commissions.
(viii) Net operating income at securitization. Provide the total underwritten revenues less total underwritten operating expenses prior to application of mortgage payments and capital items for all properties as of securitization.
(ix) Most recent net operating income. Provide the total revenues less total operating expenses before capital items and debt service per the most recent operating statement.
(x) Net cash flow at securitization. Provide the total underwritten revenue less total underwritten operating expenses and capital costs as of securitization.
(xi) Most recent net cash flow. Provide the total revenue less the total operating expenses and capital costs but before debt service per the most recent operating statement.
(xii) Net operating income or net cash flow indicator at securitization. Indicate the code that describes the method used to calculate at securitization net operating income or net cash flow.
(xiii) Net operating income or net cash flow indicator. Indicate the code that describes the method used to calculate net operating income or net cash flow.
(xiv) Most recent debt service amount. Provide the amount of total scheduled or actual payments that cover the same number of months as the most recent financial operating statement.
(xv) Debt service coverage ratio (net operating income) at securitization. Provide the ratio of underwritten net operating income to debt service as of securitization.
(xvi) Most recent debt service coverage ratio (net operating income). Provide the ratio of net operating income to debt service during the most recent operating statement reported.
(xvii) Debt service coverage ratio (net cash flow) at securitization. Provide the ratio of underwritten net cash flow to debt service as of securitization.
(xviii) Most recent debt service coverage ratio (net cash flow). Provide the ratio of net cash flow to debt service for the most recent financial operating statement.
(xix) Debt service coverage ratio indicator at securitization. If there are multiple properties underlying the loan, indicate the code that describes how the debt service coverage ratio was calculated.
(xx) Most recent debt service coverage ratio indicator. Indicate the code that describes how the debt service coverage ratio was calculated for the most recent financial operating statement.
(xxi) Date of the most recent annual lease rollover review. Provide the date of the most recent annual lease rollover review.
(e)
(2) Modification indicator—reporting period. Indicate yes or no whether the loan was modified during the reporting period.
(3) Reporting period beginning scheduled loan balance. Indicate the scheduled balance as of the beginning of the reporting period.
(4) Total scheduled principal and interest due. Provide the total amount of principal and interest due on the loan in the month corresponding to the current distribution date.
(5) Reporting period interest rate. Indicate the annualized gross interest rate used to calculate the scheduled interest amount due for the reporting period.
(6) Servicer and trustee fee rate. Indicate the sum of annual fee rates payable to the servicers and trustee.
(7) Scheduled interest amount. Provide the amount of gross interest payment that was scheduled to be collected during the reporting period.
(8) Other interest adjustment. Indicate any unscheduled interest adjustments during the reporting period.
(9) Scheduled principal amount. Indicate the principal payment amount that was scheduled to be collected during the reporting period.
(10) Unscheduled principal collections. Provide the principal prepayments and other unscheduled payments of principal received on the loan during the reporting period.
(11) Other principal adjustments. Indicate any other amounts that caused the principal balance of the loan to be decreased or increased during the reporting period, which are not considered unscheduled principal collections and are not scheduled principal amounts.
(12) Reporting period ending actual balance. Indicate the outstanding actual balance of the loan as of the end of the reporting period.
(13) Reporting period ending scheduled balance. Indicate the scheduled or stated principal balance for the loan (as defined in the servicing agreement) as of the end of the reporting period.
(14) Paid through date. Provide the date the loan's scheduled principal and interest is paid through as of the end of the reporting period.
(15) Hyper-amortizing date. Provide the date after which principal and interest may amortize at an accelerated rate, and/or interest expense to the mortgagor increases substantially.
(16) Information related to servicer advances.
(i) Servicing advance methodology. Indicate the code that describes the manner in which principal and/or interest are advanced by the servicer.
(ii) Non-recoverability determined. Indicate yes or no whether the master servicer/special servicer has ceased advancing principal and interest and/or servicing the loan.
(iii) Total principal and interest advance outstanding. Provide the total outstanding principal and interest advances made (or scheduled to be made by the distribution date) by the servicer(s).
(iv) Total taxes and insurance advances outstanding. Provide the total outstanding tax and insurance advances made by the servicer(s) as of the end of the reporting period.
(v) Other expenses advance outstanding. Provide the total outstanding other or miscellaneous advances made by the servicer(s) as of the end of the reporting period.
(17) Payment status of loan. Provide the code that indicates the payment status of the loan.
(18) Information related to activity on ARM loans. If the loan is an ARM, provide the following additional information:
(i) ARM index rate. Provide the index rate used to determine the gross interest for the reporting period.
(ii) Next interest rate. Provide the annualized gross interest rate that will be used to determine the next scheduled interest payment.
(iii) Next interest rate change adjustment date. Provide the next date that the interest rate is scheduled to change.
(iv) Next payment adjustment date. Provide the date that the amount of scheduled principal and/or interest is next scheduled to change.
(f)
(2) Most recent special servicer transfer date. Provide the date the transfer letter, email, etc. provided by the master servicer is accepted by the special servicer.
(3) Most recent master servicer return date. Provide the date of the return letter, email, etc. provided by the special servicer which is accepted by the master servicer.
(g)
(1) Status of asset subject to demand. If the loan is the subject of a demand to repurchase or replace for breach of representations and warranties, including investor demands upon a trustee, indicate the code that describes the status of the repurchase demand as of the end of the reporting period.
(2) Repurchase amount. Provide the amount paid to repurchase the loan from the pool.
(3) Demand resolution date. Indicate the date the loan repurchase or replacement demand was resolved.
(4) Repurchaser. Specify the name of the repurchaser.
(5) Repurchase or replacement reason. Indicate the code that describes the reason for the repurchase.
(h)
(i)
(1) Liquidation/Prepayment code. Indicate the code assigned to any unscheduled principal payments or liquidation proceeds received during the reporting period.
(2) Liquidation/Prepayment date. Provide the effective date on which an unscheduled principal payment or liquidation proceeds were received.
(3) Prepayment premium/yield maintenance received. Indicate the amount received from a borrower during the reporting period in exchange for allowing a borrower to pay off a loan prior to the maturity or anticipated repayment date.
(j)
(k)
(1) Date of last modification. Indicate the date of the most recent modification. A modification includes any material change to the loan document, excluding assumptions.
(2) Modification code. Indicate the code that describes the type of loan modification.
(3) Post-modification interest rate. Indicate the new initial interest rate to which the loan was modified.
(4) Post-modification payment amount. Indicate the new initial principal and interest payment amount to which the loan was modified.
(5) Post-modification maturity date. Indicate the new maturity date of the loan after the modification.
(6) Post-modification amortization period. Indicate the new amortization period in months after the modification.
Item 3. Automobile loans. If the asset pool includes automobile loans, provide the following data for each loan in the asset pool:
(a)
(2) Asset number. Provide the unique ID number of the asset.
(b)
(2) Reporting period end date. Specify the ending date of the reporting period.
(c)
(2) Origination date. Provide the date the loan was originated.
(3) Original loan amount. Indicate the amount of the loan at the time the loan was originated.
(4) Original loan term. Indicate the term of the loan in months at the time the loan was originated.
(5) Loan maturity date. Indicate the month and year in which the final payment on the loan is scheduled to be made.
(6) Original interest rate. Provide the rate of interest at the time the loan was originated.
(7) Interest calculation type. Indicate whether the interest rate calculation method is simple or other.
(8) Original interest rate type. Indicate whether the interest rate on the loan is fixed, adjustable or other.
(9) Original interest-only term. Indicate the number of months from origination in which the obligor is permitted to pay only interest on the loan beginning from when the loan was originated.
(10) Original first payment date. Provide the date of the first scheduled payment that was due after the loan was originated.
(11) Underwriting indicator. Indicate whether the loan or asset met the criteria for the first level of solicitation, credit-granting or underwriting criteria used to originate the pool asset.
(12) Grace period. Indicate the number of months during which interest accrues but no payments are due from the obligor.
(13) Payment type. Specify the code indicating how often payments are required or if a balloon payment is due.
(14) Subvented. Indicate yes or no to whether a form of subsidy is received on the loan, such as cash incentives or favorable financing for the buyer.
(d)
(2) Vehicle model. Provide the name of the model of the vehicle.
(3) New or used. Indicate whether the vehicle financed is new or used at the time of origination.
(4) Model year. Indicate the model year of the vehicle.
(5) Vehicle type. Indicate the code describing the vehicle type.
(6) Vehicle value. Indicate the value of the vehicle at the time of origination.
(7) Source of vehicle value. Specify the code that describes the source of the vehicle value.
(e)
(2) Obligor credit score. Provide the standardized credit score of the obligor used to evaluate the obligor during the loan origination process.
(3) Obligor income verification level. Indicate the code describing the extent to which the obligor's income was verified during the loan origination process.
(4) Obligor employment verification. Indicate the code describing the extent to which the obligor's employment was verified during the loan origination process.
(5) Co-obligor present indicator. Indicate whether the loan has a co-obligor.
(6) Payment-to-income ratio. Provide the scheduled monthly payment amount as a percentage of the total monthly income of the obligor and any other obligor at the origination date. Provide the methodology for determining monthly income in the prospectus.
(7) Geographic location of obligor. Specify the location of the obligor by providing the current U.S. state or territory.
(f)
(2) Remaining term to maturity. Indicate the number of months from the end of the reporting period to the loan maturity date.
(3) Modification indicator—reporting period. Indicates yes or no whether the asset was modified from its original terms during the reporting period.
(4) Servicing advance method. Specify the code that indicates a servicer's responsibility for advancing principal or interest on delinquent loans.
(5) Reporting period beginning loan balance. Indicate the outstanding principal balance of the loan as of the beginning of the reporting period.
(6) Next reporting period payment amount due. Indicate the total payment due to be collected in the next reporting period.
(7) Reporting period interest rate. Indicate the current interest rate for the loan in effect during the reporting period.
(8) Next interest rate. For loans that have not been paid off, indicate the interest rate that is in effect for the next reporting period.
(9) Servicing fee—percentage. If the servicing fee is based on a percentage, provide the percentage used to calculate the aggregate servicing fee.
(10) Servicing fee—flat-fee. If the servicing fee is based on a flat-fee amount, indicate the monthly servicing fee paid to all servicers.
(11) Other loan-level servicing fee(s) retained by servicer. Provide the amount of all other fees earned by loan administrators that reduce the amount of funds remitted to the issuing entity (including subservicing, master servicing, trustee fees, etc.).
(12) Other assessed but uncollected servicer fees. Provide the cumulative amount of late charges and other fees that have been assessed by the servicer, but not paid by the obligor.
(13) Scheduled interest amount. Indicate the interest payment amount that was scheduled to be collected during the reporting period.
(14) Scheduled principal amount. Indicate the principal payment amount that was scheduled to be collected during the reporting period.
(15) Other principal adjustments. Indicate any other amounts that caused the principal balance of the loan to be decreased or increased during the reporting period.
(16) Reporting period ending actual balance. Indicate the actual balance of the loan as of the end of the reporting period.
(17) Reporting period scheduled payment amount. Indicate the total payment amount that was scheduled to be collected during the reporting period (including all fees).
(18) Total actual amount paid. Indicate the total payment paid to the servicer during the reporting period.
(19) Actual interest collected. Indicate the gross amount of interest collected during the reporting period, whether or not from the obligor.
(20) Actual principal collected. Indicate the amount of principal collected during the reporting period, whether or not from the obligor.
(21) Actual other amounts collected. Indicate the total of any amounts, other than principal and interest, collected during the reporting period, whether or not from the obligor.
(22) Servicer advanced amount. If amounts were advanced by the servicer during the reporting period, specify the amount.
(23) Interest paid through date. Provide the date through which interest is paid with the payment received during the reporting period, which is the effective date from which interest will be calculated for the application of the next payment.
(24) Zero balance loans. If the loan balance was reduced to zero during the reporting period, provide the following additional information about the loan:
(i) Zero balance effective date. Provide the date on which the loan balance was reduced to zero.
(ii) Zero balance code. Provide the code that indicates the reason the loan's balance was reduced to zero.
(25) Current delinquency status. Indicate the number of days the obligor is delinquent past the obligor's payment due date, as determined by the governing transaction agreement.
(g)
(2) Most recent servicing transfer received date. If a loan's servicing has been transferred, provide the effective date of the most recent servicing transfer.
(h)
(1) Status of asset subject to demand. Indicate the code that describes the status of the repurchase or replacement demand as of the end of the reporting period.
(2) Repurchase amount. Provide the amount paid to repurchase the loan.
(3) Demand resolution date. Indicate the date the loan repurchase or replacement demand was resolved.
(4) Repurchaser. Specify the name of the repurchaser.
(5) Repurchase or replacement reason. Indicate the code that describes the reason for the repurchase or replacement.
(i)
(1) Charged-off principal amount. Specify the amount of uncollected principal charged off.
(2) Amounts recovered. If the loan was previously charged off, specify any amounts received after charge-off.
(j)
(1) Modification type. Indicate the code that describes the reason the asset was modified during the reporting period.
(2) Payment extension. Provide the number of months the loan was extended during the reporting period.
(k)
(1) Repossession proceeds. Provide the total amount of proceeds received on disposition (net of repossession fees and expenses).
(2) [Reserved]
Item 4. Automobile leases. If the asset pool includes automobile leases, provide the following data for each lease in the asset pool:
(a)
(2) Asset number. Provide the unique ID number of the asset.
(b)
(2) Reporting period end date. Specify the ending date of the reporting period.
(c)
(2) Origination date. Provide the date the lease was originated.
(3) Acquisition cost. Provide the original acquisition cost of the lease.
(4) Original lease term. Indicate the term of the lease in months at the time the lease was originated.
(5) Scheduled termination date. Indicate the month and year in which the final lease payment is scheduled to be made.
(6) Original first payment date. Provide the date of the first scheduled payment after origination.
(7) Underwriting indicator. Indicate whether the lease met the criteria for the first level of solicitation, credit-granting or underwriting criteria used to originate the pool asset.
(8) Grace period. Indicate the number of months during the term of the lease when no payments are due from the lessee.
(9) Payment type. Specify the code indicating the payment frequency of the lease.
(10) Subvented. Indicate yes or no whether a form of subsidy is received on the lease, such as cash incentives or favorable financing for the lessee.
(d)
(2) Vehicle model. Provide the name of the model of the leased vehicle.
(3) New or used. Indicate whether the leased vehicle is new or used.
(4) Model year. Indicate the model year of the leased vehicle.
(5) Vehicle type. Indicate the code describing the vehicle type.
(6) Vehicle value. Indicate the value of the vehicle at the time of origination.
(7) Source of vehicle value. Specify the code that describes the source of the vehicle value.
(8) Base residual value. Provide the securitized residual value of the leased vehicle.
(9) Source of base residual value. Specify the code that describes the source of the base residual value.
(10) Contractual residual value. Provide the residual value, as stated on the contract, that the lessee would need to pay to purchase the vehicle at the end of the lease term.
(e)
(2) Lessee credit score. Provide the standardized credit score of the lessee used to evaluate the lessee during the lease origination process.
(3) Lessee income verification level. Indicate the code describing the extent to which the lessee's income was verified during the lease origination process.
(4) Lessee employment verification. Indicate the code describing the extent to which the lessee's employment was verified during the lease origination process.
(5) Co-lessee present indicator. Indicate whether the lease has a co-lessee.
(6) Payment-to-income ratio. Provide the scheduled monthly payment amount as a percentage of the total monthly income of the lessee and any other co-lessee at the origination date. Provide the methodology for determining monthly income in the prospectus.
(7) Geographic location of lessee. Specify the location of the lessee by providing the current U.S. state or territory.
(f)
(2) Remaining term to maturity. Indicate the number of months from the end of the reporting period to the lease maturity date.
(3) Modification indicator—reporting period. Indicates yes or no whether the asset was modified from its original terms during the reporting period.
(4) Servicing advance method. Specify the code that indicates a servicer's responsibility for advancing principal or interest on delinquent leases.
(5) Reporting period securitization value. Provide the sum of the present values, as of the beginning of the reporting period, of the remaining scheduled monthly payment amounts and the base residual value of the leased vehicle, computed using the securitization value discount rate.
(6) Securitization value discount rate. Provide the discount rate of the lease for the securitization transaction.
(7) Next reporting period payment amount due. Indicate the total payment due to be collected in the next reporting period.
(8) Servicing fee—percentage. If the servicing fee is based on a percentage, provide the percentage used to calculate the aggregate servicing fee.
(9) Servicing fee—flat-fee. If the servicing fee is based on a flat-fee amount, indicate the monthly servicing fee paid to all servicers.
(10) Other lease-level servicing fee(s) retained by servicer. Provide the amount of all other fees earned by lease administrators that reduce the amount of funds remitted to the issuing entity (including subservicing, master servicing, trustee fees, etc.).
(11) Other assessed but uncollected servicer fees. Provide the cumulative amount of late charges and other fees that have been assessed by the servicer, but not paid by the lessee.
(12) Reporting period ending actual balance. Indicate the actual balance of the lease as of the end of the reporting period.
(13) Reporting period scheduled payment amount. Indicate the total payment amount that was scheduled to be collected during the reporting period (including all fees).
(14) Total actual amount paid. Indicate the total lease payment received during the reporting period.
(15) Actual other amounts collected. Indicate the total of any amounts, other than the scheduled lease payment, collected during the reporting period, whether or not from the lessee.
(16) Reporting period ending actual securitization value. Provide the sum of the present values, as of the end of the reporting period, of the remaining scheduled monthly payment amounts and the base residual value of the leased vehicle, computed using the securitization value discount rate.
(17) Servicer advanced amount. If amounts were advanced by the servicer during the reporting period, specify the amount.
(18) Paid through date. Provide the date through which scheduled payments have been made with the payment received during the reporting period, which is the effective date from which amounts due will be calculated for the application of the next payment.
(19) Zero balance leases. If the lease balance was reduced to zero during the reporting period, provide the following additional information about the lease:
(i) Zero balance effective date. Provide the date on which the lease balance was reduced to zero.
(ii) Zero balance code. Provide the code that indicates the reason the lease's balance was reduced to zero.
(20) Current delinquency status. Indicate the number of days the lessee is delinquent past the lessee's payment due date, as determined by the governing transaction agreement.
(g)
(2) Most recent servicing transfer received date. If a lease's servicing has been transferred, provide the effective date of the most recent servicing transfer.
(h)
(1) Status of asset subject to demand. Indicate the code that describes the status of the repurchase or replacement demand as of the end of the reporting period.
(2) Repurchase amount. Provide the amount paid to repurchase the lease from the pool.
(3) Demand resolution date. Indicate the date the lease repurchase or replacement demand was resolved.
(4) Repurchaser. Specify the name of the repurchaser.
(5) Repurchase or replacement reason. Indicate the code that describes the reason for the repurchase or replacement.
(i)
(1) Charge-off amounts. Provide the amount charged off on the lease.
(2) [Reserved]
(j)
(1) Modification type. Indicate the code that describes the reason the lease was modified during the reporting period.
(2) Lease extension. Provide the number of months the lease was extended during the reporting period.
(k)
(1) Termination indicator. Specify the code that describes the reason why the lease was terminated.
(2) Excess fees. Specify the amount of excess fees received upon return of the vehicle, such as excess wear and tear or excess mileage.
(3) Liquidation proceeds. Provide the liquidation proceeds net of repossession fees, auction fees and other expenses in accordance with standard industry practice.
Item 5. Debt securities. If the asset pool includes debt securities, provide the following data for each security in the asset pool:
(a)
(2) Asset number. Provide the standard industry identifier assigned to the asset. If a standard industry identifier is not assigned to the asset, provide a unique ID number for the asset.
(3) Asset group number. For structures with multiple collateral groups, indicate the collateral group number in which the asset falls.
(b)
(2) Reporting period end date. Specify the ending date of the reporting period.
(c)
(2) Original issuance date. Provide the date the underlying security was issued. For revolving asset master trusts, provide the issuance date of the receivable that will be added to the asset pool.
(3) Original security amount. Indicate the amount of the underlying security at the time the underlying security was issued.
(4) Original security term. Indicate the initial number of months between the month the underlying security was issued and the security's maturity date.
(5) Security maturity date. Indicate the month and year in which the final payment on the underlying security is scheduled to be made.
(6) Original amortization term. Indicate the number of months in which the underlying security would be retired if the amortizing principal and interest payment were to be paid each month.
(7) Original interest rate. Provide the rate of interest at the time the underlying security was issued.
(8) Accrual type. Provide the code that describes the method used to calculate interest on the underlying security.
(9) Interest rate type. Indicate the code that indicates whether the interest rate on the underlying security is fixed, adjustable, step or other.
(10) Original interest-only term. Indicate the number of months from the date the
(11) First payment date from issuance. Provide the date of the first scheduled payment.
(12) Underwriting indicator. Indicate whether the loan or asset met the criteria for the first level of solicitation, credit-granting or underwriting criteria used to originate the pool asset.
(13) Title of underlying security. Specify the title of the underlying security.
(14) Denomination. Give the minimum denomination of the underlying security.
(15) Currency. Specify the currency of the underlying security.
(16) Trustee. Specify the name of the trustee.
(17) Underlying SEC file number. Specify the registration statement file number of the registration of the offer and sale of the underlying security.
(18) Underlying CIK number. Specify the CIK number of the issuer of the underlying security.
(19) Callable. Indicate whether the security is callable.
(20) Payment frequency. Indicate the code describing the frequency of payments that will be made on the underlying security.
(21) Zero coupon indicator. Indicate yes or no whether an underlying security or agreement is interest bearing.
(d)
(2) Modification indicator. Indicates yes or no whether the underlying security was modified from its original terms.
(3) Reporting period beginning asset balance. Indicate the outstanding principal balance of the underlying security as of the beginning of the reporting period.
(4) Reporting period beginning scheduled asset balance. Indicate the scheduled principal balance of the underlying security as of the beginning of the reporting period.
(5) Reporting period scheduled payment amount. Indicate the total payment amount that was scheduled to be collected during the reporting period.
(6) Reporting period interest rate. Indicate the interest rate in effect on the underlying security.
(7) Total actual amount paid. Indicate the total payment paid to the servicer during the reporting period.
(8) Actual interest collected. Indicate the gross amount of interest collected during the reporting period.
(9) Actual principal collected. Indicate the amount of principal collected during the reporting period.
(10) Actual other amounts collected. Indicate the total of any amounts, other than principal and interest, collected during the reporting period.
(11) Other principal adjustments. Indicate any other amounts that caused the principal balance of the underlying security to be decreased or increased during the reporting period.
(12) Other interest adjustments. Indicate any unscheduled interest adjustments during the reporting period.
(13) Scheduled interest amount. Indicate the interest payment amount that was scheduled to be collected during the reporting period.
(14) Scheduled principal amount. Indicate the principal payment amount that was scheduled to be collected during the reporting period.
(15) Reporting period ending actual balance. Indicate the actual balance of the underlying security as of the end of the reporting period.
(16) Reporting period ending scheduled balance. Indicate the scheduled principal balance of the underlying security as of the end of the reporting period.
(17) Servicing fee—percentage. If the servicing fee is based on a percentage, provide the percentage used to calculate the aggregate servicing fee.
(18) Servicing fee—flat-fee. If the servicing fee is based on a flat-fee amount, indicate the monthly servicing fee paid to all servicers as an amount.
(19) Zero balance loans. If the loan balance was reduced to zero during the reporting period, provide the following additional information about the loan:
(i) Zero balance code. Provide the code that indicates the reason the underlying security's balance was reduced to zero.
(ii) Zero balance effective date. Provide the date on which the underlying security's balance was reduced to zero.
(20) Remaining term to maturity. Indicate the number of months from the end of the reporting period to the maturity date of the underlying security.
(21) Current delinquency status. Indicate the number of days the obligor is delinquent as determined by the governing transaction agreement.
(22) Number of days payment is past due. If the obligor has not made the full scheduled payment, indicate the number of days since the scheduled payment date.
(23) Number of payments past due. Indicate the number of payments the obligor is past due as of the end of the reporting period.
(24) Next reporting period payment amount due. Indicate the total payment due to be collected in the next reporting period.
(25) Next due date. For assets that have not been paid off, indicate the next payment due date on the underlying security.
(e)
(2) Most recent servicing transfer received date. If the servicing of the underlying security has been transferred, provide the effective date of the most recent servicing transfer.
(f)
(1) Status of asset subject to demand. Indicate the code that describes the status of the repurchase or replacement demand as of the end of the reporting period.
(2) Repurchase amount. Provide the amount paid to repurchase the underlying security from the pool.
(3) Demand resolution date. Indicate the date the underlying security repurchase or replacement demand was resolved.
(4) Repurchaser. Specify the name of the repurchaser.
(5) Repurchase or replacement reason. Indicate the code that describes the reason for the repurchase or replacement.
Item 6. Resecuritizations.
(a) If the asset pool includes asset-backed securities, provide the asset-level information specified in Item 5. Debt Securities in this Schedule AL for each security in the asset pool.
(b) If the asset pool includes asset-backed securities issued November 23, 2016, provide the asset-level information specified in § 229.1111(h) for the assets backing each security in the asset pool.
15 U.S.C. 77b, 77b note, 77c, 77d, 77d note, 77f, 77g, 77h, 77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78
The revision and addition read as follows:
(b) * * *
(1) If the offering of asset-backed securities is registered on Form SF-3 (§ 239.45 of this chapter), the offering of the underlying securities itself must be eligible to be registered under Form SF-3, Form S-3 (§ 239.13 of this chapter), or F-3 (§ 239.33 of this chapter) as a primary offering of such securities;
(d) Notwithstanding paragraph (c) of this section (that is, although the pool asset described in paragraph (c) of this section is an not an “underlying security” for purposes of this section), if the pool assets for the asset-backed securities are collateral certificates or special units of beneficial interest, those collateral certificates or special units of beneficial interest must be registered concurrently with the registration of the asset-backed securities. However, pursuant to § 230.457(t) no separate registration fee for the certificates or special units of beneficial interest is required to be paid.
The addition reads as follows:
(g) * * *
(4) Notwithstanding that the registration statement may have become effective previously, requirements as to proper form under this section will have been violated for any offering of securities where the requirements of General Instruction I.A. of Form SF-3 (§ 239.45 of this chapter) have not been met as of ninety days after the end of the depositor's fiscal year end prior to such offering.
The revisions and addition read as follows:
(a) * * *
(1) * * *
(vii) Asset-backed securities (as defined in 17 CFR 229.1101(c)) registered (or qualified to be registered) on Form SF-3 (§ 239.45 of this chapter) which are to be offered and sold on an immediate or delayed basis by or on behalf of the registrant;
(ix) Securities, other than asset-backed securities (as defined in 17 CFR 229.1101(c)), the offering of which will be commenced promptly, will be made on a continuous basis and may continue for a period in excess of 30 days from the date of initial effectiveness;
(xii) Asset-backed securities (as defined in 17 CFR 229.1101(c)) that are to be offered and sold on a continuous basis if the offering is commenced promptly and being conducted on the condition that the consideration paid for such securities will be promptly refunded to the purchaser unless:
(A) All of the securities being offered are sold at a specified price within a specified time; and
(B) The total amount due to the seller is received by him by a specified date.
The addition reads as follows:
(h)(1) Three copies of a form of prospectus relating to an offering of asset-backed securities pursuant to § 230.415(a)(1)(vii) or § 230.415(a)(1)(xii) disclosing information previously omitted from the prospectus filed as part of an effective registration statement in reliance on § 230.430D shall be filed with the Commission at least three business days before the date of the first sale in the offering, or if used earlier, the earlier of:
(i) The applicable number of business days before the date of the first sale; or
(ii) The second business day after first use.
(2) Three copies of a prospectus supplement relating to an offering of asset-backed securities pursuant to § 230.415(a)(1)(vii) or § 230.415(a)(1)(xii) that reflects any material change from the information contained in a prospectus filed in accordance with § 230.424(h)(1) shall be filed with the Commission at least forty-eight hours before the date and time of the first sale in the offering. The prospectus supplement must clearly delineate what material information has changed and how the information has changed from the prospectus filed in accordance with paragraph (h)(1) of this section.
(a) A form of prospectus filed as part of a registration statement for primary offerings of asset-backed securities pursuant to § 230.415(a)(1)(vii) or § 230.415(a)(1)(xii) may omit from the information required by the form to be in the prospectus information that is unknown or not reasonably available to the issuer pursuant to § 230.409.
(b) Information omitted from a form of prospectus that is part of an effective registration statement in reliance on paragraph (a) of this section (other than information with respect to offering price, underwriting syndicate (including any material relationships between the registrant and underwriters not named therein), underwriting discounts or commissions, discounts or commissions to dealers, amount of proceeds or other matters dependent upon the offering price to the extent such information is unknown or not reasonably available to the issuer pursuant to § 230.409) shall be disclosed in a form of prospectus required to be filed with the Commission pursuant to § 230.424(h). Each such form of prospectus shall be deemed to have been filed as part of the registration statement for the purpose of section 7 of the Act (15 U.S.C. 77g).
(c) A form of prospectus filed as part of a registration statement that omits information in reliance upon paragraph (a) of this section meets the requirements of section 10 of the Act (15 U.S.C. 77j) for the purpose of section 5(b)(1) of the Act (15 U.S.C. 77e(b)(1)). This provision shall not limit the information required to be contained in a form of prospectus in order to meet the requirements of section 10(a) of the Act for the purposes of section 5(b)(2) (15 U.S.C. 77e(b)(2)) or exception (a) of section 2(a)(10) of the Act (15 U.S.C. 77b(a)(10)(a)).
(d)(1) Except as provided in paragraph (b) or (d)(2) of this section, information omitted from a form of prospectus that is part of an effective registration statement in reliance on paragraph (a) of this section may be included subsequently in the prospectus that is part of a registration statement by:
(i) A post-effective amendment to the registration statement;
(ii) A prospectus filed pursuant to § 230.424(b); or
(iii) If the applicable form permits, including the information in the issuer's periodic or current reports filed pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) that are incorporated or deemed incorporated by reference into the prospectus that is part of the registration statement in accordance with the applicable requirements, subject to the provisions of paragraph (h) of this section.
(2) Information omitted from a form of prospectus that is part of an effective registration statement in reliance on paragraph (a) of this section that adds a new structural feature or credit enhancement must be included subsequently in the prospectus that is part of a registration statement by a post-effective amendment to the registration statement.
(e)(1) Information omitted from a form of prospectus that is part of an effective registration statement in reliance on paragraph (a) of this section and contained in a form of prospectus required to be filed with the Commission pursuant to § 230.424(b), other than as provided in paragraph (f) of this section, shall be deemed part of and included in the registration statement as of the date such form of filed prospectus is first used after effectiveness.
(2) Information omitted from a form of prospectus that is part of an effective registration statement in reliance on paragraph (a) of this section and contained in a form of prospectus required to be filed with the Commission pursuant to § 230.424(h) shall be deemed part of and included in the registration statement the earlier of the date such form of filed prospectus is filed with the Commission pursuant to § 230.424(h) or, if used earlier than the date of filing, the date it is first used after effectiveness.
(f)(1) Information omitted from a form of prospectus that is part of an effective registration statement in reliance on paragraph (a) of this section, and is contained in a form of prospectus required to be filed with the Commission pursuant to § 230.424(b)(2) or (b)(5), shall be deemed to be part of and included in the registration statement on the earlier of the date such subsequent form of prospectus is first used or the date and time of the first contract of sale of securities in the offering to which such subsequent form of prospectus relates.
(2) The date on which a form of prospectus is deemed to be part of and included in the registration statement pursuant to paragraph (f)(1) of this section shall be deemed, for purposes of liability under section 11 of the Act (15 U.S.C. 77k) of the issuer and any underwriter at the time only, to be a new effective date of the part of such registration statement relating to the securities to which such form of prospectus relates, such part of the registration statement consisting of all information included in the registration statement and any prospectus relating to the offering of such securities (including information relating to the offering in a prospectus already included in the registration statement) as of such date and all information relating to the offering included in reports and materials incorporated by reference into such registration statement and prospectus as of such date, and in each case not modified or superseded pursuant to § 230.412. The offering of such securities at that time shall be deemed to be the initial
(3) If a registration statement is amended to include or is deemed to include, through incorporation by reference or otherwise, except as otherwise provided in § 230.436, a report or opinion of any person made on such person's authority as an expert whose consent would be required under section 7 of the Act (15 U.S.C. 77g) because of being named as having prepared or certified part of the registration statement, then for purposes of this section and for liability purposes under section 11 of the Act (15 U.S.C. 77k), the part of the registration statement for which liability against such person is asserted shall be considered as having become effective with respect to such person as of the time the report or opinion is deemed to be part of the registration statement and a consent required pursuant to section 7 of the Act has been provided as contemplated by section 11 of the Act.
(4) Except for an effective date resulting from the filing of a form of prospectus filed for purposes of including information required by section 10(a)(3) of the Act (15 U.S.C. 77j(a)(3)) or pursuant to Item 512(a)(1)(ii) of Regulation S-K (§ 229.512(a)(1)(ii) of this chapter), the date a form of prospectus is deemed part of and included in the registration statement pursuant to this paragraph shall not be an effective date established pursuant to paragraph (f)(2) of this section as to:
(i) Any director (or person acting in such capacity) of the issuer;
(ii) Any person signing any report or document incorporated by reference into the registration statement, except for such a report or document incorporated by reference for purposes of including information required by section 10(a)(3) of the Act (15 U.S.C. 77j(a)(3)) or pursuant to Item 512(a)(1)(ii) of Regulation S-K (§ 229.512(a)(1)(ii) of this chapter) (such person except for such reports being deemed not to be a person who signed the registration statement within the
(5) The date a form of prospectus is deemed part of and included in the registration statement pursuant to paragraph (f)(2) of this section shall not be an effective date established pursuant to paragraph (f)(2) of this section as to:
(i) Any accountant with respect to financial statements or other financial information contained in the registration statement as of a prior effective date and for which the accountant previously provided a consent to be named as required by section 7 of the Act (15 U.S.C. 77g), unless the form of prospectus contains new audited financial statements or other financial information as to which the accountant is an expert and for which a new consent is required pursuant to section 7 of the Act or § 230.436; and
(ii) Any other person whose report or opinion as an expert or counsel has, with their consent, previously been included in the registration statement as of a prior effective date, unless the form of prospectus contains a new report or opinion for which a new consent is required pursuant to section 7 of the Act (15 U.S.C. 77g) or § 230.436.
(g) Notwithstanding paragraph (e) or (f) of this section or § 230.412(a), no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement after the effective date of such registration statement or portion thereof in respect of an offering determined pursuant to this section will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(h) Where a form of prospectus filed pursuant to § 230.424(b) relating to an offering does not include disclosure of omitted information regarding the terms of the offering, the securities or the plan of distribution for the securities that are the subject of the form of prospectus, because such omitted information has been included in periodic or current reports filed pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) incorporated or deemed incorporated by reference into the prospectus, the issuer shall file a form of prospectus identifying the periodic or current reports that are incorporated or deemed incorporated by reference into the prospectus that is part of the registration statement that contain such omitted information. Such form of prospectus shall be required to be filed, depending on the nature of the incorporated information, pursuant to § 230.424(b)(2) or (b)(5).
(i) Issuers relying on this section shall furnish the undertakings required by Item 512(a) of Regulation S-K (§ 229.512(a) of this chapter).
(c)(1) Notwithstanding paragraph (a) of this section, an asset-backed issuer that registers asset-backed securities offerings on Form SF-3 (§ 239.45 of this chapter), may, but is not required to, defer payment of all or any part of the registration fee to the Commission required by section 6(b)(1) of the Act (15 U.S.C. 77f(b)(1)) on the following conditions:
(i) If the issuer elects to defer payment of the registration fee, it shall pay the registration fees (pay-as-you-go registration fees) calculated in accordance with § 230.457(s) in advance of or in connection with an offering of securities from the registration statement at the time of filing the prospectus pursuant to § 230.424(h) for the offering; and
(ii) The issuer reflects the amount of the pay-as-you-go registration fee paid or to be paid in accordance with paragraph (c)(1)(i) of this section by updating the “Calculation of Registration Fee” table to indicate the class and aggregate offering price of securities offered and the amount of registration fee paid or to be paid in connection with the offering or offerings on the cover page of a prospectus filed pursuant to § 230.424(h).
(2) A registration statement filed relying on the pay-as-you-go registration fee payment provisions of paragraph (c)(1) of this section will be considered filed as to the securities or classes of securities identified in the registration statement for purposes of this section and section 5 of the Act (15 U.S.C. 77e) when it is received by the Commission, if it complies with all other requirements of the Act and the rules with respect to it.
(3) The securities sold pursuant to a registration statement will be considered registered, for purpose of section 6(a) of the Act (15 U.S.C. 77f(a)), if the pay-as-you-go registration fee has been paid and the post-effective amendment or prospectus including the amended “Calculation of Registration Fee” table is filed pursuant to paragraph (c)(1) of this section.
(s) Where securities are asset-backed securities being offered pursuant to a registration statement on Form SF-3 (§ 239.45 of this chapter), the registration fee is to be calculated in accordance with this section. When the issuer elects to defer payment of the fees pursuant to § 230.456(c), the “Calculation of Registration Fee” table in the registration statement must indicate that the issuer is relying on § 230.456(c) but does not need to include the number of units of securities or the maximum aggregate offering price of any securities until the issuer updates the “Calculation of Registration Fee” table to reflect payment of the registration fee, including a pay-as-you-go registration fee in accordance with § 230.456(c). The registration fee shall be calculated based on the fee payment rate in effect on the date of the fee payment.
(t) Where the security to be offered is a collateral certificate or is a special unit of beneficial interest, underlying asset-backed securities (as defined in § 229.1101(c) of this chapter) which are being registered concurrently, no separate fee for the certificate or the special unit of beneficial interest shall be payable.
15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77z-3, 77sss(a), 78c(b), 78
The addition reads as follows:
(a) * * *
(1) * * *
(xiv) Form ABS-EE (§ 249.1401 of this chapter); and
The revision and addition read as follows:
(a) If an electronic filer experiences unanticipated technical difficulties preventing the timely preparation and submission of an electronic filing, other than a Form 3 (§ 249.103 of this chapter), a Form 4 (§ 249.104 of this chapter), a Form 5 (§ 249.105 of this chapter), a Form ID (§§ 239.63, 249.446, 269.7 and 274.402 of this chapter), a Form TA-1 (§ 249.100 of this chapter), a Form TA-2 (§ 249.102 of this chapter), a Form TA-W (§ 249.101 of this chapter), a Form D (§ 239.500 of this chapter), an Interactive Data File (§ 232.11), or an Asset Data File (as defined in § 232.11), the electronic filer may file the subject filing, under cover of Form TH (§§ 239.65, 249.447, 269.10 and 274.404 of this chapter), in paper format no later than one business day after the date on which the filing was to be made.
(d) If an electronic filer experiences unanticipated technical difficulties preventing the timely preparation and submission of an Asset Data File (as defined in § 232.11) and any asset related document pursuant to Items 601(b)(102) and 601(b)(103) (§§ 229.601(b)(102) and 229.601(b)(103) of this chapter) the electronic filer still can timely satisfy the requirement to submit the Asset Data File or any asset related document in the following manner by:
(1) Posting on a Web site the Asset Data File and any asset related documents unrestricted as to access and free of charge;
(2) Substituting for the Asset Data File and any asset related documents in the required Form ABS-EE (§ 249.1401 of this chapter), a statement specifying the Web site address and that sets forth the following legend; and
IN ACCORDANCE WITH THE TEMPORARY HARDSHIP EXEMPTION PROVIDED BY RULE 201 OF REGULATION S-T, THE DATE BY WHICH THE ASSET DATA FILE IS REQUIRED TO BE SUBMITTED HAS BEEN EXTENDED BY SIX BUSINESS DAYS.
(3) Submitting the required Asset Data File and asset related documents no later than six business days after the Asset Data File originally was required to be submitted.
(b) Paragraph (a) of this section does not apply to HTML documents, Interactive Data Files (as defined in § 232.11) or XBRL-Related Documents (as defined in § 232.11).
15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77sss, 78c, 78
This Form shall be used for the registration under the Securities Act of 1933 of securities of all registrants for which no other form is authorized or prescribed, except that this Form shall not be used for securities of foreign governments or political subdivisions thereof or asset-backed securities, as defined in 17 CFR 229.1101(c).
The text of Form S-1 does not, and this amendment will not, appear in the Code of Federal Regulations.
This Form shall be used for the registration under the Securities Act of 1933 (“Securities Act”) of securities of all registrants for which no other form is authorized or prescribed, except that this Form shall not be used for securities of foreign governments or political subdivisions thereof or asset-backed securities, as defined in 17 CFR 229.1101(c).
The revision reads as follows:
(b) * * *
(5) This Form shall not be used to register offerings of asset-backed
The revision reads as follows:
The text of Form S-3 does not, and this amendment will not, appear in the Code of Federal Regulations.
5. This Form shall not be used to register offerings of asset-backed securities, as defined in 17 CFR 229.1101(c).
This Form shall be used for registration under the Securities Act of 1933 of all offerings of asset-backed securities, as defined in 17 CFR 229.1101(c).
The text of Form SF-1 does not, and this amendment will not, appear in the Code of Federal Regulations.
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ]
This Form shall be used for the registration under the Securities Act of 1933 (“Securities Act”) of asset-backed securities of all registrants for which no other form is authorized or prescribed, except that this Form shall not be used for securities of foreign governments or political subdivisions thereof.
A. Attention is directed to the General Rules and Regulations under the Securities Act, particularly those comprising Regulation C (17 CFR 230.400 to 230.499) thereunder. That Regulation contains general requirements regarding the preparation and filing of the registration statement.
B. Attention is directed to Regulation S-K and Regulation AB (17 CFR part 229) for the requirements applicable to the content of registration statements under the Securities Act.
C. Terms used in this Form have the same meaning as in Item 1101 of Regulation AB.
With respect to the registration of additional securities for an offering pursuant to Rule 462(b) under the Securities Act, the registrant may file a registration statement consisting only of the following: The facing page; a statement that the contents of the earlier registration statement, identified by file number and CIK number of the issuer, are incorporated by reference; required opinions and consents; the signature page; and any price-related information omitted from the earlier registration statement in reliance on Rule 430A that the registrant chooses to include in the new registration statement. The information contained in such a Rule 462(b) registration statement shall be deemed to be a part of the earlier registration statement as of the date of effectiveness of the Rule 462(b) registration statement. Any opinion or consent required in the Rule 462(b) registration statement may be incorporated by reference from the earlier registration statement with respect to the offering, if: (i) Such opinion or consent expressly provides for such incorporation; and (ii) such opinion relates to the securities registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b) under the Securities Act.
A. With respect to all registrants required to provide asset-level information pursuant to Item 1111(h) of Regulation AB (17 CFR 229.1111(h)):
1. The disclosures filed as exhibits to Form ABS-EE in accordance with Items 601(b)(102) and 601(b)(103) of Regulation S-K (17 CFR 229.601(b)(102) and 601(b)(103)) must be incorporated by reference into the prospectus that is part of the registration statement.
2. If the pool assets include asset-backed securities of a third-party, registrants may reference the third-party's filings of asset-level data pursuant to Item 1100(c)(2) of Regulation AB (17 CFR 229.1100(c)(2)), except that the third-party is not required to meet the definition of significant obligor in Item 1101(k) of Regulation AB (17 CFR 229.1101(k)).
3. Incorporation by reference must comply with Item 10 of this Form.
B. Registrants may elect to file the information required by Item 1105 of Regulation AB (17 CFR 229.1105), Static Pool, pursuant to Item 6.06 of Form 8-K (17 CFR 249.308), provided that the information is incorporated by reference into the prospectus that is part of the registration statement. Incorporation by reference must comply with Item 10 of this Form.
Set forth in the forepart of the registration statement and on the outside front cover page of the prospectus the information required by Item 501 of Regulation S-K (17 CFR 229.501) and Item 1102 of Regulation AB (17 CFR 229.1102).
Set forth on the inside front cover page of the prospectus or, where permitted, on the outside back cover page, the information required by Item 502 of Regulation S-K (17 CFR 229.502).
Furnish the information required by Item 503 of Regulation S-K (17 CFR 229.503) and Item 1103 of Regulation AB (17 CFR 229.1103).
Furnish the information required by Item 504 of Regulation S-K (17 CFR 229.504).
Furnish the information required by Item 508 of Regulation S-K (17 CFR 229.508).
Furnish the following information:
(a) Information required by Item 1104 of Regulation AB (17 CFR 229.1104), Sponsors;
(b) Information required by Item 1106 of Regulation AB (17 CFR 229.1106), Depositors;
(c) Information required by Item 1107 of Regulation AB (17 CFR 229.1107), Issuing entities;
(d) Information required by Item 1108 of Regulation AB (17 CFR 229.1108), Servicers;
(e) Information required by Item 1109 of Regulation AB (17 CFR 229.1109), Trustees;
(f) Information required by Item 1110 of Regulation AB (17 CFR 229.1110), Originators;
(g) Information required by Item 1112 of Regulation AB (17 CFR 229.1112), Significant obligors of pool assets;
(h) Information required by Item 1117 of Regulation AB (17 CFR 229.1117), Legal Proceedings; and
(i) Information required by Item 1119 of Regulation AB (17 CFR 229.1119), Affiliations and certain relationships and related transactions.
Furnish the following information:
(a) Information required by Item 1111 of Regulation AB (17 CFR 229.1111), Pool Assets and Item 1125 of Regulation AB (17 CFR 229.1125), Schedule AL—Asset-level information;
(b) Information required by Item 202 of Regulation S-K (17 CFR 229.202), Description of Securities Registered and Item 1113 of Regulation AB (17 CFR 229.1113), Structure of the Transaction;
(c) Information required by Item 1114 of Regulation AB (17 CFR 229.1114), Credit Enhancement and Other Support;
(d) Information required by Item 1115 of Regulation AB (17 CFR 229.1115), Certain Derivatives Instruments;
(e) Information required by Item 1116 of Regulation AB (17 CFR 229.1116), Tax Matters;
(f) Information required by Item 1118 of Regulation AB (17 CFR 229.1118), Reports and additional information; and
(g) Information required by Item 1120 of Regulation AB (17 CFR 229.1120), Ratings.
Furnish the information required by Item 1105 of Regulation AB (17 CFR 229.1105).
Furnish the information required by Item 509 of Regulation S-K (17 CFR 229.509).
(a) The prospectus shall provide a statement that the following documents filed at or prior to the time of effectiveness shall be deemed incorporated by reference into the prospectus:
(1) Any disclosures pursuant to Item 1111(h) (17 CFR 229.1111(h)) and filed as exhibits to Form ABS-EE in accordance with Items 601(b)(102) or 601(b)(103) of Regulation S-K (17 CFR 229.601(b)(102) or 601(b)(103)); and
(2) all current reports filed pursuant to Item 6.06 of Form 8-K (17 CFR 249.308) pursuant to Sections 13(a), 13(c), or 15(d) of the Exchange Act.
(b)(1) You must state:
(i) That you will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the information that has been incorporated by reference in the prospectus but not delivered with the prospectus;
(ii) that you will provide this information upon written or oral request;
(iii) that you will provide this information at no cost to the requester;
(iv) the name, address, and telephone number to which the request for this information must be made; and
(v) the registrant's Web site address, including the uniform resource locator (URL) where the incorporated information and other documents may be accessed.
(b)(2) You must:
(i) Identify the reports and other information that you file with the SEC.
(ii) State that any materials you file with the SEC will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. State that the public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. If you are an electronic filer, state that the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC and state the address of that site (
Furnish the information required by Item 510 of Regulation S-K (17 CFR 229.510).
Furnish the information required by Item 511 of Regulation S-K (17 CFR 229.511).
Furnish the information required by Item 702 of Regulation S-K (17 CFR 229.702).
Subject to the rules regarding incorporation by reference, file the exhibits required by Item 601 of Regulation S-K (17 CFR 229.601).
Furnish the undertakings required by Item 512 of Regulation S-K (17 CFR 229.512).
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SF-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of __________, State of __________, on __________, 20 __.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
1. The registration statement shall be signed by the depositor, the depositor's principal executive officer or officers, its principal financial officer, and
2. The name of each person who signs the registration statement shall be typed or printed beneath his signature. Any person who occupies more than one of the specified positions shall indicate each capacity in which he signs the registration statement. Attention is directed to Rule 402 concerning manual signatures and to Item 601 of Regulation S-K concerning signatures pursuant to powers of attorney.
This Form may be used for registration under the Securities Act of 1933 (“Securities Act”) of offerings of asset-backed securities, as defined in 17 CFR 229.1101(c). Any registrant which meets the requirements of paragraph (a) of this section may use this Form for the registration of asset-backed securities (as defined in 17 CFR 229.1101(c)) under the Securities Act which are offered in any transaction specified in paragraph (b) of this section provided that the requirements applicable to the specified transaction are met. Terms used have the same meaning as in Item 1101 of Regulation AB (17 CFR 229.1101).
(a)
(1) To the extent the depositor or any issuing entity previously established, directly or indirectly, by the depositor or any affiliate of the depositor (as defined in Item 1101 of Regulation AB (17 CFR 229.1101)) is or was at any time during the twelve calendar months and any portion of a month immediately preceding the filing of the registration statement on this Form required to comply with the transaction requirements in paragraphs (b)(1)(i) through (iv) of this section with respect to a previous offering of asset-backed securities involving the same asset class, the following requirements shall apply:
(i) Such depositor and each such issuing entity must have filed on a timely basis all certifications required by paragraph (b)(1)(i) of this section; and
(ii) Such depositor and each such issuing entity must have filed on a timely basis all transaction agreements containing the provisions that are required by paragraphs (b)(1)(ii) through (iv) of this section.
(iii) If such depositor or issuing entity fails to meet the requirements of paragraphs(a)(1)(i) and (ii) of this section, such depositor or issuing entity will be deemed to satisfy such requirements for purposes of this Form 90 days after the date it files the information required by paragraphs (a)(1)(i) and (ii) of this section; provided however that if the information is filed within 90 days of evaluating compliance with this paragraph (a) such depositor and issuing entity will be deemed to have been in compliance with such requirements for purposes of this Form 90 days after the date it files the information required by paragraphs (a)(1)(i) and (ii) of this section.
(2) To the extent the depositor or any issuing entity previously established, directly or indirectly, by the depositor or any affiliate of the depositor (as defined in Item 1101 of Regulation AB (17 CFR 229.1101)) is or was at any time during the twelve calendar months and any portion of a month immediately preceding the filing of the registration statement on this Form subject to the requirements of section 12 or 15(d) of the Exchange Act (15 U.S.C. 78
(b)
(1) Asset-backed securities (as defined in § 229.1101(c) of this chapter) to be offered for cash where the following have been satisfied:
(i)
(ii)
(A) The selection and appointment of an asset representations reviewer that is not:
(
(
(B) The asset representations reviewer shall have authority to access copies of any underlying documents related to performing a review of the pool assets;
(C) The asset representations reviewer shall be responsible for reviewing the underlying assets for compliance with the representations and warranties on the pool assets, and shall not otherwise be the party to determine whether noncompliance with representations or warranties constitutes a breach of any contractual provision. Reviews shall be required under the transaction documents, at a minimum, when the following conditions are met:
(
(
(
(
(D) The asset representations reviewer shall perform, at a minimum, reviews of all assets 60 days or more delinquent when the conditions specified in paragraph (b)(1)(ii)(C) of this section are met; and
(E) The asset representations reviewer shall provide a report to the trustee of the findings and conclusions of the review of the assets.
1. The delinquency threshold shall be calculated with respect to each sub-pool; and
2. The investor vote calculation shall be measured as a percentage of investors' interest in each sub-pool.
(iii)
(A) If an asset subject to a repurchase request, pursuant to the terms of the transaction agreements, is not resolved by the end of a 180-day period beginning when notice of the request is received, then the party submitting such repurchase request shall have the right to refer the matter, at its discretion, to either mediation or third-party arbitration, and the party obligated to repurchase must agree to the selected resolution method.
(B) If the party submitting the request elects third-party arbitration, the arbitrator shall determine the allocation of any expenses. If the party submitting the request elects mediation, the parties shall mutually determine the allocation of any expenses.
(iv)
1. If the investor is a record holder of the securities at the time of a request to communicate, then the investor will not have to provide verification of ownership, and
2. If the investor is not the record holder of the securities, then the person obligated to make the disclosure may require no more than a written certification from the investor that it is a beneficial owner and one other form of documentation such as a trade confirmation, an account statement, a letter from the broker or dealer, or other similar document.
(v)
(vi)
(2) Securities relating to an offering of asset-backed securities registered in accordance with paragraph (b)(1) of this section where those securities represent an interest in or the right to the payments of cash flows of another asset pool and meet the requirements of § 230.190(c)(1) through (4) of this chapter.
The text of Form SF-3 does not, and this amendment will not, appear in the Code of Federal Regulations.
If any of the securities being registered on this Form SF-3 are to be offered pursuant to Rule 415 under the Securities Act of 1933, check the following box: [ ]
If this Form SF-3 is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ]
If this Form SF-3 is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ]
1. Specific details relating to the fee calculation shall be furnished in notes to the Fee Table, including references to provisions of Rule 457 (§ 230.457 of this chapter) relied upon, if the basis of the calculation is not otherwise evident from the information presented in the Fee Table.
2. If the filing fee is calculated pursuant to Rule 457(s) under the Securities Act, the Fee Table must state that it registers an unspecified amount of securities of each identified class of securities and must provide that the issuer is relying on Rule 456(c) and Rule 457(s). If the Fee Table is amended in a post-effective amendment to the registration statement or in a prospectus filed in accordance with Rule 456(c)(1)(ii) (§ 230.456(c)(1)(ii) of this chapter), the Fee Table must specify the aggregate offering price for all classes of securities in the referenced offering or offerings and the applicable registration fee.
3. Any difference between the dollar amount of securities registered for such offerings and the dollar amount of securities sold may be carried forward on a future registration statement pursuant to Rule 457 under the Securities Act.
This instruction sets forth registrant requirements and transaction requirements for the use of Form SF-3. Any registrant which meets the requirements of I.A. below (“Registrant Requirements”) may use this Form for the registration of asset-backed securities (as defined in 17 CFR 229.1101(c)) under the Securities Act of 1933 (“Securities Act”) which are offered in any transaction specified in I.B. below (“Transaction Requirements”) provided that the requirements applicable to the specified transaction are met. Terms used in this Form have the same meaning as in Item 1101 of Regulation AB.
A. Registrant Requirements. Registrants must meet the following conditions in order to use this Form SF-3 for registration under the Securities Act of asset-backed securities offered in the transactions specified in I.B. below:
1. To the extent the depositor or any issuing entity previously established, directly or indirectly, by the depositor or any affiliate of the depositor (as defined in Item 1101 of Regulation AB (17 CFR 229.1101)) is or was at any time during the twelve calendar months and any portion of a month immediately preceding the filing of the registration statement on this Form required to comply with the transaction requirements in General Instructions I.B.1(a), I.B.1(b), I.B.1(c), and I.B.1(d) of this Form with respect to a previous offering of asset-backed securities involving the same asset class, the following requirements shall apply:
(a) Such depositor and each such issuing entity must have filed on a timely basis all certifications required by I.B.1(a);
(b) Such depositor and each such issuing entity must have filed on a timely basis all transaction agreements containing the provisions that are required by I.B.1(b), I.B.1(c), and I.B.1(d); and
(c) If such depositor or issuing entity fails to meet the requirements of I.A.1(a) and I.A.1(b), such depositor or issuing entity will be deemed to satisfy such requirements for purposes of this Form SF-3 90 days after the date it files the information required by I.A.1(a) and I.A.1(b).
2. To the extent the depositor or any issuing entity previously established, directly or indirectly, by the depositor or any affiliate of the depositor (as defined in Item 1101 of Regulation AB (17 CFR 229.1101)) is or was at any time during the twelve calendar months and any portion of a month immediately preceding the filing of the registration statement on this Form SF-3 subject to the requirements of section 12 or 15(d) of the Exchange Act (15 U.S.C. 78
B. Transaction Requirements. If the registrant meets the Registrant Requirements specified in I.A. above, an offering meeting the following conditions may be registered on Form SF-3:
1. Asset-backed securities (as defined in 17 CFR 229.1101(c)) to be offered for cash where the following have been satisfied:
(a) Certification. The registrant files a certification in accordance with Item 601(b)(36) of Regulation S-K (§ 229.601(b)(36)) signed by the chief executive officer of the depositor with
(b) Asset Review Provision. With respect to each offering of securities that is registered on this Form, the pooling and servicing agreement or other transaction agreement, which shall be filed, must provide for the following:
(A) The selection and appointment of an asset representations reviewer that is not (i) affiliated with any sponsor, depositor, servicer, or trustee of the transaction, or any of their affiliates, or (ii) the same party or an affiliate of any party hired by the sponsor or the underwriter to perform pre-closing due diligence work on the pool assets;
(B) The asset representations reviewer shall have authority to access copies of any underlying documents related to performing a review of the pool assets;
(C) The asset representations reviewer shall be responsible for reviewing the underlying assets for compliance with the representations and warranties on the pool assets, and shall not otherwise be the party to determine whether noncompliance with representations or warranties constitutes a breach of any contractual provision. Reviews shall be required under the transaction documents, at a minimum, when the following conditions are met:
(1) A threshold of delinquent assets, as specified in the transaction agreements, has been reached or exceeded; and
(2) an investor vote to direct a review, pursuant to the processes specified in the transaction agreements, provided that the agreement not require more than: (a) 5% of the total interest in the pool in order to initiate a vote and (b) a simple majority of those interests casting a vote to direct a review by the asset representations reviewer;
(D) The asset representations reviewer shall perform, at a minimum, reviews of all assets 60 days or more delinquent when the conditions specified in paragraph C are met; and
(E) The asset representations reviewer shall provide a report to the trustee of the findings and conclusions of the review of the assets.
(c) Dispute Resolution Provision. With respect to each offering of securities that is registered on this Form, the pooling and servicing agreement or other transaction agreement, which shall be filed, must provide for the following:
(A) If an asset subject to a repurchase request, pursuant to the terms of the transaction agreements, is not resolved by the end of a 180-day period beginning when notice of the request is received, then the party submitting such repurchase request shall have the right to refer the matter, at its discretion, to either mediation or third-party arbitration, and the party obligated to repurchase must agree to the selected resolution method.
(B) If the party submitting the request elects third-party arbitration, the arbitrator shall determine the allocation of any expenses. If the party submitting the request elects mediation, the parties shall mutually determine the allocation of any expenses.
(d) Investor Communication Provision. With respect to each offering of securities that is registered on this Form, the pooling and servicing agreement or other transaction agreement, which shall be filed, must contain a provision requiring that the party responsible for making periodic filings on Form 10-D (§ 249.312) include in the Form 10-D any request received during the reporting period from an investor to communicate with other investors related to investors exercising their rights under the terms of the transaction agreements. The disclosure regarding the request to communicate is required to include no more than the name of the investor making the request, the date the request was received, a statement to the effect that the party responsible for filing the Form 10-D has received a request from such investor, stating that such investor is interested in communicating with other investors with regard to the possible exercise of rights under the transaction agreements, and a description of the method other investors may use to contact the requesting investor.
(e) Delinquent assets. Delinquent assets do not constitute 20% or more, as measured by dollar volume, of the asset pool as of the measurement date.
(f) Residual value for certain securities. With respect to securities that are backed by leases other than motor vehicle leases, the portion of the securitized pool balance attributable to the residual value of the physical property underlying the leases, as determined in accordance with the transaction agreements for the securities, does not constitute 20% or more, as measured by dollar volume, of the securitized pool balance as of the measurement date.
2. Securities relating to an offering of asset-backed securities registered in accordance with General Instruction I.B.1. where those securities represent an interest in or the right to the payments of cash flows of another asset pool and meet the requirements of Securities Act Rule 190(c)(1) through (4) (17 CFR 230.190(c)(1) through (4)).
A. Attention is directed to the General Rules and Regulations under the Securities Act, particularly Regulation C thereunder (l7 CFR 230.400 to 230.499). That Regulation contains general requirements regarding the preparation and filing of registration statements.
B. Attention is directed to Regulation S-K (17 CFR Part 229) for the requirements applicable to the content of the non-financial statement portions of registration statements under the Securities Act. Where this Form SF-3 directs the registrant to furnish information required by Regulation S-K and the item of Regulation S-K so provides, information need only be furnished to the extent appropriate. Notwithstanding Items 501 and 502 of Regulation S-K, no table of contents is required to be included in the prospectus or registration statement prepared on this Form SF-3. In addition to the information expressly required to be included in a registration statement on this Form SF-3, registrants also may provide such other information as they deem appropriate.
C. Where securities are being registered on this Form SF-3, Rule 456(c) permits, but does not require, the registrant to pay the registration fee on a pay-as-you-go basis and Rule 457(s) permits, but does not require, the registration fee to be calculated on the basis of the aggregate offering price of the securities to be offered in an offering or offerings off the registration statement. If a registrant elects to pay all or a portion of the registration fee on a deferred basis, the Fee Table in the initial filing must identify the classes of securities being registered and provide that the registrant elects to rely on Rule 456(c) and Rule 457(s), but the Fee Table does not need to specify any other information. When the registrant amends the Fee Table in accordance with Rule 456(c)(1)(ii), the amended Fee Table must include either the dollar amount of securities being registered if paid in advance of or in connection with an offering or offerings or the aggregate offering price for all classes of securities referenced in the offerings and the applicable registration fee.
D. Information is only required to be furnished as of the date of initial effectiveness of the registration statement to the extent required by Rule 430D. Required information about a specific transaction must be included in the prospectus in the registration statement by means of a prospectus that is deemed to be part of and included in the registration statement pursuant to Rule 430D, a post-effective amendment to the registration statement, or a periodic or current report under the Exchange Act incorporated by reference into the registration statement and the prospectus and identified in a prospectus filed, as required by Rule 430D, pursuant to Rule 424(h) or Rule 424(b) (§ 230.424(h) or § 230.424(b) of this chapter).
With respect to the registration of additional securities for an offering pursuant to Rule 462(b) under the Securities Act, the registrant may file a registration statement consisting only of the following: The facing page; a statement that the contents of the earlier registration statement, identified by file number, are incorporated by reference; required opinions and consents; the signature page; and any price-related information omitted from the earlier registration statement in reliance on Rule 430A that the registrant chooses to include in the new registration statement. The information contained in such a Rule 462(b) registration statement shall be deemed to be a part of the earlier registration statement as of the date of effectiveness of the Rule 462(b) registration statement. Any opinion or consent required in the Rule 462(b) registration statement may be incorporated by reference from the earlier registration statement with respect to the offering, if: (i) Such opinion or consent expressly provides for such incorporation; and (ii) such opinion relates to the securities registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b) under the Securities Act.
Include only one form of prospectus for the asset class that may be securitized in a takedown of asset-backed securities under the registration statement. A separate form of prospectus and registration statement must be presented for each country of origin or country of property securing pool assets that may be securitized in a discrete pool in a takedown of asset-backed securities. For both separate asset classes and jurisdictions of origin or property, a separate form of prospectus is not required for transactions that principally consist of a particular asset class or jurisdiction which also describe one or more potential additional asset classes or jurisdictions, so long as the pool assets for the additional classes or jurisdictions in the aggregate are below 10% of the pool, as measured by dollar volume, for any particular takedown.
Set forth in the forepart of the registration statement and on the outside front cover page of the prospectus the information required by Item 501 of Regulation S-K (17 CFR 229.501) and Item 1102 of Regulation AB (17 CFR 229.1102).
Set forth on the inside front cover page of the prospectus or, where permitted, on the outside back cover page, the information required by Item 502 of Regulation S-K (17 CFR 229.502).
Furnish the information required by Item 503 of Regulation S-K (17 CFR 229.503) and Item 1103 of Regulation AB (17 CFR 229.1103).
Furnish the information required by Item 504 of Regulation S-K (17 CFR 229.504).
Furnish the information required by Item 508 of Regulation S-K (17 CFR 229.508).
Furnish the following information:
(a) Information required by Item 1104 of Regulation AB (17 CFR 229.1104), Sponsors;
(b) Information required by Item 1106 of Regulation AB (17 CFR 229.1106), Depositors;
(c) Information required by Item 1107 of Regulation AB (17 CFR 229.1107), Issuing entities;
(d) Information required by Item 1108 of Regulation AB (17 CFR 229.1108), Servicers;
(e) Information required by Item 1109 of Regulation AB (17 CFR 229.1109), Trustees and other transaction parties;
(f) Information required by Item 1110 of Regulation AB (17 CFR 229.1110), Originators;
(g) Information required by Item 1112 of Regulation AB (17 CFR 229.1112), Significant obligors of pool assets;
(h) Information required by Item 1117 of Regulation AB (17 CFR 229.1117), Legal Proceedings; and
(i) Information required by Item 1119 of Regulation AB (17 CFR 229.1119), Affiliations and certain relationships and related transactions.
Furnish the following information:
(a) Information required by Item 1111 of Regulation AB (17 CFR 229.1111), Pool Assets and Item 1125 of Regulation AB (17 CFR 229.1125), Schedule AL—Asset-level information;
(b) Information required by Item 202 of Regulation S-K (17 CFR 229.202), Description of Securities Registered and Item 1113 of Regulation AB (17 CFR 229.1113), Structure of the Transaction;
(c) Information required by Item 1114 of Regulation AB (17 CFR 229.1114), Credit Enhancement and Other Support;
(d) Information required by Item 1115 of Regulation AB (17 CFR 229.1115), Certain Derivatives Instruments;
(e) Information required by Item 1116 of Regulation AB (17 CFR 229.1116), Tax Matters;
(f) Information required by Item 1118 of Regulation AB (17 CFR 229.1118), Reports and additional information; and
(g) Information required by Item 1120 of Regulation AB (17 CFR 229.1120), Ratings.
Furnish the information required by Item 1105 of Regulation AB (17 CFR 229.1105).
Furnish the information required by Item 509 of Regulation S-K (17 CFR 229.509).
(a) The prospectus shall provide a statement that the following documents filed by the date of the filing of a preliminary prospectus filed in accordance with Rule 424(h) (17 CFR 230.424(b)) or a final prospectus meeting the requirements of section 10(a) of the Securities Act (15 U.S.C. 77j(a)) filed in accordance with Rule 424(b) (17 CFR 230.424(b)) are incorporated by reference into the prospectus that is part of the registration statement:
(1) The disclosures filed as exhibits to Form ABS-EE in accordance with Items 601(b)(102) and Item 601(b)(103) of Regulation S-K (17 CFR 601(b)(102) and 601(b)(103)); and
(2) except that if the pool assets include asset-backed securities of a third-party, then registrants may reference the third-party's filings of asset-level data pursuant to Item 1100(c)(2) of Regulation AB (17 CFR 229.1100(c)(2)). The third-party is not required to meet the definition of significant obligor in Item 1101(k) of Regulation AB (17 CFR 229.1101(k)).
(b) Registrants may elect to file the information required by Item 1105 of Regulation AB (17 CFR 229.1105), Static Pool, pursuant to Item 6.06 of Form 8-K (17 CFR 249.308), provided that the information is incorporated by reference into the prospectus that is part of the registration statement.
(c) If the registrant is structured as a revolving asset master trust, the documents listed in (1) and (2) below shall be specifically incorporated by reference into the prospectus by means of a statement to that effect in the prospectus listing all such documents:
(1) The registrant's latest annual report on Form 10-K (17 CFR 249.310) filed pursuant to Section 13(a) or 15(d) of the Exchange Act that contains financial statements for the registrant's latest fiscal year for which a Form 10-K was required to be filed;
(2) all other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the annual report referred to in (1) above.
(d) The prospectus shall also provide a statement regarding the incorporation of reference of Exchange Act reports prior to the termination of the offering pursuant to one of the following two ways:
(1) A statement that all reports subsequently filed by the registrant pursuant to Sections 13(a), 13(c) or 15(d) of the Exchange Act, prior to the termination of the offering shall be deemed to be incorporated by reference into the prospectus; or
(2) a statement that all current reports on Form 8-K filed by the registrant pursuant to Sections 13(a), 13(c) or 15(d) of the Exchange Act, prior to the termination of the offering shall be deemed to be incorporated by reference into the prospectus.
(e)(1) You must state:
(i) That you will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the information that has been incorporated by reference in the prospectus but not delivered with the prospectus;
(ii) that you will provide this information upon written or oral request;
(iii) that you will provide this information at no cost to the requester;
(iv) the name, address, and telephone number to which the request for this information must be made; and
(v) the registrant's Web site address, including the uniform resource locator (URL) where the incorporated information and other documents may be accessed.
(2) You must:
(i) Identify the reports and other information that you file with the SEC.
(ii) State that any materials you file with the SEC will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. State that the public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. If you are an electronic filer, state that the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC and state the address of that site (
Furnish the information required by Item 510 of Regulation S-K (17 CFR 229.510).
Furnish the information required by Item 511 of Regulation S-K (17 CFR 229.511).
Furnish the information required by Item 702 of Regulation S-K (17 CFR 229.702).
Subject to the rules regarding incorporation by reference, file the exhibits required by Item 601 of Regulation S-K (17 CFR 229.601).
Furnish the undertakings required by Item 512 of Regulation S-K (17 CFR 229.512).
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SF-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of __________, State of __________, on __________, 20__.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
1. The registration statement shall be signed by the depositor, the depositor's principal executive officer or officers, its principal financial officer, and controller or principal accounting officer and by at least a majority of its board of directors or persons performing similar functions. If the registrant is a foreign person, the registration statement shall also be signed by its authorized representative in the United States. Where the registrant is a limited partnership, the registration statement shall be signed by a majority of the board of directors of any corporate general partner signing the registration statement.
2. The name of each person who signs the registration statement shall be typed or printed beneath his signature. Any person who occupies more than one of the specified positions shall indicate each capacity in which he signs the registration statement. Attention is directed to Rule 402 concerning manual signatures and to Item 601 of Regulation S-K concerning signatures pursuant to powers of attorney.
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78
The revisions read as follows:
(b) * * * Provided, however, this paragraph (b) shall apply to all issuances of asset-backed securities (as defined in § 229.1101(c) of this chapter) regardless of whether the issuer has previously been required to file reports pursuant to sections 13(a) or 15(d) of the Securities Exchange Act of 1934, or exempted from the requirement to file reports thereunder pursuant to section 12(h) of the Act (15 U.S.C. 78l).
15 U.S.C. 78c, 78i, 78j, 78m, 78o, 78w, 78mm, and 80a-29, unless otherwise noted.
15 U.S.C. 78a
The revision and addition read as follows:
The text of Form 8-K does not, and this amendment will not, appear in the Code of Federal Regulations.
2.
Regarding an offering of asset-backed securities registered on Form SF-1 (17 CFR 239.44) or Form SF-3 (17 CFR 239.45), in lieu of providing the static pool information as required by Item 1105 of Regulation AB (17 CFR 229.1105) in a form of prospectus or prospectus, an issuer may file the required information in this report or as an exhibit to this report. The static pool disclosure must be filed by the time of effectiveness of a registration statement on Form SF-1, by the same date of the
1. Refer to Item 601(b)(106) of Regulation S-K (17 CFR 229.601(b)(106)) regarding the filing of exhibits to this Item 6.06.
2. Refer to Item 10 of Form SF-1 (17 CFR 239.44) or Item 10 of Form SF-3 (17 CFR 239.45) regarding incorporation by reference.
The revision reads as follows:
The text of Form 10-K does not, and this amendment will not, appear in the Code of Federal Regulations.
(2) * * *
(a) Immediately after the name of the issuing entity on the cover page of the Form 10-K, as separate line items, the exact name of the depositor as specified in its charter and the exact name of the sponsor as specified in its charter. Include a Central Index Key number for the depositor and the issuing entity, and if available, the sponsor.
The revisions and additions read as follows:
The text of Form 10-D does not, and this amendment will not, appear in the Code of Federal Regulations.
(3) Any item which is inapplicable or to which the answer is negative may be omitted and no reference need be made in the report. If substantially the same information has been previously reported by the asset-backed issuer, an additional report of the information on this Form need not be made. Identify the form or report on which the previously reported information was filed. Identifying information should include a Central Index Key number, file number and date of the previously reported information. The term “previously reported” is defined in Rule 12b-2 (17 CFR 240.12b-2).
(3) With respect to all registrants required to provide asset-level information pursuant to Item 1111(h) of Regulation AB (17 CFR 229.1111(h)):
(a) The disclosures filed as exhibits to Form ABS-EE in accordance with Item 601(b)(102) and Item 601(b)(103) of Regulation S-K (17 CFR 229.601(b)(102) and 601(b)(103)) must be incorporated by reference into the Form 10-D.
(b) If the pool assets include asset-backed securities of a third-party, registrants may reference the third-party's filings of asset-level data pursuant to Item 1100(c)(2) of Regulation AB (17 CFR 232.1100(c)(2)), except that the third-party is not required to meet the definition of significant obligor in Item 1101(k) of Regulation AB (17 CFR 232.1101(k)).
For the [identify distribution frequency (
Provide the information required by Item 1121(a) and (b) of Regulation AB (17 CFR 229.1121(a) and (b)), and attach as an exhibit to this report the distribution report delivered to the trustee or security holders, as the case may be, pursuant to the transaction agreements for the distribution period covered by this report. Any information required by Item 1121(a) and (b) of Regulation AB that is provided in the attached distribution report need not be repeated in this report. However, taken together, the attached distribution report and the information provided under this Item must contain the information required by Item 1121(a) and (b) of Regulation AB.
Provide the information required by Item 1111 of Regulation AB (17 CFR 229.1111), Pool Assets and Item 1125 of
For any transaction that included the provisions required by General Instructions I.B.1(b) and I.B.1(d) on Form SF-3 (referenced in § 239.45), provide the information required by Item 1121(d) and (e) of Regulation AB (17 CFR 229.1121(d) and (e)), as applicable.
Provide the information required by Item 1124 of Regulation AB (17 CFR 229.1124) with respect to the reporting period covered by this report.
This Form shall be used by an electronic filer for the submission of information required by Item 1111(h) (§ 229.1111(h) of this chapter).
The text of Form ABS-EE does not, and this amendment will not, appear in the Code of Federal Regulations.
Item 1. File an Asset Data File in accordance with Exhibit 601(b)(102) (17 CFR 229.601(b)(102)).
Item 2. File an Asset Related Document in accordance with Exhibit 601(b)(103) (17 CFR 229.601(b)(103)).
The depositor has duly caused this Form to be signed on its behalf by the undersigned hereunto duly authorized.
*Print name and title of the signing officer under his signature.
If multiple servicers are involved in servicing the pool assets, a duly authorized representative of the master servicer (or entity performing the equivalent function) must sign if a representative of the servicer is to sign the report on behalf of the issuing entity.
By the Commission.
Office of the Comptroller of the Currency, Treasury (“OCC”); Board of Governors of the Federal Reserve System (“Board”); Federal Deposit Insurance Corporation (“FDIC”); Farm Credit Administration (“FCA”); and the Federal Housing Finance Agency (“FHFA”).
Notice of proposed rulemaking and request for comment.
The OCC, Board, FDIC, FCA, and FHFA (each an “Agency” and, collectively, the “Agencies”) are seeking comment on a proposed joint rule to establish minimum margin and capital requirements for registered swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants for which one of the Agencies is the prudential regulator. This proposed rule implements sections 731 and 764 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which require the Agencies to adopt rules jointly to establish capital requirements and initial and variation margin requirements for such entities and their counterparties on all non-cleared swaps and non-cleared security-based swaps in order to offset the greater risk to such entities and the financial system arising from the use of swaps and security-based swaps that are not cleared.
Comments should be received on or before November 24, 2014.
Interested parties are encouraged to submit written comments jointly to all of the Agencies. Commenters are encouraged to use the title “Margin and Capital Requirements for Covered Swap Entities” to facilitate the organization and distribution of comments among the Agencies.
• Federal eRulemaking Portal—“regulations.gov”: Go to
• Click on the “Help” tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for submitting public comments.
• Email:
• Mail: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219.
• Hand Delivery/Courier: 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219.
• Fax: (571) 465-4326.
You may review comments and other related materials that pertain to this rulemaking action by any of the following methods:
• Viewing Comments Electronically: Go to
• Click on the “Help” tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for viewing public comments, viewing other supporting and related materials, and viewing the docket after the close of the comment period.
• Viewing Comments Personally: You may personally inspect and photocopy comments at the OCC, 400 7th Street SW., Washington, DC. For security reasons, the OCC requires that visitors make an appointment to inspect comments. You may do so by calling (202) 649-6700. Upon arrival, visitors will be required to present valid government-issued photo identification and to submit to a security screening in order to inspect and photocopy comments.
• Docket: You may also view or request available background documents and project summaries using the methods described above.
• Agency Web site:
• Federal eRulemaking Portal:
• Email:
• Fax: (202) 452-3819 or (202) 452-3102.
• Mail: Address to Robert deV. Frierson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW., Washington, DC 20551.
All public comments will be made available on the Board's Web site at
• Agency Web site:
• Email:
• Mail: Robert E. Feldman, Executive Secretary, Attention: Comments, Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429.
• Hand Delivery: Comments may be hand delivered to the guard station at the rear of the 550 17th Street Building (located on F Street) on business days between 7:00 a.m. and 5:00 p.m.
• Agency Web site:
• Federal eRulemaking Portal:
• Hand Delivery/Courier: The hand delivery address is: Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA45, Federal Housing Finance Agency, Constitution Center (OGC Eighth Floor), 400 7th St. SW., Washington, DC 20024. Deliver the package to the Seventh Street entrance Guard Desk, First Floor, on business days between 9:00 a.m. and 5:00 p.m.
• U.S. Mail, United Parcel Service, Federal Express, or Other Mail Service: The mailing address for comments is: Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA45, Federal Housing Finance Agency, Constitution Center (OGC Eighth Floor), 400 7th St. SW., Washington, DC 20024.
All comments received by the deadline will be posted for public inspection without change, including any personal information you provide, such as your name, address, email address and telephone number on the FHFA Web site at
• Email: Send us an email at
• FCA Web site:
• Federal eRulemaking Portal:
• Mail: Barry F. Mardock, Deputy Director, Office of Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090.
You may review copies of all comments we receive at our office in McLean, Virginia or on our Web site at
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act” or “Dodd-Frank Act”) was enacted on July 21, 2010.
As part of this new regulatory framework, sections 731 and 764 of the Dodd-Frank Act add a new section, section 4s, to the Commodity Exchange Act of 1936, as amended (“Commodity Exchange Act”) and a new section, section 15F, to the Securities Exchange Act of 1934, as amended (“Exchange Act”), respectively, which require the registration by the Commodity Futures Trading Commission (the “CFTC”) and the Securities and Exchange Commission (the “SEC”) of swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants (each a “swap entity” and, collectively, “swap entities”).
Sections 731 and 764 of the Dodd-Frank Act also require the CFTC and SEC separately to adopt rules imposing capital and margin requirements for swap entities for which there is no prudential regulator.
The capital and margin standards for swap entities imposed under sections 731 and 764 of the Dodd-Frank Act are intended to offset the greater risk to the swap entity and the financial system arising from non-cleared swaps.
In addition to the Dodd-Frank Act authorities mentioned above, the Agencies also have safety and soundness authority over the entities they supervise.
The capital and margin requirements for non-cleared swaps under sections 731 and 764 of the Dodd-Frank Act complement other Dodd-Frank Act provisions that require all sufficiently standardized swaps to be cleared through a derivatives clearing organization or clearing agency.
In the derivatives clearing process, CCPs manage credit risk through a range of controls and methods, including a margining regime that imposes both initial margin and variation margin requirements on parties to cleared transactions.
However, if a particular swap is not cleared because it is not subject to the mandatory clearing requirement (or because one of the parties to a particular swap is eligible for, and uses, an exemption from the mandatory clearing requirement), that swap will be a “non-cleared” swap and may be subject to the capital and margin requirements for such transactions established under sections 731 and 764 of the Dodd-Frank Act.
The swaps-related provisions of Title VII of the Dodd-Frank Act, including sections 731 and 764, are intended in general to reduce risk, increase transparency, promote market integrity within the financial system, and, in particular, address a number of weaknesses in the regulation and structure of the swaps markets that were revealed during the financial crisis of 2008 and 2009. During the financial crisis, the opacity of swap transactions among dealers and between dealers and their counterparties created uncertainty about whether market participants were significantly exposed to the risk of a default by a swap counterparty. By imposing a regulatory margin requirement on non-cleared swaps, the Dodd-Frank Act reduces the uncertainty around the possible exposures arising from non-cleared swaps.
Further, the most recent financial crisis revealed that a number of significant participants in the swaps markets had taken on excessive risk through the use of swaps without sufficient financial resources to make good on their contracts. By imposing an initial and variation margin requirement on non-cleared swaps, sections 731 and 764 of the Dodd-Frank Act will reduce the ability of firms to take on excessive risks through swaps without sufficient financial resources. Additionally, the minimum margin requirement will reduce the amount by which firms can leverage the underlying risk associated with the swap contract.
The Agencies originally published proposed rules to implement sections 731 and 764 of the Act in May 2011 (the “2011 proposal”).
The applicability of the prudential regulators' margin requirements rely in part on regulatory action taken by the CFTC, the SEC, and the Secretary of the Treasury. The margin requirements will apply to an entity listed as prudentially regulated by the Agencies under the definition of “prudential regulator” in the Commodity Exchange Act
On May 23, 2012, the CFTC and SEC adopted a final joint rule defining “swap dealer,” “major swap participant,” “security-based swap dealer,” and “major security-based swap dealer.” These definitions include quantitative thresholds in the relevant activity that affect whether an entity subject to the “prudential regulator” definition also will be subject to the margin regulations being proposed.
On August 13, 2012, the CFTC and SEC adopted a final joint rule defining “swap,” “security-based swap,” “foreign exchange swap,” and “foreign
The CFTC has adopted a final rule requiring registration by entities meeting the substantive definition of swap dealer or major swap participant and engaging in relevant activities above the applicable quantitative thresholds.
The CFTC and SEC have also adopted policies addressing how the Commodity Exchange Act's and Exchange Act's swap requirements will apply to “cross-border swaps.”
Following the release of the Agencies' 2011 proposal, the Basel Committee on Banking Supervision (“BCBS”) and the Board of the International Organization of Securities Commissions (“IOSCO”) proposed an international framework for margin requirements on non-cleared swaps with the goal of creating an international standard for non-cleared swaps (the “2012 international framework”).
The 2013 international framework articulates eight key principles for non-cleared derivatives margin rules, which are described in further detail below. These principles represent the minimum standards approved by BCBS and IOSCO and recommended to the regulatory authorities in member jurisdictions of these organizations. Key principles 1 through 8 are described below.
The 2013 international framework recommends that appropriate margining practices be in place with respect to all derivative transactions that are not cleared by CCPs. The 2013 international framework does not include a margin requirement for physically settled foreign exchange (FX) forwards and swaps.
The 2013 international framework recommends bilateral exchange of initial and variation margin for non-cleared derivatives between covered entities. The precise definition of “covered entities” is to be determined by each national regulator, but in general should include financial firms and systemically important nonfinancial entities. Sovereigns, central banks, certain multilateral development banks, the Bank for International Settlements (BIS), and non-systemic, nonfinancial firms are not included as covered entities.
Under the 2013 international framework, all covered entities that engage in non-cleared derivatives should exchange, on a bilateral basis, the full amount of variation margin with a zero threshold on a regular basis (
The 2013 international framework states that the potential future exposure of a non-cleared derivative should reflect an estimate of an increase in the value of the instrument that is consistent with a one-tailed 99% confidence level over a 10-day horizon (or longer, if variation margin is not collected on a daily basis), based on historical data that incorporates a period of significant financial stress.
The 2013 international framework permits the amount of initial margin to be calculated by reference to internal models approved by the relevant national regulator or a standardized margin schedule, but covered entities should not “cherry pick” between the two calculation methods. Models may allow for conceptually sound and empirically demonstrable portfolio risk offsets where there is an enforceable netting agreement in effect. However, portfolio risk offsets may only be recognized within, and not across, certain well-defined asset classes: Credit, equity, interest rates and foreign exchange, and commodities. A covered entity using the standardized margin schedule may adjust the gross initial margin amount (notional exposure multiplied by the relevant percentage in the table) by a “net-to-gross ratio,” which is also used in the bank counterparty credit risk capital rules to reflect a degree of netting of derivative
The 2013 international framework recommends that national supervisors develop a definitive list of eligible collateral assets. The 2013 international framework includes examples of permissible collateral types, provides a schedule of standardized haircuts, and indicates that model-based haircuts may be appropriate. In the event that a dispute arises over the value of eligible collateral, the 2013 international framework provides that both parties should make all necessary and appropriate efforts, including timely initiation of dispute resolution protocols, to resolve the dispute and exchange any required margin in a timely fashion.
The 2013 international framework provides that collateral collected as initial margin from a “customer” (defined as a “buy-side financial firm”) should be segregated from the initial margin collector's proprietary assets. The initial margin collector also should give the customer the option to individually segregate its initial margin from other customers' margin. In very specific circumstances, the initial margin collector may use margin provided by the customer to hedge the risks associated with the customer's positions with a third party. To the extent that the customer consents to rehypothecation, it should be permitted only where applicable insolvency law gives the customer protection from risk of loss of initial margin in instances where either the initial margin collector or the third party become insolvent, or they both do. Where a customer has consented to rehypothecation and adequate legal safeguards are in place, the margin collector and the third party to whom customer collateral is rehypothecated should comply with additional restrictions detailed in the 2013 international framework, including a prohibition on any further rehypothecation of the customer's collateral by the third party.
The 2013 international framework recommends that national supervisors establish margin requirements for transactions between affiliates as appropriate in a manner consistent with each jurisdiction's legal and regulatory framework.
Under the 2013 international framework, home-country supervisors may allow a covered entity to comply with a host-country's margin regime if the host-country margin regime is consistent with the 2013 international framework. A branch may be subject to the margin requirements of either the headquarters' jurisdiction or the host country.
The 2013 international framework phases in margin requirements between December 2015 and December 2019. Covered entities should begin exchanging variation margin by December 1, 2015. The date on which a covered entity should begin to exchange initial margin with a counterparty depends on the notional amount of non-cleared derivatives (including physically settled FX forwards and swaps) entered into both by its consolidated corporate group and by the counterparty's consolidated corporate group.
The Agencies have reviewed the comments received on the 2011 proposal and the 2013 international framework. The Agencies believe that a number of changes to the 2011 proposal are warranted in order to reflect certain comments received, as well as to achieve the 2013 international framework's goal of promoting global consistency and reducing regulatory arbitrage opportunities. In light of the significant differences from the 2011 proposal, the Agencies are seeking comment on a revised proposed rule to implement section 4s of the Commodity Exchange Act and section 15F of the Exchange Act (the “proposal” or the “proposed rule”).
The Agencies are proposing to adopt a risk-based approach that would establish initial and variation margin requirements for covered swap entities. Consistent with the statutory requirement, the proposed rule would help ensure the safety and soundness of the covered swap entity and would be appropriate for the risk to the financial system associated with non-cleared swaps held by covered swap entities. The proposed rule takes into account the risk posed by a covered swap entity's counterparties in establishing the minimum amount of initial and variation margin that the covered swap entity must exchange with its counterparties.
In implementing this risk-based approach, the proposed rule distinguishes among four separate types of swap counterparties: (i) Counterparties that are themselves swap entities; (ii) counterparties that are financial end users with a material swaps exposure; (iii) counterparties that are financial end users without a material swaps exposure, and (iv) other
The proposed rule's initial and variation margin requirements generally apply to the posting, as well as the collection, of minimum initial and variation margin amounts by a covered swap entity from and to its counterparties. This proposal represents a refinement to the Agencies' original collection-only approach to margin requirements based on consideration of comments made on the 2011 proposal and the 2013 international framework. While the Agencies believe that imposing requirements with respect to the minimum amount of initial and variation margin to be collected is a critical aspect of offsetting the greater risk to the covered swap entity and the financial system arising from the covered swap entity's non-cleared swap exposure, the Agencies also believe that requiring a covered swap entity to post margin to other financial entities could forestall a build-up of potentially destabilizing exposures in the financial system. The proposed rule's approach therefore is designed to ensure that covered swap entities transacting with other swap entities and with financial end users in non-cleared swaps will be collecting and posting appropriate minimum margin amounts with respect to those transactions.
For initial margin, the proposed rule would require a covered swap entity to calculate its minimum initial margin requirement in one of two ways. The covered swap entity may use a standardized margin schedule, which is set out in Appendix A of the proposed rule. The standardized margin schedule allows for certain types of netting and offsetting of exposures. In the alternative, a covered swap entity may use an internal margin model that satisfies certain criteria outlined within § __.8 of the proposed rule and that has been approved by the relevant prudential regulator.
Where a covered swap entity transacts with another swap entity (regardless of whether the other swap entity meets the definition of a “covered swap entity” under the proposed rule), the covered swap entity must collect at least the amount of initial margin required under the proposed rule. Likewise, the swap entity counterparty also will be required, under margin rules that are applicable to that swap entity,
The proposed rule permits a covered swap entity to adopt a maximum initial margin threshold amount of $65 million, below which it need not collect or post initial margin from or to swap entities and financial end users with material swaps exposures. The threshold would be applied on a consolidated basis, and would apply both to the consolidated covered swap entity as well as to the consolidated counterparty.
With respect to variation margin, the proposed rule generally requires a covered swap entity to collect or post variation margin on swaps with a swap entity or a financial end user (regardless of whether the financial end user has a material swaps exposure) in an amount that is at least equal to the increase or decrease in the value of the swap since the counterparties' previous exchange of variation margin. The proposed rule would not permit a covered swap entity to adopt a threshold amount below which it need not collect or post variation margin on swaps with swap entity and financial end user counterparties. In addition, a covered swap entity must collect or post variation margin with swap entities and financial end user counterparties under the proposed rule on at least a daily basis.
The proposed rule's margin provisions establish only
Under the proposal, a covered swap entity's collection of margin from “other counterparties” that are not swap entities or financial end users (e.g., nonfinancial or “commercial” end users that generally engage in swaps to hedge commercial risk, sovereigns, and multilateral developments banks), is subject to the judgment of the covered swap entity. That is, under the proposed rule, a covered swap entity is not required to collect initial and variation margin from these “other counterparties” as a matter of course. However, a covered swap entity should continue with the current practice of collecting initial or variation margin at such times and in such forms and amounts (if any) as the covered swap entity determines in its overall credit risk management of the swap entity's exposure to the customer.
Although covered swap entities would be required to collect variation margin from all financial end user counterparties under the proposed rule, no minimum initial margin requirement would apply to transactions with those financial end users that are not swap entities and that do not have a material swaps exposure. Thus, for the purpose of the initial margin requirements, financial end users that are not swap entities and that do not have a material swaps exposure would be treated in the same manner as entities characterized as “other counterparties.”
The Agencies believe that differential treatment of “other counterparties” is consistent with the Dodd-Frank Act's
The proposed rule limits the types of collateral that are eligible to be used to satisfy both the initial and variation margin requirements. Eligible collateral is generally limited to high-quality, liquid assets that are expected to remain liquid and retain their value, after accounting for an appropriate risk-based “haircut,” during a severe economic downturn. Eligible collateral for variation margin is limited to cash only. Eligible collateral for initial margin includes cash, debt securities that are issued or guaranteed by the U.S. Department of Treasury or by another U.S. government agency, the Bank for International Settlements, the International Monetary Fund, the European Central Bank, multilateral development banks, certain U.S. Government-sponsored enterprises' (“GSEs”) debt securities, certain foreign government debt securities, certain corporate debt securities, certain listed equities, and gold.
Separate from the proposed rule's requirements with respect to the collection and posting of initial and variation margin, the proposed rule also would require a covered swap entity to require that any collateral other than variation margin that it posts to its counterparty (even collateral in excess of any required by the proposed rule) be segregated at one or more custodians that are not affiliates of the covered swap entity or the counterparty (“third-party custodian”). The proposed rule would also require a covered swap entity to place the initial margin it collects (in accordance with the proposed rule) from a swap entity or a financial end user with material swaps exposure at a third-party custodian.
Given the global nature of swaps markets and swap transactions, margin requirements will be applied to transactions across different jurisdictions. As required by the Dodd-Frank Act, the Agencies are proposing a specific approach to address cross-border non-cleared swap transactions. Under the proposal, foreign swaps of foreign covered swap entities would not be subject to the margin requirements of the proposed rule.
Sections 731 and 764 of the Dodd-Frank Act also require each Agency to issue, in addition to margin rules, joint rules on capital for covered swap entities for which it is the prudential regulator.
In July 2013 the Board and the OCC issued a final rule (revised capital framework) implementing regulatory capital reforms reflecting agreements reached by the BCBS in “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems.”
FHFA's predecessor agencies used a methodology similar to that endorsed by the BCBS prior to the development of its recent revised and enhanced framework to develop the risk-based capital rules applicable to those entities now regulated by FHFA. Those rules still apply to all FHFA-regulated entities.
As described below, the proposed rule requires a covered swap entity to comply with regulatory capital rules already made applicable to that covered swap entity as part of its prudential regulatory regime. Given that these existing regulatory capital rules specifically take into account and address the unique risks arising from swap transactions and activities, the Agencies are proposing to rely on these existing rules as appropriate and sufficient to offset the greater risk to the covered swap entity and the financial system arising from the use of swaps that are not cleared and to protect the safety and soundness of the covered swap entity.
In the 2011 proposal, FHFA and FCA (but not the other Agencies) had proposed an additional provision, § __.11 of FHFA's and FCA's proposed rules. Proposed § __.11 would have required any entity that was regulated by FHFA or FCA, but was not itself a covered swap entity, to collect initial margin and variation margin from its swap entity counterparty when entering into a non-cleared swap.
FHFA and FCA proposed § __.11 to account for the fact that the 2011 proposal only required covered swap entities to collect initial and variation margin from, but did not require them to post initial and variation margin to, their counterparties.
FHFA and FCA are not re-proposing as part of this proposal a provision similar to that found in § __.11 of the 2011 proposal. Unlike the 2011 proposal, this proposal generally would require two-way margining in swap transactions between covered swap entities and FHFA- and FCA-regulated entities.
The Agencies expect that the proposed rule likely will have minimal impact on community banks. The Agencies anticipate that community banks will not engage in swap activity to the level necessary to meet the definition of a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant; and therefore, are unlikely to fall within the proposed definition of a covered swap entity. Because the proposed rule imposes requirements on covered swap entities, no community bank will likely be directly subject to the rule. Thus, a community bank that enters into non-cleared interest rate swaps with its commercial customers would not be required to apply to those swaps the proposed rule's requirements for initial margin or variation margin.
When a community bank enters into a swap with a covered swap entity, the covered swap entity would be required to post and collect initial margin pursuant to the rule only if the community bank had a material swaps exposure.
The proposed rule would require a covered swap entity to exchange daily variation margin with a community bank, regardless of whether the community bank had material swaps exposure. However, the covered swap entity would only be required to collect variation margin from a community bank when the amount of both initial margin and variation margin required to be collected daily exceeded $650,000. The Agencies expect that the vast majority of community banks will have a daily margin requirement that is below this amount.
The Agencies seek comment on the potential impact that this proposed rule might have on community banks.
Similar to community banks, the proposed rule will have a minimal impact on the Farm Credit System. Currently, no FCS institution, including Farmer Mac, engage in swap activity at the level necessary to meet the definition of a swap dealer, major swap participant, security-based swap dealer, or a major security-based swap participant. For this reason, no FCS institution, including Farmer Mac, would fall within the proposed definition of a covered swap entity and, therefore, become directly subject to this rule. Furthermore, an overwhelming majority of FCS institutions do not currently engage in non-cleared swaps at or near the level that they would have a material swaps exposure. Therefore, a majority of FCS institutions would not be required by this rule to exchange initial margin with a covered swap entity. For those few FCS institutions that currently have a material swaps exposure, initial margin exchange would be mandated only when non-cleared swap transactions with an individual counterparty and its affiliates exceed the $65 million threshold. All FCS institutions, including Farmer Mac, are financial end users and, therefore, they must exchange variation margin daily once the parties reach the $650,000 minimum transfer amount.
The Agencies also seek specific comments on the potential impact of this proposal on FCS institutions.
Sections __.1(a)-(c) of the proposal are agency-specific. Section __.1(a) sets out each Agency's specific authority, and § __.1(b) describes the purpose of the rule, including the specific entities covered by each Agency's rule. Section __.1(c) of the proposal specifies the scope of the transactions to which the margin requirements apply. It provides that the margin requirements apply to
Following passage of the Dodd-Frank Act, various parties expressed concerns regarding whether sections 731 and 764 of the Dodd-Frank Act authorize or require the CFTC, SEC, and Agencies to establish margin requirements with respect to transactions between a covered swap entity and a “commercial end user” (
In formulating the proposed rule, the Agencies have carefully considered these concerns and statements. The plain language of sections 731 and 764 provides that the Agencies adopt rules for covered swap entities imposing margin requirements on
The 2011 proposal permitted a covered swap entity to adopt, where appropriate, initial and variation margin thresholds below which the covered swap entity would not be required to collect initial or variation margin from nonfinancial end users. The proposal noted the lesser risk posed by these types of counterparties to covered swap entities and financial stability with respect to exposures below these thresholds. The Agencies received many comments on this aspect of the 2011 proposal. In particular, commenters requested that swap transactions with nonfinancial end users and a number of other counterparties, including sovereigns and multilateral development banks, be explicitly excluded from the margin requirements.
The proposal takes a different approach to nonfinancial end users than the 2011 proposal. Like the 2011 proposal, this proposal follows the statutory framework and proposes a risk-based approach to imposing margin requirements. Unlike the 2011 proposal, this proposal does not require that the covered swap entity determine a specific, numerical threshold for each nonfinancial end user counterparty. Rather, the proposed rule does not require a covered swap entity to collect initial margin and variation margin from nonfinancial end users and certain other counterparties as a matter of course, but instead requires it to collect initial and variation margin at such times and in such forms and amounts (if any) as the covered swap entity determines would appropriately address the credit risk posed by swaps entered into with “other counterparties.”
The proposal takes a similar approach to margin requirements for transactions between covered swap entities and sovereign entities; multilateral development banks; the Bank for International Settlements; captive finance companies exempt from clearing pursuant to the Dodd-Frank Act; and Treasury affiliates exempt from clearing pursuant to the Dodd-Frank Act.
Section __.1(d) of the proposal includes a set of compliance dates by which covered swap entities must comply with the minimum margin requirements for non-cleared swaps. The compliance dates of the proposal are consistent with the 2013 international framework. The proposed rule would be effective with respect to any swap to which a covered swap entity becomes a party on or after the relevant compliance date and would continue to apply regardless of future changes in the measured swaps exposure of the covered swap entity and its affiliates or the counterparty and its affiliates.
For variation margin, the compliance date is December 1, 2015 for all covered swap entities with respect to covered swaps with any counterparty. The Agencies believe that the collection of daily variation margin is currently a best practice and, as such, current swaps business operations for covered swap entities of all sizes will be able to achieve compliance with the proposed rule by December 1, 2015. Therefore, there is no phase-in for the variation margin requirements.
As reflected in the table below, for initial margin, the compliance dates range from December 1, 2015 to December 1, 2019 depending on the average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps (“covered swaps”) of the covered swap entity and its counterparty for June, July and August of that year.
The Agencies expect that covered swap entities likely will need to make a number of operational and legal changes to their current swaps business operations in order to achieve compliance with the proposed rule, including potential changes to internal risk management and other systems, trading documentation, collateral arrangements, and operational technology and infrastructure. In addition, the Agencies expect that covered swap entities that wish to calculate initial margin using an initial margin model will need sufficient time to develop such models and obtain regulatory approval for their use. Accordingly, the compliance dates have been structured to ensure that the largest and most sophisticated covered swap entities and counterparties that present the greatest potential risk to the financial system comply with the requirements first. These swap market participants should be able to make the required operational and legal changes more rapidly and easily than smaller entities that engage in swaps less frequently and pose less risk to the financial system.
Section __.1(e) provides that once a covered swap entity and its counterparty must comply with the margin requirements for non-cleared swaps based on the compliance dates in § __.1(d), the covered swap entity and its counterparty shall remain subject to the margin requirements from that point forward. As an example, December 1, 2016 is the relevant compliance date where both the covered swap entity combined with its affiliates and its counterparty combined with its affiliates have an average aggregate daily notional amount of covered swaps that exceeds $3 trillion. If the notional amount of the swap activity for the covered swap entity or the counterparty drops below that threshold amount of covered swaps in subsequent years, their swaps would nonetheless remain subject to the margin requirements. On December 1, 2019, any covered swap entity that did not have an earlier compliance date becomes subject to the margin requirements with respect to non-cleared swaps entered into with any counterparty.
The Agencies note that a covered swap entity may enter into swaps on or after the proposed rule's compliance date pursuant to the same master netting agreement that governs existing swaps entered into with a counterparty prior to the compliance date. As discussed below, the proposed rule permits a covered swap entity to (i) calculate initial margin requirements for swaps under an eligible master netting agreement (“EMNA”) with the counterparty on a portfolio basis in certain circumstances, if it does so using an initial margin model; and (ii) calculate variation margin requirements under the proposed rule on an aggregate, net basis under an EMNA with the counterparty. Applying the proposed rule in such a way would, in some cases, have the effect of applying it retroactively to swaps entered into prior to the compliance date under the EMNA. The Agencies expect that the covered swap entity will comply with the margin requirements with respect to all swaps governed by an EMNA, regardless of the date on which they were entered into, consistent with current industry practice.
The proposed rule prescribes margin requirements on all non-cleared swaps between a covered swap entity and its counterparties. In particular, the proposal generally would cover swaps between banks that are covered swap entities and their affiliates that are financial end users, including affiliates that are subsidiaries of a bank, such as operating subsidiaries, Edge Act subsidiaries, agreement corporation subsidiaries, financial subsidiaries, and lower-tier subsidiaries of such subsidiaries. The Agencies note that other applicable laws require transactions between banks and their affiliates to be on an arm's length basis. In particular, section 23B of the Federal Reserve Act provides that many transactions between a bank and its affiliates must be on terms and under circumstances, including credit standards, that are substantially the same or at least as favorable to the bank as those prevailing at the time for comparable transactions with or involving nonaffiliated companies.
While section 23B applies to transactions between a bank and its financial subsidiary, it does not apply to transactions between a bank and other subsidiaries, such as an operating subsidiary, an Edge Act subsidiary, or an agreement corporation subsidiary. The proposed rule does not exempt a bank's swaps with these affiliates and would therefore impose margin requirements on all swaps between a bank and a subsidiary, including a subsidiary that is not covered by section 23B.
Section __.2 of the 2011 proposal defined its key terms. In particular, the 2011 proposal defined the four types of swap counterparties that formed the basis of the 2011 proposal's risk-based approach to margin requirements. Section ___.2 also provided other key operative terms needed to calculate the amount of initial and variation margin required under other sections of the 2011 proposal.
The four types of counterparties defined in the 2011 proposal were (in order of highest to lowest risk): (i) Swap entities; (ii) high-risk financial end users; (iii) low-risk financial end users; and (iv) nonfinancial end users. The 2011 proposal defined “swap entity” as any entity that is required to register as a swap dealer, major swap participant, security-based swap dealer or major security-based swap participant.
Section __.2 of the 2011 proposal defined a financial end user largely based on the definition of a “financial entity” that is ineligible for the exemption from the mandatory clearing requirements of sections 723 and 763 of the Dodd-Frank Act, and also included foreign governments.
The Agencies requested comment on whether the 2011 proposal's categorization of various types of counterparties by risk, and the key definitions used to implement this risk-based approach, were appropriate, or whether alternative approaches or definitions would better reflect the purposes of sections 731 and 764 of the Dodd-Frank Act. As discussed above, many commenters argued that nonfinancial end users should not be subject to the margin requirements and urged that the language and intent of the statute did not require the imposition of margin on nonfinancial end users.
Many commenters also argued that particular types of entities should either be excluded from the term financial end user or be classified as a low-risk financial end user instead of a high-risk financial end user.
Section __.2 of the proposal defines key terms used in the proposed rule, including the types of counterparties that form the basis of the proposal's risk-based approach to margin requirements and other key terms needed to calculate the required amount of initial margin and variation margin.
Similar to the 2011 proposal, this proposal defines “swap entity” by reference to the Securities Exchange Act and the Commodity Exchange Act to mean a security-based swap dealer, a major security-based swap participant, a swap dealer, or a major swap participant.
The proposal's definition of financial end user takes a different approach than the 2011 proposal, which, as noted above, was based on the definition of a “financial entity” that is ineligible for the exemption from mandatory clearing requirements of sections 723 and 763 of the Dodd-Frank Act. In order to provide certainty and clarity to counterparties as to whether they would be financial end users for purposes of this proposal, the financial end user definition provides a list of entities that would be financial end users as well as a list of entities excluded from the definition. This approach would mean that covered swap entities would not need to make a determination regarding whether their counterparties are predominantly engaged in activities that are financial in nature, as defined in section 4(k) of the Bank Holding Company Act of 1956, as amended (the “BHC Act”).
Under the proposal, financial end user includes a counterparty that is not a swap entity but is:
• A bank holding company or an affiliate thereof; a savings and loan holding company; a nonbank financial institution supervised by the Board of Governors of the Federal Reserve System under Title I of the Dodd-Frank
• A depository institution; a foreign bank; a Federal credit union, State credit union as defined in section 2 of the Federal Credit Union Act (12 U.S.C. 1752(1) & (6)); an institution that functions solely in a trust or fiduciary capacity as described in section 2(c)(2)(D) of the Bank Holding Company Act (12 U.S.C. 1841(c)(2)(D)); an industrial loan company, an industrial bank, or other similar institution described in section 2(c)(2)(H) of the Bank Holding Company Act (12 U.S.C. 1841(c)(2)(H));
• An entity that is state-licensed or registered as a credit or lending entity, including a finance company; money lender; installment lender; consumer lender or lending company; mortgage lender, broker, or bank; motor vehicle title pledge lender; payday or deferred deposit lender; premium finance company; commercial finance or lending company; or commercial mortgage company; but excluding entities registered or licensed solely on account of financing the entity's direct sales of goods or services to customers;
• A money services business, including a check casher; money transmitter; currency dealer or exchange; or money order or traveler's check issuer;
• A regulated entity as defined in section 1303(20) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502(20)) and any entity for which the Federal Housing Finance Agency or its successor is the primary federal regulator;
• Any institution chartered and regulated by the Farm Credit Administration in accordance with the Farm Credit Act of 1971, as amended, 12 U.S.C. 2001 et seq.;
• A securities holding company; a broker or dealer; an investment adviser as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)); an investment company registered with the SEC under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.); or a company that has elected to be regulated as a business development company pursuant to section 54(a) of the Investment Company (15 U.S.C. 80a-53);
• A private fund as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80-b-2(a)); an entity that would be an investment company under section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3) but for section 3(c)(5)(C); or an entity that is deemed not to be an investment company under section 3 of the Investment Company Act of 1940 pursuant to Investment Company Act Rule 3a-7 of the Securities and Exchange Commission (17 CFR 270.3a-7);
• A commodity pool, a commodity pool operator, or a commodity trading advisor as defined in, respectively, sections 1a(10), 1a(11), and 1a(12) of the Commodity Exchange Act (7 U.S.C. 1a(10), 7 U.S.C. 1a(11), 7 U.S.C. 1a(12)); or a futures commission merchant;
• An employee benefit plan as defined in paragraphs (3) and (32) of section 3 of the Employee Retirement Income and Security Act of 1974 (29 U.S.C. 1002);
• An entity that is organized as an insurance company, primarily engaged in writing insurance or reinsuring risks underwritten by insurance companies, or is subject to supervision as such by a State insurance regulator or foreign insurance regulator;
• An entity that is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in loans, securities, swaps, funds or other assets for resale or other disposition or otherwise trading in loans, securities, swaps, funds or other assets;
• An entity that would be a financial end user as described above or a swap entity, if it were organized under the laws of the United States or any State thereof; or
• Notwithstanding the specified exclusions described below, any other entity that [Agency] has determined should be treated as a financial end user.
In developing this definition of financial end user, the Agencies sought to provide certainty and clarity to covered swap entities and their counterparties regarding whether particular counterparties would qualify as financial end users and be subject to the margin requirements of the proposed rule. The Agencies tried to strike a balance between the desire to capture all financial counterparties, without being overly broad and capturing commercial firms and sovereigns. Financial firms present a higher level of risk than other types of counterparties because the profitability and viability of financial firms is more tightly linked to the health of the financial system than other types of counterparties. Because financial counterparties are more likely to default during a period of financial stress, they pose greater systemic risk and risk to the safety and soundness of the covered swap entity. In case the list of financial end users in the proposal does not capture a particular entity, the last part of this definition would allow an Agency to require a covered swap entity to treat a counterparty as a financial end user for margin purposes, where appropriate for safety and soundness purposes or to address systemic risk.
In developing the list of financial entities, the Agencies sought to include entities subject to Federal statutes that impose registration or chartering requirements on entities that engage in specified financial activities, such as deposit taking and lending, securities and swaps dealing, or investment advisory activities; as well as asset management and securitization entities. For example, certain securities investment funds as well as securitization vehicles are covered, to the extent those entities would qualify as private funds defined in section 202(a) of the Investment Advisers Act of 1940, as amended (the “Advisers Act”). In addition, certain real estate investment companies would be included as financial end users as entities that would be investment companies under section 3 of the Investment Company Act of 1940, as amended (the “Investment Company Act”), but for section 3(c)(5)(C), and certain other securitization vehicles would be included as entities deemed not to be investment companies pursuant to Rule 3a-7 of the Investment Company Act.
Because Federal law largely looks to the States for the regulation of the business of insurance, the proposed definition broadly includes entities organized as insurance companies or supervised as such by a State insurance regulator. This element of the proposed definition would extend to reinsurance and monoline insurance firms, as well as insurance firms supervised by a foreign insurance regulator.
The Agencies are also proposing to cover, as financial end users, the broad variety and number of nonbank lending and retail payment firms that operate in the market. To this end, the Agencies are proposing to include State-licensed or registered credit or lending entities and money services businesses, under proposed regulatory language incorporating an inclusive list of the types of firms subject to State law.
Under the proposed rule, those cooperatives that are financial institutions, such as credit unions, FCS banks and associations, and other financial cooperatives
The Agencies remain concerned, however, that now or in the future, one or more types of financial entities might escape classification under the specific Federal or State regulatory regimes included in the proposed definition of a financial end user. The Agencies have accordingly included two additional prongs in the definition. First, the Agencies have included language that would cover an entity that is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in loans, securities, swaps, funds or other assets for resale or other disposition or otherwise trading in loans, securities, swaps, funds or other assets. The Agencies request comment on the extent to which there are (or may be in the future) pooled investment vehicles that are not captured by the other prongs of the definition (such as the provisions covering private funds under the Advisers Act or commodity pools under the Commodity Exchange Act). The Agencies also request comment on whether this aspect of the definition of financial end user provides sufficiently clear guidance to covered swap entities and market participants as to its intended scope, and whether it adequately maintains a distinction between financial end users and commercial end users.
Second, as previously explained, the proposed rule would allow an Agency to require a covered swap entity to treat an entity as a financial end user for margin purposes, as appropriate for safety and soundness purposes, or to mitigate systemic risks. In such case, consistent with the Agency's supervisory procedures, the Agency that is the covered swap entity's prudential regulator would notify the covered swap entity in writing of the regulator's intention to require treatment of the counterparty as a financial end user, and the date by which such treatment is to be implemented.
To address the classification of foreign entities as financial end users, the Agencies are proposing to require the covered swap entity to determine whether a foreign counterparty would fall within another prong of the financial end user definition if the foreign entity was organized under the laws of the United States or any State. The Agencies recognize that this approach would impose upon covered swap entities the difficulties associated with analyzing a foreign counterparty's business activities in light of a broad array of U.S. regulatory requirements. The alternative, however, would require covered swap entities to gather a foreign counterparty's financial reporting data and determine the relative amount of enumerated financial activities in which the counterparty is engaged over a rolling period.
Unlike the 2011 proposal, the proposal excludes certain types of counterparties from the definition of financial end user. In particular, the proposal states that the term “financial end user” does not generally include any counterparty that is:
• A sovereign entity;
• A multilateral development bank;
• The Bank for International Settlements;
• A captive finance company that qualifies for the exemption from clearing under section 2(h)(7)(C)(iii) of the Commodity Exchange Act and implementing regulations; or
• A person that qualifies for the affiliate exemption from clearing pursuant to section 2(h)(7)(D) of the Commodity Exchange Act or section 3C(g)(4) of the Securities Exchange Act and implementing regulations.
The Agencies note the exclusion for sovereign entities, multilateral development banks and the Bank for International Settlements is generally consistent with the 2013 international framework which recommended that margin requirements not apply to sovereigns, central banks, multilateral development banks or the Bank for International Settlements. The last two categories that are excluded from the financial end user definition were excluded by Title VII of the Dodd-Frank Act from the definition of financial entity subject to mandatory clearing. The Agencies also believe that this approach is appropriate as these entities generally pose less systemic risk to the financial system in addition to posing less counterparty risk to a swap entity. Thus, the Agencies believe that application of the margin requirements
The Agencies note that States would not be excluded from the definition of financial end user, as the term “sovereign entity” includes only central governments. The categorization of a State or particular part of a State as a financial end user depends on whether that part of the State is otherwise captured by the definition of financial end user. For example, a State entity that is a “governmental plan” under the Employment Retirement Income Security Act of 1974, as amended, would meet the definition of financial end user.
The Agencies believe that the proposal addresses many of the commenters' concerns about the definition of “financial end user” contained in the 2011 proposal. Entities that are neither financial end users nor swap entities are treated as “other counterparties” in this proposal.
The proposal differs from the 2011 proposal by distinguishing between swaps with financial end user counterparties that have a material swaps exposure and swaps with financial end user counterparties that do not have a material swaps exposure. “Material swaps exposure” for an entity is defined to mean that the entity and its affiliates have an average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps with all counterparties for June, July and August of the previous year that exceeds $3 billion, where such amount is calculated only for business days. The Agencies believe that using the average daily aggregate notional amount during June, July, and August of the previous year, instead of a single as-of date, is appropriate to gather a more comprehensive assessment of the financial end user's participation in the swaps market, and address the possibility that a market participant might “window dress” its exposure on an as-of date such as year-end, in order to avoid the Agencies' margin requirements. Material swaps exposure would be calculated based on the previous year. For example, on January 1, 2015, an entity would determine whether it had a material swaps exposure in June, July and August of 2014 that exceeded $3 billion.
The proposal also defines a number of other terms that were not defined in the 2011 proposal. The Agencies believe that these definitions will help provide additional clarity regarding the application of the margin requirements contained in the proposed rule.
The proposal defines “affiliate” to mean any company that controls, is controlled by, or is under common control with another company. This definition of affiliate is the same as that in the BHC Act and consequently should be familiar to market participants.
The term affiliate is used in the definition of initial margin threshold amount which means a credit exposure of $65 million that is applicable to non-cleared swaps between a covered swap entity and its affiliates with a counterparty and its affiliates. The inclusion of affiliates in this definition is meant to make clear that the initial margin threshold amount applies to an entity and its affiliates. Similarly, the term “affiliate” is also used in the definition of “material swaps exposure,” as material swaps exposure takes into account the exposures of an entity and its affiliates.
The definitions of “affiliate” and “subsidiary” use the term “control,” which is also a defined term in the proposal.
The Agencies seek comment on the definition of control in this proposal. In particular, the Agencies request comment on this definition of control as it relates to advised and sponsored funds and sponsored securitization vehicles. The Agencies believe that advised and sponsored funds and sponsored securitization vehicles would not be affiliates of the investment adviser or sponsor unless the adviser or sponsor meets the definition of control (
The proposal defines a cross-currency swap as a swap in which one party exchanges with another party principal and interest rate payments in one currency for principal and interest rate payments in another currency, and the exchange of principal occurs upon the inception of the swap, with a reversal of the exchange at a later date that is agreed upon at the inception of the swap. As explained in greater detail below, the proposal provides that the proposed initial margin requirements for cross-currency swaps do not apply to the portion of the swap that is the fixed exchange of principal. This treatment of cross-currency swaps is consistent with the treatment recommended in the 2013 international framework. This treatment of cross-currency swaps also aligns with the determination by the Secretary of the Treasury to exempt foreign exchange swaps from the definition of swap as explained further below. Non-deliverable forwards would not be treated as cross-currency swaps for purposes of the proposal, and thus would be subject to the margin requirements set forth under the proposed rule.
Major currencies is defined to mean: (i) United States Dollar (USD); (ii) Canadian Dollar (CAD); (iii) Euro (EUR); (iv) United Kingdom Pound (GBP); (v) Japanese Yen (JPY); (vi) Swiss Franc (CHF); (vii) New Zealand Dollar (NZD); (viii) Australian Dollar (AUD); (ix) Swedish Kronor (SEK); (x) Danish Kroner (DKK); (xi) Norwegian Krone (NOK); and (xii) any other currency as determined by the relevant Agency.
The proposal defines prudential regulator to have the meaning specified in section 1a(39) of the Commodity Exchange Act.
Qualifying master netting agreement (“QMNA”) was defined in the 2011 proposal, based on the definition of the term in the Federal banking agencies' risk-based capital rules applicable to derivatives positions held by insured depository institutions and bank holding companies.
Since the 2011 proposal, the Federal banking agencies have modified the definition of QMNA used in their risk-based capital rules.
The proposal defines EMNA as any written, legally enforceable netting agreement that creates a single legal obligation for all individual transactions covered by the agreement upon an event of default (including receivership, insolvency, liquidation, or similar proceeding) provided that certain conditions are met. These conditions include requirements with respect to the covered swap entity's right to terminate the contract and liquidate collateral and certain standards with respect to legal review of the agreement to ensure it meets the criteria in the definition. The legal review must be sufficient so that the covered swap entity may conclude with a well-founded basis that, among other things, the contract would be found legal, binding, and enforceable under the law of the relevant jurisdiction and that the contract meets the other requirements of the definition.
The Agencies believe that the revised EMNA definition addresses commenters' concerns regarding certain insolvency regimes where rights can be stayed. In particular, the second criteria has been modified to provide that any exercise of rights under the agreement will not be stayed or avoided under applicable law in the relevant jurisdictions, other than (i) in receivership, conservatorship, or resolution by an Agency exercising its statutory authority, or similar laws in foreign jurisdictions that provide for limited stays to facilitate the orderly resolution of financial institutions, or (ii) in a contractual agreement subject by its terms to any of the foregoing laws.
The Agencies request comment on whether the proposed definition of EMNA provides sufficient clarity regarding the laws of foreign jurisdictions that provide for limited stays to facilitate the orderly resolution of financial institutions or whether additional specificity should be provided regarding additional factors required in order for a foreign law to qualify under the EMNA definition. For example, should the definition include a limitation of the duration of the limited stay? If so, what should such limitation be (
State is defined in the proposal to mean any State, commonwealth, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana
The 2011 proposal did not specifically define U.S. Government-sponsored enterprises, although it allowed the securities of these entities to be pledged as eligible collateral. Under the 2014 proposal, U.S. Government-sponsored enterprise means an entity established or chartered by the U.S. government to serve public purposes specified by Federal statute, but whose debt obligations are not explicitly guaranteed by the full faith and credit of the United States. U.S. Government-sponsored enterprises currently include Farm Credit System banks, associations, and service corporations, Farmer Mac, the Federal Home Loan Banks, Fannie Mae, Freddie Mac, the Financing Corporation, and the Resolution Funding Corporation. In the future, Congress may create new U.S Government-sponsored enterprises, or terminate the status of existing U.S. Government-sponsored entities. This term is used in the definition of eligible collateral as described further in § __.6.
The Agencies are including a number of other definitions including “bank holding company,” “broker,” “dealer,” “depository institution,” “foreign bank,” “futures commission merchant,” “savings and loan holding company,” and “securities holding company” that are defined by cross-reference to the relevant statute. Many of these terms are also used in the definition of “financial end user” or “market intermediary,” which is defined to mean a securities holding company, a broker, a dealer, a futures commission merchant, a swap dealer, or a security-based swap dealer.
Section __.3 of the 2011 proposal set out the initial margin amounts for a covered swap entity to collect from its counterparty for its non-cleared swaps. The 2011 proposal specified, among other things, the manner in which a covered swap entity must calculate the initial margin requirements applicable to its non-cleared swaps. These initial margin requirements applied only to the amount of initial margin that a covered swap entity would be required to
The 2011 proposal requested comment on whether the rule should incorporate two-way margining. A number of commenters stated that the Agencies should require covered swap entities to post margin. Commenters raised a number of concerns regarding the lack of any requirement for covered swap entities to post both initial margin and variation margin to their counterparties. For example, one commenter argued that covered swap entities that do not post collateral present a risk to the system in the event that such covered swap entities experience financial distress. Commenters also said that by requiring two-way margining, overall leverage exposure would be reduced to an appropriate level.
Under the 2011 proposal, a covered swap entity would have been permitted to select from two alternatives to calculate its initial margin requirements. A covered swap entity could calculate its initial margin requirements using a standardized “look-up” table that specified the minimum initial margin that was required to be collected. Alternatively, a covered swap entity could calculate its minimum initial margin requirements using an internal margin model that met certain criteria and that had been approved by the relevant prudential regulator.
In the 2011 proposal, the Agencies proposed initial margin threshold amounts, which varied based on the relative risk posed by the counterparty; high-risk financial end users were subject to lower threshold amounts than low-risk financial end users; and nonfinancial end users were subject to thresholds that were set according to the covered swap entity's internal credit policies. Commenters expressed varying views on the proposed thresholds. For example, one commenter stated that establishing thresholds by counterparty type was too broad and did not appropriately reflect risk. Another commenter suggested that low-risk financial end users should not be subject to a threshold, while a third commenter stated that dollar threshold amounts were arbitrary and should be eliminated altogether.
Under the 2011 proposal, a covered swap entity was required to collect initial margin on or before the date it entered into a swap. Some commenters indicated that this requirement was operationally infeasible due to timing cutoffs and time differences between time zones, and for this reason, commenters requested that the Agencies permit covered swap entities to collect initial margin one to three days after entering into the transaction.
Consistent with the 2013 international framework and comments received relating to the 2011 proposal, the Agencies are proposing that swap entities that are transacting in non-cleared swaps with one another or with financial end users with material swaps exposure collect
Similar to the 2011 proposal, the proposed rule permits a covered swap entity to select from two methods (the standardized look-up table or the internal margin model) for calculating its initial margin requirements. In all cases, the initial margin amount required under the proposed rule is a minimum requirement; covered swap entities are not precluded from collecting additional initial margin (whether by contract or subsequent agreement with the counterparty) in such forms and amounts as the covered swap entity believes is appropriate. These methods are discussed further below under Appendix A and § __.8,
As part of the proposed rule's initial margin requirements and consistent with the 2013 international framework, a covered swap entity using either calculation method may adopt an initial margin threshold amount of up to $65 million, below which the covered swap entity need not collect or post initial margin from and to a swap entity or financial end user with a material swaps exposure.
The proposed initial margin threshold of $65 million would be applied on a consolidated entity level, and therefore, would apply across all non-cleared swaps between a covered swap entity and its affiliates and the counterparty and its affiliates. For example, suppose that a firm engages in separate swap transactions, executed under separate legally enforceable EMNAs, with three counterparties, all belonging to the same larger consolidated group, such as a bank holding company. Suppose further that the initial margin requirement is $100 million for each of the firm's netting sets with each of the three counterparties. The firm dealing with these three affiliates must collect at least $235 million (235 = $100 + $100 + $100 − $65) from the consolidated group. Exactly how the firm allocates the $65 million threshold among the three netting sets is subject to agreement between the firm and its counterparties. The firm may not extend the $65 million threshold to each netting set so that the total amount of initial margin collected is only $105 million (105 = 100 − 65 + 100 − 65 + 100 − 65). The requirement to apply the threshold on a fully consolidated basis applies to both the counterparty to which the threshold is being extended and the counterparty that is extending the threshold.
The Agencies' preliminary view is that the proposed initial margin threshold of $65 million is appropriate and reflects a risk-based approach to the margin requirements. However, the Agencies seek comment on the use of such a threshold in the margin requirements and the proposed size of $65 million. Importantly, the Agencies recognize that allowing for a significant initial margin threshold subjects covered swap entities and their counterparties to credit risk that may materialize quickly in the event of a significant period of financial stress. Is the proposed use of an initial margin threshold appropriate in light of the risks associated with its use? Does the proposed level of the threshold appropriately balance the need to limit the liquidity impact of the requirements with the need to limit credit exposures in non-cleared swaps markets? Are there other approaches that could be taken in this regard that would be more effective than the proposed initial margin threshold approach?
Under the proposed rule and consistent with the 2013 international framework, covered swap entities are required to collect and post initial margin only with financial end user counterparties that have a material swaps exposure. The Agencies do not propose to require the exchange of initial margin with financial end users with small exposures, as it is assumed that these entities, in most circumstances, would have an initial margin requirement that is significantly less than the proposed $65 million threshold amount.
Under the proposed rule and consistent with the 2013 international framework, the Agencies have adopted a simple and transparent approach to defining material swaps exposure that depends on a counterparty's gross notional derivative exposure for non-cleared swaps. The Agencies' preliminary view is that this approach is appropriate as gross notional derivative exposure is broadly related to a counterparty's overall size and risk exposure and provides for a simple and transparent measurement of exposure that presents only a modest operational burden. Under the proposed rule, a covered swap entity would not be required to collect or post initial margin to or from a financial end user counterparty without a material swaps exposure, that is, if its average daily aggregate notional amount of covered swaps over a defined period exceeds $3 billion.
The Agencies' preliminary view is that defining material swaps exposure
Specifically, the Agencies have reviewed actual initial margin requirements for a sample of cleared swaps. These analyses indicate that there are a significant number of cases in which a financial end user counterparty would have a material swaps exposure level below $11 billion but would have a swap portfolio with an initial margin collection amount that significantly exceeds the proposed permitted initial margin threshold amount of $65 million. The intent of both the Agencies and the 2013 international framework is that the initial margin threshold provide smaller counterparties with relief from the operational burden of measuring and tracking initial margin collection amounts that are expected to be below $65 million. Setting the material swaps exposure threshold at $11 billion appears to be inconsistent with this intent, based on the recent analyses.
The table below summarizes actual initial margin requirements for 4,686 counterparties engaged in cleared interest rate swaps. Each counterparty represents a particular portfolio of cleared interest rate swaps. Each counterparty had a swap portfolio with a total gross notional amount less than $11 billion and each is a customer of a CCP's clearing member (
As shown in the table above, the average initial margin rate across all 4,686 counterparties, reported in Column (1), is 2.1 percent, which would equate to an initial margin collection amount, reported in Column (2), of $231 million on an interest rate swap portfolio with a gross notional amount of $11 billion. This average initial margin collection amount significantly exceeds the proposed permitted threshold amount of $65 million. Seventy-five percent of the 4,686 cleared interest rate swap portfolios exhibit an initial margin rate in excess of 0.6 percent, which equates to an initial margin amount on a cleared interest rate swap portfolio of $66 million (approximately equal to the proposed permitted threshold amount).
The data above represent actual margin requirements on a sample of interest rate swap portfolios that are cleared by a single CCP. Some CCPs also provide information on the initial margin requirements on specific and representative swaps that they clear. The Chicago Mercantile Exchange (“CME”), for example, provides information on the initial margin requirements for cleared interest rate swaps and credit default swaps that it clears. This information does not represent actual margin requirements on actual swap portfolios that are cleared by the CME but does represent the initial margin that would be required on specific swaps if they were cleared at the CME. The table below presents the initial margin requirements for two swaps that are cleared by the CME.
According to the CME, the initial margin requirement on the interest rate swap and the credit default swap are both roughly two percent of the gross notional amount. This initial margin rate translates to an initial margin amount of roughly $216 million on a swap portfolio with a gross notional amount of $11 billion. Accordingly, this data also indicates that the initial margin collection amount on a swap portfolio with a gross notional size of $11 billion could be significantly larger than the proposed permitted initial margin threshold of $65 million.
In addition to the information provided in the tables above, the Agencies' preliminary view is that additional considerations suggest that the initial margin collection amounts associated with non-cleared swaps could be even greater than those reported in the tables above. The tables above represent initial margin requirements on cleared interest rate and credit default index swaps. Non-cleared swaps in other asset classes, such as single name equity or single name credit default swaps, are likely to be riskier and hence would require even more initial margin. In addition, non-cleared swaps often contain complex features, such as nonlinearities, that
In light of the data and considerations noted above, the Agencies' preliminary view is that it is appropriate and consistent with the intent of the 2013 international framework to identify a material swaps exposure with a gross notional amount of $3 billion rather than $11 billion (€8 billion) as is suggested by the 2013 international framework. Identifying a material swaps exposure with a gross notional amount of $3 billion is more likely to result in an outcome in which entities with a gross notional exposure below the material swaps exposure amount would be likely to have an initial margin collection amount below the proposed permitted initial margin threshold of $65 million. The Agencies do recognize, however, that even at the lower amount of $3 billion, there are likely to be some cases in which the initial margin collection amount of a portfolio that is below the material swaps exposure amount will exceed the proposed permitted initial margin threshold amount of $65 million. The Agencies' preliminary view is that such instances should be relatively rare and that the operational benefits of using a simple and transparent gross notional measure to define the material swaps exposure amount are substantial.
The Agencies seek comment on the use and definition of material swaps exposure. In particular, is the proposed $3 billion level of the material swaps exposure appropriate? Should the amount be higher or lower and if so, why? Are there alternative measurement methodologies that do not rely on gross notional amounts that should be used? Does the proposed rule's use and definition of the material swaps exposure raise any competitive equity issues that should be considered? Are there any other aspects of the material swaps exposure that should be considered by the Agencies?
The proposed rule establishes the timing under which a covered swap entity must comply with the initial margin requirements set out in §§ __.3(a) and (b). Under the proposed rule, a covered swap entity, with respect to any non-cleared swap to which it is a party, must, on a daily basis, comply with the initial margin requirements for a period beginning on or before the business day following the day it enters into the transaction and ending on the date the non-cleared swap is terminated or expires. This requirement will cause covered swap entities to recalculate their initial margin requirements per their internal margin models or the standardized look-up table each business day. As a result, covered swap entities may need to adjust the amount of initial margin they collect or post on a daily basis.
Under the 2011 proposal, a covered swap entity was required to collect initial margin on or before the date it entered into a non-cleared swap. In the proposed rule, the Agencies have changed the timing provision in § _.3 to require a covered swap entity to comply with the initial margin requirements beginning on or before the business day following the day it enters into the swap. Providing an additional day is intended to address the operational concerns raised by the commenters to the 2011 proposal.
Under the proposed rule, a covered swap entity is not required as a matter of course to collect initial margin with respect to any non-cleared swap with a counterparty other than a financial end user with material swaps exposure or a swap entity, but shall collect initial margin at such times and in such forms and amounts (if any) that the covered swap entity determines appropriately address the credit risk posed by the counterparty and the risks of such swaps. Thus, the specific provisions of the Agencies' rules on initial margin requirements, documentation, and eligible collateral would not apply to non-cleared swaps between covered swap entities and these “other counterparties.” These “other counterparties” would include nonfinancial end users, entities that are excluded from the definition of financial end user, and financial end users without material swaps exposure. The Agencies' preliminary view is that this treatment of “other counterparties” is consistent with the Dodd-Frank Act's risk-based approach to establishing margin requirements. In particular, the Agencies intend for the proposed requirements with respect to “other counterparties” to be consistent with current market practice and understand that in many cases a covered swap entity would exchange little or no margin with these counterparty types. There may be circumstances, however, in which a covered swap entity finds it prudent to collect initial margin from these counterparty types, for example, if a covered swap entity chose to incorporate margin to mitigate the safety and soundness effects of its credit exposures to these counterparty types.
Section _.4 of the 2011 proposal specified the variation margin requirements applicable to non-cleared swaps. Consistent with the treatment of initial margin in the 2011 proposal, the variation margin requirements applied only to the collection of variation margin by covered swap entities from their counterparties, and not to the posting of variation margin to their counterparties. Under the 2011 proposal, covered swap entities and their counterparties were free to negotiate the extent to which a covered swap entity could have been required to post variation margin to a counterparty (other than a swap entity that is itself subject to margin requirements). In the 2011 proposal, the Agencies requested comment on whether the margin rules should impose a separate, additional requirement that a covered swap entity post variation margin to financial end users and nonfinancial end users. Consistent with the comments received relating to initial margin, many commenters recommended two-way posting of variation margin for transactions between covered swap entities and financial end users. Specifically, commenters argued that the bilateral exchange of variation margin would reduce systemic risk, increase transparency, and facilitate central clearing.
The 2011 proposal also established a minimum amount of variation margin that must be collected, leaving covered swap entities free to collect larger amounts if they elected to do so. Under the 2011 proposal, a covered swap entity would have been permitted to establish, for certain counterparties that are end users, a credit exposure limit that acts as a threshold below which the covered swap entity need not collect variation margin. Specifically, the variation margin threshold amount that a covered swap entity could establish for a low-risk financial end user counterparty could be calculated in the same way as the proposed initial margin threshold amounts for such counterparties. The 2011 proposal
The 2011 proposal also specified that covered swap entities calculate and collect variation margin from counterparties that were themselves swap entities or financial end users at least once per business day, and from counterparties that are nonfinancial end users at least once per week once the relevant credit threshold was exceeded.
Consistent with the initial margin requirements of this proposal, the Agencies are proposing that swap entities transacting with one another and with financial end users be required to collect and pay variation margin with respect to non-cleared swaps. As with initial margin, the Agencies believe that requiring covered swap entities both to collect and pay margin with these counterparties effectively reduces systemic risk by protecting both the covered swap entity and its counterparty from the effects of a counterparty default.
In response to the comments received and consistent with the 2013 international framework, the proposed rule would require a covered swap entity to collect variation margin from all swap entities and from financial end users regardless of whether the financial end user has a material swaps exposure. The proposed rule generally requires a covered swap entity to collect and pay variation margin on non-cleared swaps in an amount that is at least equal to the increase or decrease (as applicable) in the value of such swaps since the previous exchange of variation margin. Unlike the 2011 proposal, and the initial margin requirements set out in §§ _.3(a) and (b) of this proposal, a covered swap entity may not adopt a threshold amount below which it need not collect or pay variation margin on swaps with a swap entity or financial end user counterparty (although transfers below a minimum transfer amount would not be required, as discussed in § _.5, below).
The terms “pay” and “paid” are used when referring to variation margin. This terminology is being proposed based on a preliminary understanding that market participants view the economic substance of variation margin as settling the daily exposure of non-cleared swaps between counterparties. This perception is reinforced by the current market practice among swap participants of requiring that variation margin, where required under the parties' negotiated agreements, be provided in cash. As noted below, § _.6 of the proposed rule would limit eligible collateral for variation margin to cash.
The market perception that variation margin essentially settles the current exposure may not always align with the underlying legal requirement or with contracts that document the parties' rights and obligations with respect to swaps. On the one hand, for cleared swaps, derivatives clearing organizations are required by law to settle the exposure with counterparties at least daily, and thus the legal requirement is aligned with market participants' perceptions about the underlying economic substance of such transfers.
It is the Agencies' understanding that standard swap documentation may treat variation margin differently depending on the underlying legal structure. For example, swap agreements under New York law might refer to variation margin as being “posted” pursuant to a security interest. Swap documentation referencing English law, however, may be aligned with a title transfer regime under which variation margin is
By proposing to use “pay” and “paid” terminology with respect to variation margin, the Agencies do not intend to propose to mandate, as a legal matter, to alter current practices under which variation margin is characterized as being “posted” pursuant to an agreement that establishes a security interest. Also, the Agencies, by proposing “pay” and “paid” terminology, do not intend to alter the characterization of such transfer of variation margin funds for accounting, tax, or other purposes. The Agencies invite comment on the appropriateness of the proposed terminology and whether other terminology may better address the underlying purpose of the legal requirements for the Agencies to establish requirements related variation margin requirements.
Section _.4(b) of the proposed rule establishes the frequency at which a covered swap entity must comply with the variation margin requirements set out in § _.4(a). Under the proposed rule, a covered swap entity must collect or pay variation margin with swap entities and financial end user counterparties no less frequently than once per business day.
Like the proposed initial margin requirements set out in § _.3, the proposed rule permits a covered swap entity to collect variation margin from counterparties other than swap entities and financial end users at such times and in such forms and amounts (if any) that the covered swap entity determines appropriately address the credit risk posed by the counterparty and the risks of such non-cleared swaps. The specific provisions of the Agencies' rules on variation margin requirements, documentation, eligible collateral, segregation, and rehypothecation would not apply to swaps between covered swap entities and these “other counterparties.” As with initial margin, the Agencies intend for the proposed requirements to be consistent with current market practice and understand that, in many cases, a covered swap entity would exchange little or no margin with these counterparty types.
An important difference between the treatment of “other counterparties” in the cases of initial margin and of variation margin is that the scope of “other counterparties” for variation margin requirements is narrower than for the initial margin requirements. Specifically, under the proposed rule, financial end users without material swaps exposures are treated similarly as “other counterparties” in the context of the initial margin requirements but not the variation margin requirements.
In other words, all financial end user counterparties are subject to the variation margin requirements, while only financial end user counterparties with material swaps exposure are subject to initial margin requirements. The different composition of “other counterparties” between the proposed initial and variation margin requirements reflects the Agencies' view that variation margin is an important risk mitigant that (i) reduces the build-up of risk that may ultimately pose systemic risk; (ii) imposes a lesser liquidity burden than does initial margin; and (iii) reflects current market practice and a risk management best practice by providing for the regular exchange of variation margin between covered swap entities and financial end users.
Similar to the 2011 proposal, the proposed rule permits a covered swap entity to calculate variation margin requirements on an aggregate net basis across all non-cleared swap transactions with a counterparty that are executed under a single EMNA. If an EMNA covers non-cleared swaps that were entered into before the applicable compliance date, those swaps must be included in the aggregate for purposes of calculating the required variation margin. As discussed previously, under the proposed rule, the margin requirements would not be applied retroactively, and therefore, no new initial margin or variation margin requirements would be imposed on non-cleared swaps entered into prior to the relevant compliance date until those transactions are rolled-over or renewed. The only requirements that would apply to a pre-compliance date transaction would be the initial margin and variation margin requirements to which the parties to the transaction had previously agreed by contract. However, if non-cleared swaps that were entered into prior to the applicable compliance date were included in the EMNA, those swaps would be subject to the proposed variation margin requirements. A covered swap entity would need to establish a new EMNA to cover only swaps entered into after the compliance date in order to not include pre-compliance date swaps. Like the 2011 proposal, the proposed rule defines an EMNA as a legally enforceable agreement to offset positive and negative mark-to-market values of one or more swaps that meet a number of specific criteria designed to ensure that these offset rights are fully enforceable, documented and monitored by the covered swap entity.
The 2011 proposal included a minimum transfer amount for the collection of initial and variation margin by covered swap entities. Under the 2011 proposal, a covered swap entity was not required to collect margin from any individual counterparty otherwise required under the rule until the required cumulative amount was $100,000 or more.
The proposed rule also provides for a minimum transfer amount for the collection and posting of margin by covered swap entities. Under the proposal, a covered swap entity need not collect or post initial or variation margin from or to any individual counterparty otherwise required unless and until the required cumulative amount of initial and variation margin is greater than $650,000.
The 2011 proposal addressed the situation where a counterparty refused or otherwise failed to make variation margin payments to a covered swap entity. The 2011 proposal provided that the covered swap entity would not be in violation of the rule in this situation so long as it took certain steps to collect the margin or commenced termination of the swap.
This proposal includes similar provisions with respect to both initial and variation margin. Specifically, under § ._5(b), a covered swap entity shall not be deemed to have violated its obligation to collect or post initial or variation margin from or to a counterparty if: (1) The counterparty has refused or otherwise failed to provide or accept the required margin to or from the covered swap entity; and (2) the covered swap entity has (i) made the necessary efforts to collect or post the required margin, or has otherwise demonstrated upon request to the satisfaction of the appropriate Agency that it has made appropriate efforts to collect the required margin, or (ii) commenced termination of the non-cleared swap with the counterparty promptly following the applicable cure period and notification requirements.
The 2011 proposal placed strict limits on the collateral that covered swap entities could collect to meet their minimum margin requirements. For minimum variation margin requirements, the Agencies proposed to recognize only immediately available cash (denominated either in U.S. dollars or in the currency in which payment obligations under the swap contract would be settled) and obligations issued by or fully guaranteed by the U.S. government. For minimum initial margin requirements, the Agencies proposed to recognize the aforementioned assets plus senior debt obligations issued by Fannie Mae, Freddie Mac, the Federal Home Loan Banks, or Farmer Mac, and “insured obligations” of the Farm Credit Banks.
Most commenters that addressed the eligible collateral section of the 2011 proposal, including industry groups and members of Congress, stated that the Agencies should expand the list of eligible collateral to include a broader range of high-quality, liquid and readily marketable assets. These commenters stated that a more expansive list of eligible collateral would be consistent with market practice, legislative intent, and international standards. Many commenters suggested that the minimum margin requirements included in the 2011 proposal could disrupt financial markets by significantly increasing the demand for certain liquid assets, inadvertently
Under the proposal, the Agencies are proposing to require the collection or payment of immediately available cash funds to satisfy the minimum variation margin requirements. Such payment must be denominated either in U.S. dollars or in the currency in which payment obligations under the swap are required to be settled. When determining the currency in which payment obligations under the swap are required to be settled, a covered swap entity must consider the entirety of the contractual obligation. As an example, in cases where a number of swaps, each potentially denominated in a different currency, are subject to a single master agreement that requires all swap cash flows to be settled in a single currency, such as the Euro, then that currency (Euro) may be considered the currency in which payment obligations are required to be settled. The Agencies request comment on whether there are current market practices that would raise difficulties or concerns about identifying the appropriate settlement currency in applying this aspect of the proposed rule, from a contractual or other operational standpoint.
Limiting variation margin to cash should sharply reduce the potential for disputes over the value of variation margin collateral. Additionally, this proposed change is consistent with regulatory and industry initiatives to improve standardization and efficiency in the OTC swaps market. For example, in June 2013, ISDA published the 2013 Standard Credit Support Annex (SCSA), which provides for the sole use of cash for variation margin. Additionally, the Agencies note that central counterparties generally require variation margin to be paid in cash.
Under this proposed rule, the value of cash paid to satisfy variation margin requirements is not subject to a haircut. Variation margin payments reflect gains and losses on a swap transaction, and payment or receipt of variation margin generally represents a transfer of ownership in the collateral. Therefore, haircuts are not a necessary component of the regulatory requirements for cash variation margin.
The Agencies seek comment on the appropriateness of limiting variation margin to cash, and on any other revisions that commenters believe would be appropriate to better align the variation margin requirements applicable with arrangements that are currently observed in the OTC swap market.
The Agencies are proposing to expand the list of eligible collateral with respect to the collection and posting of initial margin. The standards for eligible initial margin collateral in the 2014 proposal pertain to collateral collected or posted in connection with the proposed minimum requirements. This proposal in no way restricts the types of collateral that may be collected or posted to satisfy margin terms that are bilaterally negotiated and not required under the proposal. For example, under the proposal a covered swap entity may extend an initial margin threshold of up to $65 million on an aggregate basis to each swap entity or financial end user counterparty and its affiliates. If a covered swap entity extended such an initial margin threshold to a counterparty and the resulting minimum initial margin requirement was zero, but the covered swap entity decided to collect initial margin collateral to protect itself against counterparty credit risk, then the covered swap entity could choose to collect that initial margin in any form of collateral, including forms other than the types of collateral specified in the rule.
Relatedly, under the 2014 proposal, covered swap entities need to collect initial margin for non-cleared swaps with certain entities (“other counterparties”) in such forms and amounts (if any) and at such times that the covered swap entity determines appropriately address the credit risk posed by the counterparty and the risks of such transactions. For such a transaction, a covered swap entity is responsible for determining the amount, the form, and the time for the margin to be collected. Accordingly, margin collected by a covered swap entity in connection with a non-cleared swap with an “other counterparty” can be in any form of collateral, including in forms other than the types of collateral specified in the rule.
Although the list of eligible collateral in the 2014 proposal for initial margin is more expansive than the 2011 proposal, the Agencies continue to believe that it is necessary to impose limits on the types of assets eligible to satisfy the minimum margin requirements. Therefore, the Agencies are limiting the recognition of collateral to certain assets deemed to be highly liquid, particularly during a period of financial stress as suggested by the 2013 international framework. To support this approach, the Agencies note that to protect a covered swap entity during periods of financial stress, collateral eligible to satisfy the proposed minimum margin requirements should not have excessive exposures to credit, market, or foreign exchange risk.
The Agencies are proposing to permit a broader range of collateral to be pledged to satisfy the minimum initial margin requirements, which includes cash collateral (subject to the same requirements applicable to variation margin) and any of the following:
(1) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, the U.S. Department of the Treasury;
(2) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, a U.S. government agency (other than the U.S. Department of the Treasury) whose obligations are fully guaranteed by the full faith and credit of the United States government;
(3) A publicly traded debt security issued by, or an asset-backed security fully guaranteed as to the timely payment of principal and interest by, a U.S. Government-sponsored enterprise that is operating with capital support or another form of direct financial assistance received from the U.S. government that enables the repayments of the U.S. Government-sponsored enterprise's eligible securities;
(4) Any major currency, regardless of whether it is the currency in which payment obligations under the swap are required to be settled;
(5) A security that is issued by the European Central Bank or by a sovereign entity that receives no higher than a 20 percent risk weight under subpart D of the Federal banking agencies' risk-based capital rules;
(6) A security that is issued by or unconditionally guaranteed as to the timely payment of principal and interest by the Bank for International Settlements, the International Monetary Fund, or a multilateral development bank;
(7) A publicly traded debt security for which the issuer has adequate capacity to meet financial commitments (as defined by the appropriate Federal
(8) A publicly traded common equity security that is included in the Standard and Poor's Composite 1500 Index, an index that a covered swap entity's supervisor in a foreign jurisdiction recognizes for the purposes of including publicly traded common equity as initial margin, or any other index for which the covered swap entity can demonstrate that the equities represented are as liquid and readily marketable as those included in the Standard and Poor's Composite 1500 Index; and
(9) Gold.
Notably, any debt security issued by a U.S. Government-sponsored enterprise that is not operating with capital support or another form of direct financial assistance from the U.S. government would be eligible collateral only if the security met the requirements for debt securities discussed above. The Agencies seek comment on how the likelihood of financial assistance from the United States not authorized under current law (that is, the perceived “implicit guarantee”) influences the determination that a U.S. Government-sponsored enterprise has “adequate capacity to meet financial commitments” when its debt securities are considered for acceptance as collateral for initial margin. The Agencies also request comment on whether the final rule should state that debt securities of a U.S. Government-sponsored enterprise that is not operating with capital support or other financial assistance from the U.S. government are eligible collateral for initial margin only if: (1) The U.S. Government-sponsored enterprise has adequate capacity to meet financial commitments (as defined in each agency's rule)
In the context of corporate securities, initial margin collateral is further restricted to exclude any corporate securities (equity or debt) issued by the counterparty or any of its affiliates, a bank holding company, a savings and loan holding company, a foreign bank, a depository institution, a market intermediary, or any company that would be one of the foregoing if it were organized under the laws of the United States or any State, or an affiliate of one of the foregoing institutions. These restrictions reflect the Agencies' view that securities issued by the foregoing entities are very likely to come under significant pressure during a period of financial stress when a covered swap entity may be resolving a counterparty's defaulted swap position and present a general source of wrong-way risk. Accordingly, the Agencies believe that it is prudent to restrict initial margin collateral in this manner and that these restrictions will not unduly reduce the scope of collateral that is eligible to satisfy the minimum initial margin requirements.
The Agencies request comment on the securities subject to this restriction, and, in particular, on whether securities issued by other entities, such as non-bank systemically important financial institutions designated by the Financial Stability Oversight Council, also should be excluded from the list of eligible collateral.
For the purpose of the initial margin requirements, the recognized value of assets posted as initial margin collateral, except U.S. dollars and the currency in which the payment obligations of the swap is required, is subject to haircuts. These collateral haircuts reduce the value of the initial margin to an amount that is equal to the market value of the initial margin collateral multiplied by one minus the specific collateral haircut. Collateral haircuts guard against the possibility that the value of initial margin collateral could decline during the period that a defaulted swap position has to be closed out by a covered swap entity. The proposed collateral haircuts, which appear in Appendix B, have been calibrated to be broadly consistent with valuation changes observed during periods of financial stress.
The Agencies request comment on whether the proposed rule's list of eligible collateral for minimum initial and variation margin requirements, and the haircuts applied to initial margin, are appropriate.
The approach taken to initial margin collateral in the proposal, which is consistent with the 2013 international framework, recognizes a broad array of financial collateral ranging from high quality sovereign bonds to corporate securities and commodities. The Agencies believe that broadening the scope of eligible collateral addresses concerns about collateral availability and market impact without exposing covered swap entities to undue risk. In particular, the Agencies believe that this proposal appropriately restricts eligible collateral to liquid and high-quality assets with limited market and credit risk. In addition, initial margin collateral is subject to robust collateral haircuts that will further reduce risk.
Because the value of collateral may change, a covered swap entity must monitor the value and quality of collateral previously collected to satisfy minimum initial margin requirements. If the value of such collateral has decreased, or if the quality of the collateral has deteriorated so that it no longer qualifies as eligible collateral, the covered swap entity must collect additional collateral of sufficient value and quality to ensure that all applicable minimum margin requirements remain satisfied on a daily basis.
The proposal does not allow a covered swap entity to fulfill the minimum margin requirements with any forms of non-cash collateral not included in the list of liquid and readily marketable assets described above. The use of alternative types of collateral to fulfill regulatory margin requirements is complicated by pro-cyclical considerations (for example, the changes in the liquidity, price volatility, or wrong-way risk of collateral during a period of financial stress could exacerbate that stress) and the need to ensure that the collateral is subject to low credit, market, and liquidity risk. Therefore, this proposed rule limits the recognition of collateral to the aforementioned list of assets.
However, counterparties that wish to rely on assets that do not qualify as eligible collateral under the proposed rule still would be able to pledge those assets with a lender in a separate arrangement, using the cash or other eligible collateral received from that separate arrangement to meet the minimum margin requirements.
The 2011 proposal established minimum safekeeping standards for collateral posted by covered swap entities to assure that collateral is available to support the swaps and not housed in a jurisdiction where it is not available if defaults occur. The 2011 proposal required the covered swap entity to require a counterparty that is a swap entity to hold funds or other property posted as initial margin at an independent third-party custodian. The 2011 proposal also required that the independent third-party custodian be prohibited by contract from: (i) Rehypothecating or otherwise transferring any initial margin it holds for the covered swap entity; and (ii) reinvesting any initial margin held by the custodian in any asset that would
The third-party custodian requirement in the 2011 proposal was based on a preliminary view by the Agencies that requiring a covered swap entity's initial margin to be segregated at a third-party custodian was necessary to offset the greater risk to the covered swap entity and the financial system arising from the use of non-cleared swaps, and protect the safety and soundness of the covered swap entity.
Commenters generally supported the protections described in the 2011 proposal as reasonable to protect the pledged or transferred collateral but several commenters noted that these types of protections would be costly and have large liquidity impacts and may increase systemic risk, given that much of the collateral would likely be held by a relatively few large custodians. In addition, concerns were expressed by some commenters with the ability of custodians to meet the requirement that the jurisdiction of insolvency of the custodian be the same as the covered swap entity.
The proposal retains and expands on most of the collateral safekeeping requirements of the 2011 proposal and revises requirements related to the custodial agreement.
Section __.7(a) of the proposal addresses requirements for when a covered swap entity posts any collateral other than variation margin. Posting collateral to a counterparty exposes a covered swap entity to risks in recovering such collateral in the event of its counterparty's insolvency. To address this risk and to protect the safety and soundness of the covered swap entity, § __.7(a) requires a covered swap entity that posts any collateral other than variation margin with respect to a non-cleared swap to require that such collateral be held by one or more custodians that are not affiliates of the covered swap entity or the counterparty. This requirement would apply to initial margin posted by a covered swap entity pursuant to § __.3(b), as well as initial margin that is not required by this rule but is posted by a covered swap entity as a result of negotiations with its counterparty, such as initial margin posted to a financial end user that does not have material swaps exposure or initial margin posted to another covered swap entity even though the amount was less than the $65 million initial margin threshold amount.
Section __.7(b) of the proposal addresses requirements for when a covered swap entity collects initial margin required by § __.3(a). Under § __.7(b), the covered swap entity shall require that initial margin collateral collected pursuant to § __.3(a) be held at one or more custodians that are not affiliates of either party. Because the collection of initial margin does not expose the covered swap entity to the same risk of counterparty default as is created when a covered swap entity posts collateral, the scope of the requirements for initial margin that a covered swap entity collects is narrower than the scope for requirements for posting collateral. As a result, § __.7(b) applies only to initial margin that a covered swap entity collects as required by § __.3(a), rather than all collateral collected.
For collateral subject to § __.7(a) or § _.7(b), § _.7(c) requires the custodian to act pursuant to a custodial agreement that is legal, valid, binding, and enforceable under the laws of all relevant jurisdictions including in the event of bankruptcy, insolvency, or similar proceedings. Such a custodian agreement must prohibit the custodian from rehypothecating, repledging, reusing or otherwise transferring (through securities lending, repurchase agreement, reverse repurchase agreement, or other means) the funds or other property held by the custodian. Section _.7(d) provides that, notwithstanding this prohibition on rehypothecating, repledging, reusing or otherwise transferring the funds or property held by the custodian, the posting party may substitute or direct any reinvestment of collateral, including, under certain conditions, collateral collected pursuant to § __.3(a) or posted pursuant to § __.3(b).
In particular, for initial margin collected pursuant to § _.3(a) or posted pursuant to § _.3(b), the posting party may substitute only funds or other property that meet the requirements for initial margin under § _.6 and where the amount net of applicable discounts described in Appendix B would be sufficient to meet the requirements of § __.3. The posting party also may direct the custodian to reinvest funds only in assets that would qualify as eligible collateral under § __.6 and ensure that the amount net of applicable discounts described in Appendix B would be sufficient to meet the requirements of § __.3. In the cases of both substitution and reinvestment, the proposed rule requires the posting party to ensure that the value of eligible collateral net of haircuts remains equal to or above the minimum requirements contained in § __.3. In addition, the restrictions on the substitution of collateral described above do not apply to cases where a covered swap entity has posted or collected more initial margin than is required under § __.3. In such cases the initial margin that has been posted or collected in satisfaction of § __.3 is subject to the restrictions on collateral substitution but any additional collateral that has been posted is not subject to the restrictions on collateral substitution and, as noted above, any additional collateral that has been collected by the covered swap entity is not subject to any of the requirements of § __.7.
The segregation limits on rehypothecation, repledge, or reuse contained in § __.7 apply only with respect to the initial margin requirement and not with respect to variation margin.
The Agencies are concerned that not requiring funds or other property held to satisfy the initial margin requirement to be held at an unaffiliated custodian and limiting its rehypothecation, repledging, or reuse at the outset may cause an entity that incurs a severe loss, due to credit or market events, to face liquidity challenges during periods of stress. Requiring the protection of pledged initial margin bilaterally between the counterparties provides assurance that the pledging counterparty is much less likely to face additional losses (due to the loss of its transferred or pledged initial margin) above the replacement cost of the non-cleared swaps portfolio. During a period of stress, the custodian will provide assurance that the counterparties' initial margin is indeed only available to meet incremental losses during the closeout of the defaulting counterparty's non-cleared swaps and has not been used to secure other obligations. As such, this reduces the incentive for the nondefaulting counterparty to become concerned with meeting its obligations to other nondefaulting counterparties, reducing the interconnected risk associated with non-cleared swaps.
As discussed above, the limitations on rehypothecation, repledging, or reusing pledged collateral will likely increase funding costs for some market participants required to post initial margin, including some covered swap entities. Moreover, when a covered swap entity intermediates non-cleared swaps between two financial end users with material swaps exposure the proposed rule would require that the covered swap entity post initial margin to each financial end user and that the covered swap entity collect initial margin from each financial end user and that these funds or other property be held at a third-party custodian that will not rehypothecate, repledge, or reuse such assets. These proposed requirements will result in a significant amount of initial margin collateral that will be held and segregated to guard against the risk of counterparty default.
The 2013 international framework sets out parameters for member countries to permit a limited degree of rehypothecation, repledging, and reuse of initial margin collateral when a covered swap entity is dealing with a financial end user if certain safeguards for protecting the financial end user's rights in such collateral are available under applicable law. If such protections exist, under the 2013 international framework, a member country may allow a swap entity to rehypothecate, repledge, or reuse initial margin provided by a non-dealer financial end user one time to hedge the covered swap entities exposure to the financial end user.
Section __.8 of the 2011 proposal set out modeling standards that an initial margin model must meet for a covered swap entity to calculate initial margin under such a model. In situations where these requirements would not be met, initial margin would be calculated according to a standardized look-up table (Appendix A of the 2011 proposal). Under the 2011 proposal, all initial margin models had to calculate the potential future exposure of the swap consistent with a one-tailed 99 percent confidence level over a 10-day close-out period. In addition, the initial margin model had to be calibrated to be consistent with a period of financial stress. Initial margin models were permitted to recognize portfolio effects and offsets within a portfolio of swaps with a counterparty if they were conducted under the same QMNA. The recognition of portfolio effects and offsets was limited, however, to swaps within the following broad asset classes: Commodity, credit, equity, and interest rates and foreign exchange (considered as a single asset class). No portfolio effects or offsets were recognized across transactions in different asset classes.
The 2011 proposal requested comment on the requirements for initial margin models as well as the standardized look-up table based initial margin requirements. A number of commenters indicated that the assumption of a 10-day close-out period was too long and that many non-cleared swaps could effectively be replaced in less than 10 days. More specifically, a number of commenters agreed that the close-out period applied to non-cleared swaps should be longer than that applied to listed futures (1 day) and cleared swaps (5 days) but suggested that 10 days was too long. Other commenters indicated that the appropriate close-out period varied significantly across transactions and that a single close-out period would not be appropriate. One commenter suggested that covered swap entities should be allowed to use self-determined close-out period assumptions based on their specific knowledge of the transaction and its market characteristics. A number of commenters suggested that the standardized look-up table did not appropriately recognize the kind of portfolio risk offsets that are allowed in the context of initial margin models.
As in the 2011 proposal, the Agencies are now proposing an approach whereby covered swap entities may calculate initial margin requirements using an approved initial margin model. As in the case of the 2011 proposal, the proposed rule also requires that the initial margin amount be set equal to a model's calculation of the potential future exposure of the non-cleared swap consistent with a one-tailed 99 percent confidence level over a 10-day close-out period. Generally, the modeling standards for the initial margin model are consistent with current regulatory rules and best practices for such models in the context of risk-based capital rules applicable to insured depository institutions and bank holding companies, are no less conservative than those generally used by CCPs, and are also consistent with the standards of the 2013 international framework.
All initial margin models must be approved by a covered swap entity's prudential regulator before being used for margin calculation purposes. In the event that a model is not approved, initial margin calculations would have to be performed according to the standardized initial margin approach that is detailed in Appendix A and discussed below.
In addition to the requirement that the models appropriately capture all material sources of risk, as discussed above, the proposed rule contains a number of standards and criteria that must be satisfied by initial margin models. These standards relate to the technical aspects of the model as well as broader oversight and governance standards. These standards are broadly similar to modeling standards that are already required for internal regulatory capital models.
Initial margin models will be reviewed for approval by the appropriate Agency upon the request of a covered swap entity. Models that are reviewed for approval will be analyzed and subjected to a number of tests to ensure that the model complies with the requirements of the proposed rule. Given that covered swap entities may engage in highly specialized business lines with varying degrees of intensity, it is expected that specific initial margin models will vary across covered swap entities. Accordingly, the specific analyses that will be undertaken in the context of any single model review will have to be tailored to the specific uses for which the model is intended. The nature and scope of initial margin model reviews are expected to be generally similar to reviews that are conducted in the context of other model review processes such as those relating to the approval of internal models for regulatory capital purposes. Initial margin models will also undergo periodic supervisory reviews to ensure that they remain compliant with the requirements of the proposed rule and are consistent with existing best practices over time.
Since non-cleared swaps are expected to be less liquid than cleared swaps, the proposed rule specifies a minimum close-out period for the initial margin model of 10 business days, compared with a typical requirement of 3 to 5 business days used by CCPs.
Under the proposed rule, the initial margin model calculation must be performed directly over a 10-day close out period. In the context of bank regulatory capital rules, a long horizon calculation (such as 10 days) may, under certain circumstances, be indirectly computed by making a calculation over a shorter horizon (such as 1 day) and then scaling the result of the shorter horizon calculation to be consistent with the longer horizon. The proposed rule does not provide this option to covered swap entities using an approved initial margin model. The Agencies' preliminary view is that the rationale for allowing such indirect calculations that rely on scaling shorter horizon calculations has largely been based on computational and cost considerations that were material in the past but are much less so in light of advances in computational speeds and reduced computing costs. The Agencies seek comment on whether the option to make use of such indirect calculations has a material effect on the burden of complying with the proposed rule, and whether such indirect methods are appropriate in light of current computing methods and costs.
The proposed rule permits a covered swap entity to use an internal initial margin model that reflects offsetting exposures, diversification, and other hedging benefits within seven broad risk categories: Agricultural commodities, energy commodities, metal commodities, other commodities, credit, equity, and foreign exchange and interest rates (as a single asset class) when calculating initial margin for a particular counterparty if the swaps are executed under the same EMNA.
It is the preliminary view of the Agencies that the correlations of exposures across unrelated risk categories, such as credit and energy commodity, are not stable enough over time, and, importantly, during periods of financial stress, to be recognized in a regulatory margin model requirement. The Agencies note that in the case of commodities the number of distinct asset classes has been increased from one to four since the 2011 proposal. The Agencies' preliminary view is that a single commodity asset class is too broad and that the relationship between disparate commodity types, such as aluminum and corn, are not stable enough to warrant hedging benefits within the initial margin model. The Agencies seek comment on this specific treatment of commodities for initial margin purposes and whether greater or fewer distinctions should be made.
Also, the Agencies are aware that some swaps may be difficult to classify into one and only one asset class as some swaps may have characteristics that relate to more than one asset class. Under the proposal, the Agencies expect that the covered swap entity would make a determination as to which asset class best represents the swap based on a holistic view of the underlying swap. As a specific example, many swaps may have some sensitivity to interest rates even though the majority of the swap's sensitivity relates to another asset class such as equity or credit. The Agencies seek comment on whether or not this approach is reasonable and whether or
In addition to a time horizon of 10 trading days and a one-tailed confidence level of 99 percent, the proposed rule requires the initial margin model to be calibrated to a period of financial stress.
Calibration to a stress period ensures that the resulting initial margin requirement is robust to a period of financial stress during which swap entities and financial end user counterparties are more likely to default, and counterparties handling a default are more likely to be under pressure. The stress calibration requirement also reduces the systemic risk associated with any increase in margin requirements that might occur in response to an abrupt increase in volatility during a period of financial stress as initial margin requirements will already reflect a historical stress event.
As discussed above, an approved initial margin model must generally account for all of the material risks that affect the non-cleared swap. An exception to this requirement has been made in the specific case of cross-currency swaps. In a cross-currency swap, one party exchanges with another party principal and interest rate payments in one currency for principal and interest rate payments in another currency, and the exchange of principal occurs upon the inception of the swap, with a reversal of the exchange of principal at a later date that is agreed upon at the inception of the swap.
An initial margin model need not recognize any risks or risk factors associated with the foreign exchange transactions associated with the fixed exchange of principal embedded in the cross-currency swap. The initial margin model must recognize all risks and risk factors associated with all other payments and cash flows that occur during the life of the cross-currency swap. In the context of the standardized margin approach, described in Appendix A and further below, the gross initial margin rates have been set equal to those for interest rate swaps. This treatment recognizes that cross-currency swaps are subject to risks arising from fluctuations in interest rates but does not recognize any risks associated with the fixed exchange of principal since principal is typically not exchanged on interest rate swaps.
The foreign exchange transactions associated with the fixed exchange of principal in a cross-currency swap are closely related to the exchange of principal that occurs in the context of a foreign exchange forward or swap. In 2012, the U.S. Treasury made a determination that foreign exchange forwards and swaps are not to be considered swaps under the Dodd-Frank Act, in part, because of their low risk profile.
The proposed rule requires that an approved initial margin model be used to calculate the required initial margin collection amount on a
The use of an approved initial margin model may result in changes to the initial margin collection amount on a
The proposed rule requires that an initial margin model used for calculating initial margin requirements be benchmarked periodically against observable margin standards to ensure that the initial margin required is not less than what a CCP would require for similar transactions.
Covered swap entities that are either unable or unwilling to make the technology and related infrastructure investments necessary to maintain an initial margin model may elect to use standardized initial margins. The standardized initial margins are detailed in Appendix A of the proposed rule.
The Agencies have proposed standardized initial margins that depend on the asset class (agricultural commodity, energy commodity, metal commodity, other commodity, equity, credit, foreign exchange and interest rate) and, in the case of credit and interest rate asset classes, further depend on the duration of the underlying non-cleared swap.
In addition, the proposed standardized initial margin requirement allows for the recognition of risk offsets through the use of a net-to-gross ratio in cases where a portfolio of non-cleared swaps is executed under an EMNA. The net-to-gross ratio compares the net current replacement cost of the non-cleared portfolio (in the numerator) with the gross current replacement cost of the non-cleared portfolio (in the denominator). The net current replacement cost is the cost of replacing the entire portfolio of swaps that are covered under the EMNA. The gross current replacement cost is the cost of replacing those swaps that have a strictly positive replacement cost under the EMNA. As an example, consider a portfolio that consists of two non-cleared swaps under an EMNA in which the mark-to-market value of the first swap is $10 (i.e., the covered swap entity is owed $10 from its counterparty) and the mark-to-market value of the second swap is −$5 (i.e., the covered swap entity owes $5 to its counterparty). Then the net current replacement cost is $5 ($10 − $5), the gross current replacement cost is $10, and the net-to-gross ratio would be 5/10 or 0.5.
The net-to-gross ratio and gross standardized initial margin amounts (provided in Appendix A) are used in conjunction with the notional amount of the transactions in the underlying swap portfolio to arrive at the total initial margin requirement as follows:
The Agencies further note that the calculation of the net-to-gross ratio for margin purposes must be applied only to swaps subject to the same EMNA and that the calculation is performed
The Agencies also note that the BCBS has recently adopted a new method for the purpose of capitalizing counterparty credit risk.
The proposed standardized approach to initial margin depends on the calculation of a net-to-gross ratio. In the context of performing margin calculations, it must be recognized that at the time non-cleared swaps are entered into it is often the case that both the net and gross current replacement cost is zero. This precludes the calculation of the net-to-gross ratio. In cases where a new swap is being added to an existing portfolio that is being executed under an existing EMNA, the net-to-gross ratio may be calculated with respect to the existing portfolio of swaps. In cases where an entirely new swap portfolio is being established, the initial value of the net-to-gross ratio should be set to 1.0. After the first day's mark-to-market valuation has been recorded for the portfolio, the net-to-gross ratio may be re-calculated and the initial margin amount may be adjusted based on the revised net-to-gross ratio.
The proposed rule requires that the standardized initial margin collection amount be calculated on a
As in the case of internal-model-generated initial margins, the margin calculation under the standardized approach must also be performed on a
The Agencies expect that some covered swap entities may choose to adopt a mix of internal models and standardized approaches to calculating initial margin requirements. As a specific example, it may be the case that a covered swap entity engages in some swap transactions on an infrequent basis to meet client demands but the level of activity does not warrant all of the costs associated with building, maintaining and overseeing a quantitative initial margin model. Further, some covered swap entity clients may value the transparency and simplicity of the standardized approach. In such cases, the Agencies expect that it would be acceptable to use the standardized approach to margin such swaps.
As discussed in the 2013 international framework, under certain circumstances it is appropriate to employ both a model based and standardized approach to calculating initial margins. At the same time, and as discussed in the 2013 international framework, the Agencies are aware that differences between the standardized approach and internal model based margins across different types of swaps could be used to “cherry pick” the method that results in the lowest margin requirement. The Agencies would not view such an approach to choosing between a standardized and model based margin method as being appropriate and would raise safety and soundness concerns regarding the swap activities themselves. Rather, the choice to use one method over the other should be based on fundamental considerations apart from which method produces the most favorable margin results. Similarly, the Agencies do not anticipate there should be a need for covered swap entities to switch between the standardized or model-based margin method for a particular counterparty, absent a significant change in the nature of the entity's swap activities. The Agencies expect covered swap entities to provide a rationale for changing methodologies to their supervisory Agency if requested.
In global markets, counterparties organized in different jurisdictions often transact in non-cleared swaps. Section 9 addresses the cross-border applicability of the proposed margin rules to covered swap entities.
The 2011 proposal provided an exclusion from the margin requirements for certain covered swap entities that operate in foreign jurisdictions.
The 2011 proposal defined a “foreign covered swap entity” as a covered swap entity that: (i) Is not a company organized under the laws of the United States or any State; (ii) is not a branch or office of a company organized under the laws of the United States or any
Under the 2011 proposal, foreign swaps would generally have included only swaps where the foreign covered swap entity's counterparty is not organized under U.S. law or otherwise located in the United States, and no U.S. affiliate of the counterparty has guaranteed the counterparty's obligations under the swap.
The requirement that no U.S. affiliate may guarantee the counterparty's obligation was intended to prevent instances where such an affiliate, through a guarantee, effectively assumes ultimate responsibility for the performance of the counterparty's obligations under the swap. In particular, the Agencies were concerned that, without such a requirement, swaps with a U.S. counterparty could be structured, through the use of an overseas affiliate, in a manner that would evade application of the proposed margin requirements to U.S. swaps. Swaps guaranteed by a U.S. entity would also have a direct and significant connection with activities in, and an effect on, commerce of the U. S. and thus affect systemic risk in the United States.
A number of commenters argued that the 2011 proposal would put U.S. firms that do business globally at a competitive disadvantage by applying U.S. rules to U.S. firms regardless of where their operations are conducted. These commenters suggested that U.S. firms operating abroad should be subject to the same margin requirements as other foreign firms to establish competitive equity. Other commenters argued that the 2011 proposal could create situations in which a U.S. firm operating abroad could be subjected to two different and potentially conflicting margin requirements, as the foreign jurisdiction could also impose margin requirements on the foreign operations of U.S. firms.
The proposed rule's definition of “foreign non-cleared swap or foreign non-cleared security-based swap” would cover any non-cleared swap of a foreign covered swap entity to which neither the counterparty nor any guarantor (on either side) is (i) an entity organized under U.S. or State law, including a U.S. branch, agency, or subsidiary of a foreign bank; (ii) a branch or office of an entity organized under U.S. or State law; or (iii) a covered swap entity controlled by an entity organized under U.S. or State law. Under this definition, foreign swaps could include swaps with a foreign bank or with a foreign subsidiary of a U.S. bank or bank holding company, so long as that subsidiary is not itself a covered swap entity. A foreign swap would not include a swap with a foreign branch of a U.S. bank or a U.S. branch or subsidiary of a foreign bank.
Under the proposed rule, certain types of covered swap entities operating in foreign jurisdictions would be able to meet the requirement of the proposed rule by complying with the foreign requirement in the event that a comparability determination is made by the Agencies, regardless of the location of the counterparty, provided that the covered swap entity's obligations under the swap are not guaranteed by a U.S. entity. If a covered swap entity's
The Agencies are also interested in commenters' views on whether the rule should clarify and define the concept of “guarantee” to better ensure that those swaps that pose risks to U.S. insured depository institutions would be included within the scope of the rule. For example, many swaps agreements contain cross-default provisions that give swaps counterparties legal rights against certain “specified entities.” In these arrangements, a swaps counterparty of a foreign subsidiary of a U.S. covered swap entity may have a contractual right to close out and settle its swaps positions with the U.S. entity if the foreign subsidiary of the U.S. entity defaults on its own swaps positions with the counterparty. While not technically a guarantee of the foreign subsidiary's swaps, these provisions may be viewed as reassuring counterparties to foreign subsidiaries that the U.S. bank stands behind its foreign subsidiaries' swaps. Other similar arrangements may include keep well agreements or liquidity puts. Moreover, depending on the magnitudes of the swaps positions involved, such agreements can expose the U.S. bank to the risk of unexpected and disorderly termination of a subset of its own swaps positions based on the swaps activities of its foreign subsidiary.
In addition, U.S. branches and agencies of foreign banks would be permitted to comply with the foreign requirement for which a determination was made, provided their obligations under the swap are not guaranteed by a U.S. entity. While such branches and agencies clearly operate within the U.S., the proposed treatment reflects the principle that branches and agencies are part of the parent organization. Under this approach, foreign branches and agencies of U.S. banks would not be eligible for substituted compliance and would be required to comply with the U.S. requirement for the same reason. The Agencies are aware of concerns regarding potential competitive disadvantages that could arise as U.S. covered swap entities compete with U.S. branches and agencies of foreign banks in the market for non-cleared swaps. The Agencies' preliminary view is that this concern can be addressed through the comparability determination process. A foreign jurisdiction with a substantially different margin requirement that resulted in a demonstrable competitive advantage over U.S. covered swap entities is unlikely to have processes that are comparable to the U.S. compliance requirements. Moreover, a foreign margin requirement that would confer a significant competitive advantage on foreign entities through a lower margin requirement or similar means would likely represent a general increase in systemic risk and weaker incentives for central clearing relative to the U.S. requirement. Accordingly, it is unlikely that such foreign requirements would be determined comparable by the Agencies, in which case the U.S. branch or agency of a foreign bank would be required to comply with the U.S. requirement.
Under the proposed rule, if a foreign counterparty is subject to a foreign regulatory framework that has been determined to be comparable by the Agencies, a covered swap entity's posting requirement would be satisfied by posting (in amount, form, and at such time) as required by the foreign counterparty's margin collection requirement, provided that the counterparty is subject to the foreign regulatory framework. In these cases, the collection requirement of the foreign counterparty would suffice to ensure two-way exchange of margin. For example, if a U.S. bank that is a covered swap entity enters into a swap with a foreign hedge fund that is subject to a foreign regulatory framework for which the Agencies have made a comparability determination, the U.S. bank must collect the amount of margin as required under the U.S. rule, but need post only the amount of margin that the foreign hedge fund is required to collect under the foreign regulatory framework.
The proposed rule provides that the Agencies will jointly make a determination regarding the comparability of a foreign regulatory framework that will focus on the outcomes produced by the foreign framework as compared to the U.S. framework. Moreover, as margin requirements are complex and have a number of related aspects,
The Agencies propose to accept requests for a determination from a covered swap entity that it be allowed to comply with the foreign regulatory framework if a comparability determination were made to support such result. Once the Agencies make a favorable comparability determination for a foreign regulatory framework, any covered swap entity that could comply with the foreign framework will be allowed to do so (
The Agencies note that a substantial amount of swaps activities are currently conducted through foreign subsidiaries that may not be subject to certain elements of Title VII of the Dodd-Frank Act.
The Agencies seek comment on the proposed cross-border provisions of the proposed rule. In particular, are there any reasons not to recognize foreign regulatory frameworks in the manner that has been proposed? Does the recognition of foreign regulatory frameworks raise any competitive equity or related issues that the Agencies should consider? Are there any additional types of covered swap entities that should be permitted to comply with the U.S. framework by complying with a foreign framework? Are there any other covered swap entities that should not be permitted to comply with the U.S. rule in this manner? Are there any issues or potential negative consequences associated with the comparability determination process as described in the proposal?
The 2011 proposal included documentation requirements for covered swap entities. Under the 2011 proposal, a covered swap entity would have had to execute trading documentation with each counterparty that included credit support arrangements that granted the covered swap entity the contractual right to collect initial margin and variation margin in such amounts, in such form, and under such circumstances as would have been necessary to meet the initial margin and variation margin requirements set forth in the rule.
A number of commenters suggested that formal documentation should not be required with each of a covered swap entity's counterparties. In particular, some commenters indicated that swaps with counterparties (
Section __.10(a) of the proposal would retain the documentation requirements substantially as proposed in the 2011 proposal, except that the requirements would apply only to swaps with counterparties that are swap entities or financial end users. Under the proposal, a covered swap entity must execute trading documentation with each counterparty that is a swap entity or a financial end user that includes a credit support arrangement that grants the covered swap entity the contractual right to collect and post initial and variation margin in such amounts, in such form, and under such circumstances as are required by the rule. The documentation must also specify the methods, procedures, rules, and inputs for determining the value of each non-cleared swap for purposes of calculating variation margin requirements and the procedures by which any disputes concerning the valuation of non-cleared swaps or the valuation of assets collected or posted as initial margin or variation margin may be resolved.
The CFTC and SEC are responsible for specifying swap trading relationship documentation requirements for
The 2011 proposal would have required a covered swap entity to comply with any risk-based and leverage capital requirements already applicable to that covered swap entity as part of its prudential regulatory regime. A few commenters urged that capital should not be required with respect to covered swap entities' swaps exposures to nonfinancial end user counterparties. Other commenters argued that capital and collateral requirements for swaps should work together, so there is no need for both capital and margin requirements.
In the period since the 2011 proposal, the banking agencies have strengthened regulatory capital requirements for banking organizations through adoption of the revised capital framework as well as through other rulemakings.
The proposal similarly would require a covered swap entity to comply with risk-based and leverage capital requirements already applicable to the covered swap entity as follows:
• In the case of covered swap entities that are banking organizations,
• In the case of a foreign bank, any state branch or state agency of a foreign bank, the capital standards that are applicable to such covered entity under the Board's Regulation Y (12 CFR 225.2(r)(3)) or the Board's Regulation YY (12 CFR part 252);
• In the case of an Edge corporation or an Agreement corporation, the capital standards applicable to an Edge corporation engaged in banking pursuant to the Board's Regulation K (12 CFR 211.12(c));
• In the case of any “regulated entity” under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (i.e., Fannie Mae and its affiliates, Freddie Mac and its affiliates, and the Federal Home Loan Banks), the risk-based capital level or such other amount applicable to the covered swap entity as required by the Director of FHFA pursuant to 12 U.S.C. 4611;
• In the case of Farmer Mac, the capital adequacy regulations set forth in 12 CFR part 652; and
• In the case of any FCS institution (other than Farmer Mac), the capital regulations set forth in 12 CFR part 615.
The Agencies have determined that compliance with the regulatory capital rules described above is sufficient to offset the greater risk, relative to the risk of centrally cleared swaps, to the swap entity and the financial system arising from the use of non-cleared swaps, and helps ensure the safety and soundness of the covered swap entity. In particular, the Agencies note that the regulatory capital rules incorporated by reference into the proposed rule already address, in a risk-sensitive and comprehensive manner, the safety and soundness risks posed by a covered swap entity's swaps positions.
In response to commenters that argued that the Agencies should not impose both capital and margin requirements, the Agencies note that the relevant statutory provisions require both capital and margin requirements. Moreover, the revised capital framework adopted by the banking agencies and this proposal are intended to operate as complementary regimes that minimize or eliminate duplication of requirements. To the extent that a covered swap entity collects margin on a non-cleared swap, the revised capital framework would recognize the risk mitigation effects of the margin that the covered swap entity has collected, which would in turn reduce the covered swap entity's risk-based capital requirement.
The proposed rule would apply the initial margin and variation margin requirements to non-cleared swaps that are entered into by a covered swap entity over a substantial phase-in period that begins in December 2015. The proposed rule would not require an immediate or retroactive application of initial margin or variation margin for any swap entered into prior to the relevant compliance date of the final rule.
Because the requirements would not be applied retroactively, no new initial margin or variation margin requirements would be imposed on non-cleared swaps entered into prior to the relevant compliance date until those transactions are rolled over or renewed. The only requirements that would apply to a pre-compliance date transaction would be the initial margin and variation margin requirements to which the parties to the transaction had previously agreed by contract.
The new requirements will have an impact on the costs of engaging in new non-cleared swaps after the applicable compliance date. In particular, the proposed rule sets out requirements for initial and variation margin that represent a significant change from current industry practice in many circumstances. Since the 2011 proposal was released, a number of analyses have been conducted that attempt to estimate the total amount of liquidity that will be required by the new margin requirements. Given the complexity of this proposal and its inter-relationship to other rulemakings, these analyses are subject to considerable uncertainty. In particular, these analyses make a number of assumptions regarding: (i) The level of market activity in the future, (ii) the amount of central clearing in the future, and (iii) the level of financial market volatility and risk that will determine initial margin requirements. These studies also make a number of additional assumptions which may have a measurable influence on the analysis. Notwithstanding these uncertainties, the Agencies' preliminary view is that the analysis and data that appear in these studies are useful to gauge the approximate amount of liquidity that will be required by the new requirements for non-cleared swaps.
Below is a discussion of a selection of studies that have been conducted in the recent past that relate to a margin framework similar to the proposed rule. Specifically, each of these studies uses the 2013 international framework described above in estimating the total amount of initial margin collateral that will be required. While this proposal is largely consistent with the 2013 international framework, the two are not identical. Therefore, the results of these studies are limited by these differences.
The proposed rule will require an exchange of initial margin by many market participants, which represents a significant change in market practice. The total amount of initial margin that would be required at a point in time is an important input into an estimate of the liquidity costs of the new requirements. The table below presents estimates of the total amount of initial margin that would be required by U.S. swap entities and their counterparties once the requirements are fully implemented, that is, at the end of the phase-in period and after existing swaps are rolled into new swaps.
The initial margin estimates provided in the table above are taken from two different studies that have examined the impact of the 2013 international framework on overall liquidity needs. The studies were conducted by the BCBS and IOSCO
As discussed above, these estimates represent the total amount of initial margin that will be required at a point in time once the requirements have been fully phased in and all existing non-cleared swaps have been rolled over into new non-cleared swaps. Accordingly, the full amount of initial margin amount estimates provided in the table above would not be realized until, at the earliest, 2019.
The amounts reported in the table above reflect estimated amounts of initial margin that will be required under this proposal but do not reflect the cost of providing these amounts by covered swap entities and their counterparties. The cost of providing initial margin collateral depends on the difference between the cost of raising additional funds and the rate of return on the assets that are ultimately pledged as initial margin. In some cases, it may be that some entities providing initial margin, such as pension funds and asset managers, will provide assets as initial margin that they already own and would have owned even if no requirements were in place. In such cases, the economic cost of providing initial margin collateral is expected to be low. In other cases, entities engaging in non-cleared swaps will have to raise additional funds to secure assets that can be pledged as initial margin. The greater the cost of their marginal funding relative to the rate of return on the initial margin collateral, the greater the cost of providing collateral assets. It is difficult, however, to estimate these costs due to differences in marginal funding costs across different types of entities as well as differences in marginal funding costs over time and differences in the rate of return on different collateral assets that may be used to satisfy the initial margin requirements.
The proposal will also require that variation margin be exchanged between covered swap entities and certain of their counterparties. The Agencies' preliminary view is that the impact of such requirements are low in the aggregate because: (i) regular exchange of variation margin is already a well-established market practice among a large number of market participants, and (ii) exchange of variation margin simply redistributes resources from one entity to another in a manner that imposes no aggregate liquidity costs. An entity that suffers a reduction in liquidity from posting variation margin is offset by an increase in the liquidity enjoyed by the entity receiving the variation margin.
While the Agencies' preliminary view is that the studies referenced above are broadly useful for considering the overall liquidity costs of the new requirements, they do not provide useful estimates of other aspects of cost including, for example, the operational costs of complying with the requirements. Also, commenters may have additional information on the economic and liquidity costs that are not addressed in the studies referenced above. Accordingly, the Agencies request commenters to provide their own detailed quantitative impact analyses. The Agencies encourage commenters to include the following elements in their analyses: (i) The expected costs of, or additional liquidity required by, the initial margin and variation margin requirements, and (ii) the potential benefits of the initial margin and variation margin requirements to covered swap entities, their counterparties, and the financial system as a whole. The analyses should also (i) address operational and other
The Agencies are interested in receiving comments on all aspects of the proposed rule.
Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, sec. 722, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the OCC, Board and FDIC to use plain language in all proposed and final rules published after January 1, 2000. The OCC, Board and FDIC invite your comments on how to make this proposal easier to understand. For example:
• Have we organized the material to suit your needs? If not, how could this material be better organized?
• Are the requirements in the proposed regulation clearly stated? If not, how could the regulation be more clearly stated?
• Does the proposed regulation contain language or jargon that is not clear? If so, which language requires clarification?
• Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand? If so, what changes to the format would make the regulation easier to understand?
• What else could we do to make the regulation easier to understand?
Certain provisions of the proposed rule contain “collection of information” requirements within the meaning of the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with the requirements of the PRA, the Agencies may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The OMB control number for the OCC is 1557-0251. The FDIC will obtain an OMB control number. The OMB control number for the Board is 7100-0361. In addition, as permitted by the PRA, the Board proposes to extend for three years, with revision, the Reporting Requirements Associated with Regulation KK (Margin and Capital Requirements for Covered Swaps Entities) (Reg KK; OMB No. 7100-0361). The information collection requirements contained in this joint notice of proposed rulemaking have been submitted to OMB for review and approval by the OCC and FDIC under section 3507(d) of the PRA and section 1320.11 of OMB's implementing regulations (5 CFR 1320). The Board reviewed the proposed rule under the authority delegated to the Board by OMB. The proposed rule contains requirements subject to the PRA. The reporting requirements are found in §§ _.8(c)(1), _.8(c)(2), _.8(c)(3), _.8(d)(5), _.8(d)(10), _.8(d)(11), _.8(d)(12), _.8(d)(13), and _.9(e). The recordkeeping requirements are found in §§ _.2 definition of “eligible master netting agreement,” paragraph (4), _.5(b)(2)(i), _.8(e), _.8(f)(2), _.8(f)(3), _.8(f)(4), _.8(g), _.8(h), and _.10. These information collection requirements would implement sections 731 and 764 of the Dodd-Frank Act, as mentioned in the Abstract below.
Comments are invited on:
(a) Whether the collections of information are necessary for the proper performance of the Agencies' functions, including whether the information has practical utility;
(b) The accuracy of the estimates of the burden of the information collections, 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 information collections on respondents, including through the use of automated collection techniques or other forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
All comments will become a matter of public record. Comments on aspects of this notice that may affect reporting or recordkeeping requirements and burden estimates should be sent to the addresses listed in the
Section _.8 establishes standards for initial margin models. These standards include (1) a requirement that the covered swap entity receive prior approval from the relevant Agency based on demonstration that the initial margin model meets specific requirements (§§ _.8(c)(1) and _.8(c)(2)); (2) a requirement that a covered swap entity notify the relevant Agency in writing 60 days before extending use of the model to additional product types, making certain changes to the initial margin model, or making material changes to modeling assumptions (§ _.8(c)(3)); (3) a variety of quantitative requirements, including requirements that the covered swap entity validate and demonstrate the reasonableness of its process for modeling and measuring hedging benefits, demonstrate to the satisfaction of the relevant Agency that the omission of any risk factor from the calculation of its initial margin is appropriate, demonstrate to the satisfaction of the relevant Agency that incorporation of any proxy or approximation used to capture the risks of the covered swap entity's non-cleared swaps or non-cleared security-based swaps is appropriate, periodically review and, as necessary, revise the data used to calibrate the initial margin model to ensure that the data incorporate an appropriate period of significant financial stress (§§ _.8(d)(5), _.8(d)(10), _.8(d)(11), _.8(d)(12), and _.8(d)(13)).
Section _.9(e) allows a covered swap entity to request that the prudential regulators make a substituted compliance determination and must provide the reasons therefore and other required supporting documentation. A request for a substituted compliance determination must include a description of the scope and objectives of the foreign regulatory framework for non-cleared swaps and non-cleared security-based swaps; the specific provisions of the foreign regulatory framework for non-cleared swaps and security-based swaps (scope of transactions covered; determination of the amount of initial and variation margin required; timing of margin requirements; documentation requirements; forms of eligible collateral; segregation and rehypothecation requirements; and approval process and standards for models); the supervisory compliance program and enforcement authority exercised by a foreign financial regulatory authority or authorities in such system to support its oversight of the application of the non-cleared swap and security-based swap regulatory framework; and any other descriptions and documentation that the prudential regulators determine are appropriate. A covered swap entity may make a request under this section only if directly supervised by the authorities administering the foreign regulatory framework for non-cleared swaps and non-cleared security-based swaps.
Section _.2 defines terms used in the proposed rule, including the definition of “eligible master netting agreement,” which provides that a covered swap entity that relies on the agreement for purpose of calculating the required margin must (1) conduct sufficient legal review of the agreement to conclude with a well-founded basis that the agreement meets specified criteria and (2) establish and maintain written procedures for monitoring relevant changes in law and to ensure that the agreement continues to satisfy the requirements of this section. The term “eligible master netting agreement” is used elsewhere in the proposed rule to specify instances in which a covered swap entity may (1) calculate variation margin on an aggregate basis across multiple non-cleared swaps and security-based swaps and (2) calculate initial margin requirements under an initial margin model for one or more swaps and security-based swaps.
Section _.5(b)(2)(i) specifies that a covered swap entity shall not be deemed to have violated its obligation to collect or post margin from or to a counterparty if the covered swap entity has made the necessary efforts to collect or post the required margin, including the timely initiation and continued pursuit of formal dispute resolution mechanisms, or has otherwise demonstrated upon request to the satisfaction of the agency that it has made appropriate efforts to collect or post the required margin.
Section _.8 establishes standards for initial margin models. These standards include (1) a requirement that a covered swap entity review its initial margin model annually (§ _.8(e)); (2) a requirement that the covered swap entity validate its initial margin model initially and on an ongoing basis, describe to the relevant Agency any remedial actions being taken, and report internal audit findings regarding the effectiveness of the initial margin model to the covered swap entity's board of directors or a committee thereof (§§ _.8(f)(2), _.8(f)(3), and _.8(f)(4)); (3) a requirement that the covered swap entity adequately document all material aspects of its initial margin model (§ _.8(g)); and (4) that the covered swap entity must adequately document internal authorization procedures, including escalation procedures, that require review and approval of any change to the initial margin calculation under the initial margin model, demonstrable analysis that any basis for any such change is consistent with the requirements of this section, and independent review of such demonstrable analysis and approval (§ _.8(h)).
Section _.10 requires a covered swap entity to execute trading documentation with each counterparty that is either a swap entity or financial end user regarding credit support arrangements that (1) provides the contractual right to collect and post initial margin and variation margin in such amounts, in such form, and under such circumstances as are required; and (2) specifies the methods, procedures, rules, and inputs for determining the value of each non-cleared swap or non-cleared security-based swap for purposes of calculating variation margin requirements, and the procedures for resolving any disputes concerning valuation.
§§ _.8(c)(1), _.8(c)(2), _.8(c)(3), _.8(d)(5), _.8(d)(10), _.8(d)(11), _.8(d)(12), and _.8(d)(13): 240 hours.
§ _.9(e): 10 hours.
§§ _.2, _.5(b)(2)(i), _.8(e), _.8(f)(2), _.8(f)(3), _.8(f)(4), _.8(g), _.8(h), and _.10: 69 hours.
In accordance with section 3(a) of the Regulatory Flexibility Act, 5 U.S.C. 601
1. Statement of the objectives of the proposal. As required by section 4s of the Commodity Exchange Act (7 U.S.C. 6(s)) and section 15F of the Securities Exchange Act (15 U.S.C. 78o-10), which were added by sections 731 and 764 of the Dodd-Frank Act, respectively, the Agencies are proposing new regulations to establish rules imposing (i) capital requirements and (ii) initial and variation margin requirements on all non-cleared swaps into which covered swap entities enter. The capital and margin standards for swap entities imposed under sections 731 and 764 of the Dodd-Frank Act are intended to offset the greater risk to the swap entity and the financial system arising from the use of swaps and security-based swaps that are not cleared.
This proposed rule implements the statutory provisions, which require the Agencies to adopt rules jointly to establish capital requirements and initial and variation margin requirements for covered swap entities on all non-cleared swaps and non-cleared security-based swaps in order to offset the greater risk to such entities and the financial system arising from the use of swaps and security-based swaps that are not cleared.
2. Small entities affected by the proposal. This proposal may have an effect predominantly on two types of small entities: (i) Covered swap entities that are subject to the proposed rule's capital and margin requirements; and (ii) counterparties that engage in swap transactions with covered swap entities.
A financial institution generally is considered small if it has assets of $550 million or less.
The initial and variation margin requirements of the proposed rule apply to non-cleared swap transactions entered into by a covered swap entity with counterparties that are swap entities or financial end users. Non-financial or “commercial” end users would not be subject to specific requirements under the proposed rule, and a covered swap entity's collection of margin from these types of counterparties is subject to the judgment of the covered swap entity. That is, under the proposed rule, a covered swap entity is not required to collect initial or variation margin with respect to any non-cleared swap or non-cleared security-based swap with a counterparty that is a nonfinancial end user but shall collect initial and variation margin at such times and in such forms and such amounts (if any) that the covered swap entity determines appropriately address the credit risk posed by the counterparty and the risks of such non-cleared swaps and non-cleared security-based swaps. In this respect, the Agencies intend for the proposed requirements to be consistent with current market practice for such end users, with the understanding that in many cases little or no margin is, or will be, exchanged with these counterparties. The documentation requirements of the proposed rule likewise would not apply to these nonfinancial end users. The segregation requirement of the proposed rule could apply in cases where the covered swap entity posts margin to a nonfinancial end user, even though a covered swap entity is not required to post margin to nonfinancial end users under the proposed rule. In particular, under the proposal, a covered swap entity that posts any collateral other than variation margin shall require that all funds or other property other than variation margin provided by the covered swap entity be held by one or more custodians that are not affiliates of the covered swap entity or the counterparty. The Agencies believe that the treatment of nonfinancial end users under the proposal should reduce the burden on nonfinancial end users including those that are small entities.
The rule would require covered swap entities to post margin to and collect margin on non-cleared swaps from counterparties that are swap entities or financial end users. The number of such counterparties and the extent to which certain types of companies are likely to be counterparties are unknown. As noted above, the CFTC has provided a list of provisionally registered swap dealers that includes 102 institutions and provisionally registered major swap participants that includes 2 institutions.
The application of initial margin requirements to swaps with financial end user counterparties is limited, depending on the counterparty's level of swap activity. With respect to financial end user counterparties that engage in swap transactions with swap entities that are subject to the proposed rule's margin requirements, the proposed rule minimizes the burden on small entities by requiring that such counterparties have a material swaps exposure in order to be subject to initial margin requirements. Material swaps exposure for an entity is defined to mean that an entity and its affiliates have an average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps with all counterparties for June, July and August of the previous calendar year that exceeds $3 billion, where such amount is calculated only for business days. In addition, the proposed rule provides an initial margin threshold resulting in an aggregate credit exposure of $65 million from all non-cleared swaps and non-cleared security-based swaps between a covered swap entity and its affiliates and a counterparty and its affiliates. A covered swap entity would not need to collect initial margin from a counterparty to the extent the amount is below the initial margin threshold. The Agencies expect the initial margin threshold should further reduce the impact of the proposal on small entities.
Under regulations issued by the Small Business Administration, a “small entity” includes firms within the “Securities, Commodity Contracts, and Other Financial Investments and Related Activities” sector with assets of $38.5 million or less and “Funds, Trusts and Other Financial Vehicles” with assets of $32.5 million or less.
As noted above, all financial end users would be subject to the variation margin requirements and documentation requirements of the proposed rule. However, the Agencies believe that such treatment is consistent with current market practice and should not represent a significant burden on small financial end users. Consequently, the proposed rule would not appear to have a significant economic impact on a substantial number of small entities.
3. Compliance requirements. With respect to initial and variation margin requirements, the Agencies' proposed rule does not apply directly to counterparties that engage in swap transactions with swap entities. However, the proposed rule requires a covered swap entity to collect and post a minimum amount of initial margin (subject to a threshold) from all counterparties that are swap entities and financial end users with material swaps exposure and to collect and post a minimum amount of variation margin from all swap entity and financial end user counterparties. Certain aspects of the segregation requirement of the proposal would also apply regardless of the size of the counterparty. In particular, the proposal provides that a covered swap entity that posts any collateral other than variation margin with respect to a non-cleared swap or non-cleared security-based swap shall require that all funds or other property other than variation margin provided by the covered swap entity be held by one or more custodians that are not affiliates of the covered swap entity or the counterparty.
4. Other Federal rules. Sections 731 and 764 of the Dodd-Frank Act require the CFTC and SEC separately to adopt rules imposing capital and margin requirements for swap entities for which there is no prudential regulator.
The Agencies acknowledge that both the CFTC and SEC are responsible for specifying swap trading relationship documentation requirements for
Section 7 of the proposal also contains requirements regarding segregation and rehypothecation of initial margin for non-cleared for swaps. Under the Dodd-Frank Act, the CFTC and SEC have authority to separately adopt requirements for swap entities with respect to the treatment of collateral posted by their counterparties
Section 9 of the proposed rule also allows for recognition of other regulatory regimes in certain circumstances. Pursuant to this section, certain types of covered swap entities operating in foreign jurisdictions would be able to meet the U.S. requirement by complying with the foreign requirement in the event that a comparability determination is made by the Agencies, regardless of the location of the counterparty. The Agencies are seeking comment on the proposal's approach to recognizing other regulatory regimes. Allowing compliance with other regulatory regimes to satisfy the proposed rule's requirements in these cases will reduce the burden on covered swap entities and avoid duplicative requirements while ensuring that the goals of the proposed rule's requirements are achieved.
The proposed rule prescribes margin requirements on all non-cleared swap transactions between a covered swap entity and its counterparties including transactions between banks that are covered swap entities and their affiliates that are financial end users including subsidiaries of banks. To the extent that the proposed rule covers interaffiliate swap transactions, sections 23A and 23B of the Federal Reserve Act (“FRA”) might also be applicable. Section 608 of the Dodd-Frank Act amended section 23A of the FRA to include as a covered transaction a derivative transaction with an affiliate, to the extent that the transaction causes a member bank or a subsidiary to have credit exposure to the affiliate. Banks that are swap entities may have collateral requirements as a result of this proposal and section 608 of the Dodd-Frank Act with respect to their swap transactions with affiliates. To the extent there are differences, the stricter rule would apply.
5. Significant alternatives to the proposed rule. As discussed above, the Agencies have mitigated the impact of the margin requirements on nonfinancial end users from which swap entities may be required to collect initial margin and/or variation margin by leaving the collection of margin from these types of counterparties to the judgment of the covered swap entity consistent with current market practice. In addition, the Agencies have proposed to reduce the effect of the proposed rule on counterparties to covered swap entities, including small entities, by requiring a material swaps exposure for a financial end user counterparty to be subject to initial margin requirements and through the implementation of an initial margin threshold amount. The Agencies have also requested comment on a variety of alternative approaches to implementing margin requirements. The Agencies welcome comment on any significant alternatives that would minimize the impact of the proposal on small entities.
FCA: Pursuant to section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., FCA hereby certifies that the proposed rule will not have a significant economic impact on a substantial number of small entities. Each of the banks in the Farm Credit System, considered together with its affiliated associations, has assets and annual income in excess of the amounts that would qualify them as small entities; nor does the Federal Agricultural Mortgage Corporation meet the definition of “small entity.” Therefore, System institutions are not “small entities” as defined in the Regulatory Flexibility Act.
The OCC has analyzed the proposed rule under the factors in the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this analysis, the OCC considered whether the proposed rule includes a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (adjusted annually for inflation).
The OCC has determined this proposed rule is likely to result in the expenditure by the private sector of $100 million or more in any one year (adjusted annually for inflation). The OCC has prepared a budgetary impact analysis and identified and considered alternative approaches. When the proposed rule is published in the
The text of the proposed common rules appears below:
(a) [Reserved]
(b) [Reserved]
(c) [Reserved]
(d)
(1) December 1, 2015 with respect to the requirements in § _.4 for variation margin for non-cleared swaps and non-cleared security-based swaps.
(2) December 1, 2015 with respect to the requirements in § _.3 for initial margin for any non-cleared swaps and non-cleared security-based swaps, where both:
(i) The covered swap entity combined with all its affiliates; and
(ii) its counterparty combined with all its affiliates, have an average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps for June, July and August 2015 that exceeds $4 trillion, where such amounts are calculated only for business days.
(3) December 1, 2016 with respect to the requirements in § _.3 for initial margin for any non-cleared swaps and non-cleared security-based swaps, where both:
(i) The covered swap entity combined with all its affiliates; and
(ii) its counterparty combined with all its affiliates, have an average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps for June, July and August 2016 that exceeds $3 trillion, where such amounts are calculated only for business days.
(4) December 1, 2017 with respect to the requirements in § _.3 for initial margin for any non-cleared swaps and non-cleared security-based swaps, where both:
(i) The covered swap entity combined with all its affiliates; and
(ii) its counterparty combined with all its affiliates, have an average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps for June, July and August 2017 that exceeds $2 trillion, where such amounts are calculated only for business days.
(5) December 1, 2018 with respect to the requirements in § _.3 for initial margin for any non-cleared swaps and non-cleared security-based swaps, where both:
(i) The covered swap entity combined with all its affiliates; and
(ii) its counterparty combined with all its affiliates, have an average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps for June, July and August 2018 that exceeds $1 trillion, where such amounts are calculated only for business days.
(6) December 1, 2019 with respect to the requirements in § _.3 for initial margin for any other covered swap entity with respect to non-cleared swaps and non-cleared security-based swaps entered into with any other counterparty.
(e) Once a covered swap entity and its counterparty must comply with the margin requirements for non-cleared swaps and non-cleared security-based swaps based on the compliance dates in paragraph (d), the covered swap entity and its counterparty shall remain subject to the requirements of this [subpart].
(1) Ownership, control, or power to vote 25 percent or more of a class of voting securities of the company, directly or indirectly or acting through one or more other persons;
(2) Ownership or control of 25 percent or more of the total equity of the company, directly or indirectly or acting through one or more other persons; or
(3) Control in any manner of the election of a majority of the directors or trustees of the company.
(1) The agreement creates a single legal obligation for all individual transactions covered by the agreement upon an event of default following any stay permitted by paragraph (2) of this definition, including upon an event of receivership, insolvency, liquidation, or similar proceeding, of the counterparty;
(2) The agreement provides the covered swap entity the right to accelerate, terminate, and close out on a net basis all transactions under the agreement and to liquidate or apply collateral promptly upon an event of default, including upon an event of receivership, insolvency, liquidation, or similar proceeding, of the counterparty, provided that, in any such case, any exercise of rights under the agreement will not be stayed or avoided under applicable law in the relevant jurisdictions, other than:
(i) In receivership, conservatorship, resolution under the Federal Deposit Insurance Act (12 U.S.C. 1811
(ii) In a contractual agreement subject by its terms to any of the laws referenced in paragraph (2)(i) of this definiton;
(3) The agreement does not contain a walkaway clause (that is, a provision that permits a non-defaulting counterparty to make a lower payment than it otherwise would make under the agreement, or no payment at all, or suspends or conditions payment, to a defaulter or the estate of a defaulter, even if the defaulter or the estate of the defaulter is or otherwise would be, a net creditor under the agreement); and
(4) A covered swap entity that relies on the agreement for purposes of calculating the margin required by this part:
(i) Conducts sufficient legal review (and maintains sufficient written documentation of that legal review) to conclude with a well-founded basis that:
(A) The agreement meets the requirements of paragraphs (1)-(3) of this definition;
(B) In the event of a legal challenge (including one resulting from default or from receivership, insolvency, liquidation, or similar proceeding), the relevant court and administrative authorities would find the agreement to be legal, valid, binding, and enforceable
(ii) Establishes and maintains written procedures to monitor possible changes in relevant law and to ensure that the agreement continues to satisfy the requirements of this definition.
(1) Any counterparty that is not a swap entity and that is:
(i) A bank holding company or an affiliate thereof; a savings and loan holding company; or a nonbank financial institution supervised by the Board of Governors of the Federal Reserve System under Title I of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5323);
(ii) A depository institution; a foreign bank; a Federal credit union or State credit union as defined in section 2 of the Federal Credit Union Act (12 U.S.C. 1752(1) & (6); an institution that functions solely in a trust or fiduciary capacity as described in section 2(c)(2)(D) of the Bank Holding Company Act (12 U.S.C. 1841(c)(2)(D)); an industrial loan company, an industrial bank, or other similar institution described in section 2(c)(2)(H) of the Bank Holding Company Act (12 U.S.C. 1841(c)(2)(H));
(iii) An entity that is state-licensed or registered as—
(A) A credit or lending entity, including a finance company; money lender; installment lender; consumer lender or lending company; mortgage lender, broker, or bank; motor vehicle title pledge lender; payday or deferred deposit lender; premium finance company; commercial finance or lending company; or commercial mortgage company; except entities registered or licensed solely on account of financing the entity's direct sales of goods or services to customers;
(B) A money services business, including a check casher; money transmitter; currency dealer or exchange; or money order or traveler's check issuer;
(iv) A regulated entity as defined in section 1303(20) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502(20)) and any entity for which the Federal Housing Finance Agency or its successor is the primary federal regulator;
(v) Any institution chartered and regulated by the Farm Credit Administration in accordance with the Farm Credit Act of 1971, as amended, 12 U.S.C. 2001 et. seq.;
(vi) A securities holding company; a broker or dealer; an investment adviser as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)); an investment company registered with the SEC under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.); or a company that has elected to be regulated as a business development company pursuant to section 54(a) of the Investment Company (15 U.S.C. 80a-53(a));
(vii) A private fund as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80-b-2(a)); an entity that would be an investment company under section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3) but for section 3(c)(5)(C); or an entity that is deemed not to be an investment company under section 3 of the Investment Company Act of 1940 pursuant to Investment Company Act Rule 3a-7 (17 CFR 270.3a-7) of the U.S. Securities and Exchange Commission;
(viii) A commodity pool, a commodity pool operator, or a commodity trading advisor as defined, respectively, in section 1a(10), 1a(11), and 1a(12) of the Commodity Exchange Act (7 U.S.C. 1a(10), 1a(11), and 1a(12)); or a futures commission merchant;
(ix) An employee benefit plan as defined in paragraphs (3) and (32) of section 3 of the Employee Retirement Income and Security Act of 1974 (29 U.S.C. 1002);
(x) An entity that is organized as an insurance company, primarily engaged in writing insurance or reinsuring risks underwritten by insurance companies, or is subject to supervision as such by a State insurance regulator or foreign insurance regulator;
(xi) An entity that is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in loans, securities, swaps, funds or other assets for resale or other disposition or otherwise trading in loans, securities, swaps, funds or other assets;
(xii) An entity that would be a financial end user described in paragraph (1) of this section, if it were organized under the laws of the United States or any State thereof; or
(xiii) Notwithstanding paragraph (2) below, any other entity that [Agency] has determined should be treated as a financial end user.
(2) The term “financial end user” does not include any counterparty that is:
(i) A sovereign entity;
(ii) A multilateral development bank;
(iii) The Bank for International Settlements;
(iv) An entity that is exempt from the definition of financial entity pursuant to section 2(h)(7)(C)(iii) of the Commodity Exchange Act (7 U.S.C. 2(h)(7)(C)(iii)) and implementing regulations; or
(v) An affiliate that qualifies for the exemption from clearing pursuant to section 2(h)(7)(D) of the Commodity Exchange Act (7 U.S.C. 2(h)(7)(D)) or section 3C(g)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78c-3(g)(4)) and implementing regulations.
(1) In the case of a covered swap entity that does not use an initial margin model, the amount of initial margin with respect to a non-cleared swap or non-cleared security-based swap that is required under Appendix A of this part; and
(2) In the case of a covered swap entity that uses an initial margin model, the amount of initial margin with respect to a non-cleared swap or non-cleared security-based swap that is required under the initial margin model.
(1) Has been developed and designed to identify an appropriate, risk-based amount of initial margin that the covered swap entity must collect with respect to one or more non-cleared swaps or non-cleared security-based swaps to which the covered swap entity is a party; and
(2) Has been approved by [Agency] pursuant to § _.8 of this part.
(1) United States Dollar (USD);
(2) Canadian Dollar (CAD);
(3) Euro (EUR);
(4) United Kingdom Pound (GBP);
(5) Japanese Yen (JPY);
(6) Swiss Franc (CHF);
(7) New Zealand Dollar (NZD);
(8) Australian Dollar (AUD);
(9) Swedish Kronor (SEK);
(10) Danish Kroner (DKK);
(11) Norwegian Krone (NOK); and
(12) Any other currency as determined by [Agency].
(a)
(1) Zero; or
(2) The initial margin collection amount for such non-cleared swap or non-cleared security-based swap
(b)
(c)
(d)
(a)
(b)
(c)
(d)
(a)
(b)
(1) The counterparty has refused or otherwise failed to provide or accept the required margin to or from the covered swap entity; and
(2) The covered swap entity has—
(i) Made the necessary efforts to collect or post the required margin, including the timely initiation and continued pursuit of formal dispute resolution mechanisms, or has otherwise demonstrated upon request to the satisfaction of [Agency] that it has made appropriate efforts to collect or post the required margin; or
(ii) Commenced termination of the non-cleared swap or non-cleared security-based swap with the counterparty promptly following the applicable cure period and notification requirements.
(a) A covered swap entity shall collect and post initial margin and variation margin required pursuant to this part from or to a swap entity or financial end user solely in the form of one or more of the following types of eligible collateral—
(1) Immediately available cash funds that are denominated in—
(i) U.S. dollars; or
(ii) The currency in which payment obligations under the swap are required to be settled;
(2) With respect to initial margin only—
(i) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, the U.S. Department of the Treasury;
(ii) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, a U.S. government agency (other than the U.S. Department of Treasury) whose obligations are fully guaranteed by the full faith and credit of the United States government;
(iii) A publicly traded debt security issued by, or an asset-backed security fully guaranteed as to the payment of principal and interest by, a U.S. Government-sponsored enterprise that is operating with capital support or another form of direct financial assistance received from the U.S. government that enables the repayments of the U.S. Government-sponsored enterprise's eligible securities;
(iv) A major currency;
(v) A security that is issued by, or fully guaranteed as to the payment of principal and interest by, the European Central Bank or a sovereign entity that is assigned no higher than a 20 percent risk weight under the capital rules applicable to the covered swap entity as set forth in § __.11 of this part;
(vi) A security that is issued by, or fully guaranteed as to the payment of principal and interest by, the Bank for International Settlements, the International Monetary Fund, or a multilateral development bank;
(vii) Subject to paragraph (c) of this section, a security solely in the form of:
(A) Publicly traded debt, including a debt security issued by a U.S. Government-sponsored enterprise (other than one described in § __.6(a)(2)(iii)), that meets the terms of [RESERVED] and is not an asset-backed security;
(B) Publicly traded common equity that is included in:
(
(
(viii) Gold.
(b) The value of any eligible collateral described in paragraph (a)(2) of this section that is collected and held to satisfy initial margin requirements is subject to the discounts described in Appendix B of this part.
(c) Eligible collateral for initial margin required by this part does not include a security issued by—
(1) The counterparty or affiliate of the counterparty pledging such collateral; or
(2) A bank holding company, a savings and loan holding company, a foreign bank, a depository institution, a market intermediary, a company that would be any of the foregoing if it were organized under the laws of the United States or any State, or an affiliate of any of the foregoing institutions.
(d) A covered swap entity shall monitor the market value and eligibility of all collateral collected and held to satisfy its initial margin required by this part. To the extent that the market value of such collateral has declined, the covered swap entity shall promptly collect such additional eligible collateral as is necessary to bring itself
(e) A covered swap entity may collect initial margin and variation margin that is not required pursuant to this part in any form of collateral.
(a) A covered swap entity that posts any collateral other than variation margin with respect to a non-cleared swap or a non-cleared security-based swap shall require that all funds or other property other than variation margin provided by the covered swap entity be held by one or more custodians that are not affiliates of the covered swap entity or the counterparty.
(b) A covered swap entity that collects initial margin amounts required by § __.3(a) with respect to a non-cleared swap or a non-cleared security-based swap shall require that such initial margin collateral be held by one or more custodians that are not affiliates of the covered swap entity or the counterparty.
(c) For purposes of paragraphs (a) and (b) of this section, the custodian must act pursuant to a custody agreement that:
(1) Prohibits the custodian from rehypothecating, repledging, reusing, or otherwise transferring (through securities lending, repurchase agreement, reverse repurchase agreement or other means) the funds or other property held by the custodian; and
(2) Is a legal, valid, binding, and enforceable agreement under the laws of all relevant jurisdictions, including in the event of bankruptcy, insolvency, or a similar proceeding.
(d) Notwithstanding paragraph (c)(1) of this section, a custody agreement may permit the posting party to substitute or direct any reinvestment of posted collateral held by the custodian, provided that, with respect to collateral collected by a covered swap entity pursuant to § __.3(a) or posted by a covered swap entity pursuant to § __.3(b), the agreement requires the posting party to:
(1) Substitute only funds or other property that would qualify as eligible collateral under § __.6, and for which the amount net of applicable discounts described in Appendix B would be sufficient to meet the requirements of § __.3; and
(2) Direct reinvestment of funds only in assets that would qualify as eligible collateral under § __.6, and for which the amount net of applicable discounts described in Appendix B would be sufficient to meet the requirements of § __.3.
(a)
(b)
(1) A covered swap entity may calculate the amount of initial margin required to be collected or posted for one or more non-cleared swaps or non-cleared security-based swaps with a given counterparty pursuant to § __.3 on a daily basis using an initial margin model only if the initial margin model meets the requirements of this section.
(2) To the extent that one or more non-cleared swaps or non-cleared security-based swaps are executed pursuant to an eligible master netting agreement between a covered swap entity and its counterparty that is a swap entity or financial end user, a covered swap entity may use its initial margin model to calculate and comply with the initial margin requirements pursuant to § __.3 on an aggregate basis with respect to all non-cleared swaps and non-cleared security-based swaps governed by such agreement. If the agreement covers non-cleared swaps and non-cleared security-based swaps entered into before the applicable compliance date set forth in § ___.1(d), those non-cleared swaps and non-cleared security-based swaps must be included in the aggregate in the initial margin model for the purposes of calculating and complying with the initial margin requirements pursuant to § __.3.
(c)
(1) A covered swap entity must obtain the prior written approval of [Agency] before using any initial margin model to calculate the initial margin required in this part.
(2) A covered swap entity must demonstrate that the initial margin model satisfies all of the requirements of this section on an ongoing basis.
(3) A covered swap entity must notify [Agency] in writing 60 days prior to:
(i) Extending the use of an initial margin model that [Agency] has approved under this section to an additional product type;
(ii) Making any change to any initial margin model approved by [Agency] under this section that would result in a material change in the covered swap entity's assessment of initial margin requirements; or
(iii) Making any material change to modeling assumptions used by the initial margin model.
(4) [The Agency] may rescind its approval of the use of any initial margin model, in whole or in part, or may impose additional conditions or requirements if [Agency] determines, in its sole discretion, that the initial margin model no longer complies with this section.
(d)
(1) The covered swap entity's initial margin model must calculate an amount of initial margin that is equal to the potential future exposure of the non-cleared swap, non-cleared security-based swap or netting set of non-cleared swaps or non-cleared security-based swaps covered by an eligible master netting agreement. Potential future exposure is an estimate of the one-tailed 99 percent confidence interval for an increase in the value of the non-cleared swap, non-cleared security-based swap or netting set of non-cleared swaps or non-cleared security-based swaps due to an instantaneous price shock that is equivalent to a movement in all material underlying risk factors, including prices, rates, and spreads, over a holding period equal to the shorter of ten business days or the maturity of the non-cleared swap or non-cleared security-based swap.
(2) All data used to calibrate the initial margin model must be based on an equally weighted historical observation period of at least one year and not more than five years and must incorporate a period of significant financial stress for each broad asset class that is appropriate to the non-cleared swaps and non-cleared security-based swaps to which the initial margin model is applied.
(3) The covered swap entity's initial margin model must use risk factors sufficient to measure all material price risks inherent in the transactions for which initial margin is being calculated. The risk categories must include, but should not be limited to, foreign exchange or interest rate risk, credit risk, equity risk, agricultural commodity risk, energy commodity risk, metal commodity risk and other commodity risk, as appropriate. For material exposures in significant currencies and markets, modeling techniques must capture spread and basis risk and must incorporate a sufficient number of segments of the yield curve to capture differences in volatility and imperfect correlation of rates along the yield curve.
(4) In the case of a non-cleared cross-currency swap, the covered swap entity's initial margin model need not recognize any risks or risk factors associated with the fixed, physically-settled foreign exchange transactions associated with the exchange of principal embedded in the non-cleared cross-currency swap. The initial margin model must recognize all material risks and risk factors associated with all other payments and cash flows that occur during the life of the non-cleared cross-currency swap.
(5) The initial margin model may calculate initial margin for a non-cleared swap or non-cleared security-based swap or a netting set of non-cleared swaps or non-cleared security-based swaps covered by an eligible master netting agreement. It may reflect offsetting exposures, diversification, and other hedging benefits for swaps and security-based swaps that are governed by the same eligible master netting agreement by incorporating empirical correlations within the following broad risk categories, provided the covered swap entity validates and demonstrates the reasonableness of its process for modeling and measuring hedging benefits: agricultural commodity, energy commodity, metal commodity and other commodity, credit, equity, and foreign exchange or interest rate. Empirical correlations under an eligible master netting agreement may be recognized by the initial margin model within each broad risk category, but not across broad risk categories.
(6) If the initial margin model does not explicitly reflect offsetting exposures, diversification, and hedging benefits between subsets of non-cleared swaps within a broad risk category, the covered swap entity must calculate an amount of initial margin separately for each subset of non-cleared swaps and non-cleared security-based swaps for which offsetting exposures, diversification, and other hedging benefits are explicitly recognized by the initial margin model. The sum of the initial margin amounts calculated for each subset of non-cleared swaps and non-cleared security-based swaps within a broad risk category will be used to determine the aggregate initial margin due from the counterparty for the portfolio of non-cleared swaps and non-cleared security-based swaps within the broad risk category.
(7) The sum of the initial margins calculated for each broad risk category will be used to determine the aggregate initial margin due from the counterparty.
(8) The initial margin model may not permit the calculation of any initial margin collection amount to be offset by, or otherwise take into account, any initial margin that may be owed or otherwise payable by the covered swap entity to the counterparty.
(9) The initial margin model must include all material risks arising from the nonlinear price characteristics of option positions or positions with embedded optionality and the sensitivity of the market value of the positions to changes in the volatility of the underlying rates, prices, or other material risk factors.
(10) The covered swap entity may not omit any risk factor from the calculation of its initial margin that the covered swap entity uses in its initial margin model unless it has first demonstrated to the satisfaction of [Agency] that such omission is appropriate.
(11) The covered swap entity may not incorporate any proxy or approximation used to capture the risks of the covered swap entity's non-cleared swaps or non-cleared security-based swaps unless it has first demonstrated to the satisfaction of [Agency] that such proxy or approximation is appropriate.
(12) The covered swap entity must have a rigorous and well-defined process for re-estimating, re-evaluating, and updating its internal models to ensure continued applicability and relevance.
(13) The covered swap entity must review and, as necessary, revise the data used to calibrate the initial margin model at least monthly, and more frequently as market conditions warrant, to ensure that the data incorporate a period of significant financial stress appropriate to the non-cleared swaps and non-cleared security-based swaps to which the initial margin model is applied.
(14) The level of sophistication of the initial margin model must be commensurate with the complexity of the non-cleared swaps and non-cleared security-based swaps to which it is applied. In calculating an initial margin collection amount, the initial margin model may make use of any of the generally accepted approaches for modeling the risk of a single instrument or portfolio of instruments.
(15) [The Agency] may in its sole discretion require a covered swap entity using an initial margin model to collect a greater amount of initial margin than that determined by the covered swap entity's initial margin model if [the Agency] determines that the additional collateral is appropriate due to the nature, structure, or characteristics of the covered swap entity's transaction(s), or is commensurate with the risks associated with the transaction(s).
(e)
(f)
(1) The covered swap entity must maintain a risk control unit that reports directly to senior management and is independent from the business trading units.
(2) The covered swap entity's risk control unit must validate its initial margin model prior to implementation and on an ongoing basis. The covered swap entity's validation process must be independent of the development, implementation, and operation of the initial margin model, or the validation process must be subject to an independent review of its adequacy and effectiveness. The validation process must include:
(i) An evaluation of the conceptual soundness of (including developmental evidence supporting) the initial margin model;
(ii) An ongoing monitoring process that includes verification of processes and benchmarking by comparing the covered swap entity's initial margin model outputs (estimation of initial margin) with relevant alternative internal and external data sources or estimation techniques, including benchmarking against observable margin standards to ensure that the initial margin required is not less than what a derivatives clearing organization or a clearing agency would require for similar cleared transactions.
(iii) An outcomes analysis process that includes backtesting the initial margin model.
(3) If the validation process reveals any material problems with the initial margin model, the covered swap entity must notify [Agency] of the problems, describe to [Agency] any remedial actions being taken, and adjust the initial margin model to ensure an appropriately conservative amount of required initial margin is being calculated.
(4) The covered swap entity must have an internal audit function independent of business-line management and the risk control unit that at least annually assesses the effectiveness of the controls supporting the covered swap entity's initial margin model measurement systems, including the activities of the business trading
(g)
(h)
(a)
(b) For purposes of this section, a
(1) An entity organized under the laws of the United States or any State, including a U.S. branch, agency, or subsidiary of a foreign bank;
(2) A branch or office of an entity organized under the laws of the United States or any State; or
(3) A covered swap entity that is controlled, directly or indirectly, by an entity that is organized under the laws of the United States or any State.
(c) For purposes of this section, a
(1) An entity organized under the laws of the United States or any State, including a U.S. branch, agency, or subsidiary of a foreign bank;
(2) A branch or office of an entity organized under the laws of the United States or any State; or
(3) An entity controlled, directly or indirectly, by an entity that is organized under the laws of the United States or any State.
(d)
(1)
(2)
(3)
(i) A foreign covered swap entity;
(ii) A foreign bank or a U.S. branch or agency of a foreign bank; or
(iii) A foreign subsidiary of a depository institution, Edge corporation, or agreement corporation.
(4)
(e)
(1) A covered swap entity described in paragraph (d)(3) of this section may request that the prudential regulators make a determination pursuant to this section. A request for a determination must include a description of:
(i) The scope and objectives of the foreign regulatory framework for non-cleared swaps and non-cleared security-based swaps;
(ii) The specific provisions of the foreign regulatory framework for non-cleared swaps and non-cleared security-based swaps that govern:
(A) The scope of transactions covered;
(B) The determination of the amount of initial and variation margin required and how that amount is calculated;
(C) The timing of margin requirements;
(D) Any documentation requirements;
(E) The forms of eligible collateral;
(F) Any segregation and rehypothecation requirements; and
(G) The approval process and standards for models used in calculating initial and variation margin;
(iii) The supervisory compliance program and enforcement authority exercised by a foreign financial regulatory authority or authorities in such system to support its oversight of the application of the non-cleared swap and non-cleared security-based swap regulatory framework and how that framework applies to the non-cleared swaps and non-cleared security-based swaps of the covered swap entity; and
(iv) Any other descriptions and documentation that the prudential regulators determine are appropriate.
(2) A covered swap entity described in paragraph (d)(3) of this section may make a request under this section only if the non-cleared swap and non-cleared security-based swap activities of the covered swap entity are directly supervised by the authorities administering the foreign regulatory framework for non-cleared swaps and non-cleared security-based swaps.
(a) A covered swap entity shall execute trading documentation with each counterparty that is either a swap entity or financial end user regarding credit support arrangements that—
(1) Provides the covered swap entity and its counterparty with the contractual right to collect and post initial margin and variation margin in such amounts, in such form, and under such circumstances as are required by this part; and
(2) Specifies—
(i) The methods, procedures, rules, and inputs for determining the value of each non-cleared swap or non-cleared security-based swap for purposes of calculating variation margin requirements; and
(ii) The procedures by which any disputes concerning the valuation of non-cleared swaps or non-cleared security-based swaps, or the valuation of assets collected or posted as initial margin or variation margin, may be resolved.
[END OF COMMON TEXT]
The proposed adoption of the common rules by the agencies, as modified by agency-specific text, is set forth below:
Administrative practice and procedure, Capital, Margin requirements, National Banks, Federal Savings Associations, Reporting and recordkeeping requirements, Risk.
For the reasons stated in the Common Preamble and under the authority of 12 U.S.C. 93a and 5412(b)(2)(B), the Office of the Comptroller of the Currency proposes to amend chapter I of Title 12, Code of Federal Regulations, as follows:
7 U.S.C. 6s(e), 12 U.S.C. 1
(a)
(b)
(c)
A covered swap entity shall comply with:
(a) In the case of a covered swap entity that is a national bank or Federal savings association, the minimum capital requirements 12 CFR Part 3.
(b) In the case of a covered swap entity that is a Federal branch or agency of a foreign bank, the capital adequacy guidelines applicable as generally provided under 12 CFR 28.14.
Administrative practice and procedure, Banks and banking, Capital, Foreign banking, Holding companies, Margin requirements, Reporting and recordkeeping requirements, Risk.
For the reasons set forth in the
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), 12 U.S.C. 221
(a)
(b)
(c)
A covered swap entity shall comply with:
(a) In the case of a covered swap entity that is a state member bank (as defined in 12 CFR 208.2(g)), the provisions of the Board's Regulation Q (12 CFR 217) applicable to the state member bank;
(b) In the case of a covered swap entity that is a bank holding company (as defined in 12 U.S.C. 1842) or a savings and loan holding company (as defined in 12 U.S.C. 1467a), the provisions of the Board's Regulation Q (12 CFR part 217) applicable to the covered swap entity;
(c) In the case of a covered swap entity that is a foreign banking organization (as defined in 12 CFR 211.21(o)), a U.S. intermediate holding company subsidiary of a foreign banking organization (as defined in 12 CFR 252.3(y)) or any state branch or state agency of a foreign bank (as defined in 12 U.S.C. 3101(b)(11) and (12)), the capital standards that are applicable to such covered swap entity under § 225.2(r)(3) of the Board's Regulation Y (12 CFR 225.2(r)(3)) or the Board's Regulation YY (12 CFR part 252); and
(d) In the case of a covered swap entity that is an Edge or agreement corporation (as defined in 12 CFR 211.1(c)(2) and (3)), the capital standards applicable to an Edge corporation under § 211.12(c) of the Board's Regulation K (12 CFR 211.12(c)) and to an agreement corporation under § 211.5(g) and § 211.12(c) of the Board's Regulation K (12 CFR 211.5(g) and 211.12(c)).
Banks, Holding companies, Reporting and recordkeeping requirements, Savings associations.
For the reasons set forth in the Supplementary Information, the Federal Deposit Insurance Corporation proposes to add the text of the common rule as set forth at the end of the Common Preamble as subpart A of part 349 to chapter III of Title 12, Code of Federal Regulations, modified as follows:
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), and 12 U.S.C. 1818 and 12 U.S.C. 1819(a)(Tenth), 12 U.S.C. 1813(q), 1818, 1819, and 3108; 7 U.S.C. 2(c)(2)(E), 27
(a)
(b)
(c)
A covered swap entity shall comply with the capital requirements that are applicable to the covered swap entity under part 324.
Accounting, Agriculture, Banks, Banking, Capital, Cooperatives, Credit, Margin requirements, Reporting and recordkeeping requirements, Risk, Rural areas, Swaps.
For the reasons set forth in the Supplementary Information, the Farm Credit Administration proposes to add the text of the common rule as set forth at the end of the Supplementary Information as Part 624 to chapter VI of Title 12, Code of Federal Regulations, modified as follows:
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), and secs. 4.3, 5.9, 5.17, and 8.32 of the Farm Credit Act (12 U.S.C. 2154, 12 U.S.C. 2243, 12 U.S.C. 2252, and 12 U.S.C. 2279bb-1).
(a)
(b)
(c)
A covered swap entity shall comply with:
(a) In the case of the Federal Agricultural Mortgage Corporation, the capital adequacy regulations set forth in part 652 of this chapter; and
(b) In the case of any Farm Credit System institution other than the Federal Agricultural Mortgage Corporation, the capital regulations set forth in part 615 of this chapter.
Government-sponsored enterprises, Mortgages, Securities.
For the reasons set forth in the
7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), 12 U.S.C. 4513 and 12 U.S.C. 4526(a).
(a)
(b)
(c)
A covered swap entity shall comply with the capital levels or such other amounts applicable to it as required by the Director of FHFA pursuant to 12 U.S.C. 4611.
By order of the Board of Directors.
Fish and Wildlife Service, Interior.
Final rule.
This rule prescribes special late-season migratory bird hunting regulations for certain tribes on Federal Indian reservations, off-reservation trust lands, and ceded lands. This rule responds to tribal requests for U.S. Fish and Wildlife Service (hereinafter Service or we) recognition of their authority to regulate hunting under established guidelines. This rule allows the establishment of season bag limits and, thus, harvest at levels compatible with populations and habitat conditions.
This rule takes effect on September 27, 2014.
You may inspect comments received on the proposed special hunting regulations and tribal proposals during normal business hours at U.S. Fish & Wildlife Headquarters, MS: BPHC, 5275 Leesburg Pike, Falls Church, VA 22041-3803, or at
Ron W. Kokel, U.S. Fish and Wildlife Service, Department of the Interior, MS: MB, 5275 Leesburg Pike, Falls Church, VA 22041-3803; (703) 358-1967.
The Migratory Bird Treaty Act of July 3, 1918 (16 U.S.C. 703 et seq.), authorizes and directs the Secretary of the Department of the Interior, having due regard for the zones of temperature and for the distribution, abundance, economic value, breeding habits, and times and lines of flight of migratory game birds, to determine when, to what extent, and by what means such birds or any part, nest, or egg thereof may be taken, hunted, captured, killed, possessed, sold, purchased, shipped, carried, exported, or transported.
In the August 11, 2014,
(1) On-reservation hunting by both tribal members and nonmembers, with hunting by nontribal members on some reservations to take place within Federal frameworks but on dates different from those selected by the surrounding State(s);
(2) On-reservation hunting by tribal members only, outside of usual Federal frameworks for season dates and length, and for daily bag and possession limits; and
(3) Off-reservation hunting by tribal members on ceded lands, outside of usual framework dates and season length, with some added flexibility in daily bag and possession limits.
In all cases, the regulations established under the guidelines must be consistent with the March 10-September 1 closed season mandated by the 1916 Migratory Bird Treaty with Canada.
In the April 30, 2014,
(1) Harvest anticipated under the requested regulations;
(2) Methods that would be employed to measure or monitor harvest (such as bag checks, mail questionnaires, etc.);
(3) Steps that would be taken to limit level of harvest, where it could be shown that failure to limit such harvest would adversely impact the migratory bird resource; and
(4) Tribal capabilities to establish and enforce migratory bird hunting regulations.
No action is required if a tribe wishes to observe the hunting regulations established by the State(s) in which an Indian reservation is located. We have successfully used the guidelines since the 1985-86 hunting season. We finalized the guidelines beginning with the 1988-89 hunting season (August 18, 1988,
Although the August 11 proposed rule included generalized regulations for both early- and late-season hunting, this rulemaking addresses only the late-season proposals. Early-season proposals were addressed in a final rule published in the September 3, 2014,
Information on the status of waterfowl and information on the status and harvest of migratory shore and upland game birds, including detailed information on methodologies and results, is available at the address indicated under
For the 2014-15 migratory bird hunting season, we proposed regulations for 31 tribes or Indian groups that followed the 1985 guidelines and were considered appropriate for final rulemaking. Some of the proposals submitted by the tribes had both early- and late-season elements. However, as noted earlier, only those with late-season proposals are included in this final rulemaking; 14 tribes have proposals with late seasons. We also noted in the August 11 proposed rule (79 FR 46940) that we were proposing seasons for five Tribes who have submitted proposals in past years but from whom we had not yet received proposals this year. We did not receive proposals from two of those Tribes and, therefore, have not included them in this final rule.
The comment period for the August 11 proposed rule closed on August 21, 2014. We received three comments on our August 11 proposed rule, which announced proposed seasons for migratory bird hunting by American Indian Tribes. We responded to all three comments in the September 3 final rule.
The programmatic document, “Second Final Supplemental Environmental Impact Statement: Issuance of Annual Regulations Permitting the Sport Hunting of Migratory Birds (EIS 20130139),” filed with the Environmental Protection Agency (EPA) on May 24, 2013,
Section 7 of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531
Executive Order 12866 provides that the Office of Information and Regulatory Affairs (OIRA) will review all significant rules. OIRA has reviewed this rule and has determined that this rule is significant because it would have an annual effect of $100 million or more on the economy.
Executive Order 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. The executive order directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. E.O. 13563 emphasizes further that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. We have developed this rule in a manner consistent with these requirements.
An updated economic analysis was prepared for the 2013-14 season. This analysis was based on data from the 2011 National Hunting and Fishing Survey, the most recent year for which data are available (see discussion in Regulatory Flexibility Act section below). This analysis estimated consumer surplus for three alternatives for duck hunting (estimates for other species are not quantified due to lack of data). The alternatives were: (1) Issue restrictive regulations allowing fewer days than those issued during the 2012-13 season, (2) issue moderate regulations allowing more days than those in alternative 1, and (3) issue liberal regulations identical to the regulations in the 2012-13 season. For the 2013-14 season, we chose Alternative 3, with an estimated consumer surplus across all flyways of $317.8-$416.8 million. For the 2014-15 season, we have also chosen alternative 3. We also chose alternative 3 for the 2009-10, the 2010-11, the 2011-12, and the 2012-13 seasons. The 2013-14 analysis is part of the record for this rule and is available at
The annual migratory bird hunting regulations have a significant economic impact on substantial numbers of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
This rule is a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. For the reasons outlined above, this rule will have an annual effect on the economy of $100 million or more. However, because this rule establishes hunting seasons, we are not deferring the effective date under the exemption contained in 5 U.S.C. 808(1).
This final rule does not contain any new information collection that requires approval under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
• 1018-0010—Mourning Dove Call Count Survey (discontinued 7/29/2014).
• 1018-0019—North American Woodcock Singing Ground Survey (expires 4/30/2015).
• 1018-0023—Migratory Bird Surveys (expires 6/30/2017). Includes Migratory Bird Harvest Information Program, Migratory Bird Hunter Surveys, Sandhill Crane Survey, and Parts Collection Survey.
We have determined and certify, in compliance with the requirements of the Unfunded Mandates Reform Act, 2 U.S.C. 1502
The Department, in promulgating this rule, has determined that this rule will not unduly burden the judicial system and that it meets the requirements of sections 3(a) and 3(b)(2) of Executive Order 12988.
In accordance with Executive Order 12630, this rule, authorized by the Migratory Bird Treaty Act (16 U.S.C. 703-711), does not have significant takings implications and does not affect any constitutionally protected property rights. This rule will not result in the physical occupancy of property, the physical invasion of property, or the regulatory taking of any property. In fact, this rule allows hunters to exercise otherwise unavailable privileges and, therefore, reduce restrictions on the use of private and public property.
Executive Order 13211 requires agencies to prepare Statements of Energy Effects when undertaking certain actions. While this rule is a significant regulatory action under Executive Order 12866, it is not expected to adversely affect energy supplies, distribution, or use. Therefore, this action is not a significant energy action and no Statement of Energy Effects is required.
In accordance with the President's memorandum of April 29, 1994, “Government-to-Government Relations with Native American Tribal Governments” (59 FR 22951), Executive Order 13175, and 512 DM 2, we have evaluated possible effects on Federally recognized Indian tribes and have determined that there are no effects on Indian trust resources. However, in the April 30
Due to the migratory nature of certain species of birds, the Federal Government has been given responsibility over these species by the Migratory Bird Treaty Act. We annually prescribe frameworks from which the States make selections regarding the hunting of migratory birds, and we employ guidelines to establish special regulations on Federal Indian reservations and ceded lands. This process preserves the ability of the States and tribes to determine which seasons meet their individual needs. Any State or Indian tribe may be more restrictive than the Federal frameworks at any time. The frameworks are developed in a cooperative process with the States and the Flyway Councils. This process allows States to participate in the development of frameworks from which they will make selections, thereby having an influence on their own regulations. These rules do not have a substantial direct effect on fiscal capacity, change the roles or responsibilities of Federal or State governments, or intrude on State policy or administration. Therefore, in accordance with Executive Order 13132, these regulations do not have significant federalism effects and do not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.
The rulemaking process for migratory game bird hunting must, by its nature, operate under severe time constraints. However, we intend that the public be given the greatest possible opportunity to comment. Thus, when the preliminary proposed rulemaking was published, we established what we believed were the longest periods possible for public comment. In doing this, we recognized that when the comment period closed, time would be of the essence. That is, if there were a delay in the effective date of these regulations after this final rulemaking, States and Tribes would have insufficient time to select season dates and limits; to communicate those selections to us; and to establish and publicize the necessary regulations and procedures to implement their decisions. We therefore find that “good cause” exists, within the terms of 5 U.S.C. 553(d)(3) of the Administrative Procedure Act, and these seasons will, therefore, take effect less than 30 days after the date of publication.
Accordingly, with each participating Tribe having had an opportunity to participate in selecting the hunting seasons desired for its reservation or ceded territory on those species of migratory birds for which open seasons are now prescribed, and consideration having been given to all other relevant matters presented, certain sections of title 50, chapter I, subchapter B, part 20, subpart K, are hereby amended as set forth below.
Exports, Hunting, Imports, Reporting and recordkeeping requirements, Transportation, Wildlife.
Accordingly, part 20, subchapter B, chapter I of title 50 of the Code of Federal Regulations is amended as follows:
Migratory Bird Treaty Act, 40 Stat. 755, 16 U.S.C. 703-712; Fish and Wildlife Act of 1956, 16 U.S.C. 742a-j; Pub. L. 106-108, 113 Stat. 1491, Note Following 16 U.S.C. 703.
(
(a)
Season Dates: Open September 1 through 15, 2014; then open November 8 through December 22, 2014.
Daily Bag and Possession Limits: For the early season, daily bag limit is 10 mourning or white-winged doves, singly, or in the aggregate. For the late season, the daily bag limit is 10 mourning doves. Possession limits are twice the daily bag limits after the first day of the season.
Season Dates: Open October 17, 2014, through January 26, 2015.
Daily Bag and Possession Limits: Seven ducks, including two hen
Season Dates: Same as ducks.
Daily Bag and Possession Limits: 25 coots and common moorhens, singly or in the aggregate. The possession limit is twice the daily bag limit.
Season Dates: Open October 19, 2014, through January 20, 2015.
Daily Bag and Possession Limits: Three dark (Canada and white-fronted) geese and three white (snow, blue, Ross's) geese. The possession limit is six dark geese and six white geese.
General Conditions: All persons 14 years and older must be in possession of a valid Colorado River Indian Reservation hunting permit before taking any wildlife on tribal lands. Any person transporting game birds off the Colorado River Indian Reservation must have a valid transport declaration form. Other tribal regulations apply, and may be obtained at the Fish and Game Office in Parker, Arizona. The early season will be open from one-half hour before sunrise until noon. For the late season, shooting hours are from one-half hour before sunrise to sunset.
(b)
Season Dates: Open September 2, 2014, through March 9, 2015.
Daily Bag and Possession Limits: The Tribe does not have specific bag and possession restrictions for Tribal members. The season on harlequin duck is closed.
Season Dates: Same as ducks.
Daily Bag and Possession Limits: Same as ducks.
Season Dates: Same as ducks.
Daily Bag and Possession Limits: Same as ducks.
Season Dates: Open September 27, 2014, through January 9, 2015.
Season Dates: September 27, 2014, through December 21, 2014.
Daily Bag and Possession Limits: Seven ducks, including no more than two hen mallards, two pintail, three scaup (when open), one canvasback, and two redheads. The possession limit is three times the daily bag limit.
Season Dates: Same as ducks.
Daily Bag and Possession Limits: 25 and 75, respectively.
Season Dates: Open September 27, 2014, through January 11, 2015.
Daily Bag and Possession Limits: 4 and 12 geese, respectively.
Season Dates: Open September 27, 2014, through January 11, 2015.
Daily Bag and Possession Limits: 20 and 60 geese, respectively.
Season Dates: Open September 21 through 22, 2014.
Daily Bag and Possession Limits: Same as ducks.
General Conditions: Tribal and nontribal hunters must comply with all basic Federal migratory bird hunting regulations contained in 50 CFR part 20 regarding manner of taking. In addition, shooting hours are sunrise to sunset, and each waterfowl hunter 16 years of age or older must carry on his/her person a valid Migratory Bird Hunting and Conservation Stamp (Duck Stamp) signed in ink across the stamp face. Special regulations established by the Confederated Salish and Kootenai Tribes also apply on the reservation.
(f)
Season Dates: Open October 11 through November 30, 2014.
Daily Bag and Possession Limits: The daily bag limit is seven, including no more than two hen mallards, two pintail, two redheads, one canvasback, and three scaup. The possession limit is three times the daily bag limit.
Season Dates: Open October 11 through November 30, 2014.
Daily Bag and Possession Limits: Two and six, respectively.
General Conditions: Tribal and nontribal hunters must comply with all basic Federal migratory bird hunting regulations in 50 CFR part 20 regarding shooting hours and manner of taking. In addition, each waterfowl hunter 16 years of age or older must carry on his/her person a valid Migratory Bird Hunting and Conservation Stamp (Duck Stamp) signed in ink across the stamp face. Special regulations established by the Jicarilla Tribe also apply on the reservation.
(g)
Season Dates: Open September 6 through September 14, 2014, for the early season, and open October 1, 2014, through January 20, 2015, for the late season. During this period, days to be hunted are specified by the Kalispel Tribe. Nontribal hunters should contact the Tribe for more detail on hunting days.
Daily Bag and Possession Limits: 5 Canada geese for the early season, and 3 light geese and 4 dark geese, for the late season. The daily bag limit is 2 brant (when the State's season is open) and is in addition to dark goose limits for the late-season. The possession limit is twice the daily bag limit.
Season Dates: Open September 27 through September 29, 2014, for the early season, and open October 1, 2014, through January 20, 2015, for the late season.
Daily Bag and Possession Limits: 7 ducks, including no more than 2 female mallards, 2 pintail, 1 canvasback, 3 scaup, and 2 redheads. The possession limit is three times the daily bag limit.
Season Dates: Open September 20, 2014, through January 20, 2015.
Daily Bag and Possession Limits: 7 ducks, including no more than 2 female mallards, 2 pintail, 1 canvasback, 3 scaup, and 2 redheads. The possession limit is twice the daily bag limit.
Season Dates: Open September 6, 2014, through January 20, 2015.
Daily Bag Limit: 6 light geese and 4 dark geese. The daily bag limit is 2 brant and is in addition to dark goose limits.
General Conditions: Tribal members must possess a validated Migratory Bird Hunting and Conservation Stamp and a tribal ceded lands permit.
(h)
Season Dates: Open October 4, 2014, through January 31, 2015.
Daily Bag and Possession Limits: 9 and 18 ducks, respectively.
Season Dates: Same as ducks.
Daily Bag and Possession Limits: 9 and 18 coots, respectively.
Season Dates: Same as ducks.
Daily Bag and Possession Limits: 9 and 18 geese, respectively.
General Conditions: The Klamath Tribe provides its game management officers, biologists, and wildlife technicians with regulatory enforcement authority, and has a court system with judges that hear cases and set fines. Nontoxic shot is required. Shooting hours are one-half hour before sunrise to one-half hour after sunset.
(l)
Season Dates: Open September 1, 2014, through March 10, 2015.
Daily Bag and Possession Limits: Six ducks, including no more five mallards (only two of which may be hens), four scaup, one mottled duck, two redheads, three wood ducks, one canvasback, and two pintail. Coot daily bag limit is 15. Merganser daily bag limit is five, including no more than two hooded mergansers. The possession limit is three times the daily bag limit.
Season Dates: Open September 1, 2014, through March 10, 2015.
Daily Bag and Possession Limits: 6 and 18, respectively.
Season Dates: Open September 1, 2014, through March 10, 2015.
Daily Bag and Possession Limits: Two and six, respectively.
Season Dates: Open September 1, 2014, through March 10, 2015.
Daily Bag Limit: 20.
Season Dates: Open October 11, 2014, through January 15, 2015.
Daily Bag and Possession Limits: Six ducks, including five mallards (no more of which can be two hen mallard), three scaup, one canvasback, two redheads, three wood ducks, one mottled duck, and two pintail. Coot daily bag limit is 15. Merganser daily bag limit is five, including no more than two hooded mergansers. The possession limit is three times the daily bag limit.
Season Dates: Open November 1, 2014, through February 15, 2015.
Daily Bag and Possession Limits: 6 and 18, respectively.
Season Dates: Open November 1, 2014, through January 27, 2015.
Daily Bag and Possession Limits: One and three, respectively.
Season Dates: Open November 1, 2014, through February 15, 2015.
Daily Bag and Possession Limits: 50 and no possession limit.
General Conditions: All hunters must comply with the basic Federal migratory bird hunting regulations in 50 CFR part 20, including the use of steel shot. Nontribal hunters must possess a validated Migratory Bird Hunting and Conservation Stamp. The Lower Brule Sioux Tribe has an official Conservation Code that hunters must adhere to when hunting in areas subject to control by the Tribe.
(o)
Season Dates: Open September 1 through 30, 2014.
Daily Bag and Possession Limits: 5 and 10 pigeons, respectively.
Season Dates: Open September 1 through 30, 2014.
Daily Bag and Possession Limits: 10 and 20 doves, respectively.
Season Dates: Open September 27, 2014, through January 11, 2015.
Season Dates: Open September 27 through December 21, 2014.
Daily Bag and Possession Limits: Seven ducks, including no more than two hen mallards, one mottled duck, one canvasback, three scaup (when open), two redheads, and two pintail. Coot daily bag limit is 25. Merganser daily bag limit is seven. The possession limit is three times the daily bag limit.
Season Dates: Open September 27, 2014, through January 11, 2015.
Daily Bag and Possession Limits: 4 and 12, respectively.
General Conditions: Tribal and nontribal hunters will comply with all basic Federal migratory bird hunting regulations in 50 CFR part 20, regarding shooting hours and manner of taking. In addition, each waterfowl hunter 16 years of age or over must carry on his/her person a valid Migratory Bird Hunting and Conservation Stamp (Duck Stamp) signed in ink across the face. Special regulations established by the Navajo Nation also apply on the reservation.
(r) The Saginaw Chippewa Indian Tribe of Michigan, Isabella Reservation, Mt. Pleasant, Michigan (Tribal Members Only)
Season Dates: Open September 1, 2014, through January 31, 2015.
Daily Bag Limit: 25 doves.
Season Dates: Open September 1, 2014, through January 31, 2015.
Daily Bag Limits: 20, including no more than 5 hen, 5 canvasback, 5 black duck, and 5 wood duck.
Season Dates: Open September 1, 2014, through January 31, 2015.
Daily Bag Limit: 10 in the aggregate.
Season Dates: Open September 1, 2014, through January 31, 2015.
Daily Bag Limit: 20 in the aggregate.
Season Dates: Open September 1, 2014, through January 31, 2015.
Daily Bag Limit: 20 in the aggregate.
Season Dates: Open September 1, 2014, through January 31, 2015.
Daily Bag Limits: 10.
Season Dates: Open September 15, 2014, through December 31, 2014.
Daily Bag Limits: 16.
Season Dates: Open September 1, 2014, through January 31, 2015.
Daily Bag Limits: 20 in the aggregate.
General Conditions: Possession limits are twice the daily bag limits except for rails, of which the possession limit equals the daily bag limit (20). Tribal
(t)
Duck Season Dates: Open October 4, 2014, through January 15, 2015.
Scaup Season Dates: Open October 25, 2014, through January 16, 2015.
Daily Bag and Possession Limits: Seven ducks and mergansers, including no more than two hen mallards, two pintail, three scaup, one canvasback, and two redheads. The possession limit is three times the daily bag limit.
Season Dates: Same as ducks.
Daily Bag and Possession Limits: 25 coots. The possession limit is three times the daily bag limit.
Season Dates: Same as ducks.
Daily Bag and Possession Limits: 8 and 24 snipe, respectively.
Season Dates: Open October 4, 2014, through January 16, 2015.
Daily Bag and Possession Limits: 4 and 12, respectively.
Season Dates: Open October 4, 2014, through January 16, 2015.
Daily Bag and Possession Limits: 10 and 30, respectively.
Season Dates: Open October 4, 2014, through January 16, 2015.
Daily Bag and Possession Limits: 10 and 30, respectively
General Conditions: Nontribal hunters must comply with all basic Federal migratory bird hunting regulations in 50 CFR part 20 regarding shooting hours and manner of taking. In addition, each waterfowl hunter 16 years of age or older must possess a valid Migratory Bird Hunting and Conservation Stamp (Duck Stamp) signed in ink across the stamp face. Other regulations established by the Shoshone-Bannock Tribes also apply on the reservation.
(x)
Season Dates: Open September 1 through October 31, 2014.
Daily Bag and Possession Limits: Four and eight, respectively.
Season Dates: Open September 1 through October 31, 2014.
Daily Bag and Possession Limits: 10 and 20, respectively.
Season Dates: Open October 1, 2014, through March 10, 2015.
Daily Bag and Possession Limits: 10 ducks, including no more than 7 mallards, 3 of which may be hen mallards, 3 pintail, 3 scaup, 3 canvasback, and 3 redheads. The possession limit is twice the daily bag limit.
Season Dates: Open October 1, 2014, through January 31, 2015.
Daily Bag and Possession Limits: 25 coots. The possession limit is twice the daily bag limit.
Season Dates: Open October 1, 2014, through January 31, 2015.
Daily Bag and Possession Limits: 10 and 20 snipe, respectively.
Season Dates: Open October 1, 2014, through March 10, 2015.
Daily Bag and Possession Limits: 6 and 12, respectively.
Tribal members hunting on lands will observe all basic Federal migratory bird hunting regulations found in 50 CFR part 20, which will be enforced by the Stillaguamish Tribal Law Enforcement. Tribal members are required to use steel shot or a nontoxic shot as required by Federal regulations.
(y)
Season Dates: Open September 21, 2014, through February 26, 2015.
Daily Bag and Possession Limits: Seven ducks, including no more than two hen mallards, two pintail, two canvasback, one harlequin per season, and two redheads. Possession limit is twice the daily bag limit (except for harlequin).
Season Dates: Open September 28, 2014, through February 26, 2015.
Daily Bag and Possession Limits: Four geese, and may include no more than three light geese. The season on Aleutian Canada geese is closed. Possession limit is twice the daily bag limit.
Season Dates: Open November 1, 2014, through February 26, 2015.
Daily Bag and Possession Limits: Two and four brant, respectively.
Season Dates: Open September 21, 2014, through February 26, 2015.
Daily Bag and Possession Limits: 25 and 50 coots, respectively.
(aa)
Season Dates: Open October 1, 2014, through February 28, 2015.
Daily Bag and Possession Limits: 15 and 20, respectively.
Season Dates: Open October 1, 2014, through February 15, 2015.
Daily Bag and Possession Limits: 20 and 30, respectively.
Season Dates: Open October 1, 2014, through February 28, 2015.
Daily Bag and Possession Limits: 7 and 10 geese, respectively.
Season Dates: Open November 1 through 10, 2014.
Daily Bag and Possession Limits: Two and two, respectively.
Season Dates: Open September 1 through December 31, 2014.
Daily Bag and Possession Limits: 12 and 15 mourning doves, respectively.
General Conditions: Tribal members must have the tribal identification and harvest report card on their person to hunt. Tribal members hunting on the Reservation will observe all basic Federal migratory bird hunting regulations found in 50 CFR part 20, except shooting hours would be one-half hour before official sunrise to one-half hour after official sunset.
(bb)
Season Dates: Open October 10, 2014, through February 21, 2015.
Daily Bag Limits: 10 teal.
Season Dates: Open October 13 through February 21, 2015.
Daily Bag Limits: Six ducks, including no more than four hen mallards, six black ducks, four mottled ducks, one fulvous whistling duck, four mergansers, three scaup, two hooded merganser, three wood ducks, one canvasback, two redheads, and two pintail. The season is closed for harlequin ducks.
Season Dates: Open October 6, 2014, through February 21, 2015.
Daily Bag Limits: Seven ducks including no more than four of any one species (only one of which may be a hen eider).
Season Dates: Open October 10 through November 24, 2014.
Daily Bag Limits: Three woodcock.
Season Dates: Open September 3 through 20, 2014, and open October 27, 2014, through February 21, 2015.
Daily Bag Limits: Eight Canada geese.
Season Dates: Open September 3 through 20, 2014, and open November 24, 2014, through February 21, 2015.
Daily Bag Limits: 15 snow geese.
Season Dates: Open September 1 through November 10, 2014.
Daily Bag Limits: 5 sora and 10 Virginia Rails.
Season Dates: Open September 1 through December 13, 2014.
Daily Bag Limits: Eight snipe.
General Conditions: Shooting hours are one-half hour before sunrise to sunset. Nontoxic shot is required. All other basic Federal migratory bird hunting regulations contained in 50 CFR part 20 will be observed.
(dd)
Band-tailed Pigeons (Wildlife Management Unit 10 and areas south of Y-70 and Y-10 in Wildlife Management Unit 7, only)
Season Dates: Open September 1 through 15, 2014.
Daily Bag and Possession Limits: Three and six pigeons, respectively.
Mourning Doves (Wildlife Management Unit 10 and areas south of Y-70 and Y-10 in Wildlife Management Unit 7, only)
Season Dates: Open September 1 through 15, 2014.
Daily Bag and Possession Limits: 10 and 20 doves, respectively.
Season Dates: Open October 18, 2014, through January 26, 2015.
Daily Bag Limits: Seven, including no more than two female mallards and two redhead. The season on scaup is closed.
Possession Limits: Twice the daily bag limit.
Season Dates: Open October 18 through November 30, 2014.
Daily Bag Limits: Two pintail and one canvasback.
Possession Limits: Twice the daily bag limit.
Season Dates: Open October 18, 2014, through January 25, 2015.
Daily Bag and Possession Limits: 25 and 50, respectively.
Season Dates: Open October 18, 2014, through January 25, 2015.
Daily Bag and Possession Limits: Three and six Canada geese, respectively.
General Conditions: All nontribal hunters hunting band-tailed pigeons and mourning doves on Reservation lands shall have in their possession a valid White Mountain Apache Daily or Yearly Small Game Permit. In addition to a small game permit, all nontribal hunters hunting band-tailed pigeons must have in their possession a White Mountain Special Band-tailed Pigeon Permit. Other special regulations established by the White Mountain Apache Tribe apply on the reservation. Tribal and nontribal hunters will comply with all basic Federal migratory bird hunting regulations in 50 CFR part 20 regarding shooting hours and manner of taking.
Department of Veterans Affairs.
Final rule.
This document amends Department of Veterans Affairs (VA) regulations in order to implement a statutory mandate that VA provide health care to certain veterans who served at Camp Lejeune, North Carolina, for at least 30 days during the period beginning on January 1, 1957, and ending on December 31, 1987. The law requires VA to furnish hospital care and medical services for these veterans for certain illnesses and conditions that may be attributed to exposure to toxins in the water system at Camp Lejeune. This rule does not implement the statutory provision requiring VA to provide health care to these veterans' family members; regulations applicable to such family members will be promulgated through a separate notice.
Terry Walters, Deputy Chief Consultant, Post-Deployment Health, Office of Public Health (10P3A), Veterans Health Administration, 810 Vermont Avenue NW., Washington, DC 20420, (202) 461-1017 (this is not a toll-free number).
On September 11, 2013, VA published a notice of proposed rulemaking setting forth proposed regulations to provide hospital care and medical services to certain veterans who served at Camp Lejeune for at least 30 days from January 1, 1957, to December 31, 1987. 78 FR 55671-55675, Sept. 11, 2013. Interested persons were invited to submit comments on or before October 11, 2013. We received a total of 65 comments. All of the issues raised by the commenters that opposed at least one portion of the rule can be grouped together by similar topic, and we have organized our discussion of the comments accordingly. Based on the rationale set forth in the proposed rule and in this document, VA is adopting the proposed rule as a final rule with one change to 38 CFR 17.400(d)(2)(A).
In paragraph § 17.400(d)(2)(A) of the proposed rule, we had stated that in order to receive retroactive reimbursement for care provided by VA for a condition or illness that was made copayment exempt, veterans must request Camp Lejeune status no later than September 11, 2015. We explained that we selected that date because it was two years after publication of the proposed rule. We received numerous comments on this provision.
First, commenters misunderstood the effect of § 17.400(d)(2)(A). To be clear, it is not a deadline to enroll in VA as a Camp Lejeune veteran. Rather, as we explained in the proposed rule, § 17.400(d)(2) establishes that VA would retroactively reimburse certain copayments paid by Camp Lejeune veterans for VA-provided health care. There is no deadline for a veteran to enroll in VA and be recognized as a Camp Lejeune veteran.
Commenters were also concerned about the deadline for retroactive copayments. For example, one individual noted that a veteran could be treated for a period of time without being diagnosed with one of the 15 conditions, and stated that in such a case the veteran's copayments should be returned to the veteran. Another commenter suggested that VA apply a deadline for retroactive copayment only after VA notifies the affected veteran of his or her eligibility for Camp Lejeune veteran status and the procedures to apply for retroactive reimbursement.
We note that as soon as the law became effective, VA began an aggressive effort to notify veterans of the Camp Lejeune veteran status. VA does not hold or maintain the records of all individuals who served at Camp Lejeune, and has instead engaged in comprehensive outreach to all veterans. In addition, new enrollees in the VA healthcare system are now required to answer on the enrollment form, VA form 10-10EZ, whether they served at Camp Lejeune for the requisite time periods. VA has conducted, and will continue to conduct for at least the next two years, aggressive outreach to veterans through the Marine Corp registry and the Agency for Toxic Substances and Disease Registry (ATSDR) Community Action Panel, and will provide education to VA environmental health providers. VA has directly notified Veteran Service Organizations on the benefit that VA is providing to veterans. VA has used both print and digital methods to reach the largest possible number of veterans. Finally, VA clinicians are being trained to identify the 15 illnesses or conditions and ask whether veterans diagnosed as having one of them served at Camp Lejeune.
Having a deadline after which VA will not accept retroactive claims for copayment reimbursement is necessary to ensure program integrity and reduce potential administrative burdens associated with retroactive reviews of old claims. It is also consistent with other retroactive payment authorities in part 17 of title 38, Code of Federal Regulations. See 38 CFR 17.129 and 17.1004. We do, however, accept the commenters' suggestions that more time is needed for veterans to learn about this program. We therefore adjust the deadline for submission of a request for Camp Lejeune status to obtain eligibility for retroactive reimbursement from September 11, 2015, to September 24, 2016. This will align the two-year deadline with the date that this rule takes effect, rather than the date that it was proposed.
We received several comments about the enrollment process. Some commenters asked specific questions about how the regulation would be applied to their particular cases, or identified themselves as Camp Lejeune veterans and requested benefits. Whenever possible, based on identifying information provided in the comment, we have contacted these individuals privately to assist them. It is inappropriate to address individuals' claims with specificity in this notice; however, several commenters were concerned that the enrollment process would be burdensome, or that VA would require veterans to fill out forms or otherwise take actions that, in practice, VA does not require. To address these concerns, we assure the public that enrollment as a Camp Lejeune veteran will be as seamless and simple as possible. Veterans who identify themselves as Camp Lejeune veterans on VA Form 10-10EZ and whose status is confirmed will not need to re-enroll for VA care or take any further action in order to be copayment-exempt for future care related to their Camp Lejeune illness. Veterans also will generally not need to take any specific actions, once their status is verified, to receive retroactive reimbursement for copayments paid before their Camp Lejeune status was established (as long as the care was provided on or after August 6, 2012, the date that the legislation authorized VA to begin providing Camp Lejeune benefits). VA will pay retroactive copayments in accordance with paragraph (d)(2) of the regulation without requiring further action by such veterans. Only in extraordinary situations—for example, if
One commenter was concerned that veterans will not remember the exact dates that they resided at Camp Lejeune. The commenter was also concerned, generally, that older veterans have difficulty filling out forms.
We understand that some veterans may have difficulty completing VA's application for enrollment, VA Form 10-10EZ, which is available online at
Many commenters were concerned by § 17.400(c), which states that VA will assume that one of the 15 illnesses or conditions are considered attributable to the veteran's active duty in the Armed Forces unless VA clinically determines under its clinical practice guidelines that the illness or condition is not attributable to the veteran's service. One commenter suggested that VA include a “preponderance of the evidence” standard of proof for determining whether a Camp Lejeune veteran's illness or condition is attributable to a cause other than service at Camp Lejeune. Other commenters suggested that VA remove § 17.400(c) entirely because, they assert, it is impossible to determine the cause of a specific illness or condition. We are not making any changes to the final rule based on these comments because the comments misconstrue the effect of the law and regulation.
Under 38 U.S.C. 1710(e)(1)(F), VA is required to provide hospital care and medical services to a veteran who served at Camp Lejeune who has one of the 15 identified illnesses or conditions. VA does not, and cannot, require veterans to produce affirmative evidence of a connection between their illness or condition and exposure to contaminated water at Camp Lejeune. The only limitation on this requirement is that, under 38 U.S.C. 1710(e)(2)(B), VA is barred from providing such care to a veteran based solely on the veteran's status as a Camp Lejeune veteran if the veteran's illness or condition is found, in accordance with guidelines issued by the Under Secretary for Health, to have resulted from a cause other than exposure at Camp Lejeune. In other words, the burden is on VA to clinically determine that, in a particular veteran's case, his or her illness or condition resulted from something other than service at Camp Lejeune. Thus, VA practice will not be to require veterans to make an affirmative showing of a connection unless VA determines that an illness or condition is not connected to service at Camp Lejeune.
Moreover, it is not VA's intent, nor has it been our practice, to attempt to disqualify Camp Lejeune veterans from receiving copayment-free care for a listed condition or illness. We acknowledge that given current science, it may be difficult in many situations to determine the cause of a veteran's illness or condition. In these cases, VA will give the benefit of the doubt to the veteran.
For example, one commenter stated that lung cancer, one of the 15 listed illnesses or conditions, could be erroneously attributed to cigarette smoking rather than service at Camp Lejeune. Medical science cannot definitively distinguish clinically whether the origin of an individual's lung cancer is the result of service at Camp Lejeune or cigarette smoking. Therefore, VA would not be able to rule out the clinical possibility that the veteran's lung cancer was caused by service at Camp Lejeune, and such a veteran would receive his or her cancer treatments without being required to make a copayment. This would be true even if cigarette smoking were medically more likely than not the cause of the veteran's lung cancer.
Some commenters questioned whether the proposed rule would cover secondary illnesses or conditions that arise from, or lead to the development of, one of the 15 listed illnesses or conditions. Once VA enrolls a Camp Lejeune veteran as a Priority Group 6 veteran, that individual receives comprehensive VA care; however, pursuant to 38 U.S.C. 1710(e)(1)(F), VA may only waive copayments for hospital care and medical services provided for one of the 15 illnesses or conditions. Therefore, VA will determine clinically whether a separate condition or illness was caused by or resulted from one of the 15 illnesses or conditions. VA will also determine clinically whether any prior treatment was provided for one of the 15 illnesses or conditions that was undiagnosed at the time that the hospital care or medical services were provided. If such a clinical nexus exists, then VA would waive or reimburse the copayment. If VA clinically determines that the illness or condition is not related to one of the 15 illnesses or conditions, then VA will assess a copayment. Similarly, VA cannot reimburse a copayment if VA clinically determines that the previously provided hospital care or medical services were not for one of the 15 illnesses or conditions. This is consistent with the limited mandate to provide care in section 1710(e)(1)(F) and VA's provision of hospital care and medical services for other Priority Group 6 veterans. See 38 CFR 17.108(d).
One commenter provided an example of breast cancer, which is one of the 15 illnesses covered by the statute that metastasizes to the patient's brain. VA clinicians evaluate the unique needs of each patient, and will do so for Camp Lejeune veterans as well. We will use this same approach for determining the clinical progression of an illness or condition in each Camp Lejeune veteran. In this example, if a VA clinician determines that a Priority Group 6 Camp Lejeune veteran's breast cancer (one of the 15 listed illnesses) may have spread to his or her brain, and VA waives copayment for the breast cancer due to the connection to service at Camp Lejeune, then VA would also waive copayments for treatment of the brain cancer. If the VA clinician affirmatively identifies a clinical origin of the brain cancer other than the breast cancer, then VA will assess copayments for the treatment of the brain cancer.
One commenter suggested that VA implement baseline screenings for all Camp Lejeune veterans. Once VA enrolls veterans in the healthcare system, regardless of their Priority Group level, veterans and their clinicians together determine what is appropriate for each individual's clinical needs. Screenings for one or more of the 15 illnesses or conditions may often be clinically indicated and medically appropriate. In such cases, VA would consider such screenings to be related hospital care or medical services, and Camp Lejeune veterans will not be charged a copayment.
Some commenters stated that Camp Lejeune veterans who have been diagnosed with at least one of the 15 illnesses or conditions should be able to continue to see their private physicians in order to ensure continuity of care. Some also suggested that VA reimburse veterans, either prospectively or retroactively, for care obtained from private physicians. We noted in the proposed rule that 38 U.S.C. 1710 only authorizes VA to provide direct hospital care and medical services to certain veterans. 78 FR 55672, Sept. 11, 2013. Section 1710 does not authorize VA to provide payment or reimbursement for care that VA did not provide to the veteran. Referral for non-VA medical care once enrolled is for preauthorized care. VA will authorize non-VA care for Camp Lejeune veterans in the same manner that VA authorizes such care for all Priority Group 6 veterans. In general, VA is a direct care provider, but may preauthorize non-VA care for certain veterans based on a variety of circumstances, such as the urgency of an individual's medical condition, the relative distance of the travel involved, or the nature of the treatment required, in accordance with our authority in 38 U.S.C. 1703 and 8153 Subject to the provisions of § 17.400(d)(2), VA will reimburse Camp Lejeune veterans for copayments made for preauthorized non-VA hospital care and medical services that VA furnished on or after August 6, 2012. Commenters also inquired about reimbursement for costs incurred by Camp Lejeune veterans for hospital care and medical services that veterans obtained from non-VA providers prior to acquiring Camp Lejeune veteran status. Although, as noted above, VA does preauthorize non-VA hospital care and medical services when clinically appropriate, this law does not authorize VA to pay for hospital care and medical services that have already been provided to the veteran from a non-VA provider.
Similarly, one commenter stated that he is a Camp Lejeune veteran who obtains his care locally, and that by doing so, rather than travelling to the nearest VA facility, he was saving VA “thousands of dollars.” He requested reimbursing veterans for local care when the veteran lives more than one hour away from the closest VA hospital that can provide care. VA understands that there are instances where geography is a vital factor in determining the best course of treatment or care. As noted above, VA preauthorizes non-VA care based on a variety of circumstances, including geographic location, and will make the same determinations for Camp Lejeune veterans.
In addition, veterans enrolled in Priority Group 6, which includes Camp Lejeune veterans, may be eligible for travel benefits associated with their care in accordance with 38 CFR part 70—although eligibility as a Camp Lejeune veteran does not independently establish eligibility for travel benefits. We do not make any changes based on this comment.
A commenter requested that VA add “and symptoms arising therefrom prior to diagnosis” to § 17.400(c) in order to ensure that VA exempts veterans from copayments for hospital care and medical services provided for symptoms that existed before the appropriate diagnosis was made. We note that when issues of copayments are connected to clinical determinations, VA defers to the expertise of the clinical provider. VA conducts the same review process for veterans receiving treatment in connection to exposure to Agent Orange. First, the veteran requests a review of his copayments by calling the VA call center at 1-877-222-VETS(8387). The call center will then refer the request to VA Utilization nurses who manually review the claim and the veteran's medical records. The nurses also contact the providers. If the veteran's provider determines that the hospital care and medical service provided prior to the diagnosis of one of the 15 conditions or illnesses were attributable to the veteran's service at Camp Lejeune, then the provider will update the veteran's progress notes and VA will manually process a refund of the copayment. Camp Lejeune veterans will be able to request the same review of copayments made for hospital care and medical services furnished by VA prior to the diagnosis of one of the 15 illnesses or conditions. We therefore make no changes to the rule based on the above comments.
One commenter asked whether VA would require veterans to repay copayments waived or reimbursed for care for one of the 15 illnesses or conditions if VA later determines that the veteran's illness or condition resulted from a cause other than his or her service at Camp Lejeune. VA would assess a copayment for such hospital care or medical services, but we note that those instances would be rare. See 38 CFR 17.102(a) (authorizing VA to recoup payment when care is provided in error). VA would attempt to make the clinical determination about the origin of an illness or condition at the time that the veteran either enrolls, or if enrolled, the time that the veteran notifies VA of his or her service at Camp Lejeune during the relevant time periods. Any veteran who self-identified as a Camp Lejeune veteran and received care from VA for one of the 15 illnesses or conditions, may be subject to copayments for care provided prior to the publication of this final rule if VA determines that the illness or condition resulted from a cause other than service at Camp Lejeune.
A commenter suggested that VA recruit doctors who specialize in one or more of the 15 listed illnesses or conditions, and that those doctors be in the U.S. Military, or be veterans. We note that VA currently employs clinicians who specialize in each of the 15 illnesses or conditions. Though VA proudly employs a great number of veterans, it is not our view that one's status as a veteran or member of the armed forces has any bearing on an individual's ability to serve as a VA clinician. VA seeks to recruit well-qualified clinicians and will continue to do so utilizing existing hiring practices.
One commenter suggested that the rule “should include provisions that provide for notice of a denial, the provision of the research forming the basis for the denial, and the opportunity to challenge the denial before a judicial body” and provide the “ability of Camp Lejeune veterans to challenge the clinical practice guidelines and the denial of medical assistance.”
Veterans are given the same appeal rights for Camp Lejeune benefits as for other benefits administered by VA. Along with the written explanation for the denial of benefits, the veteran receives a form explaining the appeals process (VA Form 4107VHA for VHA decisions). Part 20 of title 38, CFR, gives the Board of Veterans' Appeals jurisdiction over questions of law and fact that affect the provision of VA benefits. The Board's jurisdiction also extends to questions of eligibility for health care benefits administered by the Veterans Health Administration, which would include eligibility as a Camp Lejeune Veteran. See 38 CFR 20.101(b). The clinical practice guidelines provide factors for clinicians to consider when determining whether an illness or condition is attributable to a cause other than the veteran's residence at Camp Lejeune. The guidelines explain such clinical indications, evolve over time, and encourage clinicians to consider the veteran's full history in order to make the best possible clinical determination. The clinical practice guidelines will serve as a resource to VA clinicians and will not require that VA clinicians take specific actions. Therefore, we do not
A number of commenters raised specific concerns with the statute authorizing the provision of hospital care and medical services.
Many commenters suggested other conditions or illnesses that should be covered. Other commenters stated that the dates of eligible service at Camp Lejeune, January 1, 1957, to December 31, 1987, should be expanded to cover veterans who served at Camp Lejeune before or after such dates. Regardless of the merit of these comments, VA is without legal authority to provide benefits other than those authorized by statute. We do not make any changes based on these comments.
Some commenters suggested that veterans be compensated in connection to their service at Camp Lejeune. Several suggested that they had been unable to conceive a child, and believed that this inability was directly due to exposure at Camp Lejeune, and asked to be compensated accordingly. VA cannot expand our authority through regulation beyond what Congress authorizes us to provide in law. Section 1710(e)(1)(F) of title 38, U.S.C., authorizes VA only to provide health care; it is not a compensation program. We lack authority to provide compensation under this law; however, if the commenter believes that they have a service-connected disability due to their exposure at Camp Lejeune, they should file a disability compensation claim with the Veterans Benefits Administration.
One commenter suggested that VA furnish hospital care and medical services for individuals who served at Camp Lejeune while on active duty for training. We are legally barred from doing so because 38 U.S.C. 1710(e)(1)(F) requires VA to furnish hospital care and medical services to Camp Lejeune veterans who “served on active duty.” Active duty is defined, as a matter of law, in 38 U.S.C. 101(21)(A), as full-time duty in the Armed Forces, other than active duty for training.
Some commenters raised issues of the validity of the studies relied on by Congress in enacting this law. VA cannot expand benefits beyond those granted by statute, even if the commenters believe that science does not support certain limitations in the law. Therefore, we do not make any changes based on the above comments.
Commenters requested that VA improve its claims backlog for veteran benefits. We note that this issue is outside the scope of this rulemaking and VA will therefore not respond to those comments here.
A number of commenters raised issues related to VA's furnishing of hospital care and medical services to the family members of Camp Lejeune veterans. As we noted in the proposed rule, VA will publish a separate rulemaking concerning the family members of Camp Lejeune veterans. Such comments are outside the scope of this rulemaking and no changes will be made to this rule based on those comments.
Title 38 of the Code of Federal Regulations, as revised by this rulemaking, represents VA's implementation of its legal authority on this subject. Other than future amendments to this regulation or governing statutes, no contrary guidance or procedures are authorized. All existing or subsequent VA guidance must be read to conform with this rulemaking if possible or, if not possible, such guidance is superseded by this rulemaking.
In accordance with 5 U.S.C. 553(d)(3), the Secretary of Veterans Affairs finds good cause to issue this final rule with an immediate effective date. This rule is necessary to provide clarity regarding VA's duty to provide health care to veterans who may have been exposed to toxic substances due to their service at Camp Lejeune. Section 102 of Public Law 112-154 requires VA to provide hospital care and medical services to Camp Lejeune veterans for the listed conditions and illnesses as of August 6, 2012. Many of the 15 listed conditions or illnesses are life-threatening and require immediate medical care. VA is capable of treating Camp Lejeune veterans for such illnesses or conditions immediately, which may lead to improved health outcomes for many veterans. However, this rule provides VA with the necessary framework to immediately implement this statutory requirement.
This rule clearly defines how VA proposes to identify and integrate Camp Lejeune veterans into its enrollment system so VA can provide necessary health care to these veterans. For example, Public Law 112-154 requires VA to provide hospital care and medical services to “a veteran who served on active duty in the Armed Forces at Camp Lejeune, North Carolina, for not fewer than 30 days during the period beginning on January 1, 1957, and ending on December 31, 1987.” The legislation, however, does not define the scope of who should be considered a Camp Lejeune veteran. This rule at § 17.400(b) in the definition for “Camp Lejeune veteran” explains that a veteran served at Camp Lejeune if he or she was stationed at Camp Lejeune, or traveled to Camp Lejeune as part of his or her professional duties. The regulation also explains that the 30-day minimum service requirement may be “consecutive or nonconsecutive” days. Without this regulation, VA would not be able to clearly identify all the veterans who should be provided the necessary health care as a result of their service at Camp Lejeune. Because of this final rule, VA will be able to identify those individuals who should be considered Camp Lejeune veterans and conduct outreach to the identified class of veterans. Although we expect most Camp Lejeune veterans to seek VA medical care for treatment of their illness or condition regardless of this rule, there may be some veterans who may go without treatment if they are not identified as a Camp Lejeune veteran, and their illness or condition does not result in eligibility for enrollment. Because many of the 15 listed conditions or illnesses are life-threatening and require immediate medical care, this rule with an immediate effective date is necessary to allow VA to provide medical care to all individuals identified as Camp Lejeune veterans.
Furthermore, under the provisions of this rule, VA will be able to reimburse veterans for copayments that certain veterans may have already paid for illnesses or conditions identified in this rule. An immediate effective date will allow VA to reimburse copayments to alleviate this financial hardship for some of these veterans.
For these reasons, the Secretary has concluded that ordinary effective-date procedures would be impracticable and contrary to the public interest and is accordingly issuing this final rule with immediate effective date.
The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the
This final rule contains no new provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). However, we note that veterans would apply for hospital care and medical services as a Camp Lejeune veteran under § 17.400 by completing VA Form 10-10EZ, “Application for Health Benefits,” which is required under 38 CFR 17.36(d) for all hospital care and medical services. The Office of Management and Budget (OMB) approved the collection of information for VA Form 10-10EZ and assigned OMB control number 2900-0091. As discussed in a separate notice (78 FR 39832, July 2, 2013), we requested approval from OMB to amend this form to include a specific checkbox for individuals to identify themselves as meeting the requirements of being a Camp Lejeune veteran. OMB approved the amended collection. This particular amendment to the form will have no appreciable effect on the reporting burden for the revised VA Form 10-10EZ. We also do not anticipate a significant increase in the total number of applications filed because most Camp Lejeune veterans likely would have applied for VA medical care for treatment of their illness or condition regardless of this rule.
The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-12. This final rule will directly affect only individuals and will not affect any small entities. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final flexibility analysis requirements of 5 U.S.C. 603 and 604.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” requiring review by OMB as any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 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 this Executive Order.
The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined, and it has been determined to be a significant regulatory action under Executive Order 12866. VA's impact analysis can be found as a supporting document at
The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this rule are 64.007, Blind Rehabilitation Centers; 64.008, Veterans Domiciliary Care; 64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing Home Care; 64.012, Veterans Prescription Service; 64.013, Veterans Prosthetic Appliances; 64.014, Veterans State Domiciliary Care; 64.015, Veterans State Nursing Home Care; and 64.022, Veterans Home Based Primary Care.
The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Jose D. Riojas, Chief of Staff, approved this document on June 18, 2014, for publication.
Administrative practice and procedure, Alcohol abuse, Alcoholism, Claims, Day care, Dental health, Drug abuse, Health care, Health facilities, Health professions, Health records, Homeless, Medical devices, Medical research, Mental health programs, Nursing homes, Veterans.
For the reasons set forth in the supplementary information of this rulemaking, the Department of Veterans Affairs amends 38 CFR part 17 as follows:
38 U.S.C. 501, and as noted in specific sections.
(a)
(b)
(c)
(d)
(i) Esophageal cancer;
(ii) Lung cancer;
(iii) Breast cancer;
(iv) Bladder cancer;
(v) Kidney cancer;
(vi) Leukemia;
(vii) Multiple myeloma;
(viii) Myleodysplasic syndromes;
(ix) Renal toxicity;
(x) Hepatic steatosis;
(xi) Female infertility;
(xii) Miscarriage;
(xiii) Scleroderma;
(xiv) Neurobehavioral effects; and
(xv) Non-Hodgkin's Lymphoma.
(2)
(i) The veteran requested Camp Lejeune veteran status no later than September 24, 2016; and
(ii) VA provided the hospital care or medical services to the Camp Lejeune veteran on or after August 6, 2012.
38 U.S.C. 1710.
Department of Veterans Affairs.
Interim final rule.
The Department of Veterans Affairs (VA) is promulgating regulations to implement statutory authority to provide payment or reimbursement for hospital care and medical services provided to certain veterans' family members who resided at Camp Lejeune, North Carolina, for at least 30 days during the period beginning on January 1, 1957, and ending on December 31, 1987. Under this rule, VA will reimburse family members, or pay providers, for medical expenses incurred as a result of certain illnesses and conditions that may be attributed to exposure to contaminated drinking water at Camp Lejeune during this time period. Payment or reimbursement will be made within the limitations set forth in statute and Camp Lejeune family members will receive hospital care and medical services that are consistent with the manner in which we provide hospital care and medical services to Camp Lejeune veterans.
Written comments may be submitted by email through
Terry Walters, Deputy Chief Consultant Post-Deployment Health, Office of Public Health (10P3A), Veterans Health Administration, 810 Vermont Avenue NW., Washington, DC 20420, (202) 461-1017. (This is not a toll-free number.)
On August 6, 2012, the President signed into law the Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012, Public Law 112-154 (the Act). Among other things, section 102 of the Act created 38 U.S.C. 1787, requiring VA to furnish hospital care and medical services to certain family members of Camp Lejeune veterans for certain specified illnesses and conditions. The law requires the family members to have resided for at least 30 days at Camp Lejeune, North Carolina (hereinafter referred to as Camp Lejeune), while their veteran family member served on active duty in the Armed Forces at Camp Lejeune for at least 30 days during the period beginning on January 1, 1957, and ending on December 31, 1987. This interim final rule implements this statutory requirement by amending existing VA regulations and creating a new regulation, 38 CFR 17.410.
On September 11, 2013, VA published a notice of proposed rulemaking concerning hospital care and medical services provided to Camp Lejeune veterans. 78 FR 55671. In the supplementary information to that rulemaking, we provided our interpretation of the purposes of the Act, set forth criteria to identify a “Camp Lejeune veteran,” defined the types of exposures experienced by veterans who served at Camp Lejeune during the statutorily defined period, and defined several terms relevant to this rulemaking. The final rule would apply equally and to the same extent to family members who resided at Camp Lejeune during the statutorily defined period. Under the law, family members, like veterans, experienced the same risks of exposure if they resided at Camp Lejeune during the statutorily prescribed period, and therefore should be considered as needing identical hospital care and medical services as those provided to Camp Lejeune veterans. This rulemaking addresses only those regulatory provisions specific to family members, which must be unique because VA has neither the authority nor the resources to provide comprehensive medical care to veterans' family members. In recognition of these limitations, we interpret the statutory authority to “furnish” “hospital care and medical services” as authorizing
Paragraph (b) of § 17.410 sets forth the definitions applicable to 38 CFR 17.410. For the reasons explained above, we define Camp Lejeune in this section by using the same definition established in 38 CFR 17.400(b). Under § 17.400(b), “Camp Lejeune” means any area within the borders of the U.S. Marine Corps Base Camp Lejeune or Marine Corps Air Station New River, North Carolina. This area includes the areas in which non-military personnel would have resided while their active duty family member served at Camp Lejeune.
We define “Camp Lejeune family member” as an individual who meets two requirements. First, the individual resided (or was in utero while his or her mother either resided at Camp Lejeune or served at Camp Lejeune under § 17.400(b)) for at least 30 (consecutive or nonconsecutive) days during the period beginning on January 1, 1957, and ending on December 31, 1987. Second, the individual is either related to a Camp Lejeune veteran by birth, was married to such a veteran, or was a legal dependent of the veteran. Department of Defense rules determined whether servicemembers and their families were authorized to reside at Camp Lejeune during the relevant period; our definition here aligns with those rules. Eligible individuals must meet both the residency and relational requirements as set forth in 38 U.S.C. 1787(a). We note that the requirement that a family member be related to the veteran by birth includes individuals who were in utero while the mother of the individual resided at Camp Lejeune, as identified under 38 U.S.C. 1787(a). The requirement of relation by birth or marriage encompasses any relative of the Camp Lejeune veteran who could have been authorized by a service department to reside on Camp Lejeune and therefore may have been exposed to contaminated water. We also clarify that family members include individuals who were legal dependents of the Camp Lejeune veteran during their residency at Camp Lejeune, such as adopted children, stepchildren, or individuals for whom the veteran had custody as determined by a U.S. court.
When referring to Camp Lejeune veterans, we use the same definition provided in 38 CFR 17.400(b). Under this definition, a “Camp Lejeune veteran” is any veteran who served at Camp Lejeune on active duty, as defined in 38 U.S.C. 101(21), in the Armed Forces for at least 30 (consecutive or nonconsecutive) days during the period beginning on January 1, 1957, and ending on December 31, 1987. A veteran served at Camp Lejeune if he or she was stationed at Camp Lejeune, or traveled to Camp Lejeune as part of his or her professional duties.
We define a “health-plan contract” to carry the same definition under this section as we define the term in § 17.1001(a). The § 17.1001(a) definition of health-plan contract implements the definition set forth in 38 U.S.C. 1725(f). Under 38 U.S.C. 1787(b)(3), VA must use that same definition for the purposes of this rulemaking. Under that definition, health-plan contracts include insurance policies or contracts, medical or hospital service agreements, membership or subscription contracts, or similar arrangements under which health services for individuals are provided or the expenses of such services are paid, public insurance programs such as TRICARE, CHAMPVA, Medicare or Medicaid, and worker's compensation law or plans. Similarly, as directed by 38 U.S.C. 1787(b)(3), we define “third party” in accordance with the definition set forth by Congress in section 1725(f), and as defined in 38 CFR 17.1001(b). Under § 17.1001(b), third parties include: A Federal entity, a State or political subdivision of a State, an employer or an employer's insurance carrier, an automobile accident reparations insurance carrier, and a person or entity obligated to provide, or to pay the expenses of, health services under a health-plan contract. VA has not changed those definitions in this rulemaking because Congress specified in section 1787(b)(3) that VA must define these terms to have the same meaning given to them under section 1725(f).
In § 17.410(c), we explain that individuals who seek to apply for status as a Camp Lejeune family member must complete VA Form 10-068, “Camp Lejeune Family Member Heath Care Program Application.” Once an individual submits a form, VA will confirm that the information is accurate in order to confirm Camp Lejeune family member status. VA has systems in place to verify that individuals meet the residence requirements and that they have the appropriate relationship to the Camp Lejeune veteran. VA will consider all supporting evidence submitted to confirm that an individual resided at Camp Lejeune for at least 30 days, including utility bills, pay stubs, tax forms, and similar documentation. Additionally, VA will consider as evidence any available internal housing records that show that the related Camp Lejeune veteran resided in family housing on Camp Lejeune along with all other residency-related evidence when confirming the accuracy of the family member's application.
Under § 17.410(d), we set out the process that providers of care or family members must follow in order to receive payment or reimbursement for hospital care and medical services provided by a non-VA health care provider that occurred after March 26, 2013 in connection with the 15 illnesses or conditions listed in 38 U.S.C. 1710(e)(1)(F) and 38 CFR 17.400(d)(1). These conditions are esophageal cancer, lung cancer, breast cancer, bladder cancer, kidney cancer, leukemia, multiple myeloma, myleodysplasic syndrome, renal toxicity, hepatic steatosis, female infertility, miscarriage, scleroderma, neurobehavioral effects, and non-Hodgkin's lymphoma. Pursuant to 38 U.S.C. 1787(b)(2), VA may not pay or reimburse for hospital care and medical services “for an illness or condition of a [Camp Lejeune] family member that is found, in accordance with guidelines issued by the Under Secretary for Health, to have resulted from a cause other than the residence of the family member [at Camp Lejeune].” We address this clinical determination made with the support of VA clinical practice guidelines in § 17.410(d), and discuss in detail below.
First, pursuant to § 17.410(d)(1), Camp Lejeune family members, or providers of hospital care or medical services, must file a timely claim for payment or reimbursement. The earliest that a Camp Lejeune family member can submit a claim for reimbursement will be the date that VA approves the application for Camp Lejeune family member status. VA will begin to accept applications immediately upon publication of this interim final rulemaking. We will apply a 2-year limit from the time of approved Camp Lejeune family member status for a timely claim filing. This 2-year limit is consistent with VA's review of applications for retroactive copayment
In § 17.410(d)(1)(ii), we explain the claim deadline for payment or reimbursement of hospital care and medical services that the Camp Lejeune family member received after VA has already received the Camp Lejeune family member's application. In that instance, the Camp Lejeune family member must file such a claim within two years after the date of discharge from hospital care or the date that the medical services were rendered. We believe that two years strikes an appropriate balance between allowing Camp Lejeune family members or providers adequate time to acquire the appropriate information to submit claims, and allowing VA to manage the claims process in an efficient and expedient manner. Further, this two-year requirement provides the family members and providers sufficient time to submit the medical claims to other health insurers for payment and receipt of their explanation of benefits.
We believe that VA can only effectively carry out its duty to reimburse for care provided to family members in 38 U.S.C. 1787(a) if both family members and providers can submit claims directly to VA. In order to satisfy the exhaustion requirement set forth in § 17.410(d)(4) (discussed in detail below), VA will ensure that third party payers with liability for a claim, such as private health insurers, have satisfied their respective liability before VA will cover the remaining liability to the provider. VA will primarily rely on the Camp Lejeune family member to self-report his or her insurance information, and any future changes that might occur. VA will examine claims for falsified information, and VA will follow up to verify whether the individual is insured and filing accurate claims.
In § 17.410(d)(2), we require that the Camp Lejeune family member's treating physician certify that the claimed hospital care or medical services were provided for an illness or condition listed in § 17.400(d)(1). We also require under § 17.400(d)(2) that the treating physician provide information about any co-morbidities, risk factors, or other exposures that may have contributed to the illness or condition. Because VA is not going to be conducting clinical examinations, we must rely on the clinical determinations made by the individual's treating physician who did conduct such clinical examinations of the Camp Lejeune family member. VA will use this information to reach the clinical determinations described in § 17.410(d)(3). Because VA is not providing hospital care and medical services to the Camp Lejeune family member directly, we require this information from the treating physician in order to satisfy the requirements that the treatment be for one of the 15 illnesses or conditions set forth in 38 U.S.C. 1710(e)(1)(F). Pursuant to 38 U.S.C. 1787(b)(2), VA may not furnish hospital care and medical services to a Camp Lejeune family member for illnesses or conditions that VA finds to have resulted from a cause other than the individual's residence at Camp Lejeune. VA will use clinical practice guidelines to make this determination, which we discuss in greater detail in relation to § 17.410(d)(3). VA will evaluate the clinical information provided by the Camp Lejeune family member's treating physician in conjunction with these clinical practice guidelines, and any other medical and scientific evidence and research, to reach the clinical findings described and discussed in § 17.410(d)(3).
In § 17.410(d)(3), we incorporate a limitation similar to the one in § 17.400(c) by establishing that if a Camp Lejeune family member is diagnosed with one of the 15 illnesses or conditions listed in the Act, then the illness or condition is attributable to the individual's residence at Camp Lejeune. However, if VA clinically finds, after consideration of clinical practice guidelines and other accepted forms of medical documentation, evidence, or research with respect to the listed illness or condition, that the illness or condition is not attributable to the individual's residence at Camp Lejeune, then VA will not provide payment or reimbursement for care under this rule. For many of the 15 conditions or illnesses specified in the Act, scientific knowledge limits VA's ability to make a determination regarding a specific cause. When the best scientific evidence available at the time limits VA's ability to attribute the family member's condition to a specific cause, VA will assume the condition or illness was caused by exposures while at Camp Lejeune, and thus will provide payment to providers or reimbursement to Camp Lejeune family members provided they meet all other requirements under this rule. For other conditions or illnesses, current medical knowledge offers more guidance. As such, the clinical practice guidelines represent best practices, providing factors for clinicians to consider when making determination about whether an illness or condition is attributable to a cause other than the individual's residence at Camp Lejeune. The guidelines encourage clinicians to consider each patient's full history in order to make the best possible clinical determination. Best practices cannot be static. Consistent with standard VA practice, the clinical guidelines used to make the determinations necessary to implement this regulation will be subject to continuous improvement. Specifically, over time we will update the clinical practice guidelines to reflect evolution in the science underlying these conditions, experience in implementing the guidelines, and other factors that reflect our understanding of clinical indications and the potential for more specific determinations. Camp Lejeune family members will have the option to request reconsideration of clinical determinations, and at that time will be able to submit additional evidence supporting the claim as well. Appeals will be reviewed by VA clinicians with expertise on Camp Lejeune matters, or experts on the specific illness or condition in question. To the extent that there are issues about the adequacy and sufficiency of VA's review of evidence presented by the Camp Lejeune family member, the individual can appeal to the Board of Veterans Appeals.
Under 38 CFR 17.410(d)(3), the claim must be for hospital care or medical services provided in connection with one of the 15 illnesses or conditions listed in § 17.400(d)(1). As explained in the proposed rule for “Hospital Care and Medical Services for Camp Lejeune Veterans,” VA is in the process of
The VA health care system is designed to provide comprehensive health care to veterans. Section 1787(a) authorizes VA to furnish hospital care and medical services to veterans' family members only for the 15 listed illnesses and conditions listed in 38 U.S.C. 1710(e)(1)(F). We believe that family members will receive continuity of health care for these 15 illnesses or conditions and any other health needs by receiving hospital care and medical services from their private providers. More importantly, because our authority to provide care to family members is limited to care specifically for one of the listed illnesses or conditions, there could be significant medical and ethical issues presented if VA were to attempt to provide direct care to family members. Our medical providers treat the “whole patient,” and it could be unethical (and bad for the patient) in many cases to treat a specific illness or condition while disregarding other medical issues. Therefore, as a matter of policy, VA has determined that it is in the best interests of Camp Lejeune family members to receive hospital care and medical services from private providers chosen by the family. In contrast, VA provides direct care to Camp Lejeune veterans by enrolling them in the VHA health care system because VA has separate authority to provide hospital care and medical services to eligible veterans. This is explained further in “Hospital Care and Medical Services for Camp Lejeune Veterans,” 78 FR 55671, September 11, 2013.
In 38 CFR 17.410(d)(4), we explain that any hospital care and medical services must be authorized under VA's medical benefits package in § 17.38. In 38 CFR 17.38, VA sets forth the broad scope of the medical benefits package that it furnishes to veterans, based on our authority to provide “hospital care” and “medical services” under 38 U.S.C. 1710. Because the authorizing statutes for both family members under 38 U.S.C. 1787 and veterans under 38 U.S.C. 1710 use the terms “hospital care” and “medical services,” we will pay only for care and services that meet the statutory definitions under section 1701, i.e., those that we would otherwise be authorized to provide to veterans. In short, through the payment and reimbursement system described in this rulemaking, we will “furnish” the same hospital care and medical services to family members that we would furnish to veterans for the 15 illnesses and conditions specified in Act.
Under § 17.410(d)(5), Camp Lejeune family members or hospital care or medical service providers must exhaust all claims and remedies reasonably available to the family member or provider against a third party, including health-plan contracts. We have repeated in § 17.410(d)(5) a statutory requirement under 38 U.S.C. 1787(b)(3). Section 1787(b)(3) specifically cites health-plan contracts, which we defined in § 17.1001(a) to include private health insurance. Generally, this requirement will be interpreted to be satisfied when the Camp Lejeune family member submits claims for all hospital care and medical services to the all relevant third party insurers, including Medicare and Medicaid, before submitting the claim to VA. We recognize that in some cases the only option available to the family member may have been to obtain out-of-network care, and in such cases we will find that the exhaustion requirement has been met and will cover the claimed amount so long as it is otherwise in compliance with all relevant third-party coverage.
Under paragraph § 17.410(d)(6), we note that payment or reimbursement will only be made if adequate funds have been appropriated to implement 38 U.S.C. 1787. Medical Services account funds will be available each fiscal year for Camp Lejeune care received by qualifying family members on or after the date that an appropriations act is signed into law. Under 38 U.S.C. 1787(b)(1), VA is authorized to furnish hospital care and medical services to Camp Lejeune family members “to the extent and in the amount provided in advance in appropriations Acts for such purpose.” VA is not authorized to provide payments or reimbursements before the date that an appropriation Act provides funds for the purpose of furnishing hospital care and medical service to Camp Lejeune family members. The Consolidated and Further Continuing Appropriations Act, 2013, Public Law 113-6, 127 Stat. 396, appropriated funds to the Medical Services account for fiscal year 2014 for, among other things, “hospital care and medical services authorized by section 1787 of title 38, United States Code.” These funds became available on October 1, 2013, and will expire on September 30, 2014.
In 38 CFR 17.410(e), we establish the amounts that VA will pay or reimburse for hospital care and medical services furnished to family members. Under paragraph (e)(1), if a third party is liable for partial payment for hospital care or medical services provided to a Camp Lejeune family member consistent with the other requirements of § 17.410, then VA will pay or reimburse the lesser of two rates. The first possible rate is the amount for which the Camp Lejeune family member remains personally liable. For example, if a Camp Lejeune family member receives medical services consistent with paragraph (d) and is insured under a health-plan contract, then VA will pay or reimburse any cost share or copayment amounts for which the Camp Lejeune family member is personally liable under that health-plan contract.
The second rate calculation is based on VA's existing mechanisms for paying for hospital care and medical services provided by non-VA providers to veterans under 38 CFR 17.55 and 17.56. Section 17.55 sets VA's payment methodology for authorized public or private hospital care to veterans. Section 17.56 sets VA's payment methodology for authorized medical services provided to veterans. Both 38 U.S.C. 1710(e)(1)(F) and 1787 require VA to “furnish hospital care and medical services” for the same set of 15 illnesses or conditions. Given the identical language, VA intends, to the extent possible, to furnish hospital care and medical services to Camp Lejeune family members in the same manner that it does for veterans receiving non-VA care, including calculating payments at the same rate. Under §§ 17.55(g) and 17.56(c), payments made by VA under those authorities “shall be considered payment in full.” Likewise, by cross-referencing §§ 17.55 and 17.56 in § 17.410(e)(1) and (2), any payments or reimbursements made will be payment in full, which in turn extinguishes all personal liability for the Camp Lejeune family member for the hospital care and medical services related to one of the 15 illnesses or conditions listed in the Act.
VA will pay the lesser of those two calculations because by extinguishing the Camp Lejeune family member's individual liability, VA will satisfy the requirement under 38 U.S.C. 1787 to
Title 38 of the Code of Federal Regulations, as revised by this interim final rulemaking, represents VA's implementation of its legal authority on this subject. Other than future amendments to this regulation or governing statutes, no contrary guidance or procedures are authorized. All existing or subsequent VA guidance must be read to conform with this rulemaking if possible or, if not possible, such guidance is superseded by this rulemaking.
Under 5 U.S.C. 553(b)(B), the general requirements for notice of proposed rulemaking do not apply when the agency finds that notice and public procedure are impracticable, unnecessary, or contrary to the public interest. In accordance with that section, the Secretary of Veterans Affairs finds good cause to issue this interim final rule without prior notice and comment. Accordingly, it is not necessary to obtain public comment prior to implementation. Moreover, although public comments prior to implementation are not necessary to fulfill the mandate of the law in a timely manner, comments received after publication and a brief period of implementation may assist in understanding whether this interim final rule requires minor adjustments or refinement of attendant procedures.
First, VA believes that prior notice and comment would be contrary to the public interest. This interim final rule implements VA's duty to furnish hospital care and medical services to family members of veterans, pursuant to 38 U.S.C. 1787, who may have been exposed to toxic substances due to their residence at Camp Lejeune. Many of the 15 listed conditions or illnesses are life-threatening and require immediate medical care that is often quite costly to patients, regardless of whether they have health-plan contracts. For example, several of the 15 illnesses or conditions are serious cancers, and medical research indicates that the probability of survival increases with early diagnosis and treatment. The cost of care for one of the 15 illnesses or conditions is frequently prohibitive, leading individuals to delay or forego obtaining vital hospital care and medical services. In addition to increased mortality, delays in pursuing care can unnecessarily complicate treatment when the individual eventually does seek care because, by that time, the illness or condition can progress and may directly lead to secondary conditions. VA is capable of reimbursing Camp Lejeune family members for such illnesses or conditions, and there are critical health care reasons to ensure that these family members can obtain care as soon as possible.
In addition, we believe that prior notice and comment are unnecessary. This interim final rule enforces the Congressional mandate of 38 U.S.C. 1787 very broadly. We do not believe that we would receive any comments suggesting that the proposed coverage is too broad and should be more restrictive than is provided in this rule. For these reasons, the Secretary has concluded that ordinary notice and comment procedures would be unnecessary, and contrary to the public interest and is accordingly issuing this rule as an interim final rule.
The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any 1 year. This interim final rule has no such effect on State, local, and tribal governments, or on the private sector.
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3507) requires that VA consider the impact of paperwork and other information collection burdens imposed on the public. Under 44 U.S.C. 3507(a), an agency may not collect or sponsor the collection of information, nor may it impose an information collection requirement unless it displays a currently valid Office of Management and Budget (OMB) control number. See also 5 CFR 1320.8(b)(3)(vi).
This interim final rule will impose the following new information collections requirements. Section 17.410(c) of title 38, CFR, requires an individual applying for benefits associated with hospital care and medical services for Camp Lejeune family members to submit an application to VA on VA Form 10068, “Camp Lejeune Family Member Program Application.” Section 17.410(d)(1) requires a Camp Lejeune family member or provider of care or services to submit a timely claim for payment or reimbursement. Section 17.410(d)(2) requires the provider of a Camp Lejeune family member to certify that a Camp Lejeune family member has been diagnosed with one of the 15 required illnesses or conditions. Section 17.410 requires VA to maintain timely information about the Camp Lejeune family member in order to correctly identify the individual in VA's system, and to submit any information or reimbursements. As required by the Paperwork Reduction Act of 1995 (at 44 U.S.C. 3507(d)), VA has submitted these information collections to OMB for its review. OMB assigns a control number for each collection of information it approves. Except for emergency approvals under 44 U.S.C. 3507(j), VA may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. We have requested that OMB approve the collections of information on an emergency basis. If OMB does not approve the collections of information as requested, we will immediately remove §§ 17.410(c), 17.410(d)(1), 17.410(d)(2), or take such other action as is directed by OMB.
Comments on the collection of information should be submitted to the Office of Management and Budget, Attention: Desk Officer for the Department of Veterans Affairs, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies mailed or hand-delivered to: Director, Office of Regulation Policy and Management (02REG), Department of Veterans Affairs, 810 Vermont Ave. NW., Room 1068, Washington, DC 20420; fax to (202) 273-9026; or through
A comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. This does not affect the deadline for the public to comment on the interim final rule. VA considers comments by the public on collections of information in:
• Evaluating whether the collections of information are necessary for the proper performance of the functions of the Department, including whether the information will have practical utility;
• Evaluating the accuracy of the Department's estimate of the burden of the collections of information, including the validity of the methodology and assumptions used;
• Enhancing the quality, usefulness, and clarity of the information to be collected; and
• Minimizing the burden of the collections of information on those who are to respond, including responses 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.
The Secretary hereby certifies that this interim final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-12. This rule will not require any medical providers to provide care, does not specify that care be provided by any particular medical providers, and does not supersede any existing insurance or other payment mechanism. Rather, this rule simply authorizes VA to serve as a payer of last resort for care obtained privately by Camp Lejeune family members. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final flexibility analysis requirements of 5 U.S.C. 603 and 604.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” requiring review by the Office of Management and Budget (OMB) as any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 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 this Executive Order.
The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined, and it has been
The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this rule are 64.007, Blind Rehabilitation Centers; 64.008, Veterans Domiciliary Care; 64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing Home Care; 64.012, Veterans Prescription Service; 64.013, Veterans Prosthetic Appliances; 64.014, Veterans State Domiciliary Care; 64.015, Veterans State Nursing Home Care; 64.022, Veterans Home Based Primary Care.
The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Jose D. Riojas, Chief of Staff, Department of Veterans Affairs, approved this document on March 5, 2014, for publication.
Administrative practice and procedure, Alcohol abuse, Alcoholism, Claims, Day care, Dental health, Drug abuse, Health care, Health facilities, Health professions, Health records, Homeless, Medical devices, Medical research, Mental health programs, Nursing homes, Veterans.
For the reasons set out in the preamble, VA amends 38 CFR part 17 as follows:
38 U.S.C. 501, and as noted in specific sections.
(a)
(b)
(i) Resided at Camp Lejeune (or was in utero while his or her mother either resided at Camp Lejeune or served at Camp Lejeune under § 17.400(b)) for at least 30 (consecutive or nonconsecutive) days during the period beginning on January 1, 1957, and ending on December 31, 1987; and
(ii) Meets one of the following criteria:
(A) Is related to a Camp Lejeune veteran by birth;
(B) Was married to a Camp Lejeune veteran; or
(C) Was a legal dependent of a Camp Lejeune veteran.
(c)
(d)
(1) The Camp Lejeune family member or provider of care or services has submitted a timely claim for payment or reimbursement, which means:
(i) For hospital care and medical services provided before the date that the application discussed in paragraph (c) of this section was received by VA, the hospital care and medical services must have been provided no more than 2 years prior to the date that VA receives the application but not prior to March 26, 2013, and the claim for payment or reimbursement must be received by VA no more than 60 days after VA approves the application;
(ii) For hospital care and medical services provided on or after the date that the application discussed in paragraph (c) of this section was received by VA, the claim for payment or reimbursement must be received by VA no more than 2 years after the later of either the date of discharge from a hospital or the date that medical services were rendered;
(2) The Camp Lejeune family member's treating physician certifies that the claimed hospital care or medical services were provided for an illness or condition listed in § 17.400(d)(1), and provides information about any co-morbidities, risk factors, or other exposures that may have contributed to the illness or condition;
(3) VA makes the clinical finding, under VA clinical practice guidelines, that the illness or condition did not result from a cause other than the residence of the family member at Camp Lejeune;
(4) VA would be authorized to provide the claimed hospital care or medical services to a veteran under VA's medical benefits package in § 17.38;
(5) The Camp Lejeune family member or hospital care or medical service provider has exhausted without success all claims and remedies reasonably available to the family member or provider against a third party, including health-plan contracts; and
(6) Funds were appropriated to implement 38 U.S.C. 1787 in a sufficient amount to permit payment or reimbursement.
(e)
(1) If a third party is partially liable for the claimed hospital care or medical services, then VA will pay or reimburse the lesser of the amount for which the Camp Lejeune family member remains personally liable or the amount for which VA would pay for such care under §§ 17.55 and 17.56.
(2) If VA is the sole payer for hospital care and medical services, then VA will pay or reimburse in accordance with §§ 17.55 and 17.56, as applicable.
(The information collection requirements have been submitted to OMB and are pending OMB approval.)