Economic Analysis Bureau
Industry and Security Bureau
International Trade Administration
National Oceanic and Atmospheric Administration
Patent and Trademark Office
Energy Efficiency and Renewable Energy Office
Federal Energy Regulatory Commission
Centers for Disease Control and Prevention
Children and Families Administration
Food and Drug Administration
National Institutes of Health
Coast Guard
Fish and Wildlife Service
Geological Survey
Surface Mining Reclamation and Enforcement Office
Antitrust Division
Drug Enforcement Administration
Copyright Office, Library of Congress
Copyright Royalty Board
Federal Aviation Administration
Federal Railroad Administration
Comptroller of the Currency
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
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Office of Hearings and Appeals, Department of Energy.
Final rule.
The Office of Hearings and Appeals Procedural Regulations set forth the default procedures for appearance and practice before the Office of Hearings and Appeals (OHA), the quasi-judicial branch of the Department of Energy (DOE). The procedures set forth in this regulation apply to all proceedings before the OHA where a comprehensive procedural scheme is not found in another DOE regulation. Through this rulemaking, the OHA simplified and modernized its procedures.
This final rule is effective as of November 29, 2019.
Kristin L. Martin, Attorney-Advisor, Office of Hearings and Appeals, U.S. Department of Energy, 1000 Independence Ave. SW, Washington, DC 20585-0107, (202) 287-1550, email:
Part 1003 was promulgated in 1995 to replace 10 CFR part 205, a procedural regulation designed to apply to matters involving the former oil price and allocation control regulations effective during the 1970s. As the oil price and allocation control program wound down, the OHA's jurisdiction expanded to include other programs. Part 1003 was intended to apply to most proceedings before the OHA that did not involve the former federal petroleum price and allocation control regulations. Namely, part 1003 contained a number of subparts that set forth procedures specific to the following types of proceedings: Requests for exceptions or exemptions from DOE rules, appeals of DOE orders, applications for stays, applications for modification or revision of DOE orders, requests for OHA conferences and hearings, and requests for special redress relief or other extraordinary assistance.
Since 1995, the OHA's jurisdictional portfolio has changed significantly, shifting away from petroleum product refund proceedings to include primarily personnel security hearings, Freedom of Information Act appeals, and proceedings under the DOE's Contractor Employee Whistleblower Protection Program. Most of the proceedings that the OHA oversees currently are governed by their own procedural regulations and are not subject to the procedures found in part 1003. As the nature of the OHA's work has evolved and technology has improved, the procedures set forth in part 1003 have become more cumbersome and less effective. Part 1003 proceedings involve fewer parties, few to no hearings, and fewer stakeholders than other types of OHA proceedings. In addition, Part 1003 mandates outdated methods of communication that are far less efficient than modern methods. Accordingly, the OHA has decided to make revisions to part 1003 as described in Section II.
The OHA is making a number of updates to part 1003. Specifically, the OHA is eliminating the subparts specific to individual types of proceedings and consolidating those procedures in a single part with general applicability. The new consolidated procedures will govern all proceedings before the OHA where a comprehensive procedural scheme is not found in another DOE regulation, including appeals of DOE orders, requests for exceptions or exemptions from DOE rules, and requests for modification or rescission of DOE orders. This is intended to simplify and streamline the procedures for appearing before the OHA, and to reduce cost and administrative burdens for parties.
In executing its duties under the revised part 1003, the OHA intends to make use of the
2.
Multiple parts of DOE's regulations make reference to subparts B through G as they appear in the previous iteration of part 1003. With the consolidation of the subparts, rather than attempt to identify and amend each and every reference throughout all of DOE's regulations, the OHA is adding § 1003.1(b), which clarifies that all such references shall be considered to refer to part 1003 generally, rather than to a specific subpart. For example, DOE's Energy Conservation Program for Consumer Products, at 10 CFR part 430, states, “To exhaust administrative remedies, any person aggrieved by an action under this section must file an appeal with the DOE's Office of Hearings and Appeals as provided in 10 CFR part 1003, subpart C.” 10 CFR 430.27(m). In the revised part 1003, subpart C no longer exists, but in accordance with § 1003.1(b), the general procedures contained in part 1003 will still apply to the appeals process required by § 430.27(m).
1. The OHA is adding a definition of “Alternative Dispute Resolution” (ADR). The OHA is also adding a provision to the regulation encouraging ADR.
2. As part of its effort to consolidate the multiple iterations of procedures contained in the current part 1003 into a single procedure, the OHA is using the term “petition” to refer to all initial filings in all proceedings governed by part 1003. Similarly, any person who files an initial submission with the OHA is called a “petitioner” for purposes of the regulation. However, in practice, the person could still be referred to as an appellant, applicant, or other appropriate designation.
3. The OHA is defining “verified email address,” a new term created to assist with electronic notice and filing.
4. The OHA is defining the terms “action,” “Decision and Order,” “final disposition of DOE,” “party,” and “participant.”
The OHA is allowing for methods of service other than the U.S. Mail. Specifically, the OHA now allows service via email. The OHA is also allowing for service via unspecified alternative methods, allowing for flexibility as communications technology evolves. For example, a petitioner can request that the OHA allow him to send a link to the e-docket on the
The OHA is mandating that all documents filed with the OHA be filed electronically, except when permission is granted to file in another manner. Not everyone can file electronically, and some materials are better mailed or faxed for logistical reasons. Accordingly, any person wishing to file via non-electronic means may contact the OHA and request permission to do so. The OHA will consider granting such requests in circumstances where good cause has been shown why the document cannot or should not be filed electronically.
The consolidated procedures by the OHA will be initiated by the filing of a petition by a person who believes he has been adversely affected by a DOE decision or action, or who is otherwise authorized by law.
1.
2.
A stay is a type of order that has the effect of pausing a legal process, such as a proceeding or order. Unlike under the previous iteration of part 1003, where the procedure for requesting a stay was set forth in its own subpart, subpart D, the consolidated procedures the OHA is adopting in this rulemaking do not apply to requests for stays. The OHA now will issue stays as interlocutory orders, rather than as Decisions and Orders. The legal standard for consideration of stay requests is outlined in previous OHA decisions, which have precedential authority. Motions and interlocutory orders will be posted to the e-docket, allowing the public an opportunity to comment.
The OHA is allowing notice via electronic or other means. Additionally, the OHA may require additional or alternative notice if the standard provisions prove ineffective or overly burdensome.
The OHA is adding a section encouraging the use of Alternative Dispute Resolution.
1.
2.
3.
1. The OHA is changing the term “Special Report Order” to “information request,” which the OHA considers a more accurate description of the tool used by the OHA to elicit information related to a proceeding.
2. The OHA is adding standards for oaths or affirmations. The oath or affirmation must now refer the witness to federal statutes describing penalties for perjury and falsification.
The OHA understands 18 U.S.C. 1001 and 18 U.S.C. 1621 to apply to all statements and submissions to the OHA, whether oral or written. Therefore, the OHA is removing duplicative references to these statutes from the regulation.
The OHA is expanding upon and codifying the circumstances under which it may dismiss petitions. Dismissals are separated into two categories: Dismissal with prejudice and dismissal without prejudice. A dismissal is considered a Decision and Order.
The OHA is creating a default standard of review for petitions not otherwise governed by an authority that prescribes a standard of review. Under the new standard, the OHA will pay deference to the subject matter expertise of the DOE component whose action is under review, while at the same time ensuring that such component acted legally and with appropriate consideration.
The OHA's standard of review for petitions filed under the authority of 42 U.S.C. 7194 continues to include a consideration of whether the petitioner has made a showing of serious hardship, gross inequity or unfair distribution of burdens.
The OHA is requiring that a decision granting or denying the relief sought by a petitioner be presented in a particular format, referred to as a Decision and Order. The Decision and Order will include the legal and factual basis for the decision, state whether it is the DOE's final agency action on the matter,
The OHA is eliminating the administrative appeal of a Decision and Order, except as provided by federal statute. This stems from logistical necessity. Decisions under part 1003 are issued by the OHA Director. There is no higher authority in the OHA to which a person can appeal. Furthermore, as the OHA's jurisdiction under part 1003 is almost entirely delegated from the Secretary of Energy, there is no other entity within the DOE with authority to make decisions or hear appeals on such matters.
The OHA is allowing for reconsideration of a Decision and Order if the motion to do so is filed by the 20th day after the Decision and Order is made available to the public. The Director may grant a motion for reconsideration only if he determines that the Decision and Order contains an error that materially influenced the proceeding's outcome.
Interested persons were invited to participate in the proposed rulemaking (84 FR 41654, August 15, 2019) proceeding by submitting data, views, or arguments. The comment period ended on September 16, 2019. No comments were received during that time.
It was determined that this action is not a significant regulatory action subject to review under Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993) by the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB).
On January 30, 2017, the President issued Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs.” That Order stated the policy of the executive branch is to be prudent and financially responsible in the expenditure of funds from both public and private sources. The Order stated it is essential to manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations.
Additionally, on February 24, 2017, the President issued Executive Order 13777, “Enforcing the Regulatory Reform Agenda.” The Order required that the head of each agency designate an agency official as its Regulatory Reform Officer (RRO). Each RRO oversees the implementation of regulatory reform initiatives and policies to ensure that agencies effectively carry out regulatory reforms, consistent with applicable law. Further, E.O. 13777 requires the establishment of a regulatory task force at each agency. The regulatory task force is required to make recommendations to the agency head regarding the repeal, replacement, or modification of existing regulations, consistent with applicable law. At a minimum, each regulatory reform task force must attempt to identify regulations that:
(i) Eliminate jobs, or inhibit job creation;
(ii) Are outdated, unnecessary, or ineffective;
(iii) Impose costs that exceed benefits;
(iv) Create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies;
(v) Are inconsistent with the requirements of Information Quality Act, or the guidance issued pursuant to that Act, in particular those regulations that rely in whole or in part on data, information, or methods that are not publicly available or that are insufficiently transparent to meet the standard for reproducibility; or
(vi) Derive from or implement Executive Orders or other Presidential directives that have been subsequently rescinded or substantially modified.
Pursuant to OMB's
The Regulatory Flexibility Act (5 U.S.C. 601
DOE has reviewed this final rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. This final rule will simplify procedural rules primarily for litigants and reduce the financial and administrative burdens involved in bringing cases before the OHA. DOE has determined that the final rule will not result in a significant economic impact on a substantial number of small entities because the revisions are specifically designed to ease and reduce the obligations of litigants. For example, allowing service via email and other electronic methods significantly reduces the time and expense of bringing a part 1003 proceeding for petitioners, most of whom are corporations and small businesses. Moving the public reference room from a physical location in Washington, DC, to an online location makes research far easier for litigants outside the Capital region. In making changes such as the ones mentioned here and described elsewhere in the preamble, the OHA has not added new burdens on participants in part 1003 proceedings, resulting in a net decrease in burdens.
DOE will provide its certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the Small Business Administration for review under 5 U.S.C. 605(b).
The changes to part 1003 do not contain information collection requirements subject to review and approval by OMB under the Paperwork Reduction Act.
The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally requires Federal agencies to examine
This final rule will not 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. Accordingly, no assessment or analysis is required under the Unfunded Mandates Reform Act of 1995.
Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any proposed rule that may affect family well-being. This final rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, the DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.
Executive Order 13132, “Federalism,” 64 FR 43255 (Aug. 4, 1999) imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. Agencies are required to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and carefully assess the necessity for such actions. The DOE has examined this final rule and has determined that it would not preempt State law and would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. No further action is required by Executive Order 13132.
With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (Feb. 7, 1996), imposes on Executive agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. With regard to the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or whether it is unreasonable to meet one or more of them. The DOE has completed the required review and determined that, to the extent permitted by law, the final rule meets the relevant standards of Executive Order 12988.
The Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). The DOE has reviewed this final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.
As required by 5 U.S.C. 801(2), DOE will submit to Congress a report regarding the issuance of this final rule prior to the effective date set forth at the outset of this document. The report will state it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 801(2).
The Secretary of Energy has approved publication of this final rule.
Administrative practice and procedure, Appeal procedures, Hearing and appeal procedures.
15 U.S.C. 761
(a) This part establishes the procedures to be utilized in certain proceedings before the Office of Hearings and Appeals of the Department of Energy, where comprehensive procedures are not to be found in another part of DOE's regulations. These
(b) Wherever another DOE program, statute, rule, regulation, guidance, or DOE delegation of authority references or adopts by reference the procedures set forth in a subpart contained in a previous iteration of this part, regardless of the subpart referenced, the procedures set forth in this part shall be deemed to apply.
(a) As used in this part:
(i) A rulemaking;
(ii) An internal DOE order or directive issued by the Secretary of Energy or his delegate in the management and administration of departmental elements and functions; or
(iii) Any decision or order issued under 41 U.S.C. 4712 or under part 708, part 710, part 712, or part 1004 of this title.
(b) Throughout this part the use of a word or term in the singular includes the plural, and the use of the male pronoun is gender neutral.
(a) An interested person may make an appearance, including a personal appearance at the discretion of the OHA, and participate in any proceeding described in this part on his own behalf or by a duly authorized representative. Any document filed by a duly authorized representative must contain a statement by such person certifying that he is a duly authorized representative.
(b) The OHA may deny, temporarily or permanently, in whole or in part, the privilege of participating in proceedings, including oral presentation, to any individual who is found by the OHA—
(1) To have made false or misleading statements, either orally or in writing;
(2) To have filed false or materially altered documents, affidavits or other writings;
(3) To lack the specific authority to represent the party or participant; or
(4) To have engaged in or to be engaged in conduct that substantially disrupts a proceeding.
(a)
(b)
(c)
When a document is required to be filed within a prescribed time, an extension of time to file may be granted by the OHA upon good cause shown.
(a) All documents required to be served under this part must be served personally, by first class United States mail, or by verified email address, except as otherwise provided.
(b) Service upon a person's duly authorized representative constitutes service upon that person.
(c) Official United States Postal Service receipts from certified mailing and email delivery receipts constitute evidence of service.
(d) The OHA may, at its discretion, allow for alternate forms of service when it determines that such would be advisable.
(a)
(b)
(c)
(d)
(e)
(f)
(2) The OHA will make a determination regarding any claim of confidentiality under criteria specified in 10 CFR 1004.11. Notice of the decision by the OHA to deny such claim, in whole or in part, and an opportunity to respond will be given to a person claiming confidentiality of information no less than five days prior to its public disclosure.
(g)
Any order issued under this part is effective as against all persons having actual or constructive notice thereof upon issuance, in accordance with its terms, unless and until it is stayed or suspended. An order is deemed to be issued on the date, as specified in the order, on which it is signed by the Director, unless the order provides otherwise.
Absent exceptional circumstances, all submissions to the OHA, as provided in this part or otherwise, must be filed electronically in accordance with the instructions set forth on the OHA website, found at
The OHA maintains an electronic public reference room at
(a) A list of all persons who have filed a petition and a digest of each petition;
(b) Each Decision and Order, with confidential information deleted, issued in response to a petition; and
(c) Any other information in the possession of the OHA which is required by statute to be made available for public inspection and copying, and any other information that the OHA determines should be made available to the public.
(a)
(b)
(c)
(1) A full and complete statement of all relief requested from the OHA;
(2) A citation to the statute, regulation, delegation, or other authority pursuant to which the OHA has jurisdiction to consider the petition;
(3) A full and complete statement of all relevant facts pertaining to the action that is the subject of the petition and to the OHA relief sought;
(4) A statement of the factual and legal justification for the relief requested in the petition;
(5) A copy of all documents, including, but not limited to, contracts, financial records, communications, plans, analyses, and diagrams related to the petitioner's eligibility for the relief requested in the petition; and,
(6) A motion for stay, if a stay is sought by the petitioner. The OHA may grant a motion for stay filed after the petition only upon a showing of good cause.
(d)
(e)
(a) The petitioner must serve a copy of the petition and any subsequent amendments or other documents relating to the petition, or a copy from which confidential information has been deleted in accordance with § 1003.7(f), to each person who is reasonably ascertainable by the petitioner as a person who would be aggrieved by the OHA relief sought. The copy of the petition must be accompanied by a statement that the person may submit comments regarding the petition to the OHA within 10 days. The OHA may, in its discretion, extend the comment period. The petitioner must file a service certification with the OHA, in accordance with § 1003.11(d), stating that the requirements of this paragraph have been complied with and must include the names, addresses, and verified email addresses of each person to whom a copy of the petition was sent. The OHA may require the petitioner to provide additional or alternative notice, may identify additional persons on whom an applicant must serve notice, or may determine that notice should be published in the
(b) Notwithstanding the provisions of paragraph (a) of this section, if the petitioner determines that compliance with paragraph (a) of this section would be impracticable, the petitioner must:
(1) Comply with the requirements of paragraph (a) of this section with regard to those persons whom it is reasonable and practicable to notify; and
(2) Include with the certification a description of the persons or class or classes of persons to whom notice was not sent, as well as a brief explanation of why notice to each person or class of person was impracticable.
(c) Any person submitting written comments to the OHA regarding a petition filed under this part must serve a copy of the comments, or a copy from which confidential information has been deleted in accordance with § 1003.7(f), to the petitioner. The person must certify to the OHA that he has complied with the requirements of this paragraph. The OHA may notify other persons participating in the proceeding of such comments and provide an opportunity for such persons to respond.
The DOE encourages the use of Alternative Dispute Resolution (ADR) to resolve disputes and controversies at any stage of the proceedings. Accordingly, parties appearing before the OHA are encouraged to use ADR when practical. The DOE Alternative Dispute Resolution Office, which employs multiple neutrals trained in mediation and other ADR services, provides ADR services for disputes involving the DOE and its affiliated organizations (
(a) The OHA will acknowledge receipt of all petitions filed pursuant to this part.
(b) The OHA may request information of a petitioner, including, but not limited to, financial documents, responses to interrogatories, copies of communications, and such other information the OHA determines may inform its evaluation of the petition.
(1) The OHA will provide a petitioner with a period of time within which to provide any information requested by the OHA pursuant to this paragraph and instructions on how to deliver the information to the OHA.
(2) The OHA may extend the period of time for a petitioner to provide information requested by the OHA upon a showing of good cause by the petitioner. Such extensions will generally be for a period of no more than 30 days, and in no case will the OHA grant an extension that would result in the undue delay of its evaluation of a petition.
(c) In evaluating a petition, the OHA may consider relevant information from any source, including information received from a third party, provided that the petitioner is afforded an opportunity to respond to all third-party submissions.
(d) The OHA will complete its evaluation of a petition within 180 days of receipt of the petition. However, the Director may extend the period for the OHA's review for good cause, the reasoning for which must be set forth in the order extending the review period.
(e) In its evaluations, the OHA will use as a guide, but will not be bound by, the Federal Rules of Civil Procedure and Federal Rules of Evidence.
(f) The Director has all of the judicial powers necessary to conduct the proceeding, including, but not limited to, grants or denials of motions and entry of interlocutory orders.
(g) The OHA may conduct a hearing with regard to the petition if, in its discretion, it considers that such hearing will materially advance the proceeding. In deciding whether to conduct a hearing, the OHA may consider various factors, including, but not limited to, the number of persons potentially aggrieved by a petition, the extent to which witness testimony will assist the OHA in developing a complete factual record, and the estimated costs of conducting a hearing at a venue reasonably convenient to all parties.
(a) In accordance with the provisions of this section and as otherwise authorized by law, the Director may sign, issue, and serve subpoenas; administer oaths and affirmations; take sworn testimony; compel attendance of and sequester witnesses; control dissemination of any record of testimony taken pursuant to this section; and subpoena and reproduce books, papers, correspondence, memoranda, contracts, agreements, or other relevant records or tangible evidence including, but not limited to, information retained in computerized or
(b) The OHA may issue an information request requiring any person subject to the jurisdiction of the OHA to file a report providing information relating to the OHA proceeding, including, but not limited to, written answers to specific questions. The information request may be in addition to any other reports required.
(c) The Director, for good cause shown, may extend the time prescribed for compliance with the subpoena or information request and determine the terms of satisfactory compliance.
(d) Prior to the time specified for compliance, but within 10 days after the date of service of the subpoena or information request, the person upon whom the document was served may file a request for review of the subpoena or information request with the Director. The Director then will provide notice of receipt to the person requesting review, may extend the time prescribed for compliance with the subpoena or information request, and may determine the terms of satisfactory compliance.
(e) If the subpoena or information request is not modified or rescinded within 10 days of the date of the Director's notice of receipt:
(1) The subpoena or information request will be effective as issued; and
(2) The person upon whom the document was served must comply with the subpoena or information request within 20 days of the date of the Director's notice of receipt, unless otherwise notified in writing by the Director.
(f) A subpoena or information request must be served upon a person named in the document.
(g) If any person upon whom a subpoena or information request is served pursuant to this section refuses or fails to comply with any provision of the subpoena or information request, a proceeding may be commenced in the appropriate United States District Court to enforce the subpoena or information request.
(h) Documents produced in response to a subpoena must be accompanied by the sworn certification, under penalty of perjury, of the person to whom the subpoena was directed or his authorized agent that:
(1) A diligent search has been made for each document responsive to the subpoena; and
(2) To the best of his knowledge, information, and belief each document responsive to the subpoena is being produced.
(i) Any information furnished in response to an information request must be accompanied by the sworn certification, under penalty of perjury, of the person to whom it was directed or his authorized agent who actually provides the information that:
(1) A diligent effort has been made to provide all information required by the information request; and
(2) All information furnished is true, complete, and correct.
(j) If any document responsive to a subpoena is not produced or any information required by an information request is not furnished, the certification must include a statement setting forth every reason for failing to comply with the subpoena or information request. If a person to whom a subpoena or information request is directed withholds any document or information because of a claim of attorney-client or other privilege, the person submitting the certification required by paragraph (h) or (i) of this section must also submit a written list of the documents or the information withheld indicating a description of each document or piece of information, the date of the document, each person shown on the document as having received a copy of the document, each person shown on the document as having prepared or been sent the document, the privilege relied upon as the basis for withholding the document or information, and an identification of the person whose privilege is being asserted.
(k) If testimony is taken pursuant to a subpoena, the Director will determine whether the testimony will be recorded and the means by which the testimony is recorded.
(l) A witness whose testimony is recorded may procure a copy of his testimony by making a written request for a copy and paying the appropriate fees.
(m) The Director may sequester any person subpoenaed to furnish documents or give testimony. Unless permitted by the Director, neither a witness nor his attorney is permitted to be present during the examination of any other witnesses.
(n) The Director may require testimony to be given under oath, regardless of the form of the testimony. The oath or affirmation will direct the witness's attention to 18 U.S.C. 1001 and 18 U.S.C. 1621.
(o) The Director may require submissions to the OHA to be accompanied by an oath or affirmation attesting to the truth and accuracy of the submission. The oath or affirmation will direct the submitter's attention to 18 U.S.C. 1001 and 18 U.S.C. 1621.
(p) A witness whose testimony is taken may be accompanied, represented and advised by his attorney as follows:
(1) Upon the initiative of the attorney or witness, the attorney may advise his client, in confidence, with respect to the question asked his client, and if the witness refuses to answer any question, the witness or his attorney is required to briefly state the legal grounds for such refusal; and
(2) If the witness claims a privilege to refuse to answer a question on the grounds of self-incrimination, the witness must assert the privilege personally.
(q) The Director will take all necessary steps to regulate the course of testimony and to avoid delay and prevent or restrain contemptuous or obstructionist conduct or language. The OHA may take steps as the circumstances warrant in regard to any instances where any person or attorney refuses to comply with directions or provisions of this section.
The Director may issue a Decision and Order dismissing a petition at any time during the course of a proceeding. The Decision and Order shall state whether the dismissal is with prejudice or without prejudice. A Decision and order Dismissing a petition may be the subject of a motion for reconsideration in accordance with § 1003.19 of this part.
(a)
(1) The OHA lacks jurisdiction to consider the petition;
(2) The petitioner has already received a Decision and Order from the Director in response to a previously filed petition that addresses the same issue;
(3) The petitioner provides a false statement under oath or files a false instrument with the OHA, as determined by the OHA;
(4) The petitioner refuses to comply with an order issued by the OHA;
(5) The petition is untimely;
(6) The issues raised in the petition are moot;
(7) The petitioner repeatedly fails to comply with procedural requirements; or,
(8) The same or a substantially similar petition was previously dismissed by
(b)
(1) The petitioner fails to include any of the required elements of a petition set forth in § 1003.11 of this part;
(2) The petitioner fails to provide notice as required by § 1003.12 of this part;
(3) The petitioner fails to timely provide documents or information at the request of the OHA pursuant to § 1003.14 or § 1003.15 of this part;
(4) The petition fails to state a claim upon which the OHA can grant relief; or
(5) The OHA determines that there is insufficient information upon which to base a decision.
(a) The OHA will grant a petition that seeks an adjustment from a DOE rule, regulation or order under the authority of 42 U.S.C. 7194 only if it determines that doing so will alleviate or prevent serious hardship, gross inequity or unfair distribution of burdens.
(b) Except as provided by program, statute, rule, regulation, or DOE delegation of authority, the OHA will grant any other petition filed under this part upon a showing that the DOE acted arbitrarily, capriciously, or in violation of a law, rule, regulation, or delegation with respect to the final disposition of DOE that is the subject of the petition.
(c) Petitions shall be decided in a manner that is, to the extent possible, consistent with the disposition of previous petitions of the same kind.
(a) Upon consideration of the petition and other relevant information received or obtained during the proceeding, the OHA will issue a Decision and Order granting or denying the petition and ordering relief as appropriate. The OHA will serve the Decision and Order on the parties to the proceeding and make it available to the public.
(b) The Decision and Order will set forth its legal basis and the relevant facts, state whether it is a final agency action of the DOE, and state what further review, if any, is available.
(c) There is no administrative appeal of a Decision and Order, except as provided by federal statute.
A participant in the proceeding may submit to the OHA a motion for reconsideration of a Decision and Order. The motion for reconsideration must be filed by the 20th day after the OHA makes the Decision and Order available to the public. The motion must include a statement of the grounds on which the movant believes reconsideration is warranted. Such grounds may include, but are not limited to, procedural, legal, or factual errors in the Decision and Order. A motion for reconsideration may be granted if the Director determines the Decision and Order contains an error that materially impacted the outcome of the proceeding.
Office of the Comptroller of the Currency, Treasury (OCC), Board of Governors of the Federal Reserve System (Board); and Bureau of Consumer Financial Protection (Bureau).
Final rules, official interpretations and commentary.
The OCC, the Board, and the Bureau are finalizing amendments to the official interpretations for their regulations that implement section 129H of the Truth in Lending Act (TILA). Section 129H of TILA establishes special appraisal requirements for “higher-risk mortgages,” termed “higher-priced mortgage loans” or “HPMLs” in the agencies' regulations.
The OCC, the Board, the Bureau, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA) (collectively, the Agencies) issued joint final rules implementing these requirements, effective January 18, 2014. The Agencies' rules exempted, among other loan types, transactions of $25,000 or less, and required that this loan amount be adjusted annually based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual percentage increase in the CPI-W, the OCC, the Board, and the Bureau will not adjust this exemption threshold from the prior year. However, in years following a year in which the exemption threshold was not adjusted, the threshold is calculated by applying the annual percentage increase in the CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been taken into account. Based on the CPI-W in effect as of June 1, 2019, the exemption threshold will increase from $26,700 to $27,200, effective January 1, 2020.
This final rule is effective January 1, 2020.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) amended the Truth in Lending Act (TILA) to add special appraisal requirements for “higher-risk
The OCC's, the Board's, and the Bureau's versions of the January 2013 Final Rule and December 2013 Supplemental Final Rule and corresponding official interpretations are substantively identical. The FDIC, NCUA, and FHFA adopted the Bureau's version of the regulations under the January 2013 Final Rule and December 2013 Supplemental Final Rule.
The OCC's, Board's, and Bureau's regulations,
On November 30, 2016, the OCC, the Board, and the Bureau published a final rule in the
Effective January 1, 2020, the exemption threshold amount is increased from $26,700 to $27,200. This increase is based on the CPI-W in effect on June 1, 2019, which was reported on May 10, 2019. The Bureau of Labor Statistics publishes consumer-based indices monthly, but does not report a CPI change on June 1; indices are reported in the middle of the prior month. The CPI-W is a subset of the CPI-U index (based on all urban consumers) and represents approximately 29 percent of the U.S. population. The CPI-W reported on May 10, 2019, reflects a 1.9 percent increase in the CPI-W from April 2018 to April 2019. Accordingly, the 1.9 percent increase in the CPI-W from April 2018 to April 2019 results in an exemption threshold amount of $27,200. The OCC, the Board, and the Bureau are revising the commentaries to their respective regulations to add new comments as follows:
• Comment 203(b)(2)-3.vii to 12 CFR part 34, appendix C to subpart G (OCC);
• Comment 43(b)(2)-3.vii to Supplement I of 12 CFR part 226 (Board); and
• Comment 35(c)(2)(ii)-3.vii to Supplement I of 12 CFR part 1026 (Bureau).
Under the Administrative Procedure Act, notice and opportunity for public comment are not required if the agency finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest.
The Regulatory Flexibility Act (RFA) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.
In accordance with the Paperwork Reduction Act of 1995,
The OCC analyzes proposed rules for the factors listed in Section 202 of the Unfunded Mandates Reform Act of 1995, before promulgating a final rule for which a general notice of proposed rulemaking was published.
Pursuant to the Congressional Review Act (5 U.S.C. 801
Appraisal, Appraiser, Banks, Banking, Consumer protection, Credit, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending.
Advertising, Appraisal, Appraiser, Consumer protection, Credit, Federal Reserve System, Reporting and recordkeeping requirements, Truth in lending.
Advertising, Appraisal, Appraiser, Banking, Banks, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending.
For the reasons set forth in the preamble, the OCC amends 12 CFR part 34 as set forth below:
12 U.S.C. 1
1.
2.
i.
ii.
3.
i. From January 18, 2014, through December 31, 2014, the threshold amount is $25,000.
ii. From January 1, 2015, through December 31, 2015, the threshold amount is $25,500.
iii. From January 1, 2016, through December 31, 2016, the threshold amount is $25,500.
iv. From January 1, 2017, through December 31, 2017, the threshold amount is $25,500.
v. From January 1, 2018, through December 31, 2018, the threshold amount is $26,000.
vi. From January 1, 2019, through December 31, 2019, the threshold amount is $26,700.
vii. From January 1, 2020, through December 31, 2020, the threshold amount is $27,200.
4.
5.
For the reasons set forth in the preamble, the Board amends Regulation Z, 12 CFR part 226, as set forth below:
12 U.S.C. 3806; 15 U.S.C. 1604, 1637(c)(5), 1639(l), and 1639h; Pub. L. 111-24, section 2, 123 Stat. 1734; Pub. L. 111-203, 124 Stat. 1376.
1.
2.
i.
ii.
3.
i. From January 18, 2014, through December 31, 2014, the threshold amount is $25,000.
ii. From January 1, 2015, through December 31, 2015, the threshold amount is $25,500.
iii. From January 1, 2016, through December 31, 2016, the threshold amount is $25,500.
iv. From January 1, 2017, through December 31, 2017, the threshold amount is $25,500.
v. From January 1, 2018, through December 31, 2018, the threshold amount is $26,000.
vi. From January 1, 2019, through December 31, 2019, the threshold amount is $26,700.
vii. From January 1, 2020, through December 31, 2020, the threshold amount is $27,200.
4.
5.
For the reasons set forth in the preamble, the Bureau amends Regulation Z, 12 CFR part 1026, as set forth below:
12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 5511, 5512, 5532, 5581; 15 U.S.C. 1601
1.
2.
i.
ii.
3.
i. From January 18, 2014, through December 31, 2014, the threshold amount is $25,000.
ii. From January 1, 2015, through December 31, 2015, the threshold amount is $25,500.
iii. From January 1, 2016, through December 31, 2016, the threshold amount is $25,500.
iv. From January 1, 2017, through December 31, 2017, the threshold amount is $25,500.
v. From January 1, 2018, through December 31, 2018, the threshold amount is $26,000.
vi. From January 1, 2019, through December 31, 2019, the threshold amount is $26,700.
vii. From January 1, 2020, through December 31, 2020, the threshold amount is $27,200.
4.
5.
Board of Governors of the Federal Reserve System (Board); and Bureau of Consumer Financial Protection (Bureau).
Final rules, official interpretations and commentary.
The Board and the Bureau are finalizing amendments to the official interpretations and commentary for the agencies' regulations that implement the Consumer Leasing Act (CLA). The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended the CLA by requiring that the dollar threshold for exempt consumer leases be adjusted annually by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual percentage increase in the CPI-W, the Board and the Bureau will not adjust this exemption threshold from the prior year. However, in years following a year in which the exemption threshold was not adjusted, the threshold is calculated by applying the annual percentage change in the CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been taken into account. Based on the annual percentage increase in the CPI-W as of June 1, 2019, the exemption threshold will increase from $57,200 to $58,300 effective January 1, 2020. Because the Dodd-Frank Act also requires similar adjustments in the Truth in Lending Act's threshold for exempt consumer credit transactions, the Board and the Bureau are making similar amendments to each of their respective regulations implementing the Truth in Lending Act elsewhere in this issue of the
This final rule is effective January 1, 2020.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) increased the threshold in the Consumer Leasing Act (CLA) for exempt consumer leases, and the threshold in the Truth in Lending Act (TILA) for exempt consumer credit transactions,
Title X of the Dodd-Frank Act transferred rulemaking authority for a number of consumer financial protection laws from the Board to the Bureau, effective July 21, 2011. In connection with this transfer of rulemaking authority, the Bureau issued its own Regulation M implementing the CLA, 12 CFR part 1013, substantially duplicating the Board's Regulation M.
The Board's and the Bureau's regulations,
On November 30, 2016, the Board and the Bureau published a final rule in the
Effective January 1, 2020, the exemption threshold amount is increased from $57,200 to $58,300. This is based on the CPI-W in effect on June 1, 2019, which was reported on May 10, 2019. The Bureau of Labor Statistics publishes consumer-based indices monthly, but does not report a CPI change on June 1; indices are reported in the middle of the prior month. The CPI-W is a subset of the CPI-U index (based on all urban consumers) and represents approximately 29 percent of the U.S. population. The CPI-W reported on May 10, 2019, reflects a 1.9 percent increase in the CPI-W from April 2018 to April 2019. Accordingly, the 1.9 percent increase in the CPI-W from April 2018 to April 2019 results in an exemption threshold amount of $58,300. The Board and the Bureau are revising the commentaries to their respective regulations to add new comment 2(e)-11.xi to state that, from January 1, 2020 through December 31, 2020, the threshold amount is $58,300. These revisions are effective January 1, 2020.
Under the Administrative Procedure Act, notice and opportunity for public comment are not required if the Board and the Bureau find that notice and public comment are impracticable, unnecessary, or contrary to the public interest.
The Regulatory Flexibility Act (RFA) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.
In accordance with the Paperwork Reduction Act of 1995,
Pursuant to the Congressional Review Act (5 U.S.C. 801
Advertising, Consumer leasing, Consumer protection, Federal Reserve System, Reporting and recordkeeping requirements.
Advertising, Consumer leasing, Reporting and recordkeeping requirements, Truth in lending.
For the reasons set forth in the preamble, the Board amends Regulation M, 12 CFR part 213, as set forth below:
15 U.S.C. 1604 and 1667f; Pub. L. 111-203 section 1100E, 124 Stat. 1376.
1.
2.
i. A three-month lease extended on a month-to-month basis and terminated after one year is not subject to the regulation.
ii. A month-to-month lease with a penalty, such as the forfeiture of a security deposit for terminating before one year, is subject to the regulation.
3.
i. Residual value amounts or purchase-option prices;
ii. Amounts collected by the lessor but paid to a third party, such as taxes, licenses, and registration fees.
4.
i. Agrees to pay as compensation for use a sum substantially equivalent to, or in excess of, the total value of the property and services involved; and
ii. Will become (or has the option to become), for no additional consideration or for nominal consideration, the owner of the property upon compliance with the agreement.
5.
6.
7.
i. Home entertainment systems requiring the consumer to lease equipment that enables a television to receive the transmitted programming.
ii. Security alarm systems requiring the installation of leased equipment intended to monitor unlawful entries into a home and in some cases to provide fire protection.
iii. Propane gas service where the consumer must lease a propane tank to receive the service.
8.
9.
10.
i.
ii.
11.
i. Prior to July 21, 2011, the threshold amount is $25,000.
ii. From July 21, 2011 through December 31, 2011, the threshold amount is $50,000.
iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800.
iv. From January 1, 2013 through December 31, 2013, the threshold amount is $53,000.
v. From January 1, 2014 through December 31, 2014, the threshold amount is $53,500.
vi. From January 1, 2015 through December 31, 2015, the threshold amount is $54,600.
vii. From January 1, 2016 through December 31, 2016, the threshold amount is $54,600.
viii. From January 1, 2017 through December 31, 2017, the threshold amount is $54,600.
ix. From January 1, 2018 through December 31, 2018, the threshold amount is $55,800.
x. From January 1, 2019 through December 31, 2019, the threshold amount is $57,200.
xi. From January 1, 2020 through December 31, 2020, the threshold amount is $58,300.
For the reasons set forth in the preamble, the Bureau amends Regulation M, 12 CFR part 1013, as set forth below:
15 U.S.C. 1604 and 1667f; Pub. L. 111-203 section 1100E, 124 Stat. 1376.
1.
2.
i. A three-month lease extended on a month-to-month basis and terminated after one year is not subject to the regulation.
ii. A month-to-month lease with a penalty, such as the forfeiture of a security deposit for terminating before one year, is subject to the regulation.
3.
i. Residual value amounts or purchase-option prices;
ii. Amounts collected by the lessor but paid to a third party, such as taxes, licenses, and registration fees.
4.
i. Agrees to pay as compensation for use a sum substantially equivalent to, or in excess of, the total value of the property and services involved; and
ii. Will become (or has the option to become), for no additional consideration or for nominal consideration, the owner of the property upon compliance with the agreement.
5.
6.
7.
i. Home entertainment systems requiring the consumer to lease equipment that enables a television to receive the transmitted programming.
ii. Security alarm systems requiring the installation of leased equipment intended to monitor unlawful entries into a home and in some cases to provide fire protection.
iii. Propane gas service where the consumer must lease a propane tank to receive the service.
8.
9.
10.
i.
ii.
11.
i. Prior to July 21, 2011, the threshold amount is $25,000.
ii. From July 21, 2011 through December 31, 2011, the threshold amount is $50,000.
iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800.
iv. From January 1, 2013 through December 31, 2013, the threshold amount is $53,000.
v. From January 1, 2014 through December 31, 2014, the threshold amount is $53,500.
vi. From January 1, 2015 through December 31, 2015, the threshold amount is $54,600.
vii. From January 1, 2016 through December 31, 2016, the threshold amount is $54,600.
viii. From January 1, 2017 through December 31, 2017, the threshold amount is $54,600.
ix. From January 1, 2018 through December 31, 2018, the threshold amount is $55,800.
x. From January 1, 2019 through December 31, 2019, the threshold amount is $57,200.
xi. From January 1, 2020 through December 31, 2020, the threshold amount is $58,300.
Board of Governors of the Federal Reserve System (Board); and Bureau of Consumer Financial Protection (Bureau).
Final rules, official interpretations and commentary.
The Board and the Bureau are publishing final rules amending the official interpretations and commentary for the agencies' regulations that implement the Truth in Lending Act (TILA). The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended TILA by requiring that the dollar threshold for exempt consumer credit transactions be adjusted annually by the annual percentage increase in the Consumer
This final rule is effective January 1, 2020.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) increased the threshold in the Truth in Lending Act (TILA) for exempt consumer credit transactions,
Title X of the Dodd-Frank Act transferred rulemaking authority for a number of consumer financial protection laws from the Board to the Bureau, effective July 21, 2011. In connection with this transfer of rulemaking authority, the Bureau issued its own Regulation Z implementing TILA, 12 CFR part 1026, substantially duplicating the Board's Regulation Z.
The Board's and the Bureau's regulations,
On November 30, 2016, the Board and the Bureau published a final rule in the
Effective January 1, 2020, the exemption threshold amount is increased from $57,200 to $58,300. This is based on the CPI-W in effect on June 1, 2019, which was reported on May 10, 2019. The Bureau of Labor Statistics publishes consumer-based indices monthly, but does not report a CPI
Additionally, the Board and the Bureau have made certain nonsubstantive technical amendments to their respective commentaries in order to bring certain internal cross-references into alignment with the Office of the Federal Register's Code of Federal Regulations style guidelines. These technical amendments have been made to Supplement I to 12 CFR part 226, subpart A, Section 226.3—Exempt Transactions, comments 3(b)-4.iv.B(2), 3(b)-4.iv.B(3),and 3(b)-8.ii; and Supplement I to 12 CFR part 1026, subpart A, Section 1026.3—Exempt Transactions, comments 3(b)-4.iv.B.
Under the Administrative Procedure Act, notice and opportunity for public comment are not required if the Board and the Bureau find that notice and public comment are impracticable, unnecessary, or contrary to the public interest.
The Regulatory Flexibility Act (RFA) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.
In accordance with the Paperwork Reduction Act of 1995,
Pursuant to the Congressional Review Act (5 U.S.C. 801
Advertising, Consumer protection, Federal Reserve System, Reporting and recordkeeping requirements, Truth in lending.
Advertising, Appraisal, Appraiser, Banking, Banks, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending.
For the reasons set forth in the preamble, the Board amends Regulation Z, 12 CFR part 226, as set forth below:
12 U.S.C. 3806; 15 U.S.C. 1604, 1637(c)(5), 1639(l) and 1639h; Pub. L. 111-24, section 2, 123 Stat. 1734; Pub. L. 111-203, 124 Stat. 1376.
1.
2.
i.
ii.
3.
i. Prior to July 21, 2011, the threshold amount is $25,000.
ii. From July 21, 2011 through December 31, 2011, the threshold amount is $50,000.
iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800.
iv. From January 1, 2013 through December 31, 2013, the threshold amount is $53,000.
v. From January 1, 2014 through December 31, 2014, the threshold amount is $53,500.
vi. From January 1, 2015 through December 31, 2015, the threshold amount is $54,600.
vii. From January 1, 2016 through December 31, 2016, the threshold amount is $54,600.
viii. From January 1, 2017 through December 31, 2017, the threshold amount is $54,600.
ix. From January 1, 2018 through December 31, 2018, the threshold amount is $55,800.
x. From January 1, 2019 through December 31, 2019, the threshold amount is $57,200.
xi. From January 1, 2020 through December 31, 2020, the threshold amount is $58,300.
4.
i.
A. The creditor makes an initial extension of credit at or after account opening that exceeds the threshold amount in effect at the time the initial extension is made. If a creditor makes an initial extension of credit after account opening that does not exceed the threshold amount in effect at the time the extension is made, the creditor must have satisfied all of the applicable requirements of this part from the date the account was opened (or earlier, if applicable), including but not limited to the requirements of § 226.6 (account-opening disclosures), § 226.7 (periodic statements), § 226.52 (limitations on fees), and § 226.55 (limitations on increasing annual percentages rates, fees, and charges). For example:
(1) Assume that the threshold amount in effect on January 1 is $50,000. On February 1, an account is opened but the creditor does not make an initial extension of credit at that time. On July 1, the creditor makes an initial extension of credit of $60,000. In this circumstance, no requirements of this part apply to the account.
(2) Assume that the threshold amount in effect on January 1 is $50,000. On February 1, an account is opened but the creditor does not make an initial extension of credit at that time. On July 1, the creditor makes an initial extension of credit of $50,000 or less. In this circumstance, the account is not exempt and the creditor must have satisfied all of the applicable requirements of this part from the date the account was opened (or earlier, if applicable).
B. The creditor makes a firm written commitment at account opening to extend a total amount of credit in excess of the threshold amount in effect at the time the account is opened with no requirement of additional credit information for any advances on the account (except as permitted from time to time with respect to open-end accounts pursuant to § 226.2(a)(20)).
ii.
iii.
iv.
A.
(1) Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under § 226.3(b) based on the creditor's firm commitment to extend $55,000 in credit. If during year one the creditor reduces its firm commitment to $53,000, the account remains exempt under § 226.3(b). However, if during year one the creditor reduces its firm commitment to $40,000, the account is no longer exempt under § 226.3(b).
(2) Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under § 226.3(b) based on the creditor's firm commitment to extend $55,000 in credit. If the threshold amount is $56,000 on January 1 of year six as a result of increases in the CPI-W, the account remains exempt. However, if the creditor reduces its firm commitment to $54,000 on July 1 of year six, the account ceases to be exempt under § 226.3(b).
B.
(1) Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under § 226.3(b) based on the creditor's firm commitment to extend $55,000 in credit. The account is not used for an extension of credit during year one. On January 1 of year two, the threshold amount is increased to $51,000 pursuant to § 226.3(b)(1)(ii) as a result of an increase in the CPI-W. On July 1 of year two, the consumer uses the account for an initial extension of $52,000. As a result of this extension of credit, the account remains exempt under § 226.3(b) even if, after July 1 of year two, the creditor reduces the firm commitment to $51,000 or less.
(2) Same facts as in paragraph 4.iv.B(1) of this section except that the consumer uses the account for an initial extension of $30,000 on July 1 of year two and for an extension of $22,000 on July 15 of year two. In these circumstances, the account is not exempt under § 226.3(b) based on the $30,000 initial extension of credit because that extension did not exceed the applicable threshold amount ($51,000), although the account remains exempt based on the firm commitment to extend $55,000 in credit.
(3) Same facts as in paragraph 4.iv.B(1) of this section except that, on April 1 of year two, the creditor reduces the firm commitment to $50,000, which is below the $51,000 threshold then in effect. Because the account ceases to qualify for a § 226.3(b) exemption on April 1 of year two, the account does not qualify for a § 226.3(b) exemption based on a $52,000 initial extension of credit on July 1 of year two.
5.
i.
A. The creditor makes an extension of credit at consummation that exceeds the threshold amount in effect at the time of consummation. In these circumstances, the loan remains exempt under § 226.3(b) even if the amount owed is subsequently reduced below the threshold amount (such as through repayment of the loan).
B. The creditor makes a commitment at consummation to extend a total amount of credit in excess of the threshold amount in effect at the time of consummation. In these circumstances, the loan remains exempt under § 226.3(b) even if the total amount of credit extended does not exceed the threshold amount.
ii.
6.
i.
ii.
7.
8.
i. Assume that, on July 20, 2011, the account is exempt under § 226.3(b) based on the creditor's firm commitment to extend $30,000 in credit. On November 1, 2011, the creditor increases the firm commitment on the account to $55,000. In these circumstances, the account remains exempt under § 226.3(b)(1) regardless of subsequent increases in the threshold amount as a result of increases in the CPI-W.
ii. Same facts as paragraph 8.i. of this section except, on November 1, 2011, the creditor increases the firm commitment on the account to $40,000. In these circumstances, the account ceases to be exempt under § 226.3(b)(2) after December 31, 2011, and the creditor must begin to comply with the applicable requirements of this part.
For the reasons set forth in the preamble, the Bureau amends Regulation Z, 12 CFR part 1026, as set forth below:
12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 5511, 5512, 5532, 5581; 15 U.S.C. 1601
1.
2.
i.
ii.
3.
i. Prior to July 21, 2011, the threshold amount is $25,000.
ii. From July 21, 2011 through December 31, 2011, the threshold amount is $50,000.
iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800.
iv. From January 1, 2013 through December 31, 2013, the threshold amount is $53,000.
v. From January 1, 2014 through December 31, 2014, the threshold amount is $53,500.
vi. From January 1, 2015 through December 31, 2015, the threshold amount is $54,600.
vii. From January 1, 2016 through December 31, 2016, the threshold amount is $54,600.
viii. From January 1, 2017 through December 31, 2017, the threshold amount is $54,600.
ix. From January 1, 2018 through December 31, 2018, the threshold amount is $55,800.
x. From January 1, 2019 through December 31, 2019, the threshold amount is $57,200.
xi. From January 1, 2020 through December 31, 2020, the threshold amount is $58,300.
4.
i.
A. The creditor makes an initial extension of credit at or after account opening that exceeds the threshold amount in effect at the time the initial extension is made. If a creditor makes an initial extension of credit after account opening that does not exceed the threshold amount in effect at the time the extension is made, the creditor must have satisfied all of the applicable requirements of this part from the date the account was opened (or earlier, if applicable), including but not limited to the requirements of § 1026.6 (account-opening disclosures), § 1026.7 (periodic statements), § 1026.52 (limitations on fees), and § 1026.55 (limitations on increasing annual percentage rates, fees, and charges). For example:
1. Assume that the threshold amount in effect on January 1 is $50,000. On February 1, an account is opened but the creditor does not make an initial extension of credit at that time. On July 1, the creditor makes an initial extension of credit of $60,000. In this circumstance, no requirements of this part apply to the account.
2. Assume that the threshold amount in effect on January 1 is $50,000. On February 1, an account is opened but the creditor does not make an initial extension of credit at that time. On July 1, the creditor makes an initial extension of credit of $50,000 or less. In this circumstance, the account is not exempt and the creditor must have satisfied all of the applicable requirements of this part from the date the account was opened (or earlier, if applicable).
B. The creditor makes a firm written commitment at account opening to extend a total amount of credit in excess of the threshold amount in effect at the time the account is opened with no requirement of additional credit information for any advances on the account (except as permitted from time to time with respect to open-end accounts pursuant to § 1026.2(a)(20)).
ii.
iii.
iv.
A.
1. Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under § 1026.3(b) based on the creditor's firm commitment to extend $55,000 in credit. If during year one the creditor reduces its firm commitment to $53,000, the account remains exempt under § 1026.3(b). However, if during year one the creditor reduces its firm commitment to $40,000, the account is no longer exempt under § 1026.3(b).
2. Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under § 1026.3(b) based on the creditor's firm commitment to extend $55,000 in credit. If the threshold amount is $56,000 on January 1 of year six as a result of increases in the CPI-W, the account remains exempt. However, if the creditor reduces its firm commitment to $54,000 on July 1 of year six, the account ceases to be exempt under § 1026.3(b).
B.
1. Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under § 1026.3(b) based on the creditor's firm commitment to extend $55,000 in credit. The account is not used for an extension of credit during year one. On January 1 of year two, the threshold amount is increased to $51,000 pursuant to § 1026.3(b)(1)(ii) as a result of an increase in the CPI-W. On July 1 of year two, the consumer uses the account for an initial extension of $52,000. As a result of this extension of credit, the account remains exempt under § 1026.3(b) even if, after July 1 of year two, the creditor reduces the firm commitment to $51,000 or less.
2. Same facts as in paragraph 4.iv.B.1 of this section except that the consumer uses the account for an initial extension of $30,000 on July 1 of year two and for an extension of $22,000 on July 15 of year two. In these circumstances, the account is not exempt under § 1026.3(b) based on the $30,000 initial extension of credit because that extension did not exceed the applicable threshold amount ($51,000), although the account remains exempt based on the firm commitment to extend $55,000 in credit.
3. Same facts as in paragraph 4.iv.B.1 of this section except that, on April 1 of year
5.
i.
A. The creditor makes an extension of credit at consummation that exceeds the threshold amount in effect at the time of consummation. In these circumstances, the loan remains exempt under § 1026.3(b) even if the amount owed is subsequently reduced below the threshold amount (such as through repayment of the loan).
B. The creditor makes a commitment at consummation to extend a total amount of credit in excess of the threshold amount in effect at the time of consummation. In these circumstances, the loan remains exempt under § 1026.3(b) even if the total amount of credit extended does not exceed the threshold amount.
ii.
6.
i.
ii.
7.
8.
i. Assume that, on July 20, 2011, the account is exempt under § 1026.3(b) based on the creditor's firm commitment to extend $30,000 in credit. On November 1, 2011, the creditor increases the firm commitment on the account to $55,000. In these circumstances, the account remains exempt under § 1026.3(b)(1) regardless of subsequent increases in the threshold amount as a result of increases in the CPI-W.
ii. Same facts as paragraph 8.i of this section except, on November 1, 2011, the creditor increases the firm commitment on the account to $40,000. In these circumstances, the account ceases to be exempt under § 1026.3(b)(2) after December 31, 2011, and the creditor must begin to comply with the applicable requirements of this part.
Federal Trade Commission (“FTC” or “Commission”).
Final rule.
The Commission amends the Energy Labeling Rule (“Rule”) to make the Rule easier to use by reorganizing several sections, amending language to increase clarity, eliminating several obsolete provisions, and making minor corrections.
The amendments are effective on November 29, 2019.
Copies of this document are available on the Commission's website,
Hampton Newsome (202-326-2889), Attorney, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Room CC-9528, 600 Pennsylvania Avenue NW, Washington, DC 20580.
The Commission issued the Energy Labeling Rule (“Rule”) in 1979,
The Rule requires manufacturers to attach yellow EnergyGuide labels to
In March 2019, the Commission published a Notice of Proposed Rulemaking (“NPRM”) (84 FR 9261 (Mar. 14, 2019)) seeking comments on a series of proposed amendments intended to improve the Rule's organization and clarity. The Commission proposed such changes because various amendments over the years had caused some sections to become lengthy and difficult to navigate.
The NPRM sought comment on three general categories of proposed Rule changes. First, the proposed amendments divided current section 305.3 (Description of covered products), which lists the specific product types (
Second, the amendments proposed in the NPRM divided section 305.11 into several different sections to make it easier to identify the labeling requirements applicable to specific products. Current section 305.11 addresses the label format and content for several appliances through a long list of instructions and exceptions. The proposed new provisions included a single section for general layout and formatting, plus six additional sections covering label content for refrigerators, clothes washers, dishwashers, water heaters, room air conditioners, and pool heaters.
Third, the proposed amendments removed obsolete references to products produced decades ago (
The Commission sought comment on these proposed amendments and any suggestions to clarify, correct, improve, or otherwise make the Rule easier to use. The NPRM stated that the Commission was not seeking comments on substantive changes to the Rule, such as modifications to label content, disclosure requirements, or product coverage.
In response to the NPRM, the Commission received four comments.
First, AHAM recommended a small change to refrigerator-freezer model descriptions in the Appendix A tables (“Without Through-the-Door Ice”) to match the sample refrigerator label (“No through-the-door ice”).
AHAM also requested an amendment to allow manufacturers to attach hangtags on clothes washer exteriors. The Commission declines to make this change as part of this proceeding. The current Rule does not allow hangtags on the outside of products due to concerns raised in an earlier proceeding about the durability of such tags, and AHAM has not indicated why such concerns are no longer valid.
Finally, AHRI, which expressed support for Commissioner Wilson's dissenting statement on the NPRM (84 FR at 9272-73), recommended a broader, substantive rule review aimed at reducing regulatory burden. Specifically, AHRI urged elimination of physical labels for central air conditioners, heat pumps, and furnaces. According to AHRI, the large majority of those products are not purchased off the shelves at retail stores, and consumers generally do not view them before installation. The Commission is not considering such changes at this time because they fall outside of the scope of this rulemaking, which, as explained in the NPRM, is limited to improving the Rule's organization and making minor modifications and corrections. In addition, the Commission considered similar concerns in the past and concluded that the labels on such equipment help consumers in both their use of existing equipment and their purchasing decisions for replacement products.
The current Rule contains recordkeeping, disclosure, testing, and reporting requirements that constitute information collection requirements as defined by 5 CFR 1320.3(c), the definitional provision within the Office of Management and Budget (OMB) regulations that implement the Paperwork Reduction Act. OMB has approved the Rule's existing information collection requirements through November 30, 2019 (OMB Control No. 3084-0069). The amendments do not change the substance or frequency of the recordkeeping, disclosure, or reporting requirements and therefore do not require further OMB clearance.
The provisions of the Regulatory Flexibility Act relating to a Regulatory Flexibility Act analysis (5 U.S.C. 603-604) are not applicable to this proceeding because the proposed amendments do not impose any new or different obligations on entities regulated by the Energy Labeling Rule. As explained elsewhere in this document, the amendments do not change the substance or frequency of the recordkeeping, disclosure, or reporting requirements. Thus, the amendments will not have a “significant economic impact on a substantial number of small entities.” 5 U.S.C. 605. The Commission has, therefore, concluded that a regulatory flexibility analysis is not necessary, and certifies, under 5 U.S.C. 605(b), that the amendments will not have a significant economic impact on a substantial number of small entities. This rulemaking document constitutes notice of the above certification and statement to the Small Business Administration required under 5 U.S.C. 605(b).
Advertising, Energy conservation, Household appliances, Labeling, Reporting and recordkeeping requirements.
For the reasons set out above, the Commission amends 16 CFR part 305 as follows:
42 U.S.C. 6294.
(n)
(q)
(i)
(ii)
(iii)
(2)
(aa)
(a)
(2)
(b)
(c)
(1)
(2) [Reserved]
(d)
(1) Storage type units which heat and store water at a thermostatically controlled temperature, including gas storage water heaters with an input of 75,000 Btu per hour or less, oil storage water heaters with an input of 105,000 Btu per hour or less, and electric storage water heaters with an input of 12 kilowatts or less;
(2) Instantaneous type units that heat water but contain no more than one gallon of water per 4,000 Btu per hour of input, including gas instantaneous water heaters with an input of 200,000 Btu per hour or less, oil instantaneous water heaters with an input of 210,000 Btu per hour or less, and electric instantaneous water heaters with an input of 12 kilowatts or less; and
(3) Heat pump type units, with a maximum current rating of 24 amperes at a voltage no greater than 250 volts, which are products designed to transfer thermal energy from one temperature level to a higher temperature level for the purpose of heating water, including all ancillary equipment such as fans, storage tanks, pumps, or controls necessary for the device to perform its function.
(e)
(f)
(1)
(2)
(3)
(g)
(h)
(i)
(a)
(i) Is designed to be the principal heating source for the living space of a residence;
(ii) Is not contained within the same cabinet with a central air conditioner
(iii) Is an electric central furnace, electric boiler, forced-air central furnace, gravity central furnace, or low pressure steam or hot water boiler; and
(iv) Has a heat input rate of less than 300,000 Btu per hour for electric boilers and low pressure steam or hot water boilers and less than 225,000 Btu per hour for forced-air central furnaces, gravity central furnaces, and electric central furnaces.
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(b)
(1)
(2)
(3)
(4)
(5)
(c)
(a)
(b)
(1) A low pressure mercury electric-discharge source in which a fluorescing coating transforms some of the ultra-violet energy generated by the mercury discharge into light, including only the following:
(i) Any straight-shaped lamp (commonly referred to as 4-foot medium bi-pin lamps) with medium bi-pin bases of nominal overall length of 48 inches and rated wattage of 28 or more;
(ii) Any U-shaped lamp (commonly referred to as 2-foot U-shaped lamps) with medium bi-pin bases of nominal overall length between 22 and 25 inches and rated wattage of 28 or more;
(iii) Any rapid start lamp as defined at 42 U.S.C. 6291(30)(A)(iii); and
(iv) Any instant start lamp as defined at 42 U.S.C. 6291(30)(A)(iv); but
(2)
(3)
(i) Fluorescent lamps designed to promote plant growth;
(ii) Fluorescent lamps specifically designed for cold temperature installations;
(iii) Colored fluorescent lamps;
(iv) Impact-resistant fluorescent lamps;
(v) Reflectorized or aperture lamps;
(vi) Fluorescent lamps designed for use in reprographic equipment;
(vii) Lamps primarily designed to produce radiation in the ultra-violet region of the spectrum; and
(viii) Lamps with a color rendering index of 82 or greater.
(c)
(1) A lamp that is:
(i) A medium base compact fluorescent lamp;
(ii) A general service incandescent lamp;
(iii) A general service light-emitting diode (LED or OLED) lamp; or
(iv) Any other lamp that the Secretary of Energy determines is used to satisfy lighting applications traditionally served by general service incandescent lamps.
(2) Exclusions: The term
(i) Any lighting application or bulb shape described in paragraphs (e)(3)(ii)(A) through (T) of this section; and
(ii) Any general service fluorescent lamp.
(d)
(1) Any lamp that is:
(i) Specifically designed to be used for special purpose applications; and
(ii) Unlikely to be used in general purpose applications, such as the applications described in the definition of “General Service Incandescent Lamp” in paragraph (e)(3)(ii) of this section; or
(2) Any lamp not described in the definition of “General Service Incandescent Lamp” in this section and that is excluded by the Department of Energy, by rule, because the lamp is—
(i) Designed for special applications; and
(ii) Unlikely to be used in general purpose applications.
(e)
(1) A lamp in which light is produced by a filament heated to incandescence by an electric current, including only the following:
(i) Any lamp (commonly referred to as lower wattage nonreflector general service lamps, including any tungsten halogen lamp) that has a rated wattage between 30 and 199 watts, has an E26 medium screw base, has a rated voltage or voltage range that lies at least partially within 115 and 130 volts, and is not a reflector lamp;
(ii) Any lamp (commonly referred to as a reflector lamp) which is not colored or designed for rough or vibration service applications, that contains an inner reflective coating on the outer bulb to direct the light, an R, PAR, ER, BR, BPAR, or similar bulb shapes with E26 medium screw bases, a rated voltage or voltage range that lies at least partially within 115 and 130 volts, a diameter which exceeds 2.25 inches, and has a rated wattage that is 40 watts or higher;
(iii) Any general service incandescent lamp (commonly referred to as a high- or higher-wattage lamp) that has a rated wattage above 199 watts (above 205 watts for a high wattage reflector lamp); but
(2)
(3)
(i) In general, a standard incandescent, halogen, or reflector type lamp that—
(A) Is intended for general service applications;
(B) Has a medium screw base;
(C) Has a lumen range of not less than 310 lumens and not more than 2,600 lumens; and
(D) Is capable of being operated at a voltage range at least partially within 110 and 130 volts.
(ii) Exclusions. The term “general service incandescent lamp” does not include the following incandescent lamps:
(A) An appliance lamp as defined at 42 U.S.C. 6291(30);
(B) A black light lamp;
(C) A bug lamp;
(D) A colored lamp as defined at 42 U.S.C. 6291(30);
(E) An infrared lamp;
(F) A left hand thread lamp;
(G) A marine lamp;
(H) A marine signal service lamp;
(I) A mine service lamp;
(J) A plant light lamp;
(K) A rough service lamp as defined at 42 U.S.C. 6291(30);
(L) A shatter resistant lamp (including a shatter-proof lamp and a shatter-protected lamp);
(M) A sign service lamp;
(N) A silver bowl lamp;
(O) A showcase lamp;
(P) A traffic signal lamp;
(Q) A vibration service lamp as defined at 42 U.S.C. 6291(30);
(R) A G shape lamp as defined at 42 U.S.C. 6291(30)(D)(ii)(XX);
(S) A T shape lamp as defined at 42 U.S.C. 6291(30)(D)(ii)(XXI); or
(T) A B, BA, CA, F, G16-1/2, G-25, G-30, S, or M-14 lamp as defined at 42 U.S.C. 6291(30)(D)(ii)(XXII).
(4)
(5)
(f)
(1) The infrared region;
(2) The visible region; or
(3) The ultraviolet region.
(g)
(h)
(1) Is a consumer product;
(2) Is intended for general service applications;
(3) Has a medium screw base;
(4) Has a lumen range of not less than 310 lumens and not more than 2,600 lumens; and
(5) Is capable of being operated at a voltage range at least partially within 110 and 130 volts.
(i)
(1)
(2)
(j)
(1) Any lamp that:
(i) Is not included under the definition of general service lamp in this part;
(ii) Has a lumen range between 310 lumens and no more than 2,600 lumens or a rated wattage between 30 and 199;
(iii) Has one of the following bases:
(A) A medium screw base;
(B) A candelabra screw base;
(C) A GU-10 base; or
(D) A GU-24 base; and
(iv) Is capable of being operated at a voltage range at least partially within 110 and 130 volts.
(2) Inclusions: The term
(i) Vibration-service lamps as defined at 42 U.S.C. 6291(30)(AA);
(ii) Rough service lamps as defined at 42 U.S.C. 6291(30)(X);
(iii) Appliance lamps as defined at 42 U.S.C. 6291(30)(T); and
(iv) Shatter resistant lamps (including a shatter proof lamp and a shatter protected lamp) as defined in 42 U.S.C. 6291(30)(Z).
(3) Exclusions: The term
(i) A black light lamp;
(ii) A bug lamp;
(iii) A colored lamp;
(iv) An infrared lamp;
(v) A left-hand thread lamp;
(vi) A marine lamp;
(vii) A marine signal service lamp;
(viii) A mine service lamp;
(ix) A sign service lamp;
(x) A silver bowl lamp;
(xi) A showcase lamp;
(xii) A traffic signal lamp;
(xiii) A G-shape lamp with diameter of 5 inches or more;
(xiv) A C7, M-14, P, RP, S, or T shape lamp;
(xv) A intermediate screw-base lamp; and
(xvi) A plant light lamp.
(a)
(b)
(c)
(d)
The revision reads as follows:
(e) This part shall not apply to:
(1) Any covered product if it is manufactured, imported, sold, or held for sale for export from the United States, so long as such product is not in fact distributed in commerce for use in the United States, and such covered product or the container thereof bears a stamp or label stating that such covered product is intended for export.
(2) Televisions manufactured before May 10, 2011.
(c) Representations for ceiling fans under § 305.21 and televisions under § 305.25 must be derived from applicable procedures in 10 CFR parts 429, 430, and 431.
For each covered product required by this part to bear an EnergyGuide or Lighting Facts label, the manufacturer must make a copy of the label available on a publicly accessible website in a manner that allows catalog sellers to hyperlink to the label or download it for use in websites or paper catalogs. The label for each specific model must remain on the website for six months after production of that model ceases.
The revision reads as follows:
(a) * * *
(5) Manufacturers must submit a website address for the online EnergyGuide labels covered by § 305.9 in new model and annual reports required by this section. Manufacturers may accomplish this by either submitting a specific link to a URL for each label, a link to a PDF download for each label, or a link to a website that takes users directly to a searchable database of the covered labels from which the label image or download may be accessed using the model number as certified to DOE pursuant to 10 CFR part 429 and the model number advertised in product literature. Such label information must be submitted either at the time the model is certified to DOE pursuant to 10 CFR part 429 or at some time on or before the annual report date immediately following such certification. In lieu of submitting the required information to the Commission, manufacturers may submit such information to the Department of Energy via the CCMS at
The revisions read as follows:
(c)
(1) Omit placement of such product on the scale appearing on the label, and
(a)
(b)
(c)
(d)
(e)
(1)
(2)
(3)
(f)
(2)
(a)
(2) Name of manufacturer or private labeler shall, in the case of a corporation, be deemed to be satisfied only by the actual corporate name, which may be preceded or followed by the name of the particular division of the corporation. In the case of an individual, partnership, or association, the name under which the business is conducted shall be used. Inclusion of the name of the manufacturer or private labeler is optional at the discretion of the manufacturer or private labeler.
(3) Model number(s) will be the designation given by the manufacturer or private labeler.
(4) Capacity or size is that determined in accordance with this part. The capacity provided on the label shall be the model's total refrigerated volume (VT) as determined in accordance with this part and the model description must be consistent with the categories described in Appendices A and B to this part.
(5) Unless otherwise indicated in this paragraph, estimated annual operating costs must be determined in accordance with this part. Labels for dual-mode refrigerator-freezers that can operate as either a refrigerator or a freezer must reflect the estimated energy cost of the model's most energy intensive configuration.
(6) Unless otherwise indicated in this paragraph, ranges of comparability for estimated annual operating costs are found in the appropriate appendices accompanying this part.
(7) Placement of the labeled product on the scale shall be proportionate to the lowest and highest estimated annual operating costs.
(8) Labels must contain the model's estimated annual energy consumption as determined in accordance with this part and as indicated on the sample labels in appendix L.
(9) Labels must contain statements as illustrated in the prototype labels in appendix L and specified as follows by product type:
(i) Labels for refrigerators, refrigerator-freezers, and freezers shall contain the text and graphics illustrated in sample labels of appendix L, including the statement:
Compare ONLY to other labels with yellow numbers.
Labels with yellow numbers are based on the same test procedures.
(ii) Labels for refrigerators and refrigerator-freezers must contain a statement as illustrated in the prototype labels in appendix L and specified as follows (fill in the blanks with the appropriate energy cost figure):
Your cost will depend on your utility rates and use.
Both cost ranges based on models of similar size capacity.
[Insert statement required by paragraph (a)(9)(iii) of this section].
Estimated energy cost based on a national average electricity cost of __ cents per kWh.
(iii) Labels for refrigerators and refrigerator-freezers shall include the following as part of the statement required by paragraph (a)(9)(ii) of this section:
(A) For models covered under appendix A1 to this part, the sentence shall read:
Models with similar features have automatic defrost and no freezer.
(B) For models covered under appendix A2 to this part, the sentence shall read:
Models with similar features have manual defrost.
(C) For models covered under appendix A3 to this part, the sentence shall read:
Models with similar features have partial automatic defrost.
(D) For models covered under appendix A4 to this part, the sentence shall read:
Models with similar features have automatic defrost, top-mounted freezer, and no through-the-door ice.
(E) For models covered under appendix A5 to this part, the sentence shall read:
Models with similar features have automatic defrost, side-mounted freezer, and no through-the-door ice.
(F) For models covered under appendix A6 to this part, the sentence shall read:
Models with similar features have automatic defrost, bottom-mounted freezer, and no through-the-door ice.
(G) For models covered under appendix A7 to this part, the sentence shall read:
Models with similar features have automatic defrost, bottom-mounted freezer and through-the-door ice.
(H) For models covered under appendix A8 to this part, the sentence shall read:
Models with similar features have automatic defrost, side-mounted freezer, and through-the-door ice.
(iv) Labels for freezers must contain a statement as illustrated in the prototype labels in appendix L and specified as follows (fill in the blanks with the appropriate energy cost figure):
Your cost will depend on your utility rates and use.
[Insert statement required by paragraph (a)(10)(v) of this section].
Estimated energy cost based on a national average electricity cost of __cents per kWh.
(v) For freezers, the following sentence shall be included as part of the statement required by paragraph (a)(9)(iv) of this section:
(A) For models covered under appendix B1 to this part, the sentence shall read:
Cost range based only on upright freezer models of similar capacity with manual defrost.
(B) For models covered under appendix B2 to this part, the sentence shall read:
Cost range based only on upright freezer models of similar capacity with automatic defrost.
(C) For models covered under appendix B3 to this part, the sentence shall read:
Cost range based only on chest and other freezer models of similar capacity.
(10) The following statement shall appear on each label as illustrated in the prototype and sample labels in appendix L to this part:
Federal law prohibits removal of this label before consumer purchase.
(b)
(1) A part or publication number identification may be included on this label, as desired by the manufacturer. If a manufacturer elects to use a part or publication number, it must appear in the lower right-hand corner of the label and be set in 12-point type or smaller.
(2) The energy use disclosure labels required by the governments of Canada or Mexico may appear directly adjoining this label, as desired by the manufacturer.
(3) The manufacturer or private labeler may include the ENERGY STAR logo on the bottom right corner of the label for certified products. The logo must be 1 inch by 1 inch in size. Only manufacturers that have signed a Memorandum of Understanding with the Department of Energy or the Environmental Protection Agency may add the ENERGY STAR logo to labels on certified covered products; such manufacturers may add the ENERGY STAR logo to labels only on those covered products that are contemplated by the Memorandum of Understanding.
(a)
(2) Name of manufacturer or private labeler shall, in the case of a corporation, be deemed to be satisfied only by the actual corporate name, which may be preceded or followed by the name of the particular division of the corporation. In the case of an individual, partnership, or association, the name under which the business is conducted shall be used. Inclusion of the name of the manufacturer or private labeler is optional at the discretion of the manufacturer or private labeler.
(3) Model number(s) will be the designation given by the manufacturer or private labeler.
(4) Capacity or size is that determined in accordance with this part.
(5) Estimated annual operating costs are as determined in accordance with this part. Labels must disclose estimated annual operating cost for both electricity and natural gas as illustrated in the sample labels in appendix L to this part.
(6) Unless otherwise indicated in this paragraph, ranges of comparability for estimated annual operating costs are found in the appropriate appendices accompanying this part.
(7) Placement of the labeled product on the scale shall be proportionate to the lowest and highest estimated annual operating costs.
(8) Labels must contain the model's estimated annual energy consumption as determined in accordance with this part and as indicated on the sample labels in appendix L.
(9) The label shall contain the text and graphics illustrated in the sample labels in appendix L, including the statement:
Compare ONLY to other labels with yellow numbers.
Labels with yellow numbers are based on the same test procedures.
(10) Labels must contain a statement as illustrated in the prototype labels in appendix L and specified as follows (fill in the blanks with the appropriate capacity and energy cost figures):
Your costs will depend on your utility rates and use.
Cost range based only on [compact/standard] capacity models.
Estimated energy cost is based on six wash loads a week and a national average electricity cost of __ cents per kWh and natural gas cost of $ __ per therm.
(11) The following statement shall appear on each label as illustrated in the prototype and sample labels in appendix L:
Federal law prohibits removal of this label before consumer purchase.
(b)
(1) A part or publication number identification may be included on this label, as desired by the manufacturer. If a manufacturer elects to use a part or publication number, it must appear in the lower right-hand corner of the label and be set in 12-point type or smaller.
(2) The energy use disclosure labels required by the governments of Canada or Mexico may appear directly adjoining this label, as desired by the manufacturer.
(3) The manufacturer or private labeler may include the ENERGY STAR logo on the bottom right corner of the label for certified products. The logo must be 1 inch by 1 inch in size. Only manufacturers that have signed a Memorandum of Understanding with
(a)
(2) Name of manufacturer or private labeler shall, in the case of a corporation, be deemed to be satisfied only by the actual corporate name, which may be preceded or followed by the name of the particular division of the corporation. In the case of an individual, partnership, or association, the name under which the business is conducted shall be used. Inclusion of the name of the manufacturer or private labeler is optional at the discretion of the manufacturer or private labeler.
(3) Model number(s) will be the designation given by the manufacturer or private labeler.
(4) Capacity or size is that determined in accordance with this part.
(5) Estimated annual operating costs are as determined in accordance with this part. Labels must disclose estimated annual operating cost for both electricity and natural gas as illustrated in the sample labels in appendix L to this part.
(6) Unless otherwise indicated in this paragraph, ranges of comparability for estimated annual operating costs are found in the appropriate appendices accompanying this part.
(7) Placement of the labeled product on the scale shall be proportionate to the lowest and highest estimated annual operating costs.
(8) Labels must contain the model's estimated annual energy consumption as determined in accordance with this part and as indicated on the sample labels in appendix L.
(9) Labels must contain a statement as illustrated in the prototype labels in appendix L and specified as follows (fill in the brackets with the appropriate capacity and the energy cost figures):
Your costs will depend on your utility rates and use.
Cost range based only on [compact/standard] capacity models.
Estimated energy cost is based on four wash loads a week, and a national average electricity cost of [__] cents per kWh and natural gas cost of $[__] per therm.
For more information, visit
(10) The following statement shall appear on each label as illustrated in the prototype and sample labels in appendix L to this part:
Federal law prohibits removal of this label before consumer purchase.
(b)
(1) A part or publication number identification may be included on this label, as desired by the manufacturer. If a manufacturer elects to use a part or publication number, it must appear in the lower right-hand corner of the label and be set in 12-point type or smaller.
(2) The energy use disclosure labels required by the governments of Canada or Mexico may appear directly adjoining this label, as desired by the manufacturer.
(3) The manufacturer or private labeler may include the ENERGY STAR logo on the bottom right corner of the label for certified products. The logo must be 1 inch by 1 inch in size. Only manufacturers that have signed a Memorandum of Understanding with the Department of Energy or the Environmental Protection Agency may add the ENERGY STAR logo to labels on certified covered products; such manufacturers may add the ENERGY STAR logo to labels only on those covered products that are contemplated by the Memorandum of Understanding.
(a)
(2) Name of manufacturer or private labeler shall, in the case of a corporation, be deemed to be satisfied only by the actual corporate name, which may be preceded or followed by the name of the particular division of the corporation. In the case of an individual, partnership, or association, the name under which the business is conducted shall be used. Inclusion of the name of the manufacturer or private labeler is optional at the discretion of the manufacturer or private labeler.
(3) Model number(s) will be the designation given by the manufacturer or private labeler.
(4) Capacity or size is that determined in accordance with this part. Capacity for storage water heaters shall be presented in both rated storage volume (“tank size (storage capacity)”) and first hour rating as indicated on the sample label in appendix L to this part.
(5) Estimated annual operating costs are as determined in accordance with this part.
(6) Unless otherwise indicated in this paragraph, ranges of comparability for estimated annual operating costs are found in the appropriate appendices accompanying this part.
(7) Placement of the labeled product on the scale shall be proportionate to the lowest and highest estimated annual operating costs.
(8) Labels must contain the model's estimated annual energy consumption as determined in accordance with this part and as indicated on the sample labels in appendix L to this part.
(9) Labels must contain a statement as illustrated in the prototype labels in appendix L to this part and specified as follows by product type:
(i) For water heaters covered by appendices D1, D2, and D3 to this part, the statement will read as follows (fill in the blanks with the appropriate fuel type, and energy cost figures):
Your costs will depend on your utility rates and use.
Cost range based only on models fueled by [natural gas, oil, propane, or electricity] with a [very small, low, medium, or high] first hour rating [fewer than 18 gallons, 18-50.9 gallons, 51-74.9 gallons, or greater than 75 gallons].
Estimated energy cost is based on a national average [electricity, natural gas, propane, or oil] cost of [__ cents per kWh or $__ per therm or gallon].
Estimated yearly energy use: __ [kWh or therms].
(ii) For instantaneous water heaters, the statement will read as follows (fill in the blanks with the appropriate model type, and the energy cost figures):
Your costs will depend on your utility rates and use.
Cost range based only on [electric models or models fueled by natural gas] with a [very small, low, medium, or high] gallons per minute rating [0 to 1.6, 1.7 to 2.7, 2.8 to 4.0, or greater than 4.0].
Estimated energy cost is based on a national average [electricity, natural gas, or propane] cost of [__ cents per kWh or $__ per therm or gallon].
Estimated yearly energy use: __ [kWh or therms].
(10) The following statement shall appear on each label as illustrated in the prototype and sample labels in appendix L:
Federal law prohibits removal of this label before consumer purchase.
(b)
(1) A part or publication number identification may be included on this label, as desired by the manufacturer. If a manufacturer elects to use a part or publication number, it must appear in the lower right-hand corner of the label and be set in 12-point type or smaller.
(2) The energy use disclosure labels required by the governments of Canada or Mexico may appear directly adjoining this label, as desired by the manufacturer.
(3) The manufacturer or private labeler may include the ENERGY STAR logo on the bottom right corner of the label for certified products. The logo must be 1 inch by 1 inch in size. Only manufacturers that have signed a Memorandum of Understanding with the Department of Energy or the Environmental Protection Agency may add the ENERGY STAR logo to labels on certified covered products; such manufacturers may add the ENERGY STAR logo to labels only on those covered products that are contemplated by the Memorandum of Understanding.
(a)
(2) Name of manufacturer or private labeler shall, in the case of a corporation, be deemed to be satisfied only by the actual corporate name, which may be preceded or followed by the name of the particular division of the corporation. In the case of an individual, partnership, or association, the name under which the business is conducted shall be used. Inclusion of the name of the manufacturer or private labeler is optional at the discretion of the manufacturer or private labeler.
(3) Model number(s) will be the designation given by the manufacturer or private labeler.
(4) Capacity or size is that determined in accordance with this part.
(5) Estimated annual operating costs are as determined in accordance with this part.
(6) Unless otherwise indicated in this paragraph, ranges of comparability for estimated annual operating costs are found in the appropriate appendices accompanying this part.
(7) Placement of the labeled product on the scale shall be proportionate to the lowest and highest estimated annual operating costs.
(8) Labels must contain the model's estimated annual energy consumption as determined in accordance with this part and as indicated on the sample labels in appendix L. Labels must contain the model's energy efficiency rating, as applicable, as determined in accordance with this part and as indicated on the sample labels in appendix L to this part.
(9) Labels must contain a statement as illustrated in the prototype labels in appendix L and specified as follows (fill in the blanks with the appropriate model type, year, energy type, and energy cost figure):
Your costs will depend on your utility rates and use.
Cost range based only on models [of similar capacity without reverse cycle and with louvered sides; of similar capacity without reverse cycle and without louvered sides; with reverse cycle and with louvered sides; or with reverse cycle and without louvered sides].
Estimated annual energy cost is based on a national average electricity cost of __ cents per kWh and a seasonal use of 8 hours use per day over a 3 month period.
For more information, visit
(10) The following statement shall appear on each label as illustrated in the prototype and sample labels in appendix L:
Federal law prohibits removal of this label before consumer purchase.
(b)
(1) A part or publication number identification may be included on this label, as desired by the manufacturer. If a manufacturer elects to use a part or publication number, it must appear in the lower right-hand corner of the label and be set in 12-point type or smaller.
(2) The energy use disclosure labels required by the governments of Canada or Mexico may appear directly adjoining this label, as desired by the manufacturer.
(3) The manufacturer or private labeler may include the ENERGY STAR logo on the bottom right corner of the label for certified products. The logo must be 1 inch by 1 inch in size. Only manufacturers that have signed a Memorandum of Understanding with the Department of Energy or the Environmental Protection Agency may add the ENERGY STAR logo to labels on certified covered products; such manufacturers may add the ENERGY STAR logo to labels only on those covered products that are contemplated by the Memorandum of Understanding.
(a)
(2) Name of manufacturer or private labeler shall, in the case of a corporation, be deemed to be satisfied only by the actual corporate name, which may be preceded or followed by the name of the particular division of the corporation. In the case of an individual, partnership, or association, the name under which the business is conducted shall be used. Inclusion of the name of the manufacturer or private labeler is optional at the discretion of the manufacturer or private labeler.
(3) Model number(s) will be the designation given by the manufacturer or private labeler.
(4) Capacity or size is that determined in accordance with this part.
(5) Thermal efficiencies are as determined in accordance with this part.
(6) Unless otherwise indicated in this paragraph, ranges of comparability for thermal efficiencies are found in the appropriate appendices accompanying this part.
(7) Placement of the labeled product on the scale shall be proportionate to the lowest and highest thermal efficiencies.
(8) Labels must contain the model's energy efficiency rating or thermal efficiency, as applicable, as determined in accordance with this part and as indicated on the sample labels in appendix L to this part.
(9) Labels must contain a statement as illustrated in the prototype labels in appendix L and specified as follows:
Efficiency range based only on models fueled by [natural gas or oil].
For more information, visit
(10) The following statement shall appear on each label as illustrated in the prototype and sample labels in appendix L to this part:
Federal law prohibits removal of this label before consumer purchase.
(b)
(1) A part or publication number identification may be included on this label, as desired by the manufacturer. If a manufacturer elects to use a part or publication number, it must appear in the lower right-hand corner of the label and be set in 12-point type or smaller.
(2) The energy use disclosure labels required by the governments of Canada
(3) The manufacturer or private labeler may include the ENERGY STAR logo on the bottom right corner of the label for certified products. The logo must be 1 inch by 1 inch in size. Only manufacturers that have signed a Memorandum of Understanding with the Department of Energy or the Environmental Protection Agency may add the ENERGY STAR logo to labels on certified covered products; such manufacturers may add the ENERGY STAR logo to labels only on those covered products that are contemplated by the Memorandum of Understanding.
By direction of the Commission.
Drug Enforcement Administration, Department of Justice.
Temporary rule; temporary scheduling order; extension.
The Acting Administrator of the Drug Enforcement Administration is issuing this temporary scheduling order to extend the temporary schedule I status of a synthetic cannabinoid, methyl 2-(1-(4-fluorobenzyl)-1
This temporary scheduling order, which extends the order (82 FR 51154, November 3, 2017), is effective November 3, 2019 and expires on November 3, 2020. If the Drug Enforcement Administration publishes a final rule making this scheduling action permanent, this order will expire on the effective date of that rule, if the effective date is earlier than November 3, 2020.
Scott Brinks, Diversion Control Division, Drug Enforcement Administration; Mailing Address: 8701 Morrissette Drive, Springfield, Virginia 22152; Telephone: (571) 362-8209.
On November 3, 2017, the Acting Administrator of the Drug Enforcement Administration (DEA) published a temporary scheduling order in the
The Acting Administrator of the DEA (Acting Administrator), on his own motion pursuant to 21 U.S.C. 811(a), has initiated proceedings under 21 U.S.C. 811(a)(1) to permanently schedule FUB-AMB. The DEA has gathered and reviewed the available information regarding the pharmacology, chemistry, trafficking, actual abuse, pattern of abuse, and the relative potential for abuse for this SC. On March 9, 2018, the DEA submitted a request to the HHS to provide the DEA with a scientific and medical evaluation of available information and a scheduling recommendation for FUB-AMB, and in accordance with 21 U.S.C. 811(b) and (c). Upon evaluating the scientific and medical evidence, on September 19, 2019, the HHS submitted to the Acting Administrator of the DEA its scientific and medical evaluation and a scheduling recommendation for FUB-AMB. Upon receipt of the scientific and medical evaluation and scheduling recommendation from the HHS, the DEA reviewed the documents and all other relevant data, and conducted its own eight-factor analysis of the abuse potential of FUB-AMB in accordance with 21 U.S.C. 811(c). The DEA published a notice of proposed rulemaking for the placement of FUB-AMB in schedule I elsewhere in this issue of the
Pursuant to 21 U.S.C. 811(h)(2), the Acting Administrator orders that the temporary scheduling of FUB-AMB, including its optical, positional and geometric isomers, salts, and salts of isomers, be extended for one year, or until the permanent scheduling proceeding is completed, whichever occurs first.
In accordance with the temporary scheduling order in this document, the schedule I requirements for handling FUB-AMB, including its optical, positional and geometric isomers, salts, and salts of isomers, will remain in effect for one year, or until the permanent scheduling proceeding is completed, whichever occurs first.
The CSA provides for an expedited temporary scheduling action where such action is necessary to avoid an imminent hazard to the public safety. 21 U.S.C. 811(h). The Attorney General may, by order, schedule a substance in schedule I on a temporary basis.
To the extent that 21 U.S.C. 811(h) directs that temporary scheduling actions be issued by order and sets forth the procedures by which such orders are to be issued and extended, the DEA believes that the notice and comment requirements of section 553 of the Administrative Procedure Act (APA), 5 U.S.C. 553, do not apply to this extension of the temporary scheduling action. In the alternative, even assuming that this action might be subject to section 553 of the APA, the Acting Administrator finds that there is good cause to forgo the notice and comment requirements of section 553, as any further delays in the process for extending the temporary scheduling order would be impracticable and contrary to the public interest in view of the manifest urgency to avoid an imminent hazard to the public safety. Further, the DEA believes that this order extending the temporary scheduling action is not a “rule” as defined by 5 U.S.C. 601(2), and, accordingly, is not subject to the requirements of the Regulatory Flexibility Act (RFA). The requirements for the preparation of an initial regulatory flexibility analysis in 5 U.S.C. 603(a) are not applicable where, as here, the DEA is not required by section 553 of the APA or any other law to publish a general notice of proposed rulemaking.
Additionally, this action is not a significant regulatory action as defined by Executive Order 12866 (Regulatory Planning and Review), section 3(f), and, accordingly, this action has not been reviewed by the Office of Management and Budget (OMB).
This action will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132 (Federalism) it is determined that this action does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.
As noted above, this action is an order, not a rule. Accordingly, the Congressional Review Act (CRA) is inapplicable, as it applies only to rules. However, if this were a rule, pursuant to the CRA, “any rule for which an agency for good cause finds that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest, shall take effect at such time as the federal agency promulgating the rule determines.” 5 U.S.C. 808(2). It is in the public interest to maintain the temporary placement of FUB-AMB in schedule I because it poses a public health risk. The temporary scheduling action was taken pursuant to 21 U.S.C. 811(h), which is specifically designed to enable the DEA to act in an expeditious manner to avoid an imminent hazard to the public safety. Under 21 U.S.C. 811(h), temporary scheduling orders are not subject to notice and comment rulemaking procedures. The DEA understands that the CSA frames temporary scheduling actions as orders rather than rules to ensure that the process moves swiftly, and this extension of the temporary scheduling order continues to serve that purpose. For the same reasons that underlie 21 U.S.C. 811(h), that is, the need to place this substance in schedule
Office of Surface Mining Reclamation and Enforcement, Interior.
Final rule; approval of amendment.
The Office of Surface Mining Reclamation and Enforcement (OSMRE) is approving an amendment to the Montana coal regulatory program (the Montana program or the State program) under the Surface Mining Control and Reclamation Act of 1977 (SMCRA or the Act). The proposed changes to the Montana program are in response to a 2011 state legislative change, which enacted a new State statutory provision under the Montana Strip and Underground Mine Reclamation Act (MSUMRA). The statutory change, directs the State Board to adopt rules governing underground mining that uses in situ coal gasification. Montana proposes to revise its State program to incorporate the addition and proposes changes to the Administrative Rules of Montana (ARM) pertaining to the regulation of in situ coal gasification operations.
The effective date is November 29, 2019.
Howard Strand, Office of Surface Mining Reclamation and Enforcement, 1999 Broadway, Suite 3320, Denver, CO 80202, Telephone: (303) 293-5026, Email:
Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its program includes, among other things, State laws and regulations that govern surface coal mining and reclamation operations in accordance with the Act and consistent with the Federal regulations.
By letter dated February 27, 2017 (Document ID No. OSM-2017-0001-0002), Montana sent us a proposed amendment to its State program under SMCRA (30 U.S.C. 1201
We announced receipt of the proposed amendment in the May 8, 2018,
Following is a summary of the proposed statutory and rule changes submitted by Montana, as well as OSMRE's findings concerning Montana's amendment under SMCRA and the Federal regulations at 30 CFR 732.15 and 732.17. For the reasons discussed below, we are approving the amendment.
Montana proposes to add Mont. Code Ann. sec. 82-4-207 under MSUMRA. Subsection (1) of Mont. Code Ann. sec. 82-4-207 directs the Montana Board of Environmental Review (BER) to adopt rules necessary to regulate underground mining that uses in situ coal gasification operations under the Montana program. The new statutory provision additionally states that the BER may not adopt rules specific to in situ gasification that are more stringent than the comparable Federal regulations or guidelines that address the same circumstances. Mont. Code Ann. sec. 82-4-207(2). Subsection (3) of the statutory provision relates to rule processing.
The proposed Montana statute, at Mont. Code Ann. sec. 82-4-207, provides the necessary statutory authority to allow the BER to adopt rules to regulate underground mining using in situ coal gasification. Because in situ coal processing is an activity regulated under SMCRA's implementing regulations, at 30 CFR 785.22 and 30 CFR part 828, we find Mont. Code Ann. sec. 82-4-207 to be consistent with SMCRA and the Federal regulations. Under section 503(a)(7) of SMCRA, State programs must be capable of carrying out the provisions of SMCRA and meeting the Act's purposes through rules consistent with the Federal regulations implemented under the Act. Mont. Code Ann. sec. 82-4-207 simply allows the State to proceed with rulemaking specific to in situ coal gasification, an activity already approved as part of Montana's existing program. This statutory provision is therefore consistent with SMCRA and the Federal regulations.
Regarding subsection (2) of the statutory provision, SMCRA sections 503 and 505, and the Federal regulations at 30 CFR 730.5, establish the criteria for approval of State SMCRA programs. A State program must set forth requirements that satisfy the Federal minimum standards and must include provisions that are no less stringent than SMCRA and no less effective than the Federal regulations.
In its program amendment submission, Montana proposes to adopt a new rule section, ARM 17.24.905, which is intended to clarify that certain rules are not applicable to in situ coal operations under the Montana program requirements. Montana also proposes revisions to its existing rules at ARM 17.24.902 and 17.24.903 to incorporate a reference to, and reflect the in situ coal gasification exemptions set forth at, ARM 17.24.905.
For the following reasons, OSMRE finds that the proposed changes are consistent with, and no less effective than, the counterpart Federal regulations. We are therefore approving Montana's proposed rule changes.
OSMRE previously approved the definition of “in situ coal gasification” as part of the Montana program and published the final rule in the September 19, 2012,
The Federal regulations specify which requirements apply to in situ coal processing at 30 CFR 785.22 and 30 CFR part 828. Montana's existing program at ARM 17.24.902 and 17.24.904 contain similar requirements. Both the State and Federal programs establish that in situ operations must comply with regulations governing underground mining. Underground mining performance standards are outlined in the Montana program at ARM 17.24.903. Those requirements are similar to the Federal underground mining performance standards at 30 CFR part 817. As discussed in further detail below, the Federal regulations do not require in situ processing operations to comply with all Federal coal program requirements, especially those pertaining to surface mining operations, due to the limited nature of the disturbances associated with this mining method. Similarly, Montana's existing program does not routinely apply surface mining regulations to in situ operations. This is consistent with the State's definition of “in situ coal gasification” in Mont. Code Ann. sec. 82-4-203(27)(a), which indicates that this mining method involves limited surface disturbances, and the counterpart Federal requirements.
In its submission package for this program amendment, the Montana Department of Environmental Quality (MDEQ or the Department) explained that it determined most of the rules relating to underground coal mining should apply to in situ operations. However, in an effort to minimize duplication of existing rules, Montana decided to adopt a new rule, proposed as ARM 17.24.905, that instead lists the rules that would be inapplicable to in situ operations. Montana's amendment seeks to clarify which additional regulations, beyond those already explicitly applied to all in situ operations, the State may and may not impose at its discretion. This will provide regulatory certainty to potential permittees by indicating that although the State has the discretion to apply additional requirements beyond those applicable to all in situ operations, it may not impose the specific surface mining regulations listed under new ARM 17.24.905(1)(a)-(c).
This proposed new section, ARM 17.24.905(1)(a)-(c), exempts in situ coal gasification operations from three separate groups of regulatory requirements: ARM 17.24.311 (Air Pollution Control Plan); ARM 17.24.519 (Monitoring for Settlement); and ARM 17.24.831 through ARM 17.24.837 (auger mining and remining rules). Montana further proposed language at ARM 17.24.905(2), which states that all other rules may apply on a mine-specific basis. These changes would not modify existing ARM 17.24.904, In Situ Coal Processing Operation Performance Standards, which requires in situ operations to comply with general performance standards for underground mining operations, as well as additional requirements, which explicitly apply to all in situ operations.
At subsection 17.24.905(1)(a), Montana proposes to exempt in situ operations from ARM 17.24.311 (Air Pollution Control Plan). ARM 17.24.311 applies only to strip mining operations with projected production rates exceeding 1,000,000 tons of material per year. In situ operations do not fall within the scope of this provision. Similarly, in situ operations are not subject to air pollution control plan requirements under the Federal program at 30 CFR 780.15. Therefore, the ARM 17.24.905(1)(a) exemption is not inconsistent with the Federal regulations.
Under ARM 17.24.902(1)(d), Montana requires in situ operations to include, among other requirements, plans for monitoring air quality. Likewise, under 30 CFR 784.26, the Federal program requires in situ processing operations to have an air quality monitoring program. Montana seeks to clarify that, although it has a requirement to include plans for monitoring air quality similar to underground mining operations, it will not impose the air pollution control plan requirements of ARM 17.24.311, which apply only to surface mining operations.
Because the Federal regulations do not require in situ operations to comply with surface mining air pollution control plan requirements, and both programs require air quality monitoring for in situ operations, Montana's proposed exemption is no less effective than the corresponding Federal regulations.
ARM 17.24.905(1)(b) proposes to exempt in situ operations from ARM 17.24.519 (Monitoring for Settlement), which pertains to regraded surface mine areas. The Federal regulations do not contain an analogous provision and therefore in situ operations are not subject to this requirement under the Federal program. The need to regrade spoil would not arise because in situ operations do not involve land excavation. Therefore, in situ operations would not necessitate monitoring for settlement of regraded areas. Rather, monitoring for subsidence would be appropriate. This is required under the Federal program at 30 CFR 784.20, Subsidence Control Plan, and under Montana's program at ARM 17.24.911, Subsidence Control Plan.
ARM 17.24.905(1)(c) proposes to exempt in situ operations from ARM 17.24.831 through 17.24.837 (auger mining and remining). The corresponding Federal regulations having the same effect are found at 30 CFR 785.20 (augering), and 30 CFR 785.25 (lands eligible for remining). These Federal program provisions do not apply to in situ operations. In situ processing cannot occur by the methods of, or under the geologic conditions associated with, either augering or
Finally, Montana's proposed revision at ARM 17.24.905(2) prescribes, “all other rules may apply on a mine specific basis.” This subsection would allow Montana, in its discretion, to impose additional regulatory requirements beyond those already required by the approved program, other than those specifically exempted though this rule provision. As described above, Montana's program requirements, specific to in situ coal gasification operations, satisfy the minimum Federal standards governing in situ operations. Through the addition of ARM 17.24.905, Montana provides itself with the necessary regulatory flexibility to specify any additional requirements to impose on an in situ operation, beyond those already required and applied under its approved State program. Consequently, ARM 17.24.905(2) is not inconsistent with, and does not render its State program less effective than, the Federal requirements.
For the reasons provided above, we are approving ARM 17.24.905.
Montana proposes to revise the language in ARM 17.24.902(1) to add reference to ARM 17.24.905. Because we are approving ARM 17.24.905, revising ARM 17.24.902(1) to include this reference is appropriate to clarify which additional requirements may be applied to in situ coal gasification under the Montana program. We are therefore approving this revision to ARM 17.24.902(1).
Similar to the proposed revision at ARM 17.24.902(1), Montana also proposes to revise the language at ARM 17.24.903(1) to incorporate reference to ARM 17.24.905. Because we are approving ARM 17.24.905, adding this reference in ARM 17.24.903(1) is appropriate to clarify which additional requirements may be applied to in situ coal gasification under the Montana program. We are therefore approving this revision to ARM 17.24.903(1).
OSMRE asked for public comments in the May 8, 2018,
On March 6, 2017, under 30 CFR 732.17(h)(11)(i) and section 503(b) of SMCRA, we requested comments on the amendment from various Federal agencies with an actual or potential interest in the Montana program (Document ID No. OSM-2017-0001-0005). We received comments from the Mine Safety and Health Administration (MSHA) and the United States Army Corps of Engineers (USACE).
On April 10, 2017, MSHA provided a number of comments (Document ID No. OSM-2017-0001-0003), most of which pertained to definition changes in MSUMRA that were included in the Montana SB 292. OSMRE previously approved these definition changes in a separate Montana program amendment approval in the September 19, 2012,
The USACE also commented on the proposed definition changes to MSUMRA that were included in SB 292 (Document ID No. OSM-2017-0001-0004). As stated above, these proposed definition changes were approved by OSMRE in a separate Montana program amendment approval in 2012 (77 FR 58022). Therefore, USACE comments are not germane to the current amendment proposal.
Under 30 CFR 732.17(h)(11)(ii), we are required to get a written concurrence from EPA for those provisions of the program amendment that relate to air or water quality standards issued under the authority of the Clean Water Act (33 U.S.C. 1251
Under 30 CFR 732.17(h)(4), we are required to request comments from the SHPO and ACHP on amendments that may have an effect on historic properties. On March 6, 2017, we requested comments on Montana's amendment (Document ID No. OSM-2017-0001-0006). We did not receive comments from the ACHP or SHPO.
Based on the above findings, we are approving Montana's amendment that was submitted on February 27, 2017.
To implement this decision, we are amending the Federal regulations, at 30 CFR part 926 that codify decisions concerning the Montana program. In accordance with the Administrative Procedure Act, this rule will take effect 30 days after the date of publication. Section 503(a) of SMCRA requires that the State's program demonstrate that the State has the capability of carrying out the provisions of the Act and meeting its purposes. SMCRA requires consistency of State and Federal standards.
This rule would not effect a taking of private property or otherwise have taking implications that would result in public property taken for government use without just compensation under the law. Therefore, a takings implication assessment is not required. This determination is based on an analysis of the corresponding Federal regulations.
Executive Order 12866 provides that the Office of Information and Regulatory Affairs in the Office of Management and Budget (OMB) will review all significant
State program amendments are not regulatory actions under Executive Order 13771 because they are exempt from review under Executive Order 12866.
The Department of the Interior has reviewed this rule as required by section 3(a) of Executive Order 12988. The Department determined that this
This rule is not a “[p]olicy that [has] Federalism implications” as defined by section 1(a) of Executive Order 13132 because it does not have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Instead, this rule approves an amendment to the Montana program submitted and drafted by that State. OSMRE reviewed the submission with fundamental federalism principles in mind as set forth in Sections 2 and 3 of the Executive Order and with the principles of cooperative federalism set forth in SMCRA.
The Department of the Interior strives to strengthen its government-to-government relationship with Tribes through a commitment to consultation with Tribes and recognition of their right to self-governance and tribal sovereignty. We have evaluated this rule under the Department's consultation policy and under the criteria in Executive Order 13175, and have determined that it has no substantial direct effects on federally recognized Tribes or on the distribution of power and responsibilities between the Federal government and Tribes. Therefore, consultation under the Department's tribal consultation policy is not required. The basis for this determination is that our decision is on the Montana program that does not include Tribal lands or regulation of activities on Tribal lands. Tribal lands are regulated independently under the applicable, approved Federal program.
Executive Order 13211 requires agencies to prepare a Statement of Energy Effects for a rulemaking that is (1) considered significant under Executive Order 12866, and (2) likely to have a significant adverse effect on the supply, distribution, or use of energy. Because this rule is exempt from review under Executive Order 12866 and is not a significant energy action under Executive Order 13211, a Statement of Energy Effects is not required.
This rule is not subject to Executive Order 13405, because this is not an economically significant regulatory action as defined by Executive Order 12866; and this action does not address environmental health or safety risks disproportionately affecting children.
Consistent with Sections 501(a) and 702(d) of SMCRA (30 U.S.C. 1251(a) and (d), respectively) and the U.S. Department of the Interior Departmental Manual, Part 516 Section 13.5(A), State program amendments are not major Federal actions within the meaning of section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4332(2)(C)).
Section 12(d) of the National Technology Transfer and Advancement Act (15 U.S.C. 3701
This rule does not include requests and requirements of an individual, partnership, or corporation to obtain information and report it to a Federal agency. As this rule does not contain information collection requirements, a submission to OMB under the Paperwork Reduction Act (44 U.S.C. 3507
This rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule: (a) Does not have an annual effect on the economy of $100 million; (b) will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; and (c) does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. This
This rule does not impose an unfunded mandate on State, local, or Tribal governments, or the private sector of $100 million per year. This rule does not have a significant or unique effect on State, local, or Tribal governments or the private sector. This determination is based on an analysis of the corresponding Federal regulations, which were determined not to impose an unfunded mandate. Therefore, a statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531
Intergovernmental relations, Surface mining, Underground mining.
For the reasons set out in the preamble, 30 CFR part 926 is amended as set forth below:
30 U.S.C. 1201
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is amending a temporary RNA for navigable waters in Saint Simons Sound, GA. Entry of vessels greater than 500 gross tons into the area is prohibited, unless specifically authorized by the Captain of the Port (COTP) Savannah. The RNA is needed to protect personnel, vessels, and the marine environment from potential hazards created by salvage and pollution response operations taking place near the grounded freight vessel GOLDEN RAY.
This rule is effective without actual notice from October 30, 2019 until January 29, 2021. For the purposes of enforcement, actual notice will be used from September 24, 2019 through October 30, 2019.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email LT Lauren Bloch, Marine Safety Unit Savannah Office of Waterways Management, Coast Guard; telephone 912-652-4353, extension 232, or email
The Coast Guard is amending this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because the freight vessel GOLDEN RAY capsized and grounded in Saint Simons Sound, GA on September 8, 2019. Immediate action is needed to aid in the directing of vessel traffic through the Port of Brunswick in the vicinity of the M/V GOLDEN RAY. It is impracticable to publish an NPRM because we must amend this RNA by September 24, 2019.
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The COTP Savannah has determined that an amended RNA is needed to allow vessels greater than 500 gross tons to transit safely through the area. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the RNA during salvage and pollution operations in response to the M/V GOLDEN RAY casualty.
This rule amends the coordinates and expiration date of the temporary RNA published on September 19, 2019. The RNA zone is amended to cover all navigable waters in Saint Simons Sound, GA bounded by a line drawn from a point located at 31°07′48″ N, 081°23′30″ W, thence to 31°07′29″ N, 081°23′37″ W, thence to 31°07′38″ N, 081°24′10″ W, thence to 31°07′22″ N,
The RNA is intended to protect personnel, vessels, and the marine environment in these navigable waters and provide a safe working environment for personnel and vessels responding to the M/V GOLDEN RAY casualty.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.
This regulatory action determination is based on the RNA size, location, notice, duration and provided exceptions. Vessel traffic will be able to safely transit through this RNA which would impact a small designated area of Saint Simons Sound, GA; the size and location of this RNA is limited to an area in the immediate vicinity of the grounded M/V GOLDEN RAY. The Coast Guard will provide mariners notice of the RNA through a Broadcast Notice to Mariners via VHF-FM radio channel 16. Additionally, the RNA is limited in duration. It will remain in effect until January 29, 2021 or until the COTP Savannah determines the M/V GOLDEN RAY is no longer a hazard to the safety of persons and vessels transiting the area, whichever is sooner. Lastly, this RNA will allow vessels to seek permission from the COTP to enter the area.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the RNA may be small entities, for the reasons stated in section V. A. above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please call or email the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Directive 023-01 and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
46 U.S.C. 70034, 70051; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
(1) All vessels greater than 500 gross tons intending to transit through the RNA must seek prior approval from the COTP Savannah at least 24-hours in advance of the vessel's arrival to, or departure from, the Port of Brunswick. The COTP Savannah can be contacted via telephone at 614-943-5532. The COTP Savannah's designated representative can be contacted on VHF-FM radio channel 13. Upon approval to enter the RNA, the COTP Savannah will provide an approved timeframe a vessel may enter the RNA.
(2) Only one-way traffic is authorized within the RNA at all times.
(3) All vessels greater than 500 gross tons must obtain one assist tug while transiting within the RNA.
(4) All vessels greater than 500 gross tons must check in with the designated representative via VHF-FM Channel 13 prior to transiting within the RNA and maintain communications with the designated representative while transiting through the RNA.
(5) While transiting within the RNA all vessels greater than 500 gross tons may not exceed a speed of 8 knots, unless greater speeds are required to maintain bare steerage.
(6) Any vessel unable to meet these operating limitations may, upon showing good cause, seek authorization from the COTP Savannah to deviate from the requirements in this section.
(7) The operator of any vessel transiting in RNA must comply with all lawful directions given by the COTP or the COTP's designated representative.
(8) The inland navigation rules in 33 CFR subchapter E remain in effect within the RNA and must be followed at all times.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule.
This final rule implements the measures of Framework Adjustment 13 to the Atlantic Mackerel, Squid, and Butterfish Fishery Management Plan. This action establishes a 5-year rebuilding program for Atlantic mackerel, sets 2019-2021 Atlantic mackerel specifications and a river herring and shad cap for the Atlantic mackerel fishery, modifies the Mid-Atlantic Fishery Management Council's risk policy, and modifies in-season closure measures. This action is necessary to prevent overfishing and rebuild the Atlantic mackerel stock based on a recent stock assessment that found the Atlantic mackerel stock to be overfished and subject to overfishing. The intended effect of this final rule is to sustainably manage the Atlantic mackerel fishery and achieve optimum yield on a continuing basis.
Effective November 29, 2019.
Copies of this action, including the environmental assessment (EA) and Regulatory Impact Review (RIR) analysis, prepared in support of this action, are available upon request from Dr. Christopher M. Moore, Executive Director, Mid-Atlantic Fishery Management Council, 800 North State Street, Suite 201, Dover, DE 19901, telephone (302) 674-2331. The small entity compliance guide (bulletin) describing measures approved by this action is available from Michael Pentony, Regional Administrator, 55 Great Republic Drive, Gloucester, MA 01930. Documents are also accessible via the internet at:
Alyson Pitts, Fishery Management Specialist, (978) 281-9352,
A November 2017 benchmark stock assessment (Stock Assessment Workshop (SAW) 64) concluded that the Atlantic mackerel stock is overfished and subject to overfishing. The Council developed Framework Adjustment 13 (Framework 13) to the Atlantic Mackerel, Squid, and Butterfish Fishery Management Plan (FMP) to create an Atlantic mackerel rebuilding plan that would prevent overfishing and rebuild the stock, as required by section 303 of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). This action also includes 2019-2021 specifications based on the proposed rebuilding plan, adjustments to in-season closure measures to slow fishery catch and allow Atlantic mackerel bycatch in the Atlantic herring fishery, and modifications to the river herring and shad catch cap. At its August 2018 meeting, the Council adopted final measures under Framework 13. We published a proposed rule to implement Framework 13 in the
Each year, the Council reviews the Atlantic mackerel specifications based on updated information. At its June 2019 meeting, the Council considered preliminary results of the 2019 Canadian Atlantic mackerel stock assessment. The Canadian assessment suggested that Atlantic mackerel recruitment in 2016 and 2017 was lower than the long-term average recruitment used to develop projections of 2019-2021 Atlantic mackerel specifications under Framework 13. Based on this information, the Council recommended maintaining the 2019 Atlantic mackerel acceptable biological catch (ABC) outlined in Framework 13 for 2020 instead of increasing the ABC in 2020, as included in Framework 13. If this Council-recommended change to the 2020 ABC in Framework 13 is approved in a subsequent regulatory action, this would revise the Atlantic mackerel rebuilding plan included in Framework 13, because the revised 2020 ABC would be 14 percent lower than the 2020 ABC currently being implemented in this final rule.
This action approves the management measures proposed in Framework Adjustment 13 to the Atlantic Mackerel, Squid, and Butterfish FMP. The measures implemented in this final rule are:
This rule adopts a 5-year rebuilding plan, which ends overfishing immediately and establishes measures that are projected to rebuild the stock within no more than 5 years. The 5-year rebuilding plan is as short as possible, while balancing the needs of the fishing communities and considering the interaction of the overfished stock within the marine ecosystem. The 5-year rebuilding plan will allow for a 125-percent increase in 2020 commercial catch compared to 2018, as described further below under the description of specifications.
In adopting the 5-year rebuilding program, the Council noted the substantial overlap between the Atlantic herring and Atlantic mackerel fisheries, and the expected drastic reductions in Atlantic herring quotas and the stability of associated fishing communities. The annual catch associated with the 5-year rebuilding program would help mitigate such economic impacts while still rebuilding the stock within the 10-year maximum allowable rebuilding period. As a precautionary measure, the Council capped ABCs under the 5-year plan at levels associated with the Council's current risk policy for a fully rebuilt Atlantic mackerel stock (33,474 mt), instead of allowing the ABCs to increase in 2021 and beyond, as supported by the Council's Scientific and Statistical Committee (SSC).
We closed the limited access Atlantic mackerel fishery on March 12, 2019, because the fishery harvested the river herring and shad catch cap (84 FR 8999; March 13, 2019). As a result, Atlantic mackerel catch in 2019 will be less than the projected 2019 catch allocation under the 5-year rebuilding plan. We will not know how the low catch in 2019 will affect the projections after the fishing year. Because the 2019 Atlantic mackerel catch is about 75 percent lower than expected catch used to evaluate the rebuilding program and the Council recommended maintaining the lower 2019 catch levels for 2020, it is possible that such lower levels of catch will help expedite the rebuilding program to rebuild the stock before 2023.
In order to implement this 5-year rebuilding plan, this action modifies the Council's risk policy to allow a higher fishing mortality rate to establish the increased 2019-2023 Atlantic mackerel ABCs in consideration of the economic needs of fishing communities. The change to the Council's risk policy in this action is specific to the Atlantic mackerel rebuilding plan, and will not affect the application of the Council's risk policy for any other species or FMP.
Table 1 presents the 2019-2021 Atlantic mackerel specifications. An updated stock assessment for Atlantic mackerel is scheduled to be completed in 2020, which would help the SSC and Council to develop and set the specifications for 2021 through 2023. As noted above, the Council will review each component of the Atlantic mackerel specifications annually, and will consider the results of an updated stock assessment in 2020 and other available information to refine future specifications.
In order to achieve optimum yield and effectively use the available commercial landings, Framework 13 adjusts the in-season closure measures for the commercial Atlantic mackerel fishery. The measures adopted by Framework 13 require the Regional Administrator to close the limited access commercial fishery when 90 percent of the DAH is projected to be landed. Once that trigger is reached, the Regional Administrator will reduce Atlantic mackerel possession limits to 40,000 lb (18,144 kg) per trip for Tier 1-3 limited access Atlantic mackerel permits and to 5,000 lb (2,268 kg) for open access permits. When 98 percent of the DAH is projected to be landed, the Regional Administrator will implement a 5,000-lb (2,268-kg) trip limit for all permits for the rest of the fishing year to cover remaining incidental catches. The measures also give the Regional Administrator the discretion to not implement these triggered possession limit reductions in November and December if landings are not projected to exceed the DAH by the end of the fishing year.
The initial river herring and shad catch cap for the Atlantic mackerel fishery will be set at 89 mt for 2019-2021. The cap could increase to the overall yearly catch cap if the fishery can first land 10,000 mt of Atlantic mackerel without hitting the initial 89-mt river herring and shad catch cap in each year. The overall yearly catch cap is set at 129 mt in 2019, 152 mt in 2020, and 159 mt in 2021, based on the increasing Atlantic mackerel DAHs approved under the rebuilding plan. The overall yearly catch cap for future years could be revised based on annual Council recommendations of future Atlantic mackerel DAH and river herring and shad bycatch measures.
This final rule includes revisions to correct regulatory text that is unnecessary, outdated, or unclear. These revisions are consistent with section 305(d) of the Magnuson-Stevens Act, which provides authority to the Secretary of Commerce to promulgate regulations necessary to ensure that amendments to an FMP are carried out in accordance with the FMP and the Magnuson-Stevens Act. Specifically, this final rule modifies 50 CFR 648.24(b)(1)(i)(A) and 648.24(b)(6), to reference “limited access” and “open access” permits instead of the “directed” and “incidental” fishery to be clear and consistent with the changes being made to the regulations by this action. The language clarification does not change the definition or terms of the permit.
We received comment submissions from 14 groups and individuals. This includes comments from nine environmental organizations, two commercial fishing industry groups (SeaFreeze Limited and Garden State Seafood Association), along with two members of the public. Environmental organizations that submitted comments were: Blue Planet Strategies; Conservation Law Foundation; Wild Oceans; Pew Charitable Trusts; Natural Resources Defense Council; Bennett-Nickerson Environmental Consulting; Oceans North; Ecology Action Center; and World Wildlife Federation Canada. One letter from Pew Charitable Trusts was originally submitted on August 9, 2018, and was previously considered by the Council before it adopted final measures under Framework 13. Additionally, the Council received a letter from Oceans North (a Canadian environmental advocacy group), submitted on May 30, 2019, that was not responsive to this action. However, the Council considered this letter at its June 2019 meeting when it adopted 2020 Atlantic mackerel specifications that would be implemented through a separate action. Consolidated responses to similar comments on the proposed measures are provided below.
The 5-year rebuilding plan is appropriate because it rebuilds the stock as quickly as possible while considering the needs of fishing communities, consistent with National Standard 8 of the Magnuson-Stevens Act. Due to the substantial overlap between the Atlantic herring and Atlantic mackerel fisheries, the expected reduced quotas and potential mid-water trawl gear restrictions in the Atlantic herring fishery may also have negative socioeconomic impacts on the Atlantic mackerel fishery and negatively affect the stability of associated fishing communities. The higher annual catch associated with the 5-year rebuilding program would help mitigate such economic impacts while still rebuilding the stock within the 10-year maximum allowable rebuilding period.
The Canadian Atlantic mackerel stock assessment was not completed and the results were unavailable when the Council adopted the Atlantic mackerel rebuilding program under Framework 13, and therefore were not integrated into projections used for the rebuilding plan. Such information is important, and it was considered by the Council in revising its recommendation for the 2020 Atlantic mackerel specifications that will be implemented in a subsequent action. In reviewing the U.S. Atlantic mackerel stock assessment and associated projections, the SSC expressed concern about the use of long-term recruitment in the projections, noting uncertainty in the size of the 2015 year class and the implications of this uncertainty for the projections. This concern regarding the uncertainty associated with the projections prompted the SSC to recommend conservative estimates, which were integrated into the 5-year rebuilding plan and ultimately adopted by the Council in Framework 13. As noted above, the Council considered the results of the Canadian assessment and recommended continuing the 2019 ABC for 2020 in a subsequent action. In addition the Council, with the support of the SSC, also recommended keeping the 10,000 mt Canadian deduction, which is conservative in comparison to the 8,000 mt ABC that was set after the recent Canadian assessment. This will, in effect, provide a 2,000 mt buffer in the U.S. specifications to prevent an ABC overage. The specifications are reviewed annually and will incorporate any new information, including the result of the U.S. Atlantic mackerel management track stock assessment in 2020. Thus, while it was not available when the Council initially developed this rebuilding plan, the new information from Canada was subsequently used to inform the Council's most recent recommendation for the 2020 Atlantic mackerel specifications. These 2020 specifications will be finalized and updated in future rulemaking actions, consistent with the FMP's requirement to update the specifications yearly, in light of the most recent scientific data. This regular review of the specifications will help ensure that the Framework 13 rebuilding plan approved in this final rule achieves its objectives consistent with applicable law.
There are no changes from the proposed rule.
The Administrator, Greater Atlantic Region, NMFS, determined that Framework 13 to the Atlantic Mackerel, Squid, and Butterfish FMP is necessary for the conservation and management of the Atlantic mackerel fishery managed by the Mid-Atlantic Council and that it is consistent with the Magnuson-Stevens Act and other applicable laws.
This final rule has been determined to be not significant for purposes of Executive Order 12866. This rule is not an E.O. 13771 regulatory action because this rule is not significant under E.O. 12866.
This final rule does not contain policies with Federalism or takings implications as those terms are defined in E.O. 13132 and E.O. 12630, respectively.
A Final Regulatory Flexibility Act (FRFA) analysis was prepared for this action and is included below. The FRFA incorporates the Initial Regulatory Flexibility Act (IRFA) analysis. A summary of the IRFA was published in the proposed rule for this action and is not repeated here. The FRFA below includes a summary of the significant issues raised by the public comments in response to the IRFA and the NMFS responses to those comments, and a summary of the analyses completed in the Framework 13 EA. A description of why this action was considered, the objectives of, and the legal basis for this rule is contained in Framework 13 and in the preambles of the proposed rule and this final rule, and is not repeated here. All of the documents that constitute the FRFA are available upon request (see
The public did not raise any significant issues in response to the IRFA, so no changes were made from the proposed rule.
The measures in Framework 13 apply to vessels that hold any commercial permit for Atlantic mackerel. We analyzed the impacts using NMFS's database for Atlantic mackerel permit holders in 2017 (the most recent year of full year permit data) cross-referenced with NMFS ownership data. Some small entities own multiple vessels with Atlantic mackerel permits. For purposes of the Regulatory Flexibility Act, NMFS established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing (see 50 CFR 200.2). A business primarily engaged in commercial fishing (North American Industry Classification System (NAICS) code 11411) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $11 million for all its affiliated operations worldwide. The determination of whether the entity is large or small is based on the average annual revenue for the most recent 3 years for which data are available. In 2017, 1,829 separate vessels held Atlantic mackerel permits. These vessels were owned by 1,379 entities, nearly all of which (1,368) were small business entities. Based on revenue from all species landed, 951 of these small business entities were commercial fishing entities, 116 were for-hire entities, and 301 had no revenue, but are considered small businesses. For those small businesses with revenues, average revenues were $0.6 million in 2017, which is well under the NMFS threshold of $11 million. 299 entities reported revenue from Atlantic mackerel during 2017. Of these entities, 4 were large and 295 were small. In 2017, 145 vessels were issued limited access permits and may be affected by the directed fishery closure measures proposed in this action. They are owned by 105 entities, of which 98 are small entities. Thus, NMFS concluded that almost all (98 entities with vessels issued limited access permits that could be affected by the directed fishery closure measures, and 295 entities reporting revenue from Atlantic mackerel) of the entities affected by this action are small entities.
This action does not contain a collection-of-information requirement for purposes of the Paperwork Reduction Act.
There are no significant adverse economic impacts of Framework 13. All of the rebuilding alternatives considered allow an increase in landings over time and have positive long-term socio-economic benefits compared to taking no action. The approved 5-year and 7-year rebuilding program specifications would significantly increase the allowable quota by over 8,000 mt in the first year, with increases in subsequent years. The proposed 5-year rebuilding program would result in an additional $7 million in fishing revenue annually in 2020-2021, compared to 2020-2021 under the no action alternative (which would continue under current specifications), while the 7-year rebuilding plan would result in an additional $8 million in fishing revenue. While the 7-year program would allow a larger quota increase compared to the 5-year program, the 5-year rebuilding program was selected because it would rebuild the fishery faster than the 7-year rebuilding program.
In conclusion, there are no significant adverse economic impacts on a substantial number of small entities in this action.
Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, a letter to permit holders that also serves as small entity compliance guide (the guide) was prepared. Copies of the guide (
Fisheries, Fishing, Recordkeeping and reporting requirements.
For the reasons set out in the preamble, 50 CFR part 648 is amended as follows:
16 U.S.C. 1801
(c)
(2) The SSC may specify higher 2019-2023 ABCs for Atlantic mackerel based on F
(b) * * *
(1)
(B) Unless previously closed pursuant to paragraph (b)(1)(i)(A) of this section, NMFS will close the Tier 3 commercial mackerel fishery in the EEZ when the Regional Administrator projects that 90 percent of the Tier 3 Atlantic mackerel allocation will be harvested. Unless otherwise restricted, the closure of the Tier 3 commercial mackerel fishery will be in effect for the remainder of that fishing period, with incidental catches allowed as specified in § 648.26.
(ii)
(iii) NMFS has the discretion to not implement measures outlined in paragraphs (b)(1)(i)(A) or (b)(1)(ii) of this section during November and December if the Regional Administrator projects that commercial Atlantic mackerel landings will not exceed the DAH during the remainder of the fishing year.
(6)
(a) * * *
(1) * * *
(i) A vessel issued a Tier 1 limited access mackerel permit is authorized to fish for, possess, or land Atlantic mackerel with no possession restriction in the EEZ per trip, and may only land Atlantic mackerel once on any calendar day, which is defined as the 24-hr period beginning at 0001 hours and ending at 2400 hours, provided that the fishery has not been closed because 90 percent of the DAH has been harvested, as specified in § 648.24(b)(1)(i)(A).
(ii) A vessel issued a Tier 2 limited access mackerel permit is authorized to fish for, possess, or land up to 135,000 lb (61.23 mt) of Atlantic mackerel in the EEZ per trip, and may only land Atlantic mackerel once on any calendar day, which is defined as the 24-hr period beginning at 0001 hours and ending at 2400 hours, provided that the fishery has not been closed because 90 percent of the DAH has been harvested, as specified in § 648.24(b)(1)(i)(A).
(iii) A vessel issued a Tier 3 limited access mackerel permit is authorized to fish for, possess, or land up to 100,000 lb (45.36 mt) of Atlantic mackerel in the EEZ per trip, and may only land Atlantic mackerel once on any calendar day, which is defined as the 24-hr period beginning at 0001 hours and ending at 2400 hours, provided that the fishery has not been closed because 90 percent of the DAH has been harvested, or 90 percent of the Tier 3 allocation has been harvested, as specified in § 648.24(b)(1)(i)(A) and (B), respectively.
(2)
(i)
(B) During a closure of the Tier 3 commercial Atlantic mackerel fishery pursuant to § 648.24(b)(1)(i)(B), when 90 percent of the Tier 3 allocation is harvested, vessels issued a Tier 3 limited access Atlantic mackerel permit may not take and retain, possess, or land more than 20,000 lb (9.08 mt) of Atlantic mackerel per trip at any time, and may only land Atlantic mackerel once on any calendar day, which is defined as the 24-hr period beginning at 0001 hours and ending at 2400 hours.
(ii)
(iii)
(B)
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for certain Airbus SAS Model A350-941 and -1041 airplanes. This proposed AD was prompted by a report indicating that during inspection of the installation of oxygen containers, certain fasteners of the oxygen containers and adjacent panels in the passenger supply channels (PSCs) were found damaged or unlocked, which could result in insufficient clearance between the oxygen container and adjacent panels. This proposed AD would require a one-time inspection of the oxygen containers and adjacent panels and applicable corrective actions, as specified in a European Union Aviation Safety Agency (EASA) AD, which will be incorporated by reference. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by December 16, 2019.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
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For the material identified in this proposed AD that will be incorporated by reference (IBR), contact the EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 89990 1000; email
You may examine the AD docket on the internet at
Kathleen Arrigotti, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3218.
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
The FAA will post all comments received, without change, to
The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2019-0210, dated August 26, 2019 (“EASA AD 2019-0210”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus SAS Model A350-941 and -1041 airplanes.
This proposed AD was prompted by a report indicating that during inspection of the installation of oxygen containers on the production line, certain fasteners of oxygen containers and adjacent panels in the PSCs were found damaged or unlocked; unlocked fasteners could move on the rails, which could result in insufficient clearance between the oxygen container and adjacent panels. This condition, if not addressed, could prevent the oxygen containers from opening and result in failure of the oxygen masks to deploy and provide supplemental oxygen during an in-flight decompression, possibly resulting in injury to cabin occupants. See the MCAI for additional background information.
EASA AD 2019-0210 describes procedures for inspecting the oxygen containers and the installation of adjacent panels located in all PSCs, to check that each fastener of each panel/component is locked and to measure the clearance between the oxygen container door lid and the adjacent panel/component. EASA AD 2019-0210 also describes procedures for applicable corrective actions, including attaining minimum clearance, locking any unlocked fasteners, and replacing damaged parts.
This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the State of Design Authority, the agency has been notified of the unsafe condition described in the MCAI and service information referenced above. The FAA is proposing this AD because the agency evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the actions specified in EASA AD 2019-0210 described previously, as incorporated by reference, except for any differences identified as exceptions in the regulatory text of this AD.
In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA initially worked with Airbus and EASA to develop a process to use certain EASA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has since coordinated with other manufacturers and civil aviation authorities (CAAs) to use this process. As a result, EASA AD 2019-0210 will be incorporated by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2019-0210 in its entirety, through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in the EASA AD does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in the EASA AD. Service information specified in EASA AD 2019-0210 that is required for compliance with EASA AD 2019-0210 will be available on the internet at
The FAA estimates that this proposed AD would affect 11 airplanes of U.S. registry. The agency estimates the following costs to comply with this proposed AD:
The FAA estimates the following costs to do any necessary corrective action that would be required based on the results of the inspection. The agency has no way of determining the number of aircraft that might need this corrective action:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments by December 16, 2019.
None.
This AD applies to Airbus SAS Model A350-941 and -1041 airplanes, certificated in any category, as identified in European Union Aviation Safety Agency (EASA) AD 2019-0210, dated August 26, 2019 (“EASA AD 2019-0210”).
Air Transport Association (ATA) of America Code 35, Oxygen.
This AD was prompted by a report that during inspection of the installation of oxygen containers, certain fasteners of the oxygen containers and adjacent panels in the passenger supply channels (PSCs) were found damaged or unlocked; which could result in insufficient clearance between the oxygen container and adjacent panels. The FAA is issuing this AD to address this condition, which could prevent the opening of the oxygen containers and result in failure of the oxygen masks to deploy and provide supplemental oxygen in case of an in-flight decompression, possibly resulting in injury to cabin occupants.
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraph (h) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, EASA AD 2019-0210.
(1) Where EASA AD 2019-0210 refers to its effective date, this AD requires using the effective date of this AD.
(2) The “Remarks” section of EASA AD 2019-0210 does not apply to this AD.
Although the service information referenced in EASA AD 2019-0210 specifies to submit certain information to the manufacturer, this AD does not include that requirement.
The following provisions also apply to this AD:
(1)
(2)
(3)
(1) For information about EASA AD 2019-0210, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 89990 6017; email
(2) For more information about this AD, contact Kathleen Arrigotti, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3218.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to supersede Airworthiness Directive (AD) 2003-09-04 R1, which applies to certain Bombardier, Inc., Model CL-600-2B19 (Regional Jet series 100 & 440) airplanes. AD 2003-09-04 R1 requires revising the airworthiness limitations for certain structural inspections; repair if necessary; and submission of inspection findings to the airplane manufacturer. Since the FAA issued AD 2003-09-04 R1, the agency determined that additional airplanes are affected, that new or more restrictive airworthiness limitations are necessary, and that the compliance time must be revised to include a phase-in time for certain tasks. This proposed AD would revise the applicability to include additional airplanes; revise certain compliance times; and require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by December 16, 2019.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
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For service information identified in this NPRM, contact Bombardier, Inc., 200 Côte-Vertu Road West, Dorval, Québec H4S 2A3, Canada; North America toll-free telephone 1-866-538-1247 or direct-dial telephone 1-514-855-2999; email
You may examine the AD docket on the internet at
Andrea Jimenez, Aerospace Engineer, Airframe and Mechanical Systems Section, FAA, New York ACO Branch, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7330; fax 516-794-5531; email
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
The FAA will post all comments received, without change, to
The FAA issued AD 2003-09-04 R1, Amendment 39-13305 (68 FR 54985, September 22, 2003) (“AD 2003-09-04 R1”), for certain Bombardier Model CL-600-2B19 (Regional Jet series 100 & 440) airplanes. (AD 2003-09-04 R1 revised AD 2003-09-04, Amendment 39-13133 (68 FR 22587, April 29, 2003).) AD 2003-09-04 R1 requires revising the airworthiness limitations section of the Instructions for Continued Airworthiness to incorporate new structural inspection intervals for the pressure floor skin of the center fuselage at fuselage stations 460 and 513; repair if necessary; and submission of inspection findings to the airplane manufacturer. AD 2003-09-04 R1 resulted from a report of fatigue cracks on the pressure floor skin of the center fuselage at fuselage stations 460 and 513. The FAA issued AD 2003-09-04 R1 to address fatigue cracks of the pressure floor skin of the center fuselage at fuselage stations 460 and 513, which could result in failure of the pressure floor skin and consequent rapid decompression of the airplane during flight.
Since the FAA issued AD 2003-09-04 R1, the agency has determined that the applicability must be revised to include additional airplane serial numbers, that new or more restrictive airworthiness limitations are necessary, and that the compliance time must be revised to include a phase-in time for certain airworthiness limitations tasks.
Transport Canada Civil Aviation (TCCA), which is the civil aviation authority for Canada, has issued Canadian AD CF-2002-39R2, dated August 15, 2019 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier Model CL-600-2B19 (Regional Jet series 100 & 440) airplanes.
This proposed AD was prompted by a report of fatigue cracks on the pressure floor skin of the center fuselage at fuselage stations 460 and 513. The FAA is proposing this AD to address such fatigue cracks, which could result in failure of the pressure floor skin and consequent rapid decompression of the airplane during flight. See the MCAI for additional background information.
Bombardier has issued Bombardier CL-600-2B19 Temporary Revision 2B-2265, dated July 19, 2018, to Appendix B—Airworthiness Limitations, of Part 2 of the Bombardier Maintenance Requirements Manual; and Bombardier CL-600-2B19 Temporary Revision 2B-2266, dated July 19, 2018, to Appendix B—Airworthiness Limitations, of Part 2 of the Bombardier Maintenance Requirements Manual. These temporary revisions describe airworthiness limitations for inspections of the pressure floor skin. These documents are distinct since they describe different airworthiness limitations.
This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the State of Design Authority, the agency has been notified of the unsafe condition described in the MCAI and service information referenced above. The FAA is proposing this AD because the agency evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop on other products of the same type design.
This proposed AD would require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations.
This AD requires revisions to certain operator maintenance documents to include new actions (
The MCAI specifies that if there are findings from the airworthiness limitations section (ALS) inspection tasks, corrective actions must be accomplished in accordance with Bombardier maintenance documentation. However, this proposed AD does not include that requirement. Operators of U.S.-registered airplanes are required by general airworthiness and operational regulations to perform maintenance using methods that are acceptable to the FAA. The FAA considers those methods to be adequate to address any corrective actions necessitated by the findings of ALS inspections required by this proposed AD.
The FAA estimates that this proposed AD would affect 37 airplanes of U.S. registry.
The FAA has determined that revising the maintenance or inspection program takes an average of 90 work-hours per operator, although the agency recognizes that this number may vary from operator to operator. In the past, the agency has estimated that this action takes 1 work-hour per airplane. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), the FAA has determined that a per-operator estimate is more accurate than a per-airplane estimate. Therefore, the agency estimates the average total cost per operator to be $7,650 (90 work-hours × $85 per work-hour).
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments by December 16, 2019.
This AD replaces AD 2003-09-04 R1, Amendment 39-13305 (68 FR 54985, September 22, 2003) (“AD 2003-09-04 R1”).
This AD applies to Bombardier Model CL-600-2B19 (Regional Jet series 100 & 440) airplanes, certificated in any category, serial numbers 7003 through 8999 inclusive.
Air Transport Association (ATA) of America Code 53, Fuselage.
This AD was prompted by a report of cracks occurring on the pressure floor skin at fuselage stations (FS) 460 and 513. The FAA is issuing this AD to address such fatigue cracks, which could result in failure of the pressure floor skin and consequent rapid decompression of the airplane during flight.
Comply with this AD within the compliance times specified, unless already done.
For airplane serial numbers 7003 through 8079 inclusive: Within 30 days from the effective date this AD, revise the existing maintenance or inspection program, as applicable, by incorporating the information specified in Airworthiness Limitations (AWL) task number 53-41-149 of Bombardier CL-600-2B19 Temporary Revision 2B-2265, dated July 19, 2018, to Appendix B—Airworthiness Limitations, of Part 2 of the Bombardier Maintenance Requirements Manual.
(1) The initial compliance time for doing the task is at the time specified in figure 1 to paragraph (g) of this AD, or within 90 days after the effective date of this AD, whichever occurs later.
(2) For airplanes on which Bombardier Service Bulletin 601R-53-067, Bombardier Service Bulletin 601R-53-077, and AWL task number 53-41-194 have been done, the inspections in AWL task number 53-41-149 are not required in the areas covered by doublers at FS460 and FS513.
(3) For airplanes on which the initial inspection has been accomplished at 18,325 or more total flight cycles, and no cracks were found, as of October 7, 2003 (the effective date of AD 2003-09-04), the repetitive interval of 10,000 flight cycles starts from the completion date of the initial inspection.
(4) For airplanes that were previously inspected using AWL task number 53-41-193, perform inspection in AWL task number 53-41-149 within 10,000 flight cycles from the previously accomplished inspection.
(1) For airplane serial numbers 8080 through 8999 inclusive: Within 30 days from the effective date of this AD, revise the existing maintenance or inspection program, as applicable, by incorporating the information specified in AWL task number 53-41-193 of Bombardier CL-600-2B19 Temporary Revision 2B-2266, dated July 19, 2018, to Appendix B—Airworthiness Limitations, of Part 2 of the Bombardier Maintenance Requirements Manual. Except as specified in paragraph (h)(2) of this AD, the initial compliance time for doing the task is at the time specified in Bombardier CL-600-2B19 Temporary Revision 2B-2266, dated July 19, 2018, to Appendix B—Airworthiness Limitations, of Part 2 of the Bombardier Maintenance Requirements Manual, or within 90 days after the effective date of this AD, whichever occurs later
(2) For airplanes that were previously inspected using AWL task number 53-41-149, perform inspection in AWL task number 53-41-193 within 10,000 flight cycles from the previously accomplished inspection.
If any crack is found during any inspection required by this AD, before further flight, do the actions specified in paragraphs (i)(1) and (2) of this AD.
(1) Repair using a method approved by the Manager, New York ACO Branch, FAA; or Transport Canada Civil Aviation (TCCA); or Bombardier, Inc.'s TCCA Design Approval Organization (DAO). If approved by the DAO, the approval must include the DAO-authorized signature.
(2) Revise the existing maintenance or inspection program, as applicable, by inserting a copy of the new airworthiness limitation and inspection requirements associated with the repair approved by the FAA, TCCA, or DAO specified in paragraph (i)(1) of this AD into Bombardier CL-600-2B19 Temporary Revision 2B-2265, dated July 19, 2018, to Appendix B—Airworthiness Limitations, of Part 2 of the Bombardier Maintenance Requirements Manual; or Bombardier CL-600-2B19 Temporary Revision 2B-2266, dated July 19, 2018, to Appendix B—Airworthiness Limitations, of Part 2 of the Bombardier Maintenance Requirements Manual; as applicable.
After the maintenance or inspection program has been revised as required by paragraphs (g), (h), and (i)(2) of this AD, as applicable, no alternative actions (
(1)
(i) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(ii) AMOCs approved previously for AD 2003-09-04 R1 are approved as AMOCs for the corresponding provisions of this AD.
(2)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian AD CF-2002-39R2, dated August 15, 2019, for related information. This MCAI may be found in the AD docket on the internet at
(2) For more information about this AD, contact Andrea Jimenez, Aerospace Engineer, Airframe and Mechanical Systems Section, FAA, New York ACO Branch, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7330; fax 516-794-5531; email
(3) For service information identified in this AD, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; Widebody Customer Response Center North America toll-free telephone 1-866-538-1247 or direct-dial telephone 1-514-855-2999; fax 514-855-7401; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for certain De Havilland Aircraft of Canada Limited Model DHC-8-400 series airplanes. This proposed AD was prompted by reports of wear on fuel couplings, bonding springs, and sleeves as well as fuel tube end ferrules and fuel component end ferrules. This proposed AD would require repetitive inspections of certain parts for discrepancies that meet specified criteria, and replacement as necessary; repetitive inspections of certain parts for damage and wear, and rework of parts; and electrical bonding checks of certain couplings. This proposed AD would also require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations. For certain airplanes, this proposed AD would allow a modification that would terminate the repetitive inspections. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by December 16, 2019.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
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For service information identified in this NPRM, contact De Havilland Aircraft of Canada Ltd., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416-375-4000; fax 416-375-4539; email
You may examine the AD docket on the internet at
Joseph Catanzaro, Aerospace Engineer, Airframe and Propulsion Section, FAA, New York ACO Branch, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7366; fax 516-794-5531; email
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
The FAA will post all comments received, without change, to
Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian AD CF-2017-04R2, dated September 25, 2018 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain De Havilland Aircraft of Canada Limited Model DHC-8-400 series airplanes.
The FAA has received reports of wear on fuel couplings, bonding springs, and sleeves as well as fuel tube end ferrules and fuel component end ferrules. The FAA is proposing this AD to address such wear, which could reduce the integrity of the electrical bonding paths through the fuel line and components, and ultimately lead to fuel tank ignition in the event of a lightning strike. See the MCAI for more information.
The FAA issued a related NPRM that proposed to amend 14 CFR part 39 by adding an AD that would apply to certain Bombardier, Inc., Model DHC-8-400 series airplanes. The related NPRM published in the
You may examine the MCAI in the AD docket on the internet at
Bombardier has issued Service Bulletin 84-28-20, Revision D, dated November 23, 2018. This service information describes procedures for repetitive detailed inspections of the clamshell coupling bonding wires, fuel couplings, and associated sleeves for discrepancies (wear and damage, including discoloration, worn coating, scuffing and grooves) that meet specified criteria, and replacement. This service information also describes procedures for repetitive detailed inspections for damage and wear of the fuel tube end ferrules, fuel component end ferrules, and ferrule O-ring flanges, and rework of parts.
Bombardier has also issued Service Bulletin 84-28-21, Revision C, dated July 13, 2018. This service information describes procedures for a detailed inspection for damage and wear of the fuel tube end ferrules, fuel component end ferrules, and ferrule O-ring flanges; rework (repair, replacement, or blending, as applicable) of parts; and a retrofit (structural rework) of the fuel couplings, isolators, and structural provisions.
Bombardier has also issued Service Bulletin 84-28-26, Revision A, dated November 29, 2018. This service information describes procedures for electrical bonding checks of all threaded couplings on the inboard vent lines in the left and right wings.
Bombardier has also issued Q400 Dash 8 (Bombardier) Temporary Revision ALI-00AS, dated April 24, 2018; and Q400 Dash 8 (Bombardier) Temporary Revision ALI-00AT, dated April 24, 2018. This service information describes airworthiness limitations for fuel tank systems. These documents are distinct since they describe different airworthiness limitations.
This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to a bilateral agreement with the State of Design Authority, the FAA has been notified of the unsafe condition described in the MCAI and service information referenced above. The FAA is proposing this AD because the agency evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop on other products of the same type design.
This proposed AD would require repetitive inspections of the clamshell coupling bonding wires, fuel couplings, and associated sleeves for discrepancies that meet specified criteria, and replacement as necessary; repetitive inspections of the fuel tube end ferrules, fuel component end ferrules, and ferrule O-ring flanges for damage and wear, and rework of parts; and electrical bonding checks of all threaded couplings on the inboard vent lines in the left and right wings. This proposed AD would also require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations.
This proposed AD would require revisions to certain operator maintenance documents to include new actions (
The FAA estimates that this proposed AD affects 52 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
The FAA has determined that revising the maintenance or inspection program takes an average of 90 work-hours per operator, although this number may vary from operator to operator. In the past, the FAA has estimated that this action takes 1 work-hour per airplane. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), the FAA has determined that a per-operator estimate is more accurate than a per-airplane estimate. Therefore, the FAA estimates the total cost per operator to be $7,650 (90 work-hours × $85 per work-hour).
The FAA estimates the following costs to do any necessary on-condition actions that would be required based on the results of any required or optional actions. The FAA has no way of determining the number of aircraft that might need these on-condition actions:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments by December 16, 2019.
None.
This AD applies to De Havilland Aircraft of Canada Limited Model DHC-8-400, -401 and -402 airplanes, certificated in any category, manufacturer serial numbers 4001, 4003, and subsequent.
Air Transport Association (ATA) of America Code 28, Fuel.
This AD was prompted by reports of wear on fuel couplings, bonding springs, and sleeves as well as fuel tube end ferrules and fuel component end ferrules. The FAA is proposing this AD to address such wear, which could reduce the integrity of the electrical bonding paths through the fuel line and components, and ultimately lead to fuel tank ignition in the event of a lightning strike.
Comply with this AD within the compliance times specified, unless already done.
For airplanes having serial numbers 4001 and 4003 through 4575 inclusive that, as of the effective date of this AD, have not done the actions specified in Bombardier Service Bulletin 84-28-21: At the applicable times specified in paragraph (g)(1) or (2) of this AD, do the actions specified in paragraphs (h)(1) and (2) of this AD.
(1) For all airplanes except those identified in paragraph (g)(2) of this AD: Within 6,000 flight hours or 36 months, whichever occurs first after the effective date of this AD.
(2) For airplanes with an original airworthiness certificate or original export certificate of airworthiness issued on or after the effective date of this AD: Within 6,000 flight hours or 36 months, whichever occurs first after the date of issuance of the original airworthiness certificate or the date of issuance of the original export certificate of airworthiness.
At the applicable times specified in paragraph (g)(1) or (2) of this AD, do the actions specified in paragraphs (h)(1) and (2) of this AD. Repeat the actions thereafter at intervals not to exceed 6,000 flight hours or 36 months, whichever occurs first.
(1) Do a detailed inspection of the clamshell coupling bonding wires, fuel couplings, and associated sleeves for discrepancies that meet specified criteria, as identified in, and in accordance with paragraph 3.B., “Procedure,” of the Accomplishment Instructions of Bombardier Service Bulletin 84-28-20, Revision D, dated November 23, 2018. If any conditions are found meeting the criteria specified in Bombardier Service Bulletin 84-28-20, Revision D, dated November 23, 2018, before further flight, replace affected parts with new couplings and sleeves of the same part number, in accordance with paragraph 3.B., “Procedure,” of the Accomplishment Instructions of Bombardier Service Bulletin 84-28-20, Revision D, dated November 23, 2018.
(2) Do a detailed inspection of the fuel tube end ferrules, fuel component end ferrules, and ferrule O-ring flanges for damage and wear, and rework (repair, replace, or blend, as applicable) the parts, in accordance with paragraph 3.B., “Procedure,” of the
For airplanes having serial numbers 4001 and 4003 through 4575 inclusive: Doing a detailed inspection of the fuel tube end ferrules, fuel component end ferrules, and ferrule O-ring flanges for damage and wear, and reworking (repair, replace, or blend, as applicable) the parts; and doing a retrofit (structural rework) of the fuel couplings, isolators, and structural provisions, in accordance with paragraph 3.B., “Procedure,” of the Accomplishment Instructions of Bombardier Service Bulletin 84-28-21, Revision C, dated July 13, 2018, terminates the inspections specified in paragraphs (h)(1) and (2) of this AD.
For airplanes having serial numbers 4001, 4003 through 4489 inclusive, and 4491 through 4575 inclusive that, as of the effective date of this AD, have done the actions specified in Bombardier Service Bulletin 84-28-21, Revision A, dated September 29, 2017; and airplanes having serial numbers 4576 through 4581 inclusive: Within 6,000 flight hours or 36 months after the effective date of this AD, whichever occurs first, do the actions specified in paragraph (j)(1) or (2) of this AD.
(1) Accomplish electrical bonding checks of all threaded couplings on the inboard vent lines in the left and right wings, in accordance with paragraph 3.B., “Procedure,” of the Accomplishment Instructions of Bombardier Service Bulletin 84-28-26, Revision A, dated November 29, 2018.
(2) Do a detailed inspection of the fuel tube end ferrules, fuel component end ferrules, and ferrule O-ring flanges for damage and wear, and rework (repair, replace, or blend, as applicable) the parts; and a retrofit (structural rework) of the fuel couplings, isolators, and structural provisions in accordance with paragraph 3.B., “Procedure,” of the Accomplishment Instructions of Bombardier Service Bulletin 84-28-21, Revision C, dated July 13, 2018.
Within 30 days after the effective date of this AD, revise the existing maintenance or inspection program, as applicable, to incorporate the information specified in Q400 Dash 8 (Bombardier) Temporary Revision ALI-00AS, dated April 24, 2018; and Q400 Dash 8 (Bombardier) Temporary Revision ALI-00AT, dated April 24, 2018. Except as specified in paragraph (l) of this AD, the initial compliance time for doing the tasks in Q400 Dash 8 (Bombardier) Temporary Revision ALI-00AS, dated April 24, 2018, is at the time specified in Q400 Dash 8 (Bombardier) Temporary Revision ALI-00AS, dated April 24, 2018, or within 30 days after the effective date of this AD, whichever occurs later.
The initial compliance time for task 284000-419 is at the time specified in paragraph (l)(1) or (2) of this AD, as applicable, or within 30 days after the effective date of this AD, whichever occurs later.
(1) For airplanes having serial numbers 4001 and 4003 through 4575, inclusive: Within 18,000 flight hours or 108 months, whichever occurs first, after the earliest date of embodiment of Bombardier Service Bulletin 84-28-21 on the airplane.
(2) For airplanes having serial numbers 4576 and subsequent: Within 18,000 flight hours or 108 months, whichever occurs first, from the date of issuance of the original airworthiness certificate or original export certificate of airworthiness.
After the existing maintenance or inspection program has been revised as required by paragraph (k) of this AD, no alternative actions (
Although Bombardier Service Bulletin 84-28-20, Revision D, dated November 23, 2018, specifies to submit certain information to the manufacturer, this AD does not include that requirement.
(1) This paragraph provides credit for the actions required by paragraphs (h)(1) and (2) of this AD, if those actions were performed before the effective date of this AD using the service information specified in paragraph (o)(1)(i), (ii), or (iii) of this AD.
(i) Bombardier Service Bulletin 84-28-20, Revision A, dated December 14, 2016.
(ii) Bombardier Service Bulletin 84-28-20, Revision B, dated February 13, 2017.
(iii) Bombardier Service Bulletin 84-28-20, Revision C, dated April 28, 2017.
(2) For the airplane having serial number 4164, this paragraph provides credit for the initial inspections required by paragraphs (h)(1) and (2) of this AD, if those actions were performed before the effective date of this AD using Bombardier Service Bulletin 84-28-20, dated September 30, 2016.
(3) This paragraph provides credit for the actions specified in paragraph (i) of this AD if those actions were performed before the effective date of this AD using the service information specified in paragraph (o)(3)(i), (ii), or (iii) of this AD.
(i) Bombardier Service Bulletin 84-28-21, dated August 31, 2017.
(ii) Bombardier Service Bulletin 84-28-21, Revision A, dated September 29, 2017.
(iii) Bombardier Service Bulletin 84-28-21, Revision B, dated June 8, 2018.
(4) This paragraph provides credit for the actions required by paragraph (j)(1) of this AD if those actions were performed before the effective date of this AD using Bombardier Service Bulletin 84-28-26, dated August 14, 2018.
(5) This paragraph provides credit for the actions required by paragraph (j)(2) of this AD if those actions were performed before the effective date of this AD using Bombardier Service Bulletin 84-28-21, Revision B, dated June 8, 2018.
(6) For airplanes having serial numbers 4001, 4003 through 4489 inclusive, and 4491 through 4575 inclusive, and that are post Bombardier Service Bulletin 84-28-21, Revision A, dated September 29, 2017: This paragraph provides credit for the actions required by paragraph (j) of this AD if those actions were performed prior to the effective date of this AD using the service information specified in paragraph (o)(6)(i) or (ii) of this AD.
(i) Bombardier Modification Summary Package (ModSum) IS4Q2800032, dated February 1, 2018.
(ii) Any airworthiness limitation change request (ACR) specified in figure 1 to paragraph (o)(6)(ii) of this AD.
The following provisions also apply to this AD:
(1)
(2)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian AD CF-2017-04R2, dated September 25, 2018, for related information. This MCAI may be found in the AD docket on the internet at
(2) For more information about this AD, contact Joseph Catanzaro, Aerospace Engineer, Airframe and Propulsion Section, FAA, New York ACO Branch, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7366; fax 516-794-5531; email
(3) For service information identified in this AD, contact De Havilland Aircraft of Canada Ltd., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416-375-4000; fax 416-375-4539; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to supersede Airworthiness Directive (AD) 2018-19-26, which applies to all Dassault Aviation Model MYSTERE-
The FAA must receive comments on this proposed AD by December 16, 2019.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this NPRM, contact Dassault Falcon Jet Corporation, Teterboro Airport, P.O. Box 2000, South Hackensack, NJ 07606; telephone 201-440-6700; internet
You may examine the AD docket on the internet at
Tom Rodriguez, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3226.
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
The FAA will post all comments, without change, to
The FAA issued AD 2018-19-26, Amendment 39-19427 (83 FR 49275, October 1, 2018) (“AD 2018-19-26”), for all Dassault Aviation Model MYSTERE-FALCON 200 airplanes. AD 2018-19-26 requires revising the maintenance or inspection program, as applicable, to incorporate new or more restrictive maintenance requirements and airworthiness limitations. AD 2018-19-26 resulted from a determination that new or more restrictive maintenance requirements and airworthiness limitations are necessary. The FAA issued AD 2018-19-26 to address fatigue cracking, damage, and corrosion in principal structural elements; such fatigue cracking, damage, and corrosion could result in reduced structural integrity of the airplane.
AD 2010-26-05, Amendment 39-16544 (75 FR 79952, December 21, 2010) requires repetitive inspections for overpressure tightness on both regulating valves; these inspections have since been incorporated into the airworthiness limitations document for the affected airplanes. Therefore, accomplishing the actions in this proposed AD would terminate the requirements of paragraph (g)(1) of AD 2010-26-05 for Dassault Aviation Model MYSTERE-FALCON 200 airplanes.
Since the FAA issued AD 2018-19-26, the agency has determined that new or more restrictive airworthiness limitations are necessary.
The European Union Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2019-0153, dated July 3, 2019 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Dassault Aviation Model MYSTERE-FALCON 200 airplanes.
This proposed AD was prompted by a determination that new or more restrictive airworthiness limitations are necessary. The FAA is proposing this AD to address fatigue cracking, damage, and corrosion in principal structural elements; such fatigue cracking, damage, and corrosion could result in reduced structural integrity of the airplane. See the MCAI for additional background information.
You may examine the MCAI in the AD docket on the internet at
Dassault Aviation has issued Chapter 5-40-00, Airworthiness Limitations, Revision 18, dated January 15, 2019, of the Dassault Falcon 200 Maintenance Manual. This service information describes mandatory maintenance tasks that operators must perform at specified intervals. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the State of Design Authority, the FAA has been notified of the unsafe condition described in the MCAI and service information referenced above. The FAA is proposing this AD because the FAA evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop on other products of the same type design.
This proposed AD would require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations.
This proposed AD would require revisions to certain operator maintenance documents to include new actions (
The FAA estimates that this proposed AD affects 9 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
The FAA estimates the total cost per operator for the retained actions from AD 2018-19-26 to be $7,650 (90 work-hours × $85 per work-hour).
The FAA has determined that revising the existing maintenance or inspection program takes an average of 90 work-hours per operator, although the FAA recognizes that this number may vary from operator to operator. In the past, the FAA has estimated that this action takes 1 work-hour per airplane. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), the FAA has determined that a per-operator estimate is more accurate than a per-airplane estimate. Therefore, the FAA estimates the total cost per operator to be $7,650 (90 work-hours × $85 per work-hour).
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments by December 16, 2019.
(1) This AD replaces AD 2018-19-26, Amendment 39-19427 (83 FR 49275, October 1, 2018) (“AD 2018-19-26”).
(2) This AD affects 2010-26-05, Amendment 39-16544 (75 FR 79952, December 21, 2010) (“AD 2010-26-05”).
This AD applies to all Dassault Aviation Model MYSTERE-FALCON 200 airplanes, certificated in any category.
Air Transport Association (ATA) of America Code 05, Time Limits/Maintenance Checks.
This AD was prompted by a determination that new or more restrictive airworthiness limitations are necessary. The FAA is issuing this AD to address fatigue cracking, damage, and corrosion in principal structural elements; such fatigue cracking, damage, and corrosion could result in reduced structural integrity of the airplane.
Comply with this AD within the compliance times specified, unless already done.
This paragraph restates the requirements of paragraph (g) of AD 2018-19-26, with no changes. Within 90 days after November 5, 2018 (the effective date of AD 2018-19-26), revise the maintenance or inspection program, as applicable, to incorporate Chapter 5-40-00, Airworthiness Limitations, Revision 17, dated December 20, 2017, of the Dassault Falcon 200 Maintenance Manual. The initial compliance time for accomplishing the actions is at the applicable time specified in Chapter 5-40-00, Airworthiness Limitations, Revision 17, dated December 20, 2017, of the Dassault Falcon 200 Maintenance Manual; or within 90 days after November 5, 2018 (the effective date of AD 2018-19-26); whichever occurs later.
This paragraph restates the requirements of paragraph (h) of AD 2018-19-26, with a new exception. Except as required by paragraph (i) of this AD, after the maintenance or inspection program has been revised as required by paragraph (g) of this AD, no alternative actions (
Within 90 days after the effective date of this AD, revise the existing maintenance or inspection program, as applicable, to incorporate the information specified in Chapter 5-40-00, Airworthiness Limitations, Revision 18, dated January 15, 2019, of the
After the existing maintenance or inspection program has been revised as required by paragraph (i) of this AD, no alternative actions (
Accomplishing the actions required by paragraph (g) or (i) of this AD terminates the requirements of paragraph (g)(1) of AD 2010-26-05, for Dassault Aviation Model MYSTERE-FALCON 200 airplanes.
The following provisions also apply to this AD:
(1)
(i) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(ii) AMOCs approved previously for AD 2018-19-26, are approved as AMOCs for the corresponding provisions of this AD.
(2)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA AD 2019-0153, dated July 3, 2019, for related information. This MCAI may be found in the AD docket on the internet at
(2) For more information about this AD, contact Tom Rodriguez, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3226.
(3) For service information identified in this AD, contact Dassault Falcon Jet Corporation, Teterboro Airport, P.O. Box 2000, South Hackensack, NJ 07606; telephone 201-440-6700; internet
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for certain Airbus SAS Model A350-941 airplanes. This proposed AD was prompted by a determination that ram air turbine (RAT) performance may be below the expected (certificated) level when the landing gear is extended. This proposed AD would require installing flight control and guidance system (FCGS) software (SW) X11 Standard (STD), as specified in a European Union Aviation Safety Agency (EASA) AD, which will be incorporated by reference. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by December 16, 2019.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For the material identified in this proposed AD that will be incorporated by reference (IBR), contact the EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 89990 1000; email
You may examine the AD docket on the internet at
Kathleen Arrigotti, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3218.
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
The FAA will post all comments received, without change, to
The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2019-0203, dated August 20, 2019 (“EASA AD 2019-0203”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus SAS Model A350-941 airplanes.
This proposed AD was prompted by a determination that RAT performance may be below the expected (certificated) level when the landing gear is extended. The FAA is proposing this AD to address this condition, which, if not corrected, could lead to partial or total loss of RAT electrical power generation when the RAT is deployed in an emergency situation, possibly resulting in reduced control of the airplane. See the MCAI for additional background information.
EASA AD 2019-0203 describes procedures for installing FCGS SW X11 STD. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to a bilateral agreement with the State of Design Authority, the FAA has been notified of the unsafe condition described in the MCAI referenced above. The FAA is proposing this AD because the agency evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the actions specified in EASA AD 2019-0203 described previously, as incorporated by reference, except for any differences identified as exceptions in the regulatory text of this AD.
In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA initially worked with Airbus and EASA to develop a process to use certain EASA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has since coordinated with other manufacturers and civil aviation authorities (CAAs) to use this process. As a result, EASA AD 2019-0203 will be incorporated by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2019-0203 in its entirety, through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in the EASA AD does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in the EASA AD. Service information specified in EASA AD 2019-0203 that is required for compliance with EASA AD 2019-0203 will be available on the internet at
The FAA considers this proposed AD interim action. If final action is later identified, the FAA might consider further rulemaking then.
The FAA estimates that this proposed AD affects 13 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
According to the manufacturer, some or all of the costs of this proposed AD may be covered under warranty, thereby reducing the cost impact on affected individuals. The FAA does not control warranty coverage for affected individuals. As a result, the FAA has included all known costs in the cost estimate.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments by December 16, 2019.
None.
This AD applies to Airbus SAS Model A350-941 airplanes, certificated in any category, as identified in European Union Aviation Safety Agency (EASA) AD 2019-0203, dated August 20, 2019 (“EASA AD 2019-0203”).
Air Transport Association (ATA) of America Code 24, Electrical power.
This AD was prompted by a determination through testing that ram air turbine (RAT) performance may be below the expected (certificated) level when the landing gear is extended. The FAA is issuing this AD to address this condition, which, if not corrected, could lead to partial or total loss of RAT electrical power generation when the RAT is deployed in an emergency situation, possibly resulting in reduced control of the airplane.
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraph (h) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, EASA AD 2019-0203.
(1) Where EASA AD 2019-0203 refers to its effective date, this AD requires using the effective date of this AD.
(2) The “Remarks” section of EASA AD 2019-0203 does not apply to this AD.
The following provisions also apply to this AD:
(1)
(2)
(3)
(1) For information about EASA AD 2019-0203, contact the EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 89990 6017; email
(2) For more information about this AD, contact Kathleen Arrigotti, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3218.
Securities and Exchange Commission.
Proposed rule amendment.
The Securities and Exchange Commission (the “Commission”) is proposing amending rule 0-5 under the Investment Company Act of 1940 (“Act”) to establish an expedited review procedure for applications that are substantially identical to recent precedent as well as a new rule to establish an internal timeframe for review of applications outside of such expedited procedure. In addition, the Commission is proposing amending rule 0-5 under the Act to deem an application outside of expedited review withdrawn when the applicant does not respond in writing to comments within 120 days.
Comments should be submitted on or before November 29, 2019.
Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
Studies, memoranda, or other substantive items may be added by the Commission or staff to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on the Commission's website. To ensure direct electronic receipt of such notifications, sign up through the “Stay Connected” option at
Steven Amchan and Hae-Sung Lee, Senior Counsels; Daniele Marchesani, Assistant Chief Counsel; Chief Counsel's Office, at (202) 551-6825; or Keith Carpenter, Senior Special Counsel; Disclosure Review and Accounting Office, at (202) 551-6921, Division of Investment Management, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-8549.
The Securities and Exchange Commission (“Commission”) is proposing an amendment to 17 CFR 270.05 (rule 0-5) under the Investment Company Act of 1940 [15 U.S.C. 80a
In 1940, Congress passed the Act in response to numerous abuses that existed in the investment company industry prior to that time.
The Act, therefore, contains provisions that empower the Commission to issue orders granting exemptions from provisions of the Act, authorizing transactions, or providing other relief.
The Commission regularly receives applications seeking orders for exemptions or other relief under the Act.
The staff of the Division of Investment Management (“Staff” or “Division”) reviews the applications that the
The applications process under the Act has been a significant and valuable tool in the evolution of the investment management industry, and sometimes is the origin of new rules under the Act.
As discussed in the previous section, granting appropriate exemptions from the Act can provide important economic benefits to funds and their shareholders, foster financial innovation, and increase the diversity of opportunities for investors. We thus recognize the importance of considering and, where appropriate, granting relief as efficiently and quickly as possible. However, in light of our statutory mission of investor protection and the substantive concerns underlying the Act, we also recognize the critical importance of analyzing applications carefully to determine whether the relief requested, together with any terms and conditions of the relief, meets the relevant statutory standards.
Over time, some applicants have expressed concern regarding the length of time required to obtain an order on both routine and novel applications. In 1990, the Commission requested comments on, among other things, whether it should adopt different procedures for applications.
In subsequent years, initiatives aimed at improving the application process have continued. For example, in 2008, the Staff implemented an internal performance target of providing initial comments on at least 80% of applications within 120 days after their receipt.
The amount of time necessary for the Staff to review an application depends in large part on the nature of the application. The Staff generally characterizes applications as falling into two general categories: (1) Applications that seek novel, largely unprecedented relief or relief for which some Commission precedent exists but that raises additional questions of fact, law, or policy, and (2) applications that seek relief substantively identical to relief that the Commission has recently granted (“routine applications”).
Applications in the first category may involve financial innovations or transactions on the forefront of the investment management industry. In those instances, substantial time and resources are needed to analyze thoroughly the legal and policy issues raised, and the recommendations the Staff must make to the Commission often include significant policy considerations. As part of this process, the Staff generally works with the applicant to refine the proposal and to develop appropriate terms and conditions for the relief that address the applicable standards under the Act. This process can be time consuming.
With respect to routine applications, because the Staff has already performed the overall legal and policy analysis underlying the requested relief, the Staff generally should be able to review these applications much more quickly. Sometimes, however, that is not the case. In particular, routine applications for which there is clear precedent nonetheless often contain significantly different versions of the terms or representations compared to the relevant precedent. These applications require extra time to review because the Staff must analyze the changes to determine whether they alter the scope or nature of the requested relief. On more rare occasions, the Staff may re-evaluate the appropriateness of the relief or the terms and conditions associated with the relief, or consider whether the relief can appropriately be granted to a specific applicant.
For all applications, the Commission must consider the applicants' desire to obtain prompt relief while ensuring it has sufficient time to meet its overarching responsibility to consider whether an application meets the standard for the requested relief.
Our proposal seeks to make the application process more efficient.
In order to expedite the review of routine applications, the Commission is proposing amendments to rule 0-5 under the Act, which sets forth the procedure for applications under the Act. These amendments would establish an expedited review procedure for applications that are substantially identical to recent precedent. We believe that the proposed approach balances applicants' desire for a prompt decision on their application with the Commission's need for adequate time to consider requests for relief.
We believe that the new procedure should encourage applicants for expedited review to submit applications substantially identical to precedent, which would then help facilitate Staff review. Accordingly, we should be able to grant relief that meets the applicable standards more quickly, and, in turn, devote additional resources to the review of more novel requests.
Proposed new rule 0-5(d)(1) provides that an applicant may request expedited review if the application is substantially identical to two other applications for which an order granting the requested relief has been issued within two years of the date of the application's initial filing. Rule 0-5(d)(2) defines “substantially identical” applications as those requesting relief from the same sections of the Act and rules thereunder, containing identical terms and conditions, and differing only with respect to factual differences that are not material to the relief requested.
Certain kinds of applications appear highly unlikely to be suitable for expedited review. These would include, for example, applications filed under sections 2(a)(9), 3(b)(2), 6(b), 9(c), and 26(c) of the Act.
We request comment generally on these proposed eligibility provisions and specifically on the following issues:
• Do these requirements strike the appropriate balance between permitting applicants to seek the relief they need and facilitating the Staff's prompt review of routine applications?
• Is the “substantially identical” standard appropriate? Does it effectively limit the applications eligible for expedited review to routine applications that the Staff can review in an expedited manner?
• Is the two-year standard appropriate? Does it effectively limit precedents to recent applications where it is unlikely that the Staff's review of whether the terms and conditions of an application are still appropriate would take a significant amount of time? Should the two-year period be longer? There are lines of applications that may be routine, but may not have as frequent filings currently as other lines (
• Is the view that applications under sections 2(a)(9), 3(b)(2), 6(b), 9(c), and 26(c) of the Act appear unlikely to be suitable for the expedited review procedure appropriate? Should rule 0-5 explicitly exclude such applications from expedited review? Are there other applications that would be unsuitable for the expedited review process?
• Are there applications filed under provisions other than rule 0-5 that should be included in the expedited review process?
Applicants seeking expedited review will need to include certain information with the application under proposed rule 0-5(e). Proposed rule 0-5(e)(1) requires that the cover page of the application include a notation prominently stating “EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d).” This proposed requirement would assist the Staff in clearly identifying and effectively processing the request for expedited review. Proposed rule 0-5(e)(2) requires applicants to submit exhibits with marked copies of the application showing changes from the final versions of the two precedent applications. These exhibits would help the Staff to readily discern any variations between the application seeking expedited review and the precedential applications. Proposed rule 0-5(e)(3) requires an accompanying cover letter, signed, on behalf of the applicant, by the person executing the application, (i) identifying the two substantially identical applications that serve as precedent; and (ii) certifying that the applicant believes the application meets the requirements of rule 0-5(d) and that the marked copies required by rule 0-5(e)(2) are complete and accurate.
• Is the requirement that the application include marked copies showing changes from final versions of the precedent applications appropriate? Would this requirement be
• Is the requirement that the applicant include a cover letter identifying precedent and certifying that the requirements of rule 0-5(d) are met appropriate? In particular, is it appropriate to require a “certification” for the substantially identical standard, considering that some discretion may be involved in the determination of whether two applications are substantially identical? Should we modify the certification requirement accordingly? Is the requirement of a certification as to the completeness and accuracy of the marked copies of precedent appropriate? How might the certification requirement add to the cost of an application? Is there an alternative mechanism that could help ensure that applicants make correct use of the expedited review process?
Under proposed rule 0-5(f), a notice for an application submitted for expedited review would be issued no later than 45 days from the date of filing
While we anticipate that the notice for an application meeting proposed rule 0-5(d)'s criteria would typically be issued within the 45-day timeline, there may be situations where further consideration is necessary for appropriate consideration of the application. These may include, for example, cases where the Commission is considering a change in policy that would make the requested relief, or its terms and conditions, no longer appropriate. There also may be cases where the Staff is investigating potential violations of Federal securities laws that may be relevant to the request for relief.
If the Staff notifies the applicant under rule 0-5(f)(1)(ii) that an application is not eligible for expedited review, it would ask the applicant to either withdraw the application or amend it to make changes so that the application could proceed outside of the expedited review process.
We request comment generally on this proposed timeframe for expedited review and specifically on the following issues:
• Does the proposed 45-day time period strike the right balance between facilitating a prompt review and allowing Staff to appropriately review an application? Should the time period be shorter? Should the time period be longer?
• Are the grounds for ineligibility for expedited review appropriate? Should there be additional, or different, grounds for ineligibility? Is the “necessary for appropriate consideration of the application” standard for ineligibility appropriate? Should we replace, delete, or modify it?
Certain conditions would govern the operation of the 45-day time period. In particular, the 45-day period would restart upon the filing of any amendment that the Commission or Staff did not solicit. The Staff would need additional time to review the change or changes made in such an amendment. Notwithstanding this provision, however, the Staff may act before the end of the additional 45-day period, if the unsolicited amendment relates only to factual differences not material to the relief requested or to some other minor change.
In addition, any comment on the application by the Staff would pause the 45-day period. Although the Commission anticipates that the Staff would issue few comments on an application that qualifies for expedited review, there may be times when a comment is necessary, for example, to either reflect an event that occurred after the application was filed, or to resolve technical matters.
The proposal provides that the 45-day period would pause upon such a request by the Staff and would resume 14 days after the filing of an amended application that is responsive to such request. The Staff would need the additional time to review the amended application and determine whether a notice can be issued under rule 0-5(f)(1)(i). Based on the Division's experience regarding amendments to routine applications, we propose 14 days as the appropriate amount of time for the Staff to make this determination.
Additionally, the proposed rule provides that the 45-day period will pause upon any irregular closure of the Commission's Washington, DC office to the public for normal business, including, but not limited to, closure due to a lapse in federal appropriations, national emergency, inclement weather, or ad hoc federal holiday. The 45-day period will resume upon the reopening of the Commission's Washington, DC office to the public for normal business.
The proposed rule would further provide that, if applicants do not file an amendment responsive to the Staff's requests for modification within 30 days of receiving such requests, including a marked copy showing any changes made and a certification that such marked copy is complete and accurate, the application will be deemed withdrawn. This withdrawal would be without prejudice. In the rule we are proposing here, we would be committing to processing routine applications promptly. We believe that for applicants to benefit from the expedited processing, they should also act expeditiously.
• We request comment generally on the proposed amendment procedure for applications requesting expedited review and specifically on the following issues: Is it appropriate to restart the 45-day time period upon filing of an unsolicited amendment? Should the 45-day period pause for a shorter number of days instead? Would the provision for restarting the 45-day period have a chilling effect on applicants wishing to submit unsolicited amendments?
• Is the pause mechanism appropriate for processing amendments submitted in response to comments? Is the 14 days allowed for resuming the 45-day period following submission of a responsive amendment appropriate? Is 14 days too long? Too short?
• Is it appropriate to deem withdrawn any application submitted for expedited review for which applicants have not
In addition to a new expedited review process, the Commission is also proposing a new rule to provide a timeframe for all other applications filed under rule 0-5. We believe that the proposed rule 17 CFR 202.13 would provide applicants with added transparency regarding the timing of the review of applications. Currently, the Division uses an internal performance timeline to govern the timing of Staff responses to applications and amendments. While the Staff in recent years has been successful in meeting the applicable timeline, and has recently moved to the same 90-day timeline set forth by the proposed rule,
Under the proposed rule, the Staff should take action on the application within 90 days of the initial filing and amendments thereto.
For the purposes of the proposed rule, action on an application or amendment would consist of (i) issuing a notice of application; (ii) providing the applicants with comments; or (iii) informing the applicants that the application will be forwarded to the Commission, in which case the application is no longer subject to paragraph (a) of the rule. If the Staff does not support the requested relief, the Staff typically notifies applicants that it would recommend that the Commission deny the application and give applicants the opportunity to withdraw the application before such recommendation is made.
We request comment generally on the procedures for “standard review” of applications and specifically on the following issues:
• Is the 90-day period for taking action on applications appropriate? Is this period too long? Too short?
• Are 90-day extension periods appropriate? Are they too long? Too short?
• Is the Commission's specification of potential actions on an application appropriate? Does the proposal adequately cover actions on applications that may be taken?
The Commission is also proposing to amend rule 0-5 to deem an application withdrawn if the applicant does not respond in writing to Staff comments. Deeming inactive applications withdrawn will both assist us in maintaining a clear record of pending applications, as well as provide the public, including potential new applicants, with a better sense of the applications that the Commission is actively considering at any given time.
Proposed rule 0-5(g) would provide that, if an applicant has not responded in writing to a request for clarification or modification of an application filed under this section within 120 days after the request, the application will be deemed withdrawn.
An applicant can request to withdraw an application with a letter filed as form APP-WD on EDGAR, with the corresponding permission being filed as form APP-WDG on EDGAR. The Staff would reflect that an application is deemed withdrawn under proposed rule 0-5(g) by uploading a form APP-WDG on EDGAR, without need for any action by the applicant.
We request comment generally on our proposal regarding deeming applications withdrawn and specifically on the following issues:
• Is the 120-day period appropriate for deeming an application withdrawn? Should it be longer? Shorter?
Finally, to improve the transparency of the applications process, we intend to begin to publicly disseminate Staff comments on applications, and responses to those comments, no later than 120 days after the final disposition of an application.
The Staff provides applicants with comments on an application, for example, where it believes that the current application does not meet the standard for granting an exemption.
We plan to announce in any subsequent adopting release a specific date for effectiveness of this new approach; that date will depend on completion of necessary technical modifications.
We invite comments on the approach we intend to take, and specifically on the following issues:
• Is the public dissemination of Staff comments to applications, and responses thereto (subject to confidentiality requests) in the public interest? Would this dissemination potentially lead to competitive harm affecting applicants? Would it create undesirable incentives regarding the use of the process for making confidential treatment requests?
• What types of information that applicants currently disclose in
We are mindful of the costs imposed by, and the benefits obtained from, our rules. Section 2(c) of the Act states that when the Commission is engaging in rulemaking under the Act and is required to consider or determine whether the action is necessary or appropriate in (or, with respect to the Act, consistent with) the public interest, the Commission shall consider whether the action will promote efficiency, competition, and capital formation, in addition to the protection of investors. The following analysis considers the potential economic effects that may result from the proposed amendment to rule 0-5, including the benefits and costs to applicants and other market participants as well as the broader implications of the proposal for efficiency, competition, and capital formation.
The scope of the benefits and costs of the proposed amendment to rule 0-5 depends on the expected volume of applications generally as well as the expected volume of applications for expedited review in particular. Those benefits and costs also depend on the extent to which applicant experience under the proposed amendment to rule 0-5 is expected to differ from current experience. Below, we describe the number of applications as well as the time the Commission takes in responding to such applications.
The table below reports the number of initial applications by category and calendar year for 2016, 2017, and 2018.
Among the 358
The table below reports the number of amended filings associated with initial applications from 2016 to 2018, for those applications that resulted in notices from 2016 to 2018.
Of the 213 applications from 2016 to 2018, 42 (20%) initial applications resulted in a notice without any amendment. 103 (48%) applications resulted in a notice after one amendment to the initial application. Overall, 68 (32%) of initial applications required two, or more, amended applications prior to receiving a notice.
The current rules governing applications for exemption serve as a baseline against which we assess the economic impacts of the proposed amendment to rule 0-5. At present, there are no rules under the Act or other rules governing timeframes for Commission consideration of applications for exemption. While rules governing timeframes for the consideration of applications for exemption have not been formalized, in
The table below summarizes the number of days between an applicant's initial filing and a response from the Commission from 2016 to 2018.
Overall, from 2016 through 2018, 24% of applicants experienced times between initial filing and a response from the Commission of 45 days, or less. 59% of applicants experienced times of 90 days, or less, and 99% of applicants experienced times of 120 days, or less.
We are proposing an expedited review process for routine applications and a new rule to deem an application for expedited exemptive relief withdrawn when an applicant fails to respond to Staff comments. These proposed actions could have both direct as well as indirect effects. Because the proposed actions affect the application process, the proposed actions could affect both applicants and the Commission. Further, to the extent the proposed actions have a direct effect on the Commission, there could arise an indirect effect on applicants as well as investors. These potential direct and indirect effects are discussed in the context of benefits and costs of the proposal described below.
The magnitude of these estimated expected effects will depend, at least in part, on the extent to which anticipated outcomes differ from the baseline. For example, as noted above, we calculate that in recent years 24% of initial applications have received Commission response within 45 days.
We expect the proposed expedited review process will have the direct effect of allowing the benefits of relief to be realized by applicants more quickly than otherwise would be the case. Further, we expect that the proposed expedited review procedure would make the application process less expensive. For example, we believe that the new procedure would encourage applicants for expedited review to submit applications that are substantially similar to precedent. Submitting applications that are substantially similar to precedent should reduce the cost of drafting applications as well as reduce costs associated with needing to file multiple amendments.
We estimate that the expedited review process would significantly reduce costs for applicants compared to applicants receiving orders under standard review. We believe the estimated total cost burden per application for applicants to receive an order for an average exemptive application under standard review utilizing outside counsel is approximately $74,550
The estimated savings for an application under expedited review compared to an average application under the standard review process would be approximately $59,640
$59,640 (estimated savings per application under expedited review) × 50 (estimated number of applications under expedited review) × 0.80 (approximate percentage of applications prepared by outside counsel) = $2,385,600.
120 (estimated hours saved per application under expedited review) × 50 (estimated number of applications under expedited review) × 0.20 (approximate percentage of applications prepared by in-house counsel) = 1,200.
We expect that the proposed actions will also have a direct effect on the Commission. As noted previously, often the most significant factor affecting the
The anticipated reduction in Staff resources required to review applications could result in indirect effects associated with the proposed actions. In particular, to the extent Staff is able to devote greater resources to more novel applications, the benefits realized by applicants with more novel applications may be realized more quickly than otherwise would be the case. To the extent those benefits are passed along to investors, investors would experience indirect benefits as well. Additionally, to the extent these indirect benefits accrue to applicants with more novel applications, the proposed actions could foster the submission of a greater number of novel applications which could lead to greater innovation in investment products. Further, the proposed actions could benefit investors by enhancing competition among market participants, which we discuss in more detail below.
With respect to applications for expedited review, proposed rule 0-5(e)(1) requires that the cover page of the application include a notation prominently stating “EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d).” Based on conversations with applicants and Staff experience, we expect the cost of the notation to be $248.50 per application utilizing outside counsel and $196 per application utilizing in-house counsel.
Proposed rule 0-5(e)(2) also requires applicants to submit exhibits with marked copies of the application showing changes from the final versions of the two precedent applications. Based on conversations with applicants and Staff experience, for those applicants relying on outside counsel to prepare two marked copies against two recent precedents, the estimated cost is $2,485 per application.
We estimate to receive approximately 50 applications
Proposed rule 0-5(e)(3) also requires the accompanying cover letter to certify on behalf of the applicant that applicant believes the application meets the requirements of rule 0-5(d) and that the marked copies required by rule 0-5(e)(2) are complete and accurate. The written certification is similar to the representation required from counsel under rule 485 for post-effective amendments filed by certain registered investment companies. Such a representation would be subject to section 34(b) of the Act.
The proposed amendment to rule 0-5 would also provide that with respect to expedited reviews, if applicants do not file an amendment responsive to Staff's requests for modification within 30 days of receiving such requests, including a marked PDF copy showing any changes made and a certification that such marked copy is accurate and complete, the application will be deemed withdrawn. We believe the cost of complying with the 30-day requirement would be the same as complying with the current 60-day requirement.
Finally, proposed rule 0-5(e) creates the opportunity for applicants whose applications meet certain requirements to request expedited review. The proposed amendment to rule 0-5 does not require potential applicants to request expedited review. Potential applicants for expedited review, then, would only bear the costs of requesting expedited review in those circumstances where the applicant believes the benefits justify the costs.
Proposed rule 0-5(g) would provide that, if an applicant has not responded in writing to a request for clarification or modification of an application filed under standard review within 120 days after the request, the application will be deemed withdrawn. As an oral response would not stop an application from being deemed withdrawn, proposed rule 0-5(g), would require applicants to respond “in writing” and therefore create an additional cost. We believe the “in writing” requirement would increase the burden by 2 hours or $994 per application for applicants relying on outside counsel.
This section evaluates the impact of proposed rule 0-5(e) on efficiency, competition, and capital formation.
As discussed above, applications for which there is clear precedent often omit standard terms or conditions, or contain significantly different versions of the standard terms or representations, from the relevant precedent. As a result, increased time and resources are required for the Staff to review the changes to determine whether they alter the scope or nature of the requested relief. To the extent the new procedures would encourage applicants for expedited review to submit applications that are substantially similar to precedent, we expect the new procedures to reduce the amount of Staff resources required to review such applications and increase Staff resources available to review more novel applications.
Also, to the extent the new procedures would encourage applicants for expedited review to submit applications that are substantially similar to precedent, we expect the new procedures to reduce the amount of Staff resources required to review such applications and increase Staff resources available to review more novel applications. An increase in Staff resources available to review more novel applications could, in turn, lead to more applicants who would implement innovative features or create new types of products. To the extent investors do not substitute one type of product or feature for another and find new products and features valuable, an increase in the number of applications involving innovative features or new types of products, could increase the overall amount of resources investors are willing to invest and, as a result, facilitate capital formation.
Proposed new rule 0-5(d)(1) provides that an applicant may request expedited review if the application is substantially identical to two other applications for which an order granting the requested relief was issued. As alternatives, the proposed rule could require a single precedent or more than two precedents. Our decision to require two precedent applications reflects a balancing of the accessibility to the expedited review process and the likely need for additional consideration by the Staff. Increasing the number of required precedents would decrease the likelihood of additional Staff consideration, but it would likely reduce the number of potential applicants qualifying for expedited review. For example, if we were to require three precedent applications rather than two, the third application, which would qualify for expedited review under the proposed amendment to rule 0-5, would no longer be eligible for expedited review. Increasing the number of required precedents would also likely lengthen the amount of time before applicants could request expedited exemptive relief. For example, if we were to require three precedent applications rather than two, to the extent precedent applications do not occur at the same time, applicants would have to wait for a third precedent application rather than being able to apply for expedited review after the second substantially similar application. Conversely, decreasing the number of required precedents would likely increase the number of potential applicants qualifying for expedited review, but it would increase the likelihood for additional Staff consideration. We believe the requirement of two precedent applications strikes an appropriate balance between those two competing considerations.
Further, the proposed rule requires the two precedent applications to have been filed within the past two years. Our decision to require precedents that have been filed over the past two years reflects a balancing of the accessibility to the expedited review process and the Staff resources required to review whether the terms and conditions of an application are still appropriate. Increasing the timeframe to greater than two years could increase the number applicants qualifying for expedited review, but also increase Staff resources required to review whether the terms and conditions of an application are still appropriate. Conversely, shortening the timeframe to less than two years would reduce the amount of Staff resources required to review whether the terms and conditions of an application are still appropriate, but likely reduce the number of potential applicants who could qualify for expedited review. We believe the two year requirement strikes an appropriate balance between those two competing considerations.
Throughout this release, we have discussed the anticipated benefits and costs of the proposed amendment to rule 0-5 and its potential effect on efficiency, competition, and capital formation. While we do not have comprehensive information on all aspects of the application process, we are using the data currently available in considering the effects of the proposed rule. We request comment on all aspects of this initial economic analysis, including on whether the analysis has (1) identified all benefits and costs, including all effects on efficiency, competition, and capital formation; (2) given due consideration to each benefit and cost, including each effect on efficiency, competition, and capital formation; and (3) identified and considered reasonable alternatives to the proposed new rule. We request and encourage any interested person to
Comments on the following questions are of particular interest.
• We have characterized the costs of certain requirements of the proposal as minimal. Have we correctly characterized the cost of those requirements?
• We have characterized the cost of the requirement that the accompanying cover letter certifying that the applicant believes the application meets the requirements of rule 0-5(d) and that the marked copies required by rule 0-5(e)(2) are complete and accurate as minimal. Are these costs minimal? If these costs are not minimal, what would be a more accurate characterization of these costs?
The proposed rule amendments under the Act contain “collections of information” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
Proposed rule 0-5(e) requires applicants seeking expedited review to include certain information with the application. Proposed rule 0-5(e)(1) requires that the cover page of the application include a notation prominently stating “EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d).” Proposed rule 0-5(e)(2) requires applicants to submit exhibits with marked copies of the application showing changes from the final versions of two precedent applications identified as substantially identical. Proposed rule 0-5(e)(3) requires an accompanying cover letter, signed, on behalf of the applicant, by the person executing the application (i) identifying two substantially identical applications; and (ii) certifying that that the applicant believes the application meets the requirements of rule 0-5(d) and that the marked copies required by rule 0-5(e)(2) are complete and accurate.
The Commission receives approximately 140 applications per year under the Act, and of the 140 applications, we estimate to receive approximately 50 applications
The following table summarizes the estimated effects of the proposed amendments on the paperwork burden associated with the amendments to rule 0-5(e).
Much of the work of preparing an application is performed by outside counsel. Based on conversations with applicants and Staff experience, approximately 80 percent of applications are prepared by outside counsel and approximately 20 percent of applications are prepared by in-house counsel. Therefore, the new mandatory requirements would increase the total estimated annual cost burden by approximately $109,340 utilizing outside counsel and total estimated annual hour burden by approximately 55 hours utilizing in-house counsel.
[$2,485 (estimated cost per application to prepare the marked copies) + $248.50 (estimated cost per application to notate and certify] × 50 (estimated number of applications under expedited review) × 0.80 (approximate percentage of applications prepared by outside counsel) = $109,340.
[5 (estimated hours per application to prepare the marked copies) + 0.5 (estimated hour per application to notate and certify)] × 50 (estimated number of applications under expedited review) × 0.20 (approximate percentage of applications prepared by in-house counsel) = 55.
Proposed rule 0-5(g) would provide that, if an applicant has not responded in writing to a request for clarification or modification of an application filed under standard review within 120 days after the request, the application will be deemed withdrawn. Proposed rule 0-5(g) would provide that, if an applicant has not responded in writing to a request for clarification or modification of an application filed under standard review within 120 days after the request, the application will be deemed withdrawn. As an oral response would not stop an application from being deemed withdrawn, proposed rule 0-5(g), would require applicants to respond “in writing” and therefore create an additional cost within the meaning of the PRA.
Applicants would be required to submit a letter or an email in response to a request for clarification or modification of an application from the Staff. We believe the “in writing” requirement would increase the burden by 2 hours or $994 per application for applicants relying on outside counsel.
$994 (estimated hours to prepare “in writing” response) × 90 (estimated number of applications under standard review) × 0.10 (approximate percentage of application required to respond “in writing”) × 0.80 (approximate percentage of applications prepared by outside counsel) = $7,157.
2 (estimated hours to prepare “in writing” response) × 90 (estimated number of applications under standard review) × 0.10 (approximate percentage of application required to respond “in writing”) × 0.20 (approximate percentage of applications prepared by in-house counsel) = 3.6.
We request comment on whether our estimates for burden hours and any external costs as described above are reasonable. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits comments in order to: (i) Evaluate whether the proposed collections of information are necessary for the proper performance of the function of the Commission, including whether the information will have practical utility; (ii) evaluate the accuracy of the Commission's estimate of the burden of the proposed collections of information; (iii) determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; and (iv) determine whether there are ways to minimize the burden of the collections of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology.
The Commission has submitted the proposed collection of information to OMB for approval. Persons wishing to submit comments on the collection of information requirements of the proposed amendments should direct them to the Office of Management and Budget, Attention Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and should send a copy to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090, with reference to File No. S7-19-19. OMB is required to make a decision concerning the collections of information between 30 and 60 days after publication of this release; therefore, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days after publication of this release. Requests for materials submitted to OMB by the Commission with regard to these collections of information should be in writing, refer to File No. S7-19-19, and be submitted to the Securities and Exchange Commission, Office of FOIA Services, 100 F Street 85 NE, Washington, DC 20549-2736.
The Commission has prepared the following Initial Regulatory Flexibility Analysis (“IRFA”) in accordance with section 3 of the Regulatory Flexibility Act (“RFA”)
The application process under the Act has become more important as the industry has grown and diversified. Granting appropriate exemptions from the Act can provide important economic benefits to funds and their shareholders, and foster financial innovation. Thus,
We believe that the new procedure would encourage applicants for expedited review to submit applications that are substantially identical to precedent, which we expect would facilitate Staff review. Accordingly, we should be able to grant relief that meets the applicable standards more quickly, and, in turn, devote additional resources to the review of more novel requests. A faster application process would allow the benefits of relief to be realized by applicants, and ultimately by fund shareholders, more quickly than otherwise would be the case. Further, we expect that the proposed expedited review procedure would make the applications process less expensive for applicants, because we believe that it would reduce the numbers of Staff comments.
The Commission is proposing the rules contained in this document under the authority set forth in sections 6(c) and 38(a) of the Act [15 U.S.C. 80a-6(c) and 80a-37(a)].
Any registered investment company is a small entity if, together with other investment companies in the same group of related investment companies, it has net assets of $50 million or less as of the end of its most recent fiscal year.
Proposed new rule 0-5(e) will require applicants seeking expedited review of an application to file with the Commission: (1) A cover page of the application that states prominently, “EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)”; (2) exhibits with marked copies of the application showing changes from the final versions of two precedent applications identified as substantially identical; and (3) requires an accompanying cover letter, signed, on behalf of the applicant, by the person executing the application (i) identifying two substantially identical applications; and (ii) certifying that that the applicant believes the application meets the requirements of rule 0-5(d) and that the marked copies required by rule 0-5(e)(2) are complete and accurate.
As discussed in section III, we believe the additional costs and administrative burdens of providing the required statements and certifications on the included cover page and submitting two marked copies against two precedents would not have a substantial impact on the total cost for applications that qualify for the expedited review procedure. Small entities will considerably benefit from the expedited review procedure as the total estimated savings significantly justify the estimated added burden under proposed rule 0-5(e). The estimated savings for an application under expedited review compared to an average application under the standard review process would be approximately $59,640
Proposed new rule 0-5(g) will require applicants to respond “in writing” to a request for clarification or modification of an application filed under standard review within 120 days after the request from the Staff or the application will be deemed withdrawn. As discussed in section IV, the estimated cost and administrative burdens for small entities associated with these activities for applicants utilizing outside counsel would be $994
In addition, compliance with the proposed amendments would require the use of professional legal skills necessary for research and preparation of required documents. We discuss the economic impact, including the estimated costs and burdens, of the proposed amendments to all registrants, including small entities, in sections III and IV above.
We believe there are no reporting, recordkeeping and other compliance requirements for small entities with respect to the proposed new rule 17 CFR 202.13. The rule we propose here is an internal set of deadlines with no costs and administrative burdens incurred by the applicants.
The Commission believes that there are no duplicative, overlapping or conflicting federal rules to the proposed amendments to rule 0-5 and the new rule 17 CFR 202.13.
The RFA directs the Commission to consider significant alternatives that would accomplish the stated objectives, while minimizing any significant adverse impact on small entities. In connection with the proposals, we considered the following alternatives: (i) Establishing differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (ii) clarification, consolidation, or
We do not believe that establishing a different compliance or reporting requirements for small entities would permit us to achieve our stated goals. We believe that the new approach is expected to reduce costs by shortening the time it takes for applicants to obtain orders on certain routine applications. Further clarification, consolidation, or simplification of the compliance and reporting requirements is not necessary to achieve the goals of the proposal and would not be appropriate in the public interest and consistent with the protection of investors. The use of performance rather than design standards is not appropriate, as the new approach is intended to expedite the applications process and the use of a single design standard would make the procedure more efficient. Exemption from coverage of the rule would not be necessary, as the new expedited process would further benefit small entities by making the applications process more cost efficient.
The Commission requests comments regarding this analysis. We request comment on the number of small entities that would be subject to the proposed amendments and whether the proposed amendments would have any effects on small entities that have not been discussed. We request that commenters describe the nature of any effects on small entities subject to the proposed amendments and provide empirical data to support the nature and extent of such effects. We also request comment on the estimated compliance burdens of the proposed amendments and how they would affect small entities.
For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996 (“SBREFA”),
• An annual effect on the economy of $100 million or more;
• A major increase in costs or prices for consumers or individual industries; or
• Significant adverse effects on competition, investment, or innovation.
We request comment on whether our proposal would be a “major rule” for purposes of SBREFA. We solicit comment and empirical data on:
• The potential effect on the U.S. economy on an annual basis;
• Any potential increase in costs or prices for consumers or individual industries; and
• Any potential effect on competition, investment, or innovation.
Commenters are requested to provide empirical data and other factual support for their views to the extent possible.
The Commission is proposing the rules contained in this document under the authority set forth in sections 6(c) and 38(a) of the Act [15 U.S.C. 80a-6(c) and 80a-37(a)].
Administrative practice and procedure, Securities.
Investment companies, Reporting and recordkeeping requirements, Securities.
For the reasons set forth in the preamble, title 17, chapter II of the Code of Federal Regulations is proposed to be amended as follows:
15 U.S.C. 77s, 77t, 77sss, 77uuu, 78d-1, 78u, 78w, 78
(a) On any application subject to 17 CFR 270.0-5, other than an application eligible for and proceeding under expedited review as provided for by 17 CFR 270.0-5(d), (e), and (f), the Division should take action within 90 days of the initial filing or any amendment thereto. Such 90 day period will stop running upon any irregular closure of the Commission's Washington, DC office to the public for normal business, including, but not limited to, closure due to a lapse in federal appropriations, national emergency, inclement weather, or ad hoc federal holiday, and will resume upon the reopening of the Commission's Washington, DC office to the public for normal business. The Division may grant 90-day extensions and the applicant should be notified of any such extension.
(b) Action on the application or any amendment thereto shall consist of:
(1) Issuing a notice,
(2) Providing the applicant with requests for clarification or modification of the application, or
(3) Informing applicant that the application will be forwarded to the Commission, in which case the application is no longer subject to the provisions set forth in paragraph (a) of this section.
(c) The provisions of this rule, including the time frames provided for herein, are not intended to create enforceable rights by any interested parties and shall not be deemed to do so. Rather, this rule provides informal non-binding guidelines and procedures that the Commission anticipates the Division following.
15 U.S.C. 80a-1
(d)(1) An applicant may request expedited review of an application if such application is substantially identical to two other applications for which an order granting the requested relief has been issued within two years of the date of the application's initial filing.
(2) For purposes of this section, “substantially identical” applications are applications requesting relief from the same sections of the Act and rules thereunder, containing identical terms and conditions, and differing only with respect to factual differences that are not material to the relief requested.
(e) An application submitted for expedited review must include:
(1) A notation on the cover page of the application that states prominently,
(2) Exhibits with marked copies of the application showing changes from the final versions of the two applications identified as substantially identical under paragraph (e)(3) of this section, and
(3) An accompanying cover letter, signed, on behalf of the applicant, by the person executing the application,
(i) Identifying two substantially identical applications; and
(ii) Certifying that that the applicant believes the application meets the requirements of paragraph (d) of this section and that the marked copies required by paragraph (e)(2) of this section are complete and accurate.
(f)(1) No later than 45 days from the date of filing of an application for which expedited review is requested:
(i) Notice of an application will be issued in accordance with paragraph (a) of this section, or
(ii) The applicant will be notified that the application is not eligible for expedited review because it does not meet the criteria set forth in paragraph (d) of this section or because additional time is necessary for appropriate consideration of the application;
(2) For purposes of paragraph (f)(1) of this section:
(i) The 45 day period will restart upon the filing of any unsolicited amendment.
(ii) The 45 day period will stop running upon:
(A) Any request for modification of an application and will resume running on the 14th day after the applicant has filed an amended application responsive to such request, including a marked copy showing any changes made and a certification signed by the person executing the application that such marked copy is complete and accurate; and
(B) Any irregular closure of the Commission's Washington, DC office to the public for normal business, including, but not limited to, closure due to a lapse in federal appropriations, national emergency, inclement weather, or ad hoc federal holiday, and will resume upon the reopening of the Commission's Washington, DC office to the public for normal business.
(iii) If the applicant does not file an amendment responsive to any request for modification within 30 days of receiving such request, including a marked copy showing any changes made and a certification signed by the person executing the application that such marked copy is complete and accurate, the application will be deemed withdrawn.
(g) If an applicant has not responded in writing to any request for clarification or modification of an application filed under this section, other than an application that is under expedited review under paragraphs (d) through (e) of this section, within 120 days after the request, the application will be deemed withdrawn.
By the Commission.
Drug Enforcement Administration, Department of Justice.
Notice of proposed rulemaking.
The Drug Enforcement Administration proposes placing methyl 2-(1-(4-fluorobenzyl)-1
Interested persons may file written comments on this proposal in accordance with 21 CFR 1308.43(g). Comments must be submitted electronically or postmarked on or before November 29, 2019. Commenters should be aware that the electronic Federal Docket Management System will not accept comments after 11:59 p.m. Eastern Time on the last day of the comment period.
Interested persons, defined at 21 CFR 1300.01 as those “adversely affected or aggrieved by any rule or proposed rule issuable pursuant to section 201 of the Act (21 U.S.C. 811),” may file a request for hearing or waiver of hearing pursuant to 21 CFR 1308.44 and in accordance with 21 CFR 1316.45 and/or 1316.47, as applicable. Requests for hearing and waivers of an opportunity for a hearing or to participate in a hearing must be received on or before November 29, 2019.
To ensure proper handling of comments, please reference “Docket No. DEA-472” on all electronic and written correspondence, including any attachments.
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Scott Brinks, Diversion Control Division, Drug Enforcement Administration; Mailing Address: 8701 Morrissette Drive, Springfield, Virginia 22152; Telephone: (571) 362-8209.
Please note that all comments received in response to this docket are considered part of the public record. They will, unless reasonable cause is given, be made available by the Drug Enforcement Administration (DEA) for public inspection online at
If you want to submit confidential business information as part of your comment, but do not want it to be made publicly available, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment. You must also prominently identify the confidential business information to be redacted within the comment.
Comments containing personal identifying information or confidential business information identified as directed above will be made publicly available in redacted form. If a comment has so much confidential business information that it cannot be effectively redacted, all or part of that comment may not be made publicly available. Comments posted to
An electronic copy of this document and supplemental information to this proposed rule are available at
Pursuant to 21 U.S.C. 811(a), this action is a formal rulemaking “on the record after opportunity for a hearing.” Such proceedings are conducted pursuant to the provisions of the Administrative Procedure Act (APA), 5 U.S.C. 551-559. 21 CFR 1308.41-1308.45; 21 CFR part 1316, subpart D. Interested persons may file requests for a hearing or notices of intent to participate in a hearing in conformity with the requirements of 21 CFR 1308.44(a) or (b), and include a statement of interest of the person in the proceeding and the objections or issues, if any, concerning which the person desires to be heard. Any interested person may file a waiver of an opportunity for a hearing or to participate in a hearing together with a written statement regarding the interested person's position on the matters of fact and law involved in any hearing as set forth in 21 CFR 1308.44(c).
Please note that pursuant to 21 U.S.C. 811(a), the purpose and subject matter of a hearing held in relation to this rulemaking is restricted to: “(A) find[ing] that such drug or other substance has a potential for abuse, and (B) mak[ing] with respect to such drug or other substance the findings prescribed by subsection (b) of section 812 of this title for the schedule in which such drug is to be placed . . .” All requests for hearing and waivers of participation must be sent to the DEA using the address information provided above.
The Controlled Substances Act (CSA) provides that proceedings for the issuance, amendment, or repeal of the scheduling of any drug or other substance may be initiated by the Attorney General (1) on his own motion; (2) at the request of the Secretary of the Department of Health and Human Services (HHS);
On November 3, 2017, the DEA published an order in the
The Acting Administrator, on his own motion pursuant to 21 U.S.C. 811(a), has initiated proceedings under 21 U.S.C. 811(a)(1) to permanently schedule FUB-AMB. The DEA has gathered and reviewed the available information regarding the pharmacology, chemistry, trafficking, actual abuse, pattern of abuse, and the relative potential for abuse for this synthetic cannabinoid. On March 9, 2018, the Acting Administrator submitted a request to the Assistant Secretary to provide the DEA with a scientific and medical evaluation of available information and a scheduling recommendation for FUB-AMB, in accordance with 21 U.S.C. 811(b) and (c). Upon evaluating the scientific and medical evidence, on September 19,
As discussed in the background section, the Acting Administrator initiated proceedings, pursuant to 21 U.S.C. 811(a)(1), to add FUB-AMB permanently to schedule I. The DEA has reviewed the scientific and medical evaluations and scheduling recommendation, received from HHS, and all other relevant data and conducted its own eight-factor analysis of the abuse potential of FUB-AMB pursuant to 21 U.S.C. 811(c). Included below is a brief summary of each factor as analyzed by the HHS and the DEA, and as considered by the DEA in its proposed scheduling action. Please note that both the DEA 8-Factor and HHS 8-Factor analyses and the Assistant Secretary's September 19, 2019, letter, are available in their entirety under the tab “Supporting Documents” of the public docket of this action at
1.
Epidemiological data reviewed by HHS has concluded that individuals are taking FUB-AMB in sufficient amounts as to create a hazard to the health and safety of both the individual users and others within the community. Adverse effects observed following the ingestion of FUB-AMB include nausea, persistent vomiting, agitation, altered mental status, seizures, convulsions, loss of consciousness and cardiotoxicity. SCs like FUB-AMB are easily accessible and difficult to detect in standard urine drug screens, which contributes to their popularity and high rates of abuse.
The HHS stated in their letter dated June 9, 2017 that there are currently no approved new drug applications or active investigational new drug applications for FUB-AMB. In addition, HHS stated that since FUB-AMB is not a Food and Drug Administration (FDA)-approved drug product for treatment in the United States and there appear to be no legitimate sources for FUB-AMB as a marketed drug or as a subject of scientific investigations, this characteristic of abuse potential is not applicable.
HHS has determined that since FUB-AMB is not approved for medical use and is not formulated or available for clinical use, the human use of this substance is assumed to be on an individual's own initiative, rather than on the basis of medical advice from a practitioner licensed by law to administer drugs. Further, published scientific and medical literature and law enforcement reports indicate that individuals are taking FUB-AMB on their own initiative, rather than on the basis of medical advice of a licensed practitioner.
As stated by HHS, in vitro and in vivo data for FUB-AMB indicate that it has a pharmacological profile similar to other schedule I SCs of various structural classes, including tetrahydrocannabinols (such as Δ9-THC), bicyclic cannabinoid analogs (
2.
Based on data from CB1 receptor binding (Ki), CB1 receptor functional assays, drug discrimination, and locomotor studies, HHS stated that FUB-AMB is a full cannabinoid agonist with no antagonist activity, and is more potent than Δ9-THC, the principal psychoactive constituent in marijuana (schedule I).
3.
Neither the DEA nor HHS is aware of any currently accepted medical use for FUB-AMB. A letter, dated May 19, 2017, was sent from the DEA Acting Administrator to the Assistant Secretary for Health of the HHS as notification of intent to temporarily place FUB-AMB in schedule I and solicited comments, including whether there is an exemption or approval in effect for the substance in question under the Federal Food, Drug and Cosmetic Act. The Assistant Secretary for Health responded on June 9, 2017 that there are currently no approved new drug applications or active investigational new drug applications for FUB-AMB and that HHS has no objection regarding the temporary placement of FUB-AMB in schedule 1 of the CSA. Also, HHS is not aware of any reports of clinical studies or claims of an accepted medical use in the United States. HHS concluded without further consideration that FUB-AMB has no currently accepted medical use in the United States.
HHS stated in its recommendation that information collected by the World Health Organization indicates that FUB-AMB is most commonly ingested following inhalation either via smoking an adulterated plant material or by manipulating the substance into a liquid form for vaporization via an electronic smoking device.
4.
The designer drug products laced with SCs, including FUB-AMB, are often sold under the guise of “herbal incense” or “potpourri,” use various product names, and are routinely labeled “not for human consumption.” Additionally, these products are marketed as a “legal high” or “legal alternative to marijuana” and are readily available over the internet, in head shops, or in convenience stores.
There are incorrect assumptions that these products are safe, that they are a synthetic form of marijuana, and that labeling these products as “not for human consumption” is a legal defense to criminal prosecution under the Controlled Substances Analogue Enforcement Act.
Presentations at emergency departments directly linked to the abuse of FUB-AMB have resulted in similar symptoms, including nausea, persistent vomiting, agitation, altered mental status, seizures, convulsions, loss of consciousness, cardio toxicity and/or death (see Factor 6 DEA 8-Factor Analysis). Law enforcement has had numerous encounters of FUB-AMB and has documented the abuse of this substance (see Factor 5 DEA 8-Factor Analysis). SCs and their associated products are available over the internet and sold in gas stations, convenience stores, and tobacco and head shops. FUB-AMB, similar to the previously scheduled SCs, have been seized alone and/or laced on products that are marketed under the guise of “herbal incense” and promoted as a “legal” alternative to marijuana.
5.
HHS stated that based on FUB-AMB's pharmacological properties, it is reasonable to assume that, if uncontrolled, the scope, duration, and significance of FUB-AMB abuse would be similar to Δ9-THC and other SCs that are listed in schedule I. The threat of serious injury to the individual following the ingestion of FUB-AMB and other SCs persists.
From June 2014 to the present, the National Forensic Laboratory Information System (NFLIS) has documented over 21,000 reports involving FUB-AMB across the District of Columbia, Puerto Rico, and the following states: Alabama, Arizona, California, Colorado, Florida, Georgia, Iowa, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Hampshire, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.
6.
7.
8.
The CSA establishes five schedules of controlled substances known as schedules I, II, III, IV, and V. The CSA
1. FUB-AMB has a high potential for abuse;
2. FUB-AMB has no currently accepted medical use in treatment in the United States;
i. the drug's chemistry must be known and reproducible;
ii. there must be adequate safety studies;
iii. there must be adequate and well-controlled studies proving efficacy;
iv. the drug must be accepted by qualified experts; and
v. the scientific evidence must be widely available.
57 FR 10499 (1992).
3. There is a lack of accepted safety for use of FUB-AMB under medical supervision.
Based on these findings, the Acting Administrator of the DEA concludes that methyl 2-(1-(4-fluorobenzyl)-1
If this rule is finalized as proposed, FUB-AMB would continue
1.
2.
3.
4.
5.
After the initial inventory, every DEA registrant must take a new inventory of all stocks of controlled substances (including FUB-AMB) on hand every two years, pursuant to 21 U.S.C. 827 and 958, and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11.
6.
7.
8.
9.
In accordance with 21 U.S.C. 811(a), this proposed scheduling action is subject to formal rulemaking procedures performed “on the record after opportunity for a hearing,” which are conducted pursuant to the provisions of 5 U.S.C. 556 and 557. The CSA sets forth the criteria for scheduling a drug or other substance. Such actions are exempt from review by the Office of Management and Budget (OMB) pursuant to section 3(d)(1) of Executive Order 12866 and the principles reaffirmed in Executive Order 13563.
This proposed regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate drafting errors and ambiguity, minimize litigation, provide a clear legal standard for affected conduct, and promote simplification and burden reduction.
This proposed rulemaking does not have federalism implications warranting the application of Executive Order 13132. The proposed rule does not have substantial direct effects on the States, on the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government.
This proposed rule does not have tribal implications warranting the application of Executive Order 13175. It does not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
This proposed rule does not meet the definition of an Executive Order 13771 regulatory action, and the repeal and cost offset requirements of Executive Order 13771 have not been triggered. OMB has previously determined that formal rulemaking actions concerning the scheduling of controlled substances, such as this rule, are not significant regulatory actions under Section 3(f) of Executive Order 12866.
The Acting Administrator, in accordance with the Regulatory Flexibility Act, 5 U.S.C. 601-602, has reviewed this proposed rule and by approving it certifies that it will not have a significant economic impact on a substantial number of small entities. On November 3, 2017, the DEA published an order to temporarily place FUB-AMB in schedule I of the CSA pursuant to the temporary scheduling provisions of 21 U.S.C. 811(h). The DEA
A review of the 22 registrations indicates that all entities that currently handle FUB-AMB also handle other schedule I controlled substances, and have established and implemented (or maintain) the systems and processes required to handle FUB-AMB. Therefore, the DEA anticipates that this proposed rule will impose minimal or no economic impact on any affected entities; and thus, will not have a significant economic impact on any of the 12 affected small entities. Therefore, the DEA has concluded that this proposed rule will not have a significant effect on a substantial number of small entities.
In accordance with the Unfunded Mandates Reform Act (UMRA) of 1995, 2 U.S.C. 1501
This action does not impose a new collection of information under the Paperwork Reduction Act of 1995. 44 U.S.C. 3501-3521. This action would not impose recordkeeping or reporting requirements on State or local governments, individuals, businesses, or organizations. 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.
Administrative practice and procedure, Drug traffic control, Reporting and recordkeeping requirements.
For the reasons set out above, the DEA proposes to amend 21 CFR part 1308:
21 U.S.C. 811, 812, 871(b), 956(b), unless otherwise noted.
The addition reads as follows:
(d) * * *
Copyright Royalty Board (CRB), Library of Congress.
Proposed rule related to noncommercial educational webcasters.
The Copyright Royalty Judges are publishing for comment proposed regulations governing the rates and terms for the digital performance of sound recordings by noncommercial educational webcasters and for the making of ephemeral recordings necessary for the facilitation of such transmissions for the period commencing January 1, 2021, and ending on December 31, 2025.
Comments and objections, if any, are due no later than November 20, 2019.
You may submit comments and proposals, identified by docket number 19-CRB-0005-WR (2021-2025), by any of the following methods:
Anita Blaine, CRB Program Specialist, by telephone at (202) 707-7658 or email at
On September 23, 2019, the Copyright Royalty Judges (Judges) received a joint motion from SoundExchange, Inc., (“SoundExchange”) and College Broadcasters, Inc., (“CBI”) to adopt a partial settlement of their interests regarding Web V rates and terms for 2021-2025.
Section 114 of the Copyright Act, title 17 of the United States Code, provides a statutory license that allows for the public performance of sound recordings by means of a digital audio transmission by, among others, eligible nonsubscription transmission services and new subscription services. 17 U.S.C. 114(f). For purposes of the section 114 license, an “eligible nonsubscription transmission” is a noninteractive digital audio transmission that does not require a subscription for receiving the transmission. The transmission must also be made as part of a service that provides audio programming consisting in whole or in part of performances of sound recordings the purpose of which is to provide audio or other entertainment programming, but not to sell, advertise, or promote particular goods or services.
Services using the section 114 license may need to make one or more temporary or “ephemeral” copies of a sound recording to facilitate the transmission of that recording. The section 112 statutory license allows for the making of these ephemeral reproductions. 17 U.S.C. 112(e).
Chapter 8 of the Copyright Act requires the Judges to conduct proceedings every five years to determine the rates and terms for the sections 114 and 112 statutory licenses. 17 U.S.C. 801(b)(1), 804(b)(3)(A). The current proceeding commenced in January 2019 for rates and terms that will become effective on January 1, 2021, and end on December 31, 2025. Pursuant to section 804(b)(3)(A), the Judges published in the
On September 23, 2019, SoundExchange and CBI submitted to the Judges a joint motion to adopt a partial settlement of their interests in the proceeding. SoundExchange and CBI requested that the Judges “endeavor to determine before the deadline for the filing of written rebuttal statements in this Proceeding (January 10, 2020) whether or not they will adopt the Settlement.” Joint Motion at 1.
Section 801(b)(7)(A) of the Copyright Act authorizes the Judges to adopt royalty rates and terms negotiated by “some or all of the participants in a proceeding at any time during the proceeding” provided they are submitted to the Judges for approval. The Judges must provide “an opportunity to comment on the agreement” to participants and non-participants in the rate proceeding who “would be bound by the terms, rates, or other determination set by any agreement. . . .” 17 U.S.C. 801(b)(7)(A)(i). Participants in the proceeding may also “object to [the agreement's] adoption as a basis for statutory terms and rates.”
The Judges “may decline to adopt the agreement as a basis for statutory terms and rates for participants that are not parties to the agreement,” only “if any participant [in the proceeding] objects to the agreement and the [Judges] conclude, based on the record before them if one exists, that the agreement does not provide a reasonable basis for setting statutory terms or rates.” 17 U.S.C. 801(b)(7)(A)(ii).
Any rates and terms adopted pursuant to this provision would be binding on all copyright owners of sound recordings, college radio stations, and other noncommercial educational webcasters performing the sound recordings for the license period 2021-2025.
According to SoundExchange and CBI, the agreement generally continues in effect the current provisions of 37 CFR part 380, subpart C, which were themselves adopted pursuant to 17 U.S.C. 801(b)(7)(A) as part of the Webcasting IV proceeding, with two primary changes: (1) The minimum fee applicable to noncommercial educational webcasters will increase by $50 per year throughout the rate period; and (2) consistent with the preferences previously expressed by the Judges, the generally applicable provisions in subpart A will apply to noncommercial educational webcasters to the extent consistent with subpart C, and the corresponding provisions have been removed from subpart C. Joint Motion at 2.
The public may comment and object to any or all of the proposed regulations contained in this document. Such comments and objections must be submitted no later than November 20, 2019.
Copyright, Sound recordings, Webcasters.
For the reasons set forth in the preamble, the Copyright Royalty Judges propose to amend 37 CFR part 380 as follows:
17 U.S.C. 112(e), 114(f), 804(b)(3).
For purposes of this subpart, the following definitions apply:
(1) Has obtained a compulsory license under 17 U.S.C. 112(e) and 114 and the implementing regulations therefor to make Educational Transmissions and related Ephemeral Recordings;
(2) Complies with all applicable provisions of Sections 112(e) and 114 and applicable regulations in this part;
(3) Is directly operated by, or is affiliated with and officially sanctioned by, and the digital audio transmission operations of which are staffed substantially by students enrolled at, a
(4) Is not a “public broadcasting entity” (as defined in 17 U.S.C. 118(f)) qualified to receive funding from the Corporation for Public Broadcasting pursuant to its criteria; and
(5) Takes affirmative steps not to make total transmissions in excess of 159,140 Aggregate Tuning Hours (ATH) on any individual channel or station in any month, if in any previous calendar year it has made total transmissions in excess of 159,140 ATH on any individual channel or station in any month.
(a)
(1) 2021: $550;
(2) 2022: $600;
(3) 2023: $650;
(4) 2024: $700; and
(5) 2025: $750.
(b)
(1) The Noncommercial Educational Webcaster shall, for such month and the remainder of the calendar year in which such month occurs, pay royalties in accordance, and otherwise comply, with the provisions of subpart B of this part applicable to Noncommercial Webcasters;
(2) The Minimum Fee paid by the Noncommercial Educational Webcaster for such calendar year will be credited to the amounts payable under the provisions of subpart B of this part applicable to Noncommercial Webcasters; and
(3) The Noncommercial Educational Webcaster shall, within 45 days after the end of each month, notify the Collective if it has made total transmissions in excess of 159,140 ATH on a channel or station during that month; pay the Collective any amounts due under the provisions of subpart B of this part applicable to Noncommercial Webcasters; and provide the Collective a statement of account pursuant to subpart A of this part.
(c)
(d)
(e)
(a)
(b)
(c)
(1) The name of the Noncommercial Educational Webcaster, exactly as it appears on the notice of use, and if the statement of account covers a single station only, the call letters or name of the station;
(2) The name, address, business title, telephone number, facsimile number (if any), electronic mail address (if any) and other contact information of the
(3) The signature of a duly authorized representative of the applicable educational institution;
(4) The printed or typewritten name of the person signing the statement of account;
(5) The date of signature;
(6) The title or official position held by the person signing the statement of account;
(7) A certification of the capacity of the person signing; and
(8) A statement to the following effect:
I, the undersigned duly authorized representative of the applicable educational institution, have examined this statement of account; hereby state that it is true, accurate, and complete to my knowledge after reasonable due diligence; and further certify that the licensee entity named herein qualifies as a Noncommercial Educational Webcaster for the relevant year, and did not exceed 159,140 total ATH in any month of the prior year for which the Noncommercial Educational Webcaster did not submit a statement of account and pay any required additional royalties.
(d)
(2)
(3)
(A) The Noncommercial Educational Webcaster exceeded 159,140 total ATH for any individual channel or station for more than one calendar month in the immediately preceding calendar year;
(B) The Noncommercial Educational Webcaster expects to exceed 159,140 total ATH for any individual channel or station for any calendar month in the applicable calendar year; or
(C) The Noncommercial Educational Webcaster otherwise does not elect to be subject to paragraph (d)(1) or (2) of this section.
(ii) A Noncommercial Educational Webcaster required to report pursuant to paragraph (d)(3)(i) of this section shall provide reports of use to the Collective quarterly on a census reporting basis in accordance with § 370.4 of this chapter, except that, notwithstanding § 370.4(d)(2), such a Noncommercial Educational Webcaster shall not be required to include ATH or actual total performances, and may in lieu thereof provide channel or station name and play frequency, during the first calendar year it reports in accordance with paragraph (d)(3) of this section. For the avoidance of doubt, after a Noncommercial Educational Webcaster has been required to report in accordance with paragraph (d)(3)(i) of this section for a full calendar year, it must thereafter include ATH or actual total performances in its reports of use. All reports of use under paragraph (d)(3)(i) of this section shall be submitted to the Collective no later than the 45th day after the end of each calendar quarter.
(e)
(f)
Coast Guard, DHS.
Notice of proposed rulemaking.
In accordance with the Great Lakes Pilotage Act of 1960, the Coast Guard is proposing new base pilotage rates for the 2020 shipping season. This proposed rule would adjust the pilotage rates to account for changes in district operating expenses, an increase in the number of pilots, and anticipated inflation. The net result of decreased operating expenses for the associations compared to the previous year, inflation of pilot compensation, and the addition of one working pilot at the beginning of the 2020 shipping season is a 3 percent increase in pilotage rates. In addition, the Coast Guard is not proposing any surcharges for the 2020 shipping season, which would result in a 1 percent net decrease in pilotage costs compared to the 2019 season, when combined with the changes above. The Coast Guard is also proposing to clarify the rules related to the working capital fund.
Comments and related material must be received by the Coast Guard on or before November 29, 2019.
You may submit comments identified by docket number USCG-2019-0736 using the Federal eRulemaking Portal at
For information about this document, call or email Mr. Brian Rogers, Commandant (CG-WWM-2), Coast Guard; telephone 202-372-1535, email
The Coast Guard views public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments received will be posted without change to
We do not plan to hold a public meeting, but we will consider doing so if public comments indicate a meeting would be helpful. We would issue a separate
Pursuant to the Great Lakes Pilotage Act of 1960 (“the Act”),
In this NPRM, as part of our annual review, we are proposing new pilotage rates for 2020 based on the existing methodology. The result is an increase in rates for four areas, and a decrease in rates for the remaining two areas. These changes are due to a combination of four factors: (1) Decreased total operating expenses for the associations compared to the previous year,
This proposed rule would impact 52 U.S. Great Lakes pilots, 3 pilot associations, and the owners and operators of an average of 266 oceangoing vessels that transit the Great Lakes annually. This proposed rule is not economically significant under Executive Order 12866 and would not affect the Coast Guard's budget or increase Federal spending. The estimated overall annual regulatory economic impact of this rate change is a net decrease of $225,658 in estimated payments made by shippers from the 2019 shipping season. Because the Coast Guard must review, and, if necessary, adjust rates each year, we analyze these as single-year costs and do not annualize them over 10 years. Section VIII of this preamble provides the regulatory impact analyses of this proposed rule.
The legal basis of this rulemaking is the Great Lakes Pilotage Act of 1960 (“the Act”),
The purpose of this NPRM is to propose new pilotage rates for the 2020 shipping season. The Coast Guard believes that the new rates would continue to promote pilot retention, ensure safe, efficient, and reliable pilotage services on the Great Lakes, and provide adequate funds to upgrade and maintain infrastructure.
Pursuant to the Act, the Coast Guard, in conjunction with the Canadian Great Lakes Pilotage Authority (GLPA), regulates shipping practices and rates on the Great Lakes. Under Coast Guard regulations, all vessels engaged in foreign trade (often referred to as “salties”) are required to engage U.S. or Canadian pilots during their transit through the regulated waters.
The U.S. waters of the Great Lakes and the St. Lawrence Seaway are divided into three pilotage districts. Pilotage in each district is provided by an association certified by the Coast Guard's Director of the Great Lakes Pilotage (“the Director”) to operate a pilotage pool. The Saint Lawrence Seaway Pilotage Association provides pilotage services in District One, which includes all U.S. waters of the St. Lawrence River and Lake Ontario. The Lakes Pilotage Association provides pilotage services in District Two, which includes all U.S. waters of Lake Erie, the Detroit River, Lake St. Clair, and the St. Clair River. Finally, the Western Great Lakes Pilotage Association provides pilotage services in District Three, which includes all U.S. waters of the St. Mary's River; Sault Ste. Marie Locks; and Lakes Huron, Michigan, and Superior.
Each pilotage district is further divided into “designated” and “undesignated” areas, which is depicted in Table 2 below. Designated areas, classified as such by Presidential Proclamation, are waters in which pilots must, at all times, be fully engaged in the navigation of vessels in their charge.
Each
Over the past 4 years, the Coast Guard has made adjustments to the Great Lakes pilotage ratemaking methodology. In 2016, we made significant changes to the methodology, moving to an hourly billing rate for pilotage services and changing the compensation benchmark to a more transparent model. In 2017, we added additional steps to the ratemaking methodology, including new steps that accurately account for the additional revenue produced by the application of weighting factors (discussed in detail in Steps 7 through 9 of this preamble). In 2018, we revised the methodology by which we develop the compensation benchmark, based upon U.S. mariners rather than Canadian registered pilots. The current methodology, which was finalized in the Great Lakes Pilotage Rates—2019 Annual Review and Revisions to Methodology final rule (84 FR 20551), published May 10, 2019, is designed to accurately capture all of the costs and revenues associated with Great Lakes pilotage requirements and produce an hourly rate that adequately and accurately compensates pilots and covers expenses. The current methodology is summarized in the section below.
As stated above, the ratemaking methodology, outlined in 46 CFR 404.101 through 404.110, consists of 10 steps that are designed to account for the revenues needed and total traffic expected in each district. The result is an hourly rate, determined separately for each of the areas administered by the Coast Guard.
In Step 1, “Recognize previous operating expenses,” (§ 404.101) the Director reviews audited operating expenses from each of the three pilotage associations. This number forms the baseline amount that each association is budgeted. Because of the time delay between when the association submits raw numbers and the Coast Guard receives audited numbers, this number is 3 years behind the projected year of expenses. So in calculating the 2020 rates in this proposal, we are beginning with the audited expenses from the 2017 shipping season.
While each pilotage association operates in an entire district, the Coast Guard tries to determine costs by area. Thus, with regard to operating expenses, we allocate certain operating expenses to undesignated areas, and certain expenses to designated areas. In some cases (
In Step 2, “Project operating expenses, adjusting for inflation or deflation,” (§ 404.102) the Director develops the 2020 projected operating expenses. To do this, we apply inflation adjustors for 3 years to the operating expense baseline received in Step 1. The inflation factors used are from the Bureau of Labor Statistics' (BLS) Consumer Price Index (CPI) for the Midwest Region, or, if not available, the Federal Open Market Committee (FOMC) median economic projections for Personal Consumption Expenditures (PCE) inflation. This step produces the total operating expenses for each area and district.
In Step 3, “Estimate number of working pilots,” (§ 404.103) the Director calculates how many pilots are needed for each district. To do this, we employ a “staffing model,” described in § 401.220, paragraphs (a)(1) through (a)(3), to estimate how many pilots would be needed to handle shipping during the beginning and close of the season. This number is helpful in providing guidance to the Director in approving an appropriate number of credentials for pilots.
For the purpose of the ratemaking calculation, we determine the number of working pilots provided by the pilotage associations (see § 404.103), which is what we use to determine how many pilots need to be compensated via the pilotage fees collected.
In Step 4, “Determine target pilot compensation benchmark,” (§ 404.104) the Director determines the revenue needed for pilot compensation in each area and district. This step contains two processes. In previous years, in the first process, we calculated the total compensation for each pilot using a “compensation benchmark.” Next, we multiplied the individual pilot compensation by the number of working pilots for each area and district (from Step 3), producing a figure for total pilot compensation. Because pilots are paid by the associations, but the costs of pilotage is divided by area for accounting purposes, we assigned a certain number of pilots for the designated areas and a certain number of pilots for the undesignated areas to determine the revenues needed for each area. To make the determination of how many pilots to assign, we used the staffing model designed to determine the total number of pilots, described in Step 3, above.
For the 2020 ratemaking, the Coast Guard is proposing to update the benchmark compensation model in accordance with § 404.104(b), switching from using the American Maritime Officers Union (AMOU) 2015 aggregated wage and benefit information, to using the 2019 compensation benchmark. Prior to 2016, the Coast Guard based the compensation benchmark on data provided by the AMOU regarding its contract for first mates on the Great Lakes. However, in 2016 the AMOU elected to no longer provide this data to the Coast Guard, and thus, in the 2016 ratemaking, we used average compensation for a Canadian pilot plus a 10 percent adjustment. As a result of a legal challenge filed by the shipping industry, the court found that the Coast Guard did not adequately support the 10 percent addition to the Canadian GLPA benchmark, and thus its use was deemed arbitrary and capricious. The Coast Guard then based the 2018 benchmark on data provided by the AMOU regarding its contract for first mates on the Great Lakes in the 2011 to 2015 period, and adjusted it for inflation using FOMC median economic projections for PCE inflation. We used the information provided by the AMOU because it was the most recent publicly available information to which we had access. This benchmark has successfully achieved the Coast Guard's goals of safety through rate and compensation stability while also promoting recruitment and retention of qualified United States registered pilots. Therefore, the Coast Guard proposes to use this as the compensation benchmark for future rates.
In the second process of Step 4, set forth in § 404.104(c), the Director determines the total compensation figure for each District. To do this, the Director multiplies the compensation benchmark by the number of working pilots for each area and district (from Step 3), producing a figure for total pilot compensation.
In Step 5, “Project working capital fund,” (§ 404.105) the Director calculates a value that is added to pay for needed capital improvements. This value is calculated by adding the total operating expenses (derived in Step 2) to the total pilot compensation (derived in Step 4), and multiplying that figure by the preceding year's average annual rate of return for new issues of high-grade corporate securities. This figure constitutes the “working capital fund” for each area and district.
In Step 6, “Project needed revenue,” (§ 404.106) the Director simply adds up the totals produced by the preceding steps. The projected operating expense for each area and district (from Step 2) is added to the total pilot compensation (from Step 4) and the working capital fund contribution (from Step 5). The total figure, calculated separately for each area and district, is the “needed revenue.”
In Step 7, “Calculate initial base rates,” (§ 404.107) the Director calculates an hourly pilotage rate to cover the needed revenue as calculated in Step 6. This step consists of first calculating the 10-year hours of traffic average for each area. Next, the revenue needed in each area (calculated in Step 6) is divided by the 10-year hours of traffic average to produce an initial base rate.
An additional element, the “weighting factor,” is required under § 401.400. Pursuant to that section, ships pay a multiple of the “base rate” as calculated in Step 7 by a number ranging from 1.0 (for the smallest ships, or “Class I” vessels) to 1.45 (for the largest ships, or “Class IV” vessels). As this significantly increases the revenue collected, we need to account for the added revenue produced by the weighting factors to ensure that shippers are not overpaying for pilotage services.
In Step 8, “Calculate average weighting factors by area,” (§ 404.108) the Director calculates how much extra revenue, as a percentage of total revenue, has historically been produced by the weighting factors in each area. We do this by using a historical average of the applied weighting factors for each year since 2014 (the first year the current weighting factors were applied).
In Step 9, “Calculate revised base rates,” (§ 404.109) the Director modifies the base rates by accounting for the extra revenue generated by the weighting factors. We do this by dividing the initial pilotage rate for each area (from Step 7) by the corresponding average weighting factor (from Step 8), to produce a revised rate.
In Step 10, “Review and finalize rates,” (§ 404.110) often referred to informally as “director's discretion,” the Director reviews the revised base rates (from Step 9) to ensure that they meet the goals set forth in the Act and 46 CFR 404.1(a), which include promoting efficient, safe, and reliable pilotage service on the Great Lakes; generating sufficient revenue for each pilotage association to reimburse necessary and reasonable operating expenses; compensating trained and rested pilots fairly; and providing appropriate profit for improvements. Because it is our goal
After the base rates are set, § 401.401 permits the Coast Guard to apply surcharges. We previously used surcharges to pay for the training of new pilots, rather than incorporating training costs into the overall “needed revenue” used in the calculation of the base rates. The surcharge accelerates the reimbursement of certain necessary and reasonable expense. Last year, we applied a surcharge to account for the associations' expenses for the Applicant Trainee and Apprentice Pilots, which included providing a stipend, lodging, training, and per diem. We implemented these surcharges because of a large number of pending pilot retirements, and a large amount of recruitment at the pilot associations. Without the surcharge, the associations would have been reimbursed for expenses associated with training new pilots 3 years later via the rate. However, any pilot who retired prior to that 3-year date would not have been reimbursed. Therefore, we applied a surcharge to ensure that these pilots would not have to incur the costs of training their replacements. As the vast majority of registered pilots are not anticipated to reach the regulatory required retirement age of 70 in the next 20 years, we believe that pilot associations are now able to plan for the costs associated with retirements without relying on the Coast Guard to impose surcharges.
For 2020, the Coast Guard is proposing no new methodological changes to the ratemaking model. We believe that the methodology laid out in the 2019 Annual Review would produce rates for the 2020 shipping season that would ensure safe and reliable pilotage services are available on the Great Lakes.
In previous years, several commenters have raised issues regarding the working capital fund. The purpose of the working capital fund is to ensure that associations have a way to set aside money to pay for high cost items and infrastructure improvements. The Coast Guard is proposing changes in this proposed rule to codify the procedures related to the use of funds and accounting requirements related to the working capital fund.
The Coast Guard is proposing two changes to the regulatory text related to the working capital fund, formerly called “return on investment.” In 46 CFR 404.106, the Coast Guard proposes to change the words “return on investment” to “working capital fund,” as that is the current name for that fund. This change was made in the Great Lakes Pilotage Rates 2017 Annual Review final rule (82 FR 41466, August 31, 2017), but the entry was overlooked in that rule. Prior to 2017, the working capital fund described in 46 CFR 404.105 was called “return on investment.” In the Great Lakes Pilotage Rates 2017 Annual Review final rule (82 FR 41466, August 31, 2017), the Coast Guard changed the name of that fund to the “working capital fund.” However, the 2017 final rule did not change a reference to “return on investment” in 46 CFR 404.106. This proposed change corrects that oversight so that 46 CFR 404.105 and 46 CFR 404.106 will use consistent terminology. In addition, the Coast Guard proposes to incorporate into regulations the policy currently being followed by the pilots associations regarding these funds. The Coast Guard proposes to add text to 46 CFR 403.110 requiring each pilot association set aside, in a separate account, an amount at least equal to the amount calculated in Step 5 of the ratemaking, and place restrictions on how those funds are expended. Under the proposed rule, pilot associations can only apply these funds in the working capital fund account to capital projects, infrastructure improvements, infrastructure maintenance, and non-recurring technology purchases that are necessary for providing pilotage services. The pilot associations may grow the working capital fund over successive shipping seasons for a future significant purchase, including for a down payment on a purchase that would also be financed in part. If needed, pilot associations could request a waiver from the requirements from the Director. We invite interested parties to provide their input and recommendations on this issue.
In this NPRM, based on the current methodology described in the previous section, we are proposing new pilotage rates for 2020. We propose to conduct the 2020 ratemaking as an “interim year,” as was done in 2019, rather than a full ratemaking as was conducted in 2018. Thus, the Coast Guard proposes to adjust the compensation benchmark pursuant to § 404.104(b) for this purpose, rather than § 404.104(a).
This section discusses the proposed rate changes using the ratemaking steps provided in 46 CFR part 404. We will detail all ten steps of the ratemaking procedure for each of the three districts to show how we arrived at the proposed new rates.
Step 1 in our ratemaking methodology requires that the Coast Guard review and recognize the previous year's operating expenses (§ 404.101). To do so, we begin by reviewing the independent accountant's financial reports for each association's 2017 expenses and revenues.
As noted above, in 2016, the Coast Guard began authorizing surcharges to cover the training costs of applicant pilots. The surcharges were intended to reimburse pilot associations for training applicants in a more timely fashion than if those costs were listed as operating expenses, which would have required 3 years to reimburse. The rationale for using surcharges to cover these expenses, rather than including the costs as operating expenses, was so these non-recurring costs could be recovered in a more timely fashion, and so that retiring pilots would not have to cover the costs of training their replacements. Because operating expenses incurred are not actually recouped for a period of 3 years, the Coast Guard added a $150,000 surcharge per applicant pilot, beginning in 2016, to recoup those costs in the year incurred. Now that these issues are no longer a concern, we are not proposing any surcharges for the 2020 shipping season.
We also propose to deduct 3 percent of the “shared counsel” expenses, as stated in the auditor's reports for each district to account for lobbying expenditures. Pursuant to 46 CFR 404.2(c)(3), lobbying expenses are not permitted to be recouped as operating expenses.
For District One, we do not propose any Director's adjustments, other than the surcharge adjustment and lobbying expenses described above. Other adjustments have been made by the auditors and are explained in the auditor's reports, which are available in the docket for this rulemaking where indicated under the
Having identified the recognized 2017 operating expenses in Step 1, the next step is to estimate the current year's operating expenses by adjusting those expenses for inflation over the 3-year period. We calculate inflation using the BLS data from the CPI for the Midwest Region of the United States for the 2018 inflation rate.
In accordance with the text in § 404.103, we estimate the number of working pilots in each district. We determine the number of working pilots based on data provided by the Saint Lawrence Seaway Pilots Association. Using these numbers, we estimate that there will be 17 working pilots in 2020 in District One. Furthermore, based on the seasonal staffing model discussed in the 2017 ratemaking (see 82 FR 41466), we assign a certain number of pilots to designated waters and a certain number to undesignated waters, as shown in Table 5. These numbers are used to determine the amount of revenue needed in their respective areas.
In this step, we determine the total pilot compensation for each area. As we are proposing an “interim” ratemaking this year, we propose to follow the procedure outlined in paragraph (b) of § 404.104, which adjusts the existing compensation benchmark by inflation. Because we do not have a value for the employment cost index for 2020, we multiply the 2019 compensation benchmark of $359,887 by the Median PCE Inflation value of 2.0 percent.
Next, we certify that the number of pilots estimated for 2020 is less than or equal to the number permitted under the staffing model in § 401.220(a). The staffing model suggests that the number of pilots needed is 17 pilots for District One, which is more than or equal to the numbers of working pilots provided by the pilot associations. In accordance with § 404.104(c), we use the revised target individual compensation level to derive the total pilot compensation by multiplying the individual target compensation by the estimated number of working pilots for District One, as shown in Table 6.
Next, we calculate the working capital fund revenues needed for each area. First, we add together the figures for projected operating expenses and total pilot compensation for each area. Next, we find the preceding year's average annual rate of return for new issues of high-grade corporate securities. Using Moody's data, the number is 3.93 percent.
In this step, we add together all of the expenses accrued to derive the total revenue needed for each area. These expenses include the projected operating expenses (from Step 2), the total pilot compensation (from Step 4), and the working capital fund contribution (from Step 5). We show these calculations in Table 8.
Having determined the revenue needed for each area in the previous six steps, to develop an hourly rate we divide that number by the expected number of hours of traffic. Step 7 is a two-part process. In the first part, we calculate the 10-year average of traffic in District One, using the total time on task or pilot bridge hours.
Next, we derive the initial hourly rate by dividing the revenue needed by the average number of hours for each area. This produces an initial rate, which is necessary to produce the revenue needed for each area, assuming the amount of traffic is as expected. We present the calculations for each area in Table 10.
In this step, we calculate the average weighting factor for each designated and undesignated area. We collect the weighting factors, set forth in 46 CFR 401.400, for each vessel trip. Using this database, we calculate the average weighting factor for each area using the data from each vessel transit from 2014 onward, as shown in Tables 11 and 12.
In this step, we revise the base rates so that once the impact of the weighting factors are considered; the total cost of pilotage would be equal to the revenue needed. To do this, we divide the initial base rates, calculated in Step 7, by the average weighting factors calculated in Step 8, as shown in Table 13.
In this step, the Director reviews the rates set forth by the staffing model and ensures that they meet the goal of ensuring safe, efficient, and reliable pilotage. To establish that the proposed rates do meet the goal of ensuring safe, efficient and reliable pilotage, the Director considers whether the proposed rates incorporate appropriate compensation for pilots to handle heavy traffic periods and whether there is a sufficient number of pilots to handle those heavy traffic periods. The Director also considers whether the proposed rates would cover operating expenses and infrastructure costs, and takes average traffic and weighting factors into consideration. Based on this information, the Director is not proposing any alterations to the rates in this step. We propose to modify the text in § 401.405(a) to reflect the final rates shown in Table 14.
Step 1 in our ratemaking methodology requires that the Coast Guard review and recognize the previous year's operating expenses (§ 404.101). To do so, we begin by reviewing the independent accountant's financial reports for each association's 2017 expenses and revenues.
In addition to the surcharge adjustment and lobbying expenses described for District One in Section VII A.
Having identified the recognized 2017 operating expenses in Step 1, the next step is to estimate the current year's operating expenses by adjusting those expenses for inflation over the 3-year period. We calculate inflation using the BLS data from the CPI for the Midwest Region of the United States for the 2018 inflation rate.
In accordance with the text in § 404.103, we estimate the number of working pilots in each district. We determine the number of working pilots based on input from the Lakes Pilots Association. Using these numbers, we estimate that there will be 15 working pilots in 2020 in District Two. Furthermore, based on the seasonal staffing model discussed in the 2017 ratemaking (see 82 FR 41466), we assign a certain number of pilots to designated waters and a certain number to undesignated waters, as shown in Table 17. These numbers are used to determine the amount of revenue needed in their respective areas.
In this step, we determine the total pilot compensation for each area. As we are proposing an “interim” ratemaking this year, we propose to follow the procedure outlined in paragraph (b) of § 404.104, which adjusts the existing compensation benchmark by inflation. Because we do not have a value for the employment cost index for 2020, we multiply the 2019 compensation benchmark of $359,887 by the Median PCE Inflation value of 2.0 percent.
Next, we certify that the number of pilots estimated for 2020 is less than or equal to the number permitted under the staffing model in § 401.220(a). The staffing model suggests that the number of pilots needed is 15 pilots for District Two, which is more than or equal to the numbers of working pilots provided by the pilot associations.
Thus, in accordance with § 404.104(c), we use the revised target individual compensation level to derive the total pilot compensation by multiplying the individual target compensation by the estimated number of working pilots for District Two, as shown in Table 18.
Next, we calculate the working capital fund revenues needed for each area. First, we add together the figures for projected operating expenses and total pilot compensation for each area. Next, we find the preceding year's average annual rate of return for new issues of high-grade corporate securities. Using Moody's data, the number is 3.93 percent.
In this step, we add together all of the expenses accrued to derive the total revenue needed for each area. These expenses include the projected operating expenses (from Step 2), the total pilot compensation (from Step 4), and the working capital fund contribution (from Step 5). We show these calculations in Table 20.
Having determined the needed revenue for each area in the previous six steps, to develop an hourly rate, we divide that number by the expected number of hours of traffic. Step 7 is a two-part process. In the first part, we calculate the 10-year average of traffic in District Two, using the total time on task or pilot bridge hours.
Next, we derive the initial hourly rate by dividing the revenue needed by the average number of hours for each area. This produces an initial rate, which is necessary to produce the revenue needed for each area, assuming the amount of traffic is as expected. The calculations for each area are set forth in Table 22.
In this step, we calculate the average weighting factor for each designated and undesignated area. We collect the weighting factors, set forth in 46 CFR 401.400, for each vessel trip. Using this database, we calculated the average weighting factor for each area using the data from each vessel transit from 2014 onward, as shown in Tables 23 and 24.
In this step, we revise the base rates so that once the impact of the weighting factors are considered, the total cost of pilotage would be equal to the revenue needed. To do this, we divide the initial base rates, calculated in Step 7, by the average weighting factors calculated in Step 8, as shown in Table 25.
In this step, the Director reviews the rates set forth by the staffing model and ensures that they meet the goal of ensuring safe, efficient, and reliable pilotage. To establish that the proposed rates do meet the goal of ensuring safe, efficient and reliable pilotage, the Director considers whether the proposed rates incorporate appropriate compensation for pilots to handle heavy traffic periods, and whether there is a sufficient number of pilots to handle those heavy traffic periods. The Director also considers whether the proposed rates would cover operating expenses and infrastructure costs, and takes average traffic and weighting factors into consideration. Based on this information, the Director is not proposing any alterations to the rates in this step. We propose to modify the text in § 401.405(a) to reflect the final rates shown in Table 26.
Step 1 in our ratemaking methodology requires that the Coast Guard review and recognize the previous year's operating expenses (§ 404.101). To do so, we begin by reviewing the independent accountant's financial reports for each association's 2017 expenses and revenues.
In addition to the surcharge adjustment and lobbying expenses described for District One in Section VII A.
Having
In accordance with the text in § 404.103, we estimate the number of working pilots in each district. We determine the number of working pilots based on input from the Western Great Lakes Pilots Association. Using these number, we estimate that there will be 20 working pilots in 2020 in District Three. Furthermore, based on the seasonal staffing model discussed in the 2017 ratemaking (see 82 FR 41466), we assign a certain number of pilots to designated waters and a certain number to undesignated waters, as shown in Table 29. These numbers are used to determine the amount of revenue needed in their respective areas.
In this step, we determine the total pilot compensation for each area. As we are proposing an “interim” ratemaking this year, we propose to follow the procedure outlined in paragraph (b) of § 404.104, which adjusts the existing compensation benchmark by inflation. Because we do not have a value for the employment cost index for 2020, we multiply the 2019 compensation benchmark of $359,887 by the Median PCE Inflation value of 2.0 percent.
Next, we certify that the number of pilots estimated for 2020 is less than or equal to the number permitted under the staffing model in § 401.220(a). The staffing model suggests that the number of pilots needed for District Three is 22 pilots,
Thus, in accordance with § 404.104(c), we use the revised target individual compensation level to derive the total pilot compensation by multiplying the individual target compensation by the estimated number of working pilots for District Three, as shown in Table 30.
Next, we calculate the working capital fund revenues needed for each area. First, we add together the figures for projected operating expenses and total pilot compensation for each area. Next, we find the preceding year's average annual rate of return for new issues of high grade corporate securities. Using Moody's data, the number is 3.93 percent.
In this step, we add together all of the expenses accrued to derive the total revenue needed for each area. These expenses include the projected operating expenses (from Step 2), the total pilot compensation (from Step 4), and the working capital fund contribution (from Step 5). The calculations is shown in Table 32.
Having determined the revenue needed for each area in the previous six steps, to develop an hourly rate, we divide that number by the expected number of hours of traffic. Step 7 is a two-part process. In the first part, we calculate the 10-year average of traffic in District Three, using the total time on task or pilot bridge hours.
Next, we derive the initial hourly rate by dividing the revenue needed by the average number of hours for each area. This produces an initial rate, which is necessary to produce the revenue needed for each area, assuming the amount of traffic is as expected. The calculations for each area are set forth in Table 34.
In this step, we calculate the average weighting factor for each designated and undesignated area. We collect the weighting factors, set forth in 46 CFR 401.400, for each vessel trip. Using this database, we calculate the average weighting factor for each area using the data from each vessel transit from 2014 onward, as shown in Tables 35 and 36.
In this step, we revise the base rates so that once the impact of the weighting factors are considered, the total cost of pilotage would be equal to the revenue needed. To do this, we divide the initial base rates, calculated in Step 7, by the average weighting factors calculated in Step 8, as shown in Table 37.
In this step, the Director reviews the rates set forth by the staffing model and ensures that they meet the goal of ensuring safe, efficient, and reliable pilotage. To establish that the proposed rates do meet the goal of ensuring safe, efficient and reliable pilotage, the Director considers whether the proposed rates incorporate appropriate compensation for pilots to handle heavy traffic periods and whether there is a sufficient number of pilots to handle those heavy traffic periods. The Director also considers whether the proposed rates would cover operating expenses and infrastructure costs, and takes average traffic and weighting factors into consideration. Based on this information, the Director is not proposing any alterations to the rates in this step. We propose to modify the text in § 401.405(a) to reflect the final rates shown in Table 38.
The Coast Guard is not proposing any surcharges in this ratemaking. As stated earlier, we previously used surcharges to pay for the training of new pilots, rather than incorporating training costs into the overall “needed revenue” that is used in the calculation of the base rate, because the surcharge accelerates the reimbursement of certain necessary and reasonable expense. For the 2019 ratemaking, this reimbursement needed to be accelerated because of the large number of registered pilots retiring, and the large number of new pilots being trained to replace them. As the vast majority of registered pilots are not anticipated to retire in the next 20 years, we believe that pilot associations are now able to plan for the costs associated with retirements without relying on the Coast Guard to impose surcharges.
We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. A summary of our analyses based on these statutes or Executive orders follows.
Executive Orders 12866 (Regulatory Planning and Review) and 13563 (Improving Regulation and Regulatory Review) direct agencies to assess the 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). Executive Order 13563 emphasizes the importance of quantifying costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 13771 (Reducing Regulation and Controlling Regulatory Costs) directs agencies to reduce regulation and control regulatory costs and provides that “for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.”
The Office of Management and Budget (OMB) has not designated this proposed rule a significant regulatory action under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed it. Because this proposed rule is not a significant regulatory action, it is exempt from the requirements of Executive Order 13771.
The purpose of this proposed rule is to establish new base pilotage rates. The Great Lakes Pilotage Act of 1960 requires that rates be established or reviewed and adjusted each year. The Act requires that base rates be established by a full ratemaking at least once every five years, and in years when base rates are not established, they must be reviewed and, if necessary, adjusted. The last full ratemaking was concluded in June of 2018.
The Coast Guard is required to review and adjust pilotage rates on the Great Lakes annually. See Sections IV and V of this preamble for detailed discussions of the legal basis and purpose for this rulemaking and for background information on Great Lakes pilotage ratemaking. Based on our annual review for this rulemaking, we are proposing to adjust the pilotage rates for the 2020 shipping season to generate sufficient revenues for each district to reimburse its necessary and reasonable operating expenses, fairly compensate trained and rested pilots, and provide an appropriate working capital fund to use for improvements. The rate changes in this proposed rule would increase the rates for four areas (District One: Designated, District Two: Undesignated, and all of District Three), and decrease the rates for the remaining two areas (District One: Undesignated, and District Two: Designated). In addition, the proposed rule would not implement a surcharge. These changes lead to a net decrease in the cost of service to shippers. However, because the proposed rates would increase for some areas and decrease for others, the change in per unit cost to each individual shipper would be dependent on their area of operation, and if they previously paid a surcharge.
A detailed discussion of our economic impact analysis follows.
This rule would impact U.S. Great Lakes pilots, the three pilot associations, and the owners and operators of oceangoing vessels that transit the Great Lakes annually. We estimate that there would be 52 pilots working during the 2020 shipping season. The shippers affected by these rate changes are those owners and operators of domestic vessels operating “on register” (engaged in foreign trade) and owners and operators of non-Canadian foreign vessels on routes within the Great Lakes system. These owners and operators must have pilots or pilotage service as required by 46 U.S.C. 9302. There is no minimum tonnage limit or exemption for these vessels. The statute applies only to commercial vessels and not to recreational vessels. U.S.-flagged vessels not operating on register and Canadian “lakers,” which account for most commercial shipping on the Great Lakes, are not required by 46 U.S.C. 9302 to have pilots. However, these U.S.- and Canadian-flagged lakers may voluntarily choose to engage a Great Lakes registered pilot. Vessels that are U.S.-flagged may opt to have a pilot for varying reasons, such as unfamiliarity with designated waters and ports, or for insurance purposes.
The Coast Guard used billing information from the years 2016 through 2018 from the Great Lakes Pilotage Management System (GLPMS) to estimate the average annual number of vessels affected by the rate adjustment. The GLPMS tracks data related to managing and coordinating the dispatch of pilots on the Great Lakes, and billing in accordance with the services. As described in Step 7 of the methodology, we use a 10-year average to estimate the traffic. We used 3 years of the most recent billing data to estimate the affected population. When we reviewed 10 years of the most recent billing data, we found the data included vessels that have not used pilotage services in recent years. We believe using 3 years of billing data is a better representation of the vessel population that is currently using pilotage services and would be impacted by this rulemaking. We found that 457 unique vessels used pilotage services during the years 2016 through 2018. That is, these vessels had a pilot dispatched to the vessel, and billing information was recorded in the GLPMS. Of these vessels, 420 were foreign-flagged vessels and 37 were U.S.-flagged vessels. As previously stated, U.S.-flagged vessels not operating on register are not required to have a registered pilot per 46 U.S.C. 9302, but they can voluntarily choose to have one.
Numerous factors affect vessel traffic, which varies from year to year. Therefore, rather than using the total number of vessels over the time period, we took an average of the unique vessels using pilotage services from the years 2016 through 2018 as the best representation of vessels estimated to be affected by the rates in this rulemaking. From 2016 through 2018, an average of 266 vessels used pilotage services annually.
The proposed rate changes resulting from this adjustment to the rates would result in a net decrease in the cost of service to shippers. However, because the rates would increase for some areas and decrease for others, the proposed change in per unit cost to each individual shipper would be dependent on their area of operation, and if they previously paid a surcharge.
The Coast Guard estimates the effect of the rate changes on shippers by comparing the total projected revenues needed to cover costs in 2019 with the total projected revenues to cover costs in 2020, including any temporary surcharges we have authorized.
The impacts of the rate changes on shippers are estimated from the district pilotage projected revenues (shown in Tables 8, 20, and 32 of this preamble). The Coast Guard estimates that for the 2020 shipping season, the projected revenue needed for all three districts is $27,762,527.
To estimate the change in cost to shippers from this rule, the Coast Guard compared the 2020 total projected revenues to the 2019 projected revenues. Because we review and prescribe rates for the Great Lakes Pilotage annually, the effects are estimated as a single-year cost rather than annualized over a 10-year period. In the 2019 rulemaking, we estimated the total projected revenue needed for 2019, including surcharges, as $27,988,185.
The resulting difference between the projected revenue in 2019 and the projected revenue in 2020 is the annual change in payments from shippers to pilots as a result of the rate change imposed by this proposed rule. The effect of the rate change to shippers varies by area and district. The rate changes, after taking into account the change in pilotage rates, would lead to affected shippers operating in District One experiencing a decrease in payments of $370,164, over the previous year. District Two and District Three would experience an increase in payments of $138,076 and, $6,430 respectively, when compared with 2019. The overall adjustment in payments would be a decrease in payments by shippers of $225,658 across all three districts (a 1-percent decrease when compared with 2019). Again, because the Coast Guard reviews and sets rates for Great Lakes Pilotage annually, we estimate the impacts as single-year costs rather than annualizing them over a 10-year period.
Table 42 shows the difference in revenue by revenue-component from 2019 to 2020, and presents each revenue-component as a percentage of the total revenue needed. In both 2019 and 2020, the largest revenue-component was pilotage compensation (66% of total revenue needed in 2019 and 69% of total revenue needed in 2020), followed by operating expenses (27% of total revenue needed in 2019 and 2020).
Table 43 presents the percentage change in revenue by area and revenue-component, excluding surcharges as they are applied at the district level.
This proposed rule would allow the Coast Guard to meet the requirements in 46 U.S.C. 9303 to review the rates for pilotage services on the Great Lakes. The rate changes would promote safe, efficient, and reliable pilotage service on the Great Lakes by: (1) Ensuring that rates cover an association's operating expenses; (2) providing fair pilot compensation, adequate training, and sufficient rest periods for pilots; and (3) ensuring pilot associations produce enough revenue to fund future improvements. The rate changes would also help recruit and retain pilots, which would ensure a sufficient number of pilots to meet peak shipping demand, helping to reduce delays caused by pilot shortages.
Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.
For the rule, the Coast Guard reviewed recent company size and ownership data for the vessels identified in the GLPMS, and we reviewed business revenue and size data provided by publicly available sources such as Manta
Of the 12 U.S. entities, 10 exceed the SBA's small business standards for small entities. To estimate the potential impact on the 2 small entities, the Coast Guard used their 2018 invoice data to estimate their pilotage costs in 2020. We increased their 2018 costs to account for the changes in pilotage rates resulting from this rule and the Great Lakes Pilotage Rates—2019 Annual Review and Revisions to Methodology final rule (84 FR 20551). We estimated the change in cost to these entities resulting from this rule by subtracting their estimated 2019 costs from their estimated 2020 costs. We then compared the estimated change in pilotage costs between 2019 and 2020 with each firm's annual revenue and compared their total estimated 2020 pilotage costs to their annual revenue. In both cases, their estimated pilotage expenses were below 1 percent of their annual revenue. Table 44 presents the calculation of these cost estimates for both entities.
In
Finally, the Coast Guard did not find any small not-for-profit organizations that are independently owned and operated and are not dominant in their fields that would be impacted by this rule. We did not find any small governmental jurisdictions with populations of fewer than 50,000 people that would be impacted by this rule. Based on this analysis, we conclude this rulemaking would not affect a substantial number of small entities, nor have a significant economic impact on any of the affected entities.
Based on our analysis, this proposed rule would have a less than 1 percent annual impact on 2 small entities; therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities. If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this proposed rule would have a significant economic impact on it, please submit a comment to the docket at the address listed in the
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).
This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). This proposed rule would not change the burden in the collection currently approved by OMB under OMB Control Number 1625-0086, Great Lakes Pilotage Methodology.
A rule has implications for federalism under Executive Order 13132 (Federalism) if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under Executive Order 13132 and have determined that it is consistent with the fundamental federalism principles and preemption requirements as described in Executive Order 13132. Our analysis follows.
Congress directed the Coast Guard to establish “rates and charges for pilotage services.” See 46 U.S.C. 9303(f). This regulation is issued pursuant to that statute and is preemptive of State law as specified in 46 U.S.C. 9306. Under 46 U.S.C. 9306, a “State or political subdivision of a State may not regulate or impose any requirement on pilotage on the Great Lakes.” As a result, States or local governments are expressly prohibited from regulating within this category. Therefore, this proposed rule is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
While it is well settled that States may not regulate in categories in which Congress intended the Coast Guard to be the sole source of a vessel's obligations, the Coast Guard recognizes the key role that State and local governments may have in making regulatory determinations. Additionally, for rules with implications and preemptive effect, Executive Order 13132 specifically directs agencies to consult with State and local governments during the rulemaking process. If you believe this rule has implications for federalism under Executive Order 13132, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538, requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100 million (adjusted for inflation) or more in any one year. Although this proposed rule would not result in such
This proposed rule would not cause a taking of private property or otherwise have taking implications under Executive Order 12630 (Governmental Actions and Interference with Constitutionally Protected Property Rights).
This proposed rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, (Civil Justice Reform), to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this proposed rule under Executive Order 13045 (Protection of Children from Environmental Health Risks and Safety Risks). This proposed rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children.
This proposed rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments), because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
We have analyzed this proposed rule under Executive Order 13211 (Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use). We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy.
The National Technology Transfer and Advancement Act, codified as a note to 15 U.S.C. 272, directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through OMB, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (
This proposed rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. If you disagree with our analysis or are aware of voluntary consensus standards that might apply, please send a comment explaining your disagreement or identifying appropriate standards to the docket using the method listed in the
We have analyzed this proposed rule under Department of Homeland Security Management Directive 023-01-001-01, Revision 1 (DHS Directive 023-01), Commandant Instruction 5090.1 (COMDTINST 5090.1), and U.S. Coast Guard Environmental Planning Policy (April 2019), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. A preliminary Record of Environmental Consideration supporting this determination is available in the docket where indicated under the
This proposed rule involves: (1) Clarifying the rules related to the working capital fund, (2) adjusting the base pilotage rates, and (3) eliminating surcharges for administering the 2020 shipping season in accordance with applicable statutory and regulatory mandates pursuant to the Great Lakes Pilotage Act of 1960. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.
Administrative practice and procedure, Great Lakes, Navigation (water), Penalties, Reporting and recordkeeping requirements, Seamen.
Great Lakes, Navigation (water), Reporting and recordkeeping requirements, Seamen, Uniform System of Accounts.
Great Lakes, Navigation (water), Seamen.
For the reasons discussed in the preamble, the Coast Guard proposes to amend 46 CFR parts 401, 403, and 404 as follows:
46 U.S.C. 2103, 2104(a), 6101, 7701, 8105, 9303, 9304; Department of Homeland Security Delegation No. 0170.1(II)(92.a), (92.d), (92.e), (92.f).
(a) The hourly rate for pilotage service on—
(1) The St. Lawrence River is $757;
(2) Lake Ontario is $462;
(3) Lake Erie is $573;
(4) The navigable waters from Southeast Shoal to Port Huron, MI is $602;
(5) Lakes Huron, Michigan, and Superior is $302; and
(6) The St. Mary's River is $621.
46 U.S.C. 2103, 2104(a), 9303, 9304; Department of Homeland Security Delegation No. 0170.1(II)(92.a), (92.f).
The addition to read as follows:
(a) * * *
(b) Each Association will maintain a separate account called the “Working Capital Fund.” Each Association will deposit into the working capital fund an amount each year at least equal to the amount calculated in Step 5, 46 CFR 404.105. Working capital funds may only be used for infrastructure improvements and infrastructure maintenance necessary to provide safe, efficient, and reliable pilot service such as pilot boat replacements, major repairs to pilot boats, non-recurring technology purchases necessary for providing pilot services, or for the acquisition of real property for use as a dispatch center, office space, or pilot lodging. The Director may grant exceptions to the requirements of this paragraph (403.110(b)) upon request by an Association.
46 U.S.C. 2103, 2104(a), 9303, 9304; Department of Homeland Security Delegation No. 0170.1(II)(92.a), (92.f).
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 are requested regarding (1) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including 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 November 29, 2019 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.
Bureau of Economic Analysis, Department of Commerce.
Request for comments.
The Bureau of Economic Analysis (BEA) is soliciting comments from the public about new prototype statistics on the economic activity generated by outdoor recreation in each U.S. state and the District of Columbia. Following the public comment period, BEA will evaluate feedback, finalize the methodology and related materials, and begin publishing this data series annually in the Outdoor Recreation Satellite Account (ORSA).
Comments must be received no later than March 31, 2020.
You may submit written comments to Christian Awuku-Budu, Chief, Regional Research and Methodology Branch, Bureau of Economic Analysis, Department of Commerce, 4600 Silver Hill Road (BE-61), or via email at
Christian Awuku-Budu, Chief, Regional Research and Methodology Branch, Bureau of Economic Analysis, Department of Commerce, 4600 Silver
Pursuant to the requirements of the Outdoor Recreation Jobs and Economic Impact Act of 2016, Public Law 114-249, the Bureau of Economic Analysis (BEA) developed the Outdoor Recreation Satellite Account (ORSA). The ORSA measures the size of the U.S. outdoor recreation economy and its link to the broader national economy. Like other BEA accounts, the ORSA incorporates a variety of private and public data sources to create comprehensive measures of the spending and production activities that are the focus of the account. BEA produced the first, national prototype ORSA statistics on February 14, 2018, and released updated national statistics on September 20, 2018. After an additional year of development, BEA released state-level prototype statistics on September 20, 2019.
The state-level prototype statistics are an extension of the national industry ORSA statistics. State ORSA statistics isolate the economic activity associated with outdoor recreation spending and production in a state's economy. The concepts, definitions, and methodology used to produce state-level prototype statistics are consistent with the national industry concepts, definitions, and methodology. However, the additional geographic detail introduces added complexity to the estimation methodology. ORSA spending and production measures must be allocated to the correct geographic region by place of production, not by residence of consumer. In the state-level statistics, outdoor recreation activity is allocated as follows:
• The value of manufactured goods is assigned to the state where they are produced, even if the goods are not ultimately used in that state.
• The value of services is assigned to the location where they are consumed.
• The value of production of imported goods is excluded from ORSA measures, but the value of the services of retailers selling imported goods is included and assigned to the location of the sale.
BEA is seeking feedback on the prototype statistics and will continue to refine its methodology and presentation before official state ORSA statistics are released in the fall of 2020.
BEA invites comments from the public, private industry, state and local governments, non-profit organizations, and other interested parties to assist in improving the prototype statistics' quality, reliability, and usefulness. In particular, BEA is interested in feedback regarding the following:
1. What are some useful applications of state ORSA statistics?
2. BEA plans to release the state ORSA statistics annually in September. Will the statistics be useful if released on this schedule? What time of year should the release be scheduled to maximize the usefulness of the statistics?
3. Are the prototype statistics consistent with the data and information about outdoor recreation available from other sources? If not, what are some differences?
4. Are the methodology documents available at
5. Are there additional source data that could be used to generate and corroborate these statistics beyond those described in the methodology documents available at
On September 4, 2018, in the U.S. District Court for the District of Vermont, Alexis Vlachos (“Vlachos”) was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. 2778 (2012)) (“AECA”). Vlachos was convicted of violating Section 38 of the AECA by knowingly and willfully exporting and causing to be exported from the United States to Canada firearms that were designated as defense articles on the United States Munitions List, without the required U.S. Department of State licenses. Vlachos was sentenced to fifty-one (51) months in prison and an assessment of $200.
The Export Administration Regulations (“EAR” or “Regulations”) are administered and enforced by the U.S. Department of Commerce's Bureau of Industry and Security (“BIS”).
BIS has received notice of Vlachos's conviction for violating Section 38 of the AECA, and pursuant to Section 766.25 of the Regulations, has provided notice and an ooportunity for Vlachos to make a written submission to BIS.
Based upon my review and consultations with BIS's Office of Export Enforcement, including its Director, and the facts available to BIS, I have decided to deny Vlachos's export privileges under the Regulations for a period of seven years from the date of Vlachos's conviction. I have also decided to revoke any BIS-issued license in which Vlachos had an interest at the time of his conviction.
Accordingly, it is hereby
A. Applying for, obtaining, or using any license, license exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or engaging in any other activity subject to the Regulations; or
C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or from any other activity subject to the Regulations.
A. Export or reexport to or on behalf of the Denied Person any item subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted acquisition by the Denied Person of the ownership, possession, or control of any item subject to the Regulations that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby the Denied Person acquires or attempts to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the Denied Person of any item subject to the Regulations that has been exported from the United States;
D. Obtain from the Denied Person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States; or
E. Engage in any transaction to service any item subject to the Regulations that has been or will be exported from the United States and which is owned, possessed or controlled by the Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by the Denied Person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing.
The Transportation and Related Equipment Technical Advisory Committee will meet on November 13, 2019, 9:30 a.m., in the Herbert C. Hoover Building, Room 3884, 14th Street between Constitution & Pennsylvania Avenues NW, Washington, DC. The Committee advises the Office of the Assistant Secretary for Export Administration with respect to technical questions that affect the level of export controls applicable to transportation and related equipment or technology.
1. Welcome and Introductions.
2. Status reports by working group chairs.
3. Public comments and Proposals.
4. Discussion of matters determined to be exempt from the provisions relating to public meetings found in 5 U.S.C. app. 2 10(a)(1) and 10(a)(3).
The open session will be accessible via teleconference to 20 participants on a first come, first serve basis. To join the conference, submit inquiries to Ms. Yvette Springer at
A limited number of seats will be available during the public session of the meeting. Reservations are not accepted. To the extent time permits, members of the public may present oral statements to the Committee. The public may submit written statements at any time before or after the meeting. However, to facilitate distribution of public presentation materials to Committee members, the Committee suggests that presenters forward the public presentation materials prior to the meeting to Ms. Springer via email.
The Assistant Secretary for Administration, with the concurrence of the delegate of the General Counsel, formally determined on April 19, 2019, pursuant to Section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. app. 2 (10)(d)), that the portion of the meeting dealing with pre-decisional changes to the Commerce Control List and U.S. export control policies shall be exempt from the provisions relating to public meetings found in 5 U.S.C. app. 2 10(a)(1) and 10(a)(3). The remaining portions of the meeting will be open to the public.
For more information, call Yvette Springer at (202) 482-2813.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) is rescinding the
Applicable October 30, 2019.
Darla Brown, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-1791.
On July 1, 2019, Commerce published in the
In October 2019, the petitioner timely withdrew its request for an administrative review for all 147 companies.
Pursuant to 19 CFR 351.213(d)(1), the Secretary will rescind an administrative review, in whole or in part, if a party who requested the review withdraws the request within 90 days of the date of publication of notice of initiation of the requested review. As noted above, the petitioner withdrew its request for review by the 90-day deadline, and we received no other requests for review. Accordingly, we are rescinding the administrative review of the countervailing duty order on CWP from China covering the period January 1, 2018, through December 31, 2018, in its entirety.
Commerce will instruct U.S. Customs and Border Protection (CBP) to assess countervailing duties on all appropriate entries. Countervailing duties shall be assessed at rates equal to the cash deposit of estimated countervailing duties required at the time of entry, or withdrawal from warehouse, for consumption, in accordance with 19 CFR 351.212(c)(1)(i). Commerce intends to issue appropriate assessment instructions to CBP 15 days after publication of this notice in the
This notice serves as the only reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information. Timely written notification of the return/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 a sanctionable violation.
This notice is issued and published in accordance with section 751(a)(1) and 751(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On October 18, 2019, the United States Court of International Trade (CIT) issued a final judgment in
October 30, 2019.
Sally C. Gannon, Bilateral Agreements Unit, Office of Policy and Negotiations, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-0162.
On December 19, 2014, Commerce and the signatory producers/exporters accounting for substantially all imports of sugar from Mexico signed the AD Agreement.
CSC Sugar LLC (CSC Sugar) challenged Commerce's determination to amend the AD Agreement by contending that Commerce did not meet its obligation to file a complete administrative record.
The CIT agreed with CSC Sugar and ordered Commerce to supplement the administrative record with any
The CIT found that Commerce's failure to follow the recordkeeping requirements of Section 777 of the Act cannot be described as “harmless.”
The
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) preliminarily determines that Protech Diamond Tools Inc. (Protech) is circumventing the antidumping duty order on diamond sawblades and parts thereof (diamond sawblades) from the People's Republic of China (China).
Applicable October 30, 2019.
Yang Jin Chun, AD/CVD Operations Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-5760.
On May 3, 2019, in response to a request from the Diamond Sawblades Manufacturers' Coalition (the petitioner), Commerce published the initiation of the anti-circumvention inquiry to determine whether certain imports of diamond sawblades comprised of cores and segments produced in China and joined into diamond sawblades in, and exported from, Canada by Protech are circumventing the antidumping duty order on diamond sawblades from China.
The products subject to the order are diamond sawblades. The diamond sawblades subject to the order are currently classifiable under subheadings 8202 to 8206 of the Harmonized Tariff Schedule of the United States (HTSUS), and may also enter under subheading 6804.21.00. The HTSUS subheadings are provided for convenience and customs purposes. A full description of the scope of the order is contained in the Preliminary Decision Memorandum.
We initiated this anti-circumvention inquiry to cover diamond sawblades produced in Canada by Protech with cores and segments produced in China and subsequently exported from Canada by Protech to the United States.
Commerce is conducting this anti-circumvention inquiry in accordance with section 781(b) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.225(h). Because Protech did not respond to our request for information, we made the affirmative preliminary determination based on adverse facts available in accordance with section 776(a)-(b) of the Act. For a full description of the methodology underlying our conclusions,
As detailed in the Preliminary Decision Memorandum, Commerce preliminarily determines that diamond sawblades produced by Protech in Canada using cores and segments from China and exported from Canada by Protech to the United States are circumventing the antidumping duty order on diamond sawblades from China. We therefore preliminarily determine that it is appropriate to include this merchandise within the antidumping duty order on diamond sawblades from China and to instruct U.S. Customs and Border Protection (CBP) to suspend entries of merchandise produced using Chinese cores and Chinese segments by Protech in Canada
As stated above, Commerce has made a preliminary affirmative finding of circumvention of the antidumping duty order on diamond sawblades from China for diamond sawblades assembled or completed using Chinese cores and Chinese segments as inputs by Protech in Canada and exported from Canada by Protech to the United States. This preliminary determination of circumvention applies to diamond sawblades assembled or completed using Chinese cores and Chinese segments as inputs by Protech in Canada. In accordance with section 19 CFR 351.225(l)(2), Commerce will direct CBP to suspend liquidation and to require a cash deposit of estimated duties on unliquidated entries of diamond sawblades produced (
Diamond sawblades assembled or completed in Canada using non-Chinese origin cores and/or non-Chinese origin segments are not subject to this anti-circumvention inquiry. However, because Protech failed to cooperate with Commerce's request for information, Commerce finds that Protech is not currently able to identify diamond sawblades produced with non-Chinese origin cores and/or non-Chinese origin segments. Therefore, Commerce will not implement a certification process at this preliminary stage, and Commerce will require cash deposits on all entries of diamond sawblades produced and exported by Protech in Canada. Commerce will reconsider Protech's eligibility to participate in the certification process if Protech demonstrates in a future segment of the proceeding (
Interested parties are invited to comment on the preliminary determination of this anti-circumvention inquiry. Pursuant to 19 CFR 351.309(b)(2), interested parties may submit case briefs not later than 30 days after the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than five days after the time limit for filing case briefs.
Any interested party who wishes to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Enforcement and Compliance within 30 days after the day of publication of this notice pursuant to 19 CFR 351.310(c). A request should contain: (1) The party's name, address, and telephone number; (2) the number of participants; (3) whether any participant is a foreign national; and (4) a list of issues to be discussed. If a request for a hearing is made, then Commerce intends to hold the hearing at the U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230, at a time and date to be determined. Parties should confirm by telephone the date, time, and location of the hearing two days before the scheduled date. Issues raised in the hearing will be limited to those raised in case and rebuttal briefs.
Consistent with section 781(e) of the Act, Commerce will notify the International Trade Commission (ITC) of this preliminary determination to include the merchandise subject to this anti-circumvention inquiry within the antidumping duty order on diamond sawblades from China. Pursuant to section 781(e) of the Act, the ITC may request consultations concerning Commerce's proposed inclusion of the subject merchandise. If, after consultations, the ITC believes that a significant injury issue is presented by the proposed inclusion, it will have 60 days from the date of notification by Commerce to provide written advice.
According to section 781(f) of the Act, Commerce shall, to the maximum extent practicable, make its anti-circumvention determination within 300 days from the date of the initiation of the inquiry.
This preliminary affirmative circumvention determination is published in accordance with section 781(b) of the Act and 19 CFR 351.225(f).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
In response to a request from the Rebar Trade Action Coalition (RTAC), the Department of Commerce (Commerce) is initiating an anti-circumvention inquiry to determine whether otherwise straight rebar bent at one or both ends produced and/or exported to the United States by Deacero S.A.P.I de C.V. (Deacero) is circumventing the antidumping duty (AD) order on rebar from Mexico.
Applicable October 30, 2019.
Jonathan Hall-Eastman, AD/CVD Operations, Office III, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-1468.
On September 3, 2019, RTAC, a domestic interested party in the above-mentioned proceeding recommended that Commerce issue a scope ruling or initiate an anti-circumvention inquiry with regard to certain hooked or bent rebar that is produced and/or exported to the United States by Deacero.
In its September 25, 2019 submission, Deacero opposed RTAC's request for a scope ruling or initiation of an anti-circumvention proceeding.
The merchandise subject to this
The subject merchandise may also enter under other HTSUS numbers including 7215.90.1000, 7215.90.5000, 7221.00.0017, 7221.00.0018, 7221.00.0030, 7221.00.0045, 7222.11.0001, 7222.11.0057, 7222.11.0059, 7222.30.0001, 7227.20.0080, 7227.90.6085, 7228.20.1000, and 7228.60.6000. Specifically excluded are plain rounds (
This minor alternation anti-circumvention inquiry covers otherwise straight rebar bent at one or both ends produced and/or exported to the United States by Deacero. In this circumvention proceeding, Commerce intends to consider whether any affirmative finding of circumvention through minor alterations to otherwise straight rebar should be applied to imports of similarly situated otherwise straight rebar bent at one or both ends rebar from Mexico, regardless of producer or exporter.
Section 781(c) of the Act provides that Commerce may find circumvention of an AD order when products which are of the class or kind of merchandise subject to an AD order have been “altered in form or appearance in minor respects . . . whether or not included in the same tariff classification.” Section 781(c)(2) of the Act provides an exception that “{p}aragraph 1 shall not apply with respect to altered merchandise if the administering authority determines that it would be unnecessary to consider the altered merchandise within the scope of the AD order.”
While the statute is silent as to what factors to consider in determining whether alterations are properly considered “minor,” the legislative history of this provision indicates that there are certain factors which should be considered before reaching a circumvention determination. In conducting a circumvention inquiry under section 781(c) of the Act, Commerce has generally relied upon “such criteria as the overall physical characteristics of the merchandise, the expectations of the ultimate users, the use of the merchandise, the channels of marketing and the cost of any modification relative to the total value of the imported products.”
After analyzing the information in the Circumvention Allegation, we determine that RTAC has satisfied the criteria listed above to warrant an initiation of a formal anti-circumvention inquiry, pursuant to section 781(c) of the Act and 19 CFR 351.225(i), to determine whether otherwise straight rebar bent at one or both ends produced and/or exported to the United States by Deacero constitutes merchandise altered in form or appearance in such minor respects that should be included within the scope of the
Commerce will not order the suspension of liquidation of entries of any additional merchandise at this time. However, in accordance with 19 CFR 351.225(l)(2), if Commerce issues a preliminary affirmative determination, we will then instruct U.S. Customs and Border Protection to suspend liquidation and require a cash deposit of estimated duties, at the applicable rate, for each unliquidated entry of the merchandise at issue, entered or withdrawn from warehouse for consumption on or after the date of initiation of the inquiry. Following consultation with interested parties, Commerce will establish a schedule for questionnaires and comments on the issues related to the
This notice is published in accordance with section 781(c) of the Act and 19 CFR 351.225(i) and (j).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) is rescinding its administrative review of the antidumping duty order on certain steel nails from the Socialist Republic of Vietnam (Vietnam) for the period of review (POR) July 1, 2018, through June 30, 2019.
Applicable October 30, 2019.
Mark Flessner, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-6312.
On July 1, 2019, Commerce published in the
On September 9, 2019, Commerce published in the
Pursuant to 19 CFR 351.213(d)(1), Commerce will rescind an administrative review, in whole or in part, if the parties that requested a review withdraw the request within 90 days of the date of publication of the notice of initiation of the requested review. The petitioner withdrew its request for review for all companies by the 90-day deadline, and no other party requested an administrative review of this order. Therefore, we are rescinding the administrative review of the antidumping duty order on certain steel nails from the Vietnam covering the period July 1, 2018, through June 30, 2019, in its entirety.
Commerce will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties on all appropriate entries. Antidumping duties shall be assessed at rates equal to the cash deposit of estimated antidumping duties required at the time of entry, or withdrawal from warehouse, for consumption, in accordance with 19 CFR 351.212(c)(1)(i). Commerce intends to issue appropriate assessment instructions to CBP 15 days after publication of this notice in the
This notice serves as the only 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 may result in the presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice serves as the only reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). 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 the terms of an APO is a sanctionable violation.
This notice is published in accordance with section 777(i)(1) of the Act, and 19 CFR 351.213(d)(4).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that aluminum wire and cable from the People's Republic of China (China) is being, or is likely to be, sold in the United States at less than fair value (LTFV).
Applicable October 30, 2019.
Mark Hoadley or Kathryn Turlo, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-3148 or (202) 482-3870, respectively.
The petitioners in this investigation are Encore Wire Corporation (Encore) and Southwire Company, LLC (Southwire) (collectively, the petitioners). The mandatory respondents in this investigation are Hebei Huatong Wires and Cables Group Co., Ltd. (Huatong) and Shanghai Silin Special Equipment Co., Ltd. (Silin). On June 5, 2019, Commerce published its
The period of investigation is January 1, 2018 through June 30, 2018.
The products covered by this investigation are aluminum wire and cable from China. For a full description of the scope of this investigation,
During the course of this investigation and the concurrent countervailing duty (CVD) investigation, Commerce received scope comments from interested parties. In our
Because the mandatory respondents in this investigation did not provide information requested by Commerce, and Commerce found in the
In response to our invitation to comment on the
Based on our analysis of the comments received, we made no changes to the
For the reasons explained in the Issues and Decision Memorandum, we are continuing to find that the use of adverse facts available (AFA), pursuant to sections 776(a) and (b) of the Tariff Act of 1930, as amended (the Act), is appropriate, and we are determining an estimated weighted-average dumping margin based entirely on AFA for the China-wide entity. Further, Commerce continues to consider the mandatory respondents, Huatong and Silin, to be a part of the China-wide entity. We continue to find that the China-wide entity, which also includes companies that failed to establish their eligibility for separate rate status as well as other Chinese exporters or producers that did not respond to Commerce's quantity and value questionnaire, withheld requested information, significantly impeded the proceeding, and failed to cooperate to the best of their abilities, and thus we are continuing to base the final determination for the China-wide entity on AFA.
In selecting the estimated weighted-average dumping margin based on AFA for the China-wide entity, Commerce's practice is to select a rate that is sufficiently adverse to ensure that the uncooperative party does not obtain a more favorable result by failing to cooperate than if it had fully
Certain parties commented on our decision in the
We have continued to calculate producer/exporter combination rates for the respondents that are eligible for a separate rate. Policy Bulletin 05.1 describes this practice.
The final estimated weighted-average dumping margins are as follows:
We will disclose the calculations performed within five days of public announcement of this notice in accordance with 19 CFR 351.224(b).
In accordance with section 735(c)(1)(B) of the Act, we will direct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of aluminum wire and cable from China, as described in Appendix I of this notice, which were entered, or withdrawn from warehouse, for consumption on or after June 5, 2019, the date of publication in the
To determine the cash deposit rate, Commerce normally adjusts the estimated weighted-average dumping margin by the amount of domestic subsidy pass-through and export subsidies determined in a companion CVD proceeding when CVD provisional measures are in effect. Accordingly, where Commerce makes an affirmative determination for domestic subsidy pass through or export subsidies, Commerce offsets the calculated estimated weighted-average dumping margin by the appropriate rate(s). We have made an affirmative final determination for export subsidies in the companion CVD investigation. However, suspension of liquidation for provisional measures in the companion CVD case has been discontinued; therefore, we are not instructing CBP to collect cash deposits based upon the adjusted estimated weighted-average dumping margin for those subsidies at this time.
In accordance with section 735(d) of the Act, Commerce will notify the International Trade Commission (ITC) of its final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports, or sales (or the likelihood of sales) for importation of aluminum wire and cable from China no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated, and all cash deposits will be refunded. If the ITC determines that such injury does exist, Commerce will issue an antidumping duty order directing CBP to assess, upon further instruction by Commerce, antidumping duties on all imports of the subject merchandise, entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.
This notice serves as the only reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). 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 the terms of an APO is a violation subject to sanction.
This notice also serves as an initial reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties.
This determination is issued and published in accordance with sections 735(d) and 777(i)(1) of the Act and 19 CFR 351.210(c).
The scope of the investigation covers aluminum wire and cable, which is defined as an assembly of one or more electrical conductors made from 8000 Series Aluminum Alloys (defined in accordance with ASTM B800), Aluminum Alloy 1350 (defined in accordance with ASTM B230/B230M or B609/B609M), and/or Aluminum Alloy 6201 (defined in accordance with ASTM B398/B398M), provided that: (1) At least one of the electrical conductors is insulated; (2) each insulated electrical conductor has a voltage rating greater than 80 volts and not exceeding 1,000 volts; and (3) at least one electrical conductor is stranded and has a size not less than 16.5 thousand circular mil (kcmil) and not greater than 1,000 kcmil. The assembly may: (1) Include a grounding or neutral conductor; (2) be clad with aluminum, steel, or other base metal; or (3) include a steel support center wire, one or more connectors, a tape shield, a jacket or other covering, and/or filler materials.
Most aluminum wire and cable products conform to National Electrical Code (NEC) types THHN, THWN, THWN-2, XHHW-2, USE, USE-2, RHH, RHW, or RHW-2, and also conform to Underwriters Laboratories (UL) standards UL-44, UL-83, UL-758, UL-854, UL-1063, UL-1277, UL-1569, UL-1581, or UL-4703, but such conformity is not required for the merchandise to be included within the scope.
The scope of the investigation specifically excludes aluminum wire and cable products in lengths less than six feet, whether or not included in equipment already assembled at the time of importation.
The merchandise covered by the investigation is currently classifiable under subheading 8544.49.9000 of the Harmonized Tariff Schedule of the United States (HTSUS). Products subject to the scope may also enter under HTSUS subheading 8544.42.9090. The HTSUS subheadings are provided for convenience and customs purposes. The written description of the scope of the investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On October 18, 2019, the United States Court of International Trade (CIT) issued a final judgment in
November 29, 2019.
Sally C. Gannon, Bilateral Agreements Unit, Office of Policy and Negotiations, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-0162.
On December 19, 2014, Commerce and the Government of Mexico (GOM) signed the CVD Agreement.
CSC Sugar LLC (CSC Sugar) challenged Commerce's determination to amend the CVD Agreement by contending that Commerce did not meet its obligation to file a complete administrative record.
The CIT agreed with CSC Sugar and ordered Commerce to supplement the administrative record with any
The CIT found that Commerce's failure to follow the recordkeeping requirements of Section 777 of the Act cannot be described as “harmless.”
The
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that countervailable subsidies are being provided to producers and exporters of aluminum wire and cable from the People's Republic of China (China).
Applicable October 30, 2019.
Caitlin Monks or Nancy Decker, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: 202-482-2670 or 202-482-0196, respectively.
The petitioners in this investigation are Encore Wire Corporation (Encore) and Southwire Company, LLC (Southwire) (the petitioners). In addition to the Government of China (GOC), the mandatory respondents in this investigation are Shanghai Silin Special Equipment Co., Ltd. (Silin), Changfeng Wire & Cable Co., Ltd. (Changfeng), and Shanghai Yang Pu Qu Gong (Qu Gong). Qu Gong did not respond to our requests for information.
On April 8, 2019, Commerce published in the
A summary of events that occurred since Commerce published the
The products covered by this investigation are aluminum wire and cable. For a complete description of the scope of this investigation,
The period of investigation is January 1, 2017 through December 31, 2017.
In making this final determination, Commerce is relying on facts otherwise available, including adverse facts available (AFA), pursuant to section 776(a) of the Tariff Act of 1930, as amended (the Act). For a full discussion of our application of AFA,
In the Issues and Decision Memorandum, we address all issues raised in parties' case and rebuttal briefs. A list of the issues that parties raised, and to which we responded, is attached to this notice as Appendix II.
Based on our review and analysis of the comments received from parties, minor corrections presented at verification, and our verification findings, we made changes to Changfeng's subsidy rate calculation, and we have now assigned Silin a rate based entirely on AFA. For a discussion of these changes,
In accordance with section 705(c)(1)(B)(i)(I) of the Tariff Act of 1930, as amended (the Act), we calculated an individual estimated subsidy rate for Changfeng and assigned to Qu Gong and Silin rates based entirely on AFA pursuant to section 776 of the Act.
Section 705(c)(5)(A) of the Act provides that in the final determination, Commerce shall determine an estimated all-others rate for companies not individually examined. This rate shall be an amount equal to the weighted average of the estimated subsidy rates established for those companies individually examined, excluding any zero and
Commerce determines the total estimated net countervailable subsidy rates to be the following:
We intend to disclose to interested parties under Administrative Protective Order (APO), the calculations performed in connection with this final determination within five days of any public announcement or, if there is no public announcement, within five days of the date of publication of the notice of final determination in the
As a result of our
If the U.S. International Trade Commission (ITC) issues a final affirmative injury determination, we will issue a countervailing duty order, reinstate the suspension of liquidation under section 706(a) of the Act, and will require a cash deposit of estimated countervailing duties for entries of subject merchandise in the amounts indicated above. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated, and all estimated duties deposited as a result of the suspension of the suspension of liquidation will be refunded.
In accordance with section 705(d) of the Act, we will notify the ITC of our determination. Because Commerce's final determination in this proceeding is affirmative, in accordance with section 705(b) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of aluminum wire and cable from China no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated, and all cash deposits will be refunded. If the ITC determines that such injury does exist, Commerce will issue a countervailing duty order directing CBP to assess, upon further instruction by Commerce, countervailing duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation, as discussed above in the “Continuation of Suspension of Liquidation” section.
This notice serves as a reminder to the parties subject to an APO of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials or, alternatively, conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and terms of an APO is a violation that is subject to sanction.
This determination is issued and published pursuant to sections 705(d) and 777(i) of the Act and 19 CFR 351.210(c).
The scope of the investigation covers aluminum wire and cable, which is defined as an assembly of one or more electrical conductors made from 8000 Series Aluminum Alloys (defined in accordance with ASTM B800), Aluminum Alloy 1350 (defined in accordance with ASTM B230/B230M or B609/B609M), and/or Aluminum Alloy 6201 (defined in accordance with ASTM B398/B398M), provided that: (1) At least one of the electrical conductors is insulated; (2) each insulated electrical conductor has a voltage rating greater than 80 volts and not exceeding 1,000 volts; and (3) at least one electrical conductor is stranded and has a size not less than 16.5 thousand circular mil (kcmil) and not greater than 1,000 kcmil. The assembly may: (1) Include a grounding or neutral conductor; (2) be clad with aluminum, steel, or other base metal; or (3) include a steel support center wire, one or more connectors, a tape shield, a jacket or other covering, and/or filler materials.
Most aluminum wire and cable products conform to National Electrical Code (NEC) types THHN, THWN, THWN-2, XHHW-2, USE, USE-2, RHH, RHW, or RHW-2, and also conform to Underwriters Laboratories (UL) standards UL-44, UL-83, UL-758, UL-854, UL-1063, UL-1277, UL-1569, UL-1581, or UL-4703, but such conformity is not required for the merchandise to be included within the scope.
The scope of the investigation specifically excludes aluminum wire and cable products in lengths less than six feet, whether or not included in equipment already assembled at the time of importation.
The merchandise covered by the investigation is currently classifiable under subheading 8544.49.9000 of the Harmonized Tariff Schedule of the United States (HTSUS). Products subject to the scope may also enter under HTSUS subheading 8544.42.9090. The HTSUS subheadings are provided for convenience and customs purposes. The written description of the scope of the investigation is dispositive.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; solicitation of nominations.
NMFS solicits nominations for the Atlantic Highly Migratory Species (HMS) Advisory Panel (AP). NMFS consults with and considers the comments and views of the HMS AP when preparing and implementing Fishery Management Plans (FMPs) or FMP amendments for Atlantic tunas, swordfish, sharks, and billfish. Nominations are being sought to fill approximately one-third (10) of the seats on the HMS AP for 3-year appointments. Individuals with definable interests in the recreational and commercial fishing and related industries, environmental community, academia, and non-governmental organizations are considered for membership on the HMS AP.
Nominations must be received on or before November 29, 2019.
You may submit nominations and requests for the Advisory Panel Statement of Organization, Practices, and Procedures by any of the following methods:
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Peter Cooper at (301) 427-8503.
The Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 U.S.C. 1801
Nomination packages should include:
1. The name of the nominee and a description of his/her interest in HMS or HMS fisheries, or in particular species of sharks, swordfish, tunas, or billfish;
2. Contact information, including mailing address, phone, and email of the nominee;
3. A statement of background and/or qualifications;
4. A written commitment that the nominee shall actively participate in good faith, and consistent with ethics obligations, in the meetings and tasks of the HMS AP; and
5. A list of outreach resources that the nominee has at his/her disposal to communicate Qualifications for HMS AP Membership.
Qualification for membership includes one or more of the following: (1) Experience in HMS recreational fisheries; (2) experience in HMS commercial fisheries; (3) experience in fishery-related industries (
Member tenure will be for 3 years (36 months), with approximately one-third of the members' terms expiring on December 31 of each year. Nominations are sought for terms beginning January 2020 and expiring December 2022.
Nominations for the HMS AP will be accepted to allow representation from commercial and recreational fishing interests, academic/scientific interests, and the environmental/non-governmental organization community, who are knowledgeable about Atlantic HMS and/or Atlantic HMS fisheries. Current representation on the HMS AP, as shown in Table 1, consists of 12 members representing commercial interests, 12 members representing recreational interests, 4 members representing environmental interests, 4 academic representatives, and the International Commission for the Conservation of Atlantic Tunas (ICCAT) Advisory Committee Chairperson. Each HMS AP member serves a 3-year term with approximately one-third of the total number of seats (33) expiring on December 31 of each year. NMFS seeks to fill 3 commercial, 5 recreational, and 2 environmental organization vacancies by December 31, 2019. NMFS will seek to fill vacancies based primarily on maintaining the current representation from each of the sectors. NMFS also considers species expertise and representation from the fishing regions (Northeast, Mid-Atlantic, Southeast, Gulf of Mexico, and Caribbean) to ensure the diversity and balance of the AP. Table 1 includes the current representation on the HMS AP by sector, region, and species with terms that are expiring identified in bold. It is not meant to indicate that NMFS will only consider persons who have expertise in the species or fishing regions that are listed. Rather, NMFS will aim toward having as diverse and balanced an AP as possible.
The intent is to have a group that, as a whole, reflects an appropriate and equitable balance and mix of interests given the responsibilities of the HMS AP.
Five additional members on the HMS AP include one member representing each of the following Councils: New England Fishery Management Council, the Mid-Atlantic Fishery Management Council, the South Atlantic Fishery Management Council, the Gulf of Mexico Fishery Management Council, and the Caribbean Fishery Management Council. The HMS AP also includes 22 ex-officio participants: 20 representatives of the coastal states and two representatives of the interstate commissions (the Atlantic States Marine Fisheries Commission and the Gulf States Marine Fisheries Commission).
NMFS will provide the necessary administrative support, including technical assistance, for the HMS AP. However, NMFS will not compensate participants with monetary support of any kind. Depending on availability of funds, members may be reimbursed for travel costs related to the HMS AP meetings.
Meetings of the HMS AP will be held as frequently as necessary but are routinely held twice each year—once in the spring, and once in the fall. The meetings may be held in conjunction with public hearings.
National Marine Fisheries Service (NMFS), National Oceanic and
Notice of public meeting.
The Mid-Atlantic Fishery Management Council (Council) will hold a webinar-based meeting with the public to provide information on options available to commercial fishing operators for electronically submitting required Vessel Trip Reports (VTRs) in the Greater Atlantic Region. This is in support of the Council's joint action with the New England Fishery Management Council that could require electronic reporting of VTRs by operators holding commercial fishing permits for species managed by either council that require the submission of VTRs.
The meeting will be held Wednesday, November 20, 2019, from 5:30 p.m. to 7:30 p.m., EST.
The meeting will be held via webinar (
Council address: Mid-Atlantic Fishery Management Council, 800 N State St., Suite 201, Dover, DE 19901; telephone: (302) 674-2331.
Christopher M. Moore, Ph.D., Executive Director, Mid-Atlantic Fishery Management Council; telephone: (302) 526-5255. The Council's website,
The Council is considering requiring electronic reporting of commercial fishery VTRs in a joint action with the New England Fishery Management Council. This action would change the method of transmitting VTRs—the required data elements would not change. Existing regulations requiring that VTRs be completed before arriving at the dock would not change, but the timeline for submitting electronic reports may change. This meeting will provide a review of approved electronic VTR applications, initial steps that would be necessary for commercial operators to begin reporting electronically, and a demonstration of two of the most popular electronic reporting applications (with limited time for questions) to convey information on the process involved for commercial operators to report VTRs electronically.
The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aid should be directed to M. Jan Saunders, (302) 526-5251, at least 5 days prior to the meeting date.
16 U.S.C. 1801
United States Patent and Trademark Office, Department of Commerce.
Request for comments.
The United States Patent and Trademark Office (“USPTO”) is gathering information about the impact of artificial intelligence (“AI”) technologies on intellectual property law and policy. To assist in gathering this information, on August 27, 2019, the USPTO published questions related to the impact of artificial intelligence inventions on patent law and policy and asked the public for written comments. Those questions cover a variety of topics, including whether revisions to intellectual property protection are needed. The present notice extends this inquiry to copyright, trademark, and other intellectual property rights impacted by AI.
Written comments must be received on or before December 16, 2019.
Written comments should be sent by email to
Because written comments and testimony will be made available for public inspection, information that a respondent does not desire to be made public, such as a phone number, should not be included in the testimony or written comments.
Coke Stewart, Office of the Under Secretary and Director of the USPTO, (571) 272-8600.
Artificial Intelligence (AI) technologies are increasingly becoming important across a diverse spectrum of technologies and businesses. AI poses unique challenges in the sphere of intellectual property law. At a January 31, 2019 conference on “Artificial Intelligence: Intellectual Property Policy Considerations,” USPTO explored a number of those challenges.
1. Should a work produced by an AI algorithm or process, without the involvement of a natural person contributing expression to the resulting work, qualify as a work of authorship protectable under U.S. copyright law? Why or why not?
2. Assuming involvement by a natural person is or should be required, what kind of involvement would or should be sufficient so that the work qualifies for copyright protection? For example, should it be sufficient if a person (i) designed the AI algorithm or process that created the work; (ii) contributed to the design of the algorithm or process; (iii) chose data used by the algorithm for training or otherwise; (iv) caused the AI algorithm or process to be used to yield the work; or (v) engaged in some specific combination of the foregoing
3. To the extent an AI algorithm or process learns its function(s) by ingesting large volumes of copyrighted material, does the existing statutory language (
4. Are current laws for assigning liability for copyright infringement adequate to address a situation in which an AI process creates a work that infringes a copyrighted work?
5. Should an entity or entities other than a natural person, or company to which a natural person assigns a copyrighted work, be able to own the copyright on the AI work? For example: Should a company who trains the artificial intelligence process that creates the work be able to be an owner?
6. Are there other copyright issues that need to be addressed to promote the goals of copyright law in connection with the use of AI?
7. Would the use of AI in trademark searching impact the registrablity of trademarks? If so, how?
8. How, if at all, does AI impact trademark law? Is the existing statutory language in the Lanham Act adequate to address the use of AI in the marketplace?
9. How, if at all, does AI impact the need to protect databases and data sets? Are existing laws adequate to protect such data?
10. How, if at all, does AI impact trade secret law? Is the Defend Trade Secrets Act (DTSA), 18 U.S.C. 1836
11. Do any laws, policies, or practices need to change in order to ensure an appropriate balance between maintaining trade secrets on the one hand and obtaining patents, copyrights, or other forms of intellectual property protection related to AI on the other?
12. Are there any other AI-related issues pertinent to intellectual property rights (other than those related to patent rights) that the USPTO should examine?
13. Are there any relevant policies or practices from intellectual property agencies or legal systems in other countries that may help inform USPTO's policies and practices regarding intellectual property rights (other than those related to patent rights)?
10:00 a.m., Tuesday, November 5, 2019.
CFTC Headquarters, Lobby-Level Hearing Room, Three Lafayette Centre, 1155 21st Street NW, Washington, DC.
Open.
The Commodity Futures Trading Commission (“Commission” or “CFTC”) will hold this meeting to consider the following matters:
• Proposed Rule—Correcting Amendment to Commission Regulation 160.30 (Privacy of Consumer Financial Information);
• Foreign Board of Trade (FBOT) Applications of Euronext Amsterdam, Euronext Paris, and European Energy Exchange; and
• Other Commission business.
The agenda for this meeting will be available to the public and posted on the Commission's website at
Christopher Kirkpatrick, Secretary of the Commission, 202-418-5964.
5 U.S.C. 552b.
Office of Postsecondary Education (OPE), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995, ED is proposing a revision of an existing information collection.
Interested persons are invited to submit comments on or before November 29, 2019.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact Carmen Gordon, 202-453-7311.
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
National Center for Education Statistics (NCES), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995, ED is proposing a revision of an existing information collection.
Interested persons are invited to submit comments on or before November 29, 2019.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact Kashka Kubzdela, 202-502-7411 or email
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 Environmental Management, Department of Energy.
Notice of open meeting.
This notice announces a meeting of the Environmental Management Site-Specific Advisory Board (EM SSAB), Savannah River Site. The Federal Advisory Committee Act requires that public notice of this meeting be announced in the
Monday, November 18, 2019; 1:00 p.m.-5:00 p.m. Tuesday, November 19, 2019; 9:00 a.m.-5:00 p.m.
Hyatt House, 1268 Broad Street, Augusta, GA 30901.
Amy Boyette, Office of External Affairs, U.S. Department of Energy, Savannah River Operations Office, P.O. Box A, Aiken, SC 29802; Phone: (803) 952-6120; email:
Office of Environmental Management, Department of Energy.
Notice of open meeting.
This notice announces a meeting of the Environmental Management Site-Specific Advisory Board (EM SSAB), Northern New Mexico. The Federal Advisory Committee Act requires that public notice of this meeting be announced in the
Wednesday, January 22, 2020; 1:00 p.m.-5:15 p.m.
Ohkay Conference Center, 68 New Mexico 291, San Juan, New Mexico 87566.
Menice Santistevan, Northern New Mexico Citizens' Advisory Board (NNMCAB), 94 Cities of Gold Road, Santa Fe, NM 87506. Phone (505) 995-0393; Fax (505) 989-1752 or Email:
Office of Environmental Management, Department of Energy.
Notice of open meeting.
This notice announces a meeting of the Environmental Management Site-Specific Advisory Board (EM SSAB), Paducah. The Federal Advisory Committee Act requires that public notice of this meeting be announced in the
Thursday, November 21, 2019; 6:00 p.m.
West Kentucky Community and Technical College, Emerging Technology Center, 5100 Alben Barkley Drive, Paducah, Kentucky 42001.
Jennifer Woodard, Deputy Designated Federal Officer, U.S. Department of Energy, Paducah Site Office, Post Office Box 1410, MS-103, Paducah, Kentucky 42001, (270) 441-6825;
Breaks Taken as Appropriate
Office of Science, Department of Energy.
Notice of open meeting.
This notice sets forth the schedule and summary agenda for an open meeting of the President's Council of Advisors on Science and Technology (PCAST), and describes the functions of the Council. The Federal Advisory Committee Act (FACA) requires that public notice of these meetings be announced in the
November 18, 2019; 9:15 a.m. to 6:00 p.m.
The meeting will be held at the National Academy of Sciences (in the Lecture Room), 2101 Constitution Avenue NW, Washington, DC.
This PCAST meeting will occur on Monday, November 18, 2019, from 9:15 a.m.-6:00 p.m., at the National Academies of Science. Individuals from the public who wish to attend must register using the following email address:
PCAST is an advisory group of the nation's leading scientists and engineers, appointed by the President to augment the science and technology advice available to him from inside the White House, cabinet departments, and other Federal agencies. See the Executive Order at
The public comment period for this meeting will take place on November 18, 2019, at a time specified in the meeting agenda. This public comment period is designed only for substantive commentary on PCAST's work, not for business marketing purposes.
Please note that because PCAST operates under the provisions of FACA, all public comments and/or presentations will be treated as public documents and will be made available for public inspection, including being posted on the PCAST website.
Energy Efficiency and Renewable Energy, Department of Energy.
Notice of open meeting.
This notice announces an open meeting of the Biomass Research and Development Technical Advisory Committee. The Federal Advisory Committee Act requires that agencies publish these notices in the
November 19, 2019; 8:00 a.m.-5:00 p.m.
November 20, 2019; 8:00 a.m.-1:30 p.m.
Capitol Skyline Hotel, 10 I St. SW, Washington, DC 20024.
Dr. Ian Rowe, Designated Federal Officer, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy, 1000 Independence Avenue SW, Washington, DC 20585; telephone at (202) 586-7720, or email:
• Update on USDA Biomass R&D Activities
• Update on DOE Biomass R&D Activities
• Presentations from government and industry that provide insights on the intersection of forest health and bioenergy growth.
On September 12, 2019, Lock+
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 the Commission's website at
Take notice that on October 22, 2019, pursuant to Rule 207 of the Federal Energy Regulatory Commission's (Commission) Rules of Practice and Procedure,
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. Anyone filing a motion to intervene or protest must serve a copy of that document on the Petitioner.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the eFiling link at
This filing is accessible online at
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j. Energy Stream filed its request to use the Traditional Licensing Process (TLP) on August 5, 2019, and provided public notice of the request on August 27, 2019 when it filed the Pre-Application Document (PAD). In a letter dated October 24, 2019, the Director of the Division of Hydropower Licensing approved Energy Stream's request to use the Traditional Licensing Process.
k. With this notice, we are initiating informal consultation with the U.S. Fish and Wildlife Service and NOAA Fisheries under section 7 of the Endangered Species Act and the joint agency regulations thereunder at 50 CFR part 402; and NOAA Fisheries under section 305(b) of the Magnuson-Stevens Fishery Conservation and Management Act and implementing regulations at 50 CFR 600.920. We are also initiating consultation with the Connecticut State Historic Preservation Officer, as required by section 106 of the National Historic Preservation Act, and the implementing regulations of the Advisory Council on Historic Preservation at 36 CFR 800.2.
l. With this notice, we are designating Energy Stream as the Commission's non-federal representative for carrying out informal consultation pursuant to section 7 of the Endangered Species Act and section 305(b) of the Magnuson-Stevens Fishery Conservation and Management Act; and consultation pursuant to section 106 of the National Historic Preservation Act.
m. On August 27, 2019, Energy Stream filed a Pre-Application Document (PAD; including a proposed process plan and schedule) with the Commission, pursuant to 18 CFR 5.6 of the Commission's regulations.
n. A copy of the PAD is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's website (
o. The licensee states its unequivocal intent to submit an application for a subsequent license for Project No. 5679. Pursuant to 18 CFR 16.20, each application for a subsequent license and any competing license applications must be filed with the Commission at least 24 months prior to the expiration of the existing license. All applications for license for this project must be filed by July 31, 2022.
p. Register online at
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
This is a supplemental notice in the above-referenced proceeding of Reading Wind Energy, LLC's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is November 12, 2019.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426.
The filings in the above-referenced proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for electronic review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the website that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
Take notice that the Commission received the following electric rate filings:
Take notice that the Commission received the following electric securities filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Environmental Protection Agency (EPA).
Notice.
With this document, EPA is opening the public comment period for review of anthraquinone. 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.
Comments must be received on or before December 30, 2019.
Submit your comments, identified by docket identification (ID) number EPA-HQ-OPP-2017-0326, by one of the following methods:
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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.
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EPA is initiating its reviews of the pesticide identified in this document pursuant to section 3(g) of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) (7 U.S.C. 136a(g)) and the Procedural Regulations for Registration Review at 40 CFR part 155, subpart C. FIFRA section 3(g) 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) (7 U.S.C. 136a(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 registration for anthraquinone to assure that it continues to satisfy the FIFRA standard for registration—that is, it 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. The registration review docket for anthraquinone was opened in 2017 and included a Preliminary Work Plan reflecting anthraquinone's status as a biopesticide. Anthraquinone is currently classified as a conventional pesticide. As such, EPA has drafted an amended Preliminary Work Plan reflecting anthraquinone's conventional pesticide status. This amended Preliminary Work Plan is being made available for public comment in docket EPA-HQ-OPP-2017-0326 (Case Number 6054).
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• An overview of the registration review case status.
• A list of current product registrations and registrants.
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• 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.
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• 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.
The Environmental Protection Agency (EPA) has submitted an information collection request (ICR), Recordkeeping and Reporting Related to E15 (EPA ICR Number 2408.05, OMB Control Number 2060-0675) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act. This is a proposed extension of the ICR, which is currently approved through October 31, 2019. Public comments were previously requested via the
Additional comments may be submitted on or before November 29, 2019.
Submit your comments, referencing Docket ID No. EPA-HQ-OAR-2015-0202, to (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
James W. Caldwell, Compliance Division, Office of Transportation and Air Quality, 6405A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460; telephone number: (202) 343-9303; fax number: (202) 343-2802; email address:
Supporting documents which explain in detail the information that the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA) has submitted an information collection request (ICR), NESHAP for the Manufacture of Amino/Phenolic Resins (EPA ICR Number 1869.10, OMB Control Number 2060-0434) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork
Additional comments may be submitted on or before November 29, 2019.
Submit your comments, referencing Docket ID Number EPA-HQ-OECA-2013-0338, to (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
Patrick Yellin, Monitoring, Assistance, and Media Programs Division, Office of Compliance, Mail Code 2227A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460; telephone number: (202) 564-2970; fax number: (202) 564-0050; email address:
Supporting documents, which explain in detail the information that the EPA will be collecting, are available in the public docket for this ICR. The docket can be viewed online at
The October 15, 2018 amendments (83 FR 51842) responded to petitions for reconsideration regarding the NESHAP rule revisions that were promulgated on October 8, 2014 and revised the standards for continuous process vents (CPVs) at existing affected sources, revised the requirements for storage vessels at new and existing sources during periods when an emission control system used to control vents on fixed roof storage vessels is undergoing planned routine maintenance, and included minor technical corrections to improve rule clarity. This renewal incorporates revised costs and burden from activities from these final rule amendments.
In general, all NESHAP standards require initial notifications, performance tests, and periodic reports by the owners/operators of the affected facilities. They are also required to maintain records of the occurrence and duration of any startup, shutdown, or malfunction in the operation of an affected facility, or any period during which the monitoring system is inoperative. These notifications, reports, and records are essential in determining compliance, and are required of all affected facilities subject to NESHAP.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA) has submitted an information collection request (ICR), EPA Application Materials for the Water Infrastructure Finance and Innovation Act (EPA ICR Number 2549.02, OMB Control Number 2040-0292) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act. This is a proposed extension of the ICR, which is currently approved through December 31, 2019. Public comments were previously requested via the
Additional comments may be submitted on or before November 29, 2019.
Submit your comments, referencing Docket ID Number EPA-HQ-OW-2016-0178, to (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
Arielle Gerstein, Water Infrastructure Division, Office of Wastewater Management, 4201-T, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460; telephone number: 202-566-1868; email address:
Supporting documents, which explain in detail the information that the EPA will be collecting, are available in the public docket for this ICR. The docket can be viewed online at
WIFIA requires that an eligible entity submit to the Administrator an application at such time, in such manner, and containing such information, as the Secretary or the Administrator
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA) has submitted an information collection request (ICR), Motor Vehicle and Engine Compliance Program Fees (EPA ICR Number 2080.07, OMB Control Number 2060-0545) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act. This is a proposed extension of the ICR, which is currently approved through December 31, 2019. Public comments were previously requested via the
Additional comments may be submitted on or before November 29, 2019.
Submit your comments, referencing Docket ID Number EPA-HQ-OAR-2013-0119, to (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
Lynn Sohacki, Compliance Division, Office of Transportation and Air Quality, Environmental Protection Agency, 2000 Traverwood Dr., Ann Arbor, MI 48105; telephone number: 734-214-4851, fax number: 734-214-4869; email address:
Supporting documents, which explain in detail the information that the EPA will be collecting, are available in the public docket for this ICR. The docket can be viewed online at
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA) is planning to submit an information collection request (ICR), Treatment of Indian Tribes in a Similar Manner as States for Purposes of Section 303(d) of the Clean Water Act (EPA ICR Number 2553.03; OMB Control Number 2040-0290), to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act. This is a proposed extension of the ICR, which is currently approved through December 31, 2019. Public comments were previously requested via the
Additional comments must be submitted on or before November 29, 2019.
Submit your comments, referencing Docket ID No. EPA-HQ-OW-2019-0143, to (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information, or other information whose disclosure is restricted by statute.
Carol Peterson, Watershed Assessment, Restoration, and Protection Division, Office of Wetlands, Oceans, and Watersheds (4503T), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460; telephone number: (202) 566-1304; fax number: (202) 566-1331; email address:
Supporting documents, which explain in detail the information that the EPA will be collecting, are available in the public docket for this ICR. The docket can be viewed online at
Section 303(d) of the CWA requires states, territories, and authorized tribes to identify and establish a priority ranking for waters that do not meet EPA-approved or promulgated water quality standards (WQS) following the implementation of technology-based controls. For waters so identified, Section 303(d) requires states, territories, and authorized tribes to establish TMDLs in accordance with their priority ranking for those pollutants the Administrator identified as suitable for TMDL calculation. A TMDL is the calculation and allocation to point and nonpoint sources of the maximum amount of a pollutant that a water body can receive and still meet applicable WQS, with a margin of safety.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency is planning to submit an information collection request (ICR), “Control of Air Pollution from Motor Vehicles: Tier 3 Motor Vehicle Emission Standards (Renewal)” (EPA ICR No. 0783.65, OMB Control No. 2060-0104) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act. Before doing so, EPA is soliciting public comments on specific aspects of the proposed information collection as described below. This is a proposed extension of the ICR, which is currently approved through March 31, 2020. 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.
Comments must be submitted on or before December 30, 2019.
Submit your comments, referencing Docket ID No. EPA-HQ-OAR-2019-0489, online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
David Wright, Compliance Division, Office of Transportation and Air Quality, U.S. Environmental Protection Agency, 2000 Traverwood, Ann Arbor, Michigan 48105; telephone number: 734-214-4467; fax number 734-214-4869; email address:
Supporting documents which explain in detail the information that the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
Pursuant to section 3506(c)(2)(A) of the PRA, EPA is soliciting comments and information to enable it to: (i) 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; (ii) 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; (iii) enhance the quality, utility, and clarity of the information to be collected; and (iv) 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,
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 by email at
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The applications will also be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)).
Comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors, Ann E. Misback, Secretary of the Board, 20th and Constitution Avenue NW, Washington, DC 20551-0001, not later than November 29, 2019.
1.
Notice is hereby given that I have delegated to the Director, Centers for Disease Control and Prevention (CDC), with the authority to redelegate exclusively to the Director, National Institute for Occupational Safety and Health, the authority vested in the Secretary, under the Firefighter Cancer Registry Act of 2018 (Pub. L. 115-194).
This delegation became effective upon date of signature. In addition, I hereby adopt any actions taken by the Director, CDC, or his/her subordinates which involved the exercise of the authorities delegated herein prior to the effective date of the delegation.
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is announcing the availability of a draft guidance for industry entitled “Providing Regulatory Submissions in Electronic Format: IND Safety Reports.” The draft guidance describes the electronic format sponsors will be required to use when they electronically submit to FDA investigational new drug (IND) safety reports to the Center for Drug Evaluation and Research (CDER) or the Center for Biologics Evaluation and Research (CBER) for serious and unexpected suspected adverse reactions that are required under the Agency's regulations. FDA is establishing the electronic format requirements described in this guidance under the Federal Food, Drug, and Cosmetic Act (FD&C Act). The draft guidance, once finalized and effective, will require sponsors submitting the specified IND safety reports electronically to submit the reports to FDA using the FDA Adverse Event Reporting System (FAERS) as structured data elements and will provide sponsors with a reporting format that is consistent with the International Council for Harmonisation (ICH) E2B(R2) format guidelines and reporting requirements to other regulatory agencies. Additional technical specification documents and instructions for submitting IND safety reports, including “Electronic Submission of IND Safety Reports Technical Conformance Guide” and an updated technical specifications document entitled “Specifications for Preparing and Submitting Electronic ICSRs and ICSR Attachments” are available on the FAERS Electronic Submission web page (available at
Submit either electronic or written comments on the draft guidance by December 30, 2019 to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance.
You may submit comments on any guidance at any time as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
You may submit comments on any guidance at any time (see 21 CFR 10.115(g)(5)).
Submit written requests for single copies of the draft guidance to the Division of Drug Information, Center for Drug Evaluation and Research, Food and Drug Administration, 10001 New Hampshire Ave., Hillandale Building, 4th Floor, Silver Spring, MD 20993-0002; or the Office of Communication, Outreach, and Development, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 3128, Silver Spring, MD 20993-0002. Send one self-addressed adhesive label to assist that office in processing your requests. See the
Meredith K. Chuk, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 22, MD 20993-0002, 301-796-2340; or Stephen Ripley, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993-0002, 240-402-7911.
FDA is announcing the availability of a draft guidance for industry entitled “Providing Regulatory Submissions in Electronic Format: IND Safety Reports.” The draft guidance describes the electronic format sponsors will be required to use when they electronically submit to FDA IND safety reports to CDER and CBER for serious and unexpected suspected adverse reactions that are required under 21 CFR 312.32(c)(1)(i). FDA is establishing the electronic format requirements described in this guidance under section 745A(a) of the FD&C Act. In section 745A(a) of the FD&C Act, Congress granted explicit statutory authorization to FDA to specify in guidance the format for the electronic submissions required under that section. The draft guidance, once finalized, will require sponsors submitting the specified IND safety reports electronically to submit the reports to FDA using FAERS as structured data elements. Additional technical specification documents and instructions for submitting IND safety reports, including “Electronic Submission of IND Safety Reports Technical Conformance Guide” and an updated technical specifications document entitled “Specifications for Preparing and Submitting Electronic ICSRs and ICSR Attachments,” are available on the FAERS Electronic Submission web page (available at
The draft guidance, when finalized, will represent the current thinking of FDA on “Providing Regulatory Submissions in Electronic Format: IND Safety Reports.” The electronic format requirements specified in this guidance will be effective 24 months after the publication of the final guidance on this topic. Before the effective date of this requirement, FDA will accept the IND safety reports described in this guidance to FAERS as part of a voluntary submission program.
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 Act of 1995 (44 U.S.C. 3501-3520). The collection of information under 21 CFR 312.10 for submitting waiver requests and under 21 CFR 312.32 for submitting IND safety reports and reporting serious and unexpected adverse events has been approved under OMB control number 0910-0014. The collection of information for submitting Forms FDA 3500 and 3500A has been approved under OMB control number 0910-0291. The collection of information for submitting periodic adverse drug experience reports has been approved under OMB control number 0910-0230.
Persons with access to the internet may obtain the draft guidance at either
Office of the Secretary, HHS.
Notice.
In compliance with the requirement of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, is publishing the following summary of a proposed collection for public comment.
Comments on the ICR must be received on or before November 29, 2019.
Submit your comments to
Sherrette Funn,
Interested persons are invited to send comments regarding this burden estimate or any other aspect of this collection of information, including any of the following subjects: (1) The necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
The Title X Family Planning Program (“Title X program” or “program”) is the only Federal grant program dedicated solely to providing individuals with comprehensive family planning and related preventive health services (
This weighted average hour burden accounts for differences in reporting burden by type of grantee agency grantee (
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, 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,
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, 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.
National Institutes of Health, HHS.
Notice.
In compliance with the requirement of the Paperwork Reduction Act of 1995 to provide opportunity for public comment on proposed data collection projects, the National Institutes of Health, Office of the Director, Office of Acquisitions and Logistics Management (OALM), Small Business Program Office (SBPO), will publish periodic summaries of proposed projects to be submitted to the Office of Management and Budget (OMB) for review and approval.
Comments regarding this information collection are best assured of having their full effect if received within 60 days of the date of this publication.
To obtain a copy of the data collection plans and instruments, submit comments in writing, or request more information on the proposed project, contact: Rachel Kenlaw, Program Analyst, NIH, Office of the Director, Office of Acquisitions and Logistics Management, Small Business Program Office, 6100 Executive Blvd., Suite 6E01G, Rockville, MD 20852, or call non-toll-free number (301) 451-6827 or Email your request, including your address to:
Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires: Written comments and/or suggestions from the public and affected agencies are invited to address one or more of the following points: (1) Whether the proposed collection of information is necessary for the proper performance of the function of the agency, including whether the information will have practical utility; (2) The accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) Ways to enhance the quality, utility, and clarity of the information to be collected; and (4) Ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
The Path to Excellence and Innovation is a comprehensive plan to expand the existing National Institutes of Health Small Business Program in the Office of Acquisition and Logistics Management. The Path to Excellence provides a platform for increased transparency between Historically Black Colleges and Universities and the Federal Government through the provision of outreach events, training opportunities and one-on-one assistance. There are six pilot schools and each school has chosen one or more small business teaming partner(s) to support their effort in this pilot program. Through the collection of this information the National Institutes of Health Small Business Program Office will gain insight into what government grants and contracts are of interest to Historically Black Colleges and Universities and small businesses. This information will support the initiative to help Historically Black Colleges and Universities and small businesses because this tool aids them to be more knowledgeable about what opportunities regarding grants and contracts exist for their organization.
OMB approval is requested for 3 years. There are no costs to respondents other than their time. The total estimated annualized burden hours are 22.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The contract proposals and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the contract proposals, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, 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(d) of the Federal Advisory Committee Act, as amended, 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(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C.,
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The contract proposals and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the contract proposals, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, 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.
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. 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: Colette Pollard, Reports Management Officer, QDAM, Department of Housing and Urban Development, 451 7th Street SW, Room 4176, Washington, DC 20410-5000; telephone 202-402-3400 (this is not a toll-free number) or email at
Katina Washington, Program Analyst, Multifamily Housing Programs, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC 20410; email:
This notice informs the public that HUD is seeking approval from OMB for 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.
Office of the Chief Information Officer, HUD.
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for 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:
Anna P. Guido, Reports Management Officer, QMAC, Department of Housing
This notice informs the public that HUD is seeking approval from OMB for 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.
Office of the Assistant Secretary for Public and Indian Housing, PIH, HUD.
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for 60 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: Colette Pollard, Reports Management Officer, QDAM, Department of Housing and Urban Development, 451 7th Street SW, Room 4176, Washington, DC 20410-5000; telephone 202-402-3400 (this is not a toll-free number) or email at
Arlette Mussington, Office of Policy, Programs and Legislative Initiatives, PIH, Department of Housing and Urban Development, 451 7th Street SW, (L'Enfant Plaza, Room 2206), Washington, DC 20410; telephone 202-402-4109, (this is not a toll-free number). Persons with hearing or speech impairments may access this number via TTY by calling the Federal Information Relay Service at (800) 877-8339. Copies of available documents submitted to OMB may be obtained from Ms. Mussington.
This notice informs the public that HUD is seeking approval from OMB for the information collection described in Section A. The
Under the provisions of Section 3507(a)(1)(D) of the Paperwork Reduction Act of 1995, the Department of Housing and Urban Development (HUD) has submitted to the Office of Management and Budget (OMB) a request to review and approve the information collection listed below. This proposed information collection was previously published in the
The PHA Plan was created by section 5A of the United States Housing Act of 1937 (42 U.S.C. 1437c-1). There are two different PHA Plans: The Five-Year Plan and the Annual Plan. The Five-Year Plan describes the agency's mission, long-range goals and objectives for achieving its mission over a five-year period. The Annual PHA Plan is a comprehensive guide to PHA policies, programs, operations, and strategies for meeting local housing needs and goals each fiscal year.
The PHA Plans informs HUD, residents, and the public of the PHA's goals, programs, and activities for serving the housing needs of low, very low-income, and extremely low-income families and its strategy for addressing those needs. This information helps hold PHAs accountable to HUD, residents, and the local community for how PHAs intend to spend their funding and operate their programs. Also, PHA Plans allow HUD to review the PHA's proposed changes in the administration and operation of HUD-funded housing programs.
In July 2016, HUD revised the collection in response to public comments urging HUD to return to earlier multiple versions of the PHA Plan template and certifications by PHA type (
With this current proposed information collection, HUD intends to further modify the 5-Year and Annual PHA Plan Templates, as well as the accompanying certification forms in the following manner:
(1) Revise the instructions provided on items related to the AFFH Rule, reflecting that, until HUD approves a revised Assessment of Fair Housing (AFH) Tool and template, PHAs would not be specifying fair housing strategies actions in their PHA Plans. Instead, PHAs would rely on their corresponding community's Analysis of Impediments (AI) to fair housing until choice and undertake activities to support their civil rights certification specified in PHA Plan regulations promulgated prior to August 17, 2015. (See
(2) Revise PHA certifications to bring them up to date with HUD program and AFFH requirements, and to give PHAs an optional blank answer section to explain how they are not able to certify compliance with civil rights authorities and certain specific requirements.
(3) Revise the introductory text and signature blocks on certification forms to distinguish the PHA Executive Director (ED) and Board Chairperson.
In addition, it should be noted that, due to the de-coupling of reporting on Capital Fund Program activities and plans from PHA Plan submissions in 2016, (
Finally, revisions to the reporting burden reflect a reduction in the total number of, active PHAs. The number of active public housing agencies has changed from 3,819 to 3,780 since the last approved information collection. The number of PHAs can fluctuate due to many factors, including but not limited to performance scoring, the merging of two or more PHAs or the termination of a PHA's public and other assisted housing programs due to conversion under the Rental Assistance Demonstration (RAD).
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 automated data collection techniques or other forms of information technology, such as electronic submission of responses.
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.
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for an additional 30 days of public comment.
Comments Due Date: November 29, 2019.
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: Colette Pollard, Reports Management Officer, QDAM, Department of Housing and Urban Development, 451 7th Street SW, Room 4176, Washington, DC 20410-5000; telephone 202-402-3400 (this is not a toll-free number) or email at
Department of Housing and Urban Development, 451 7th Street SW, Washington, DC 20410; email Harry Messner at
Copies of available documents submitted to OMB may be obtained from Ms. Pollard.
This notice informs the public that HUD is seeking approval from OMB for 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.
Fish and Wildlife Service, Interior.
Notice of availability; extension of public comment period.
The U.S. Fish and Wildlife Service (Service) is extending the public comment period for the draft environmental impact statement (DEIS) and habitat conservation plan (HCP) in support of incidental take permit (ITP) applications received from the Deschutes Basin Board of Control, on behalf of its eight member irrigation districts, and the City of Prineville (applicants). The applicants have submitted applications for ITPs to both the Service and the National Marine Fisheries Service for various species under each agency's jurisdiction. Also available for review is the Service's DEIS, which was prepared in response to the applications.
The comment period for the DEIS and HCP addressing the ITP applications for incidental take, which published on October 4, 2019 (84 FR 53164), is extended by 15 days. Please submit your written comments by 11:59 p.m. EST on December 3, 2019.
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Bridget Moran, by telephone at 541-383-7146, or by email at
The U.S. Fish and Wildlife Service (Service) and National Marine Fisheries Service (NMFS) received incidental take permit (ITP) applications on August 30, 2019, from the Deschutes Basin Board of Control (DBBC) member districts (Arnold, Central Oregon, Lone Pine, North Unit, Ochoco, Swalley, Three Sisters, and Tumalo Irrigation Districts), and the City of Prineville (applicants) in accordance with the requirements of the Endangered Species Act, as amended (ESA; 16 U.S.C. 1531
The ITPs, if issued, would authorize take of the covered species that may occur incidental to the storage, release,
We are extending the public comment period on the DEIS and HCP documents (see
We will post on
We provide this notice in accordance with the requirements of section 10 of the ESA and its implementing regulations (50 CFR 17.32) and NEPA and its implementing regulations (40 CFR 1506.6).
Fish and Wildlife Service, Interior.
Notice of document availability for review and public comment.
We, the U.S. Fish and Wildlife Service (Service), announce the availability of the Draft Recovery Plan for the Streaked Horned Lark under the Endangered Species Act of 1973, as amended. The draft recovery plan includes specific goals, objectives, and criteria that should be met to remove the species from the Federal List of Endangered and Threatened Wildlife. We request review and comment on this draft recovery plan from Federal, State, and local agencies; Native American Tribes; and the public.
In order to be considered, comments on the draft recovery plan must be received on or before December 30, 2019.
(1) You may submit written comments and materials via U.S. mail or hand-delivery to State Supervisor, Oregon Fish and Wildlife Office, at the above Portland address.
(2) You may fax comments to (503) 231-6195.
(3) You may send comments by email to
Paul Henson, State Supervisor, U.S. Fish and Wildlife Service, Oregon Fish and Wildlife Office, at the above Portland address; telephone (503) 231-6179. If you use a telecommunications device for the deaf, call the Federal Relay Service at 1-800-877-8339.
The streaked horned lark (
Recovery of endangered and threatened animals and plants is a primary goal of our endangered species program. To help guide the recovery effort, we prepare recovery plans for most listed species. Recovery plans describe actions considered necessary for conservation of the species, establish criteria for downlisting or delisting, and estimate time and cost for implementing recovery measures.
The Service has recently revised its approach to recovery planning, and is now using a new process termed Recovery Planning and Implementation (RPI) (see
The Streaked Horned Lark Draft Recovery Plan is supported by the Streaked Horned Lark Biological Report and the Recovery Implementation Strategy, which are available at
The primary recovery strategy for the streaked horned lark is to reduce or eliminate systemic threats to the species; reduce risk from random events and natural catastrophes; conserve genetic variability; and provide for long-term survival by protecting, managing, and restoring habitat and monitoring populations. We may initiate an assessment of whether recovery has been achieved and delisting is warranted when the recovery criteria have been met, including: A population of at least 5,725 individuals distributed across core sites and matrix lands in 3
Section 4(f) of the Act requires us to provide public notice and an opportunity for public review and comment during recovery plan development. In an appendix to the approved final recovery plan, we will summarize and respond to the issues raised during public comment. Substantive comments may or may not result in changes to the recovery plan; comments regarding recovery plan implementation will be forwarded as appropriate to Federal or other entities so that they can be taken into account during the course of implementing recovery actions.
We request written comments on the draft recovery plan. We will consider all comments we receive by the date specified in
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 can 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.
The authority for this action is section 4(f) of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531
U.S. Geological Survey, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, we, the U.S. Geological Survey (USGS) are proposing to renew an information collection.
Interested persons are invited to submit comments on or before December 30, 2019.
Send your comments on this information collection request (ICR) by mail to U.S. Geological Survey, Information Collections Officer, 12201 Sunrise Valley Drive, MS 159, Reston, VA 20192; or by email to
To request additional information about this ICR, contact Elizabeth S. Sangine by email at
In accordance with the Paperwork Reduction Act of 1995, we provide the general public and other Federal agencies with an opportunity to comment on new, proposed, revised, and continuing collections of information. This helps us assess the impact of our information collection requirements and minimize the public's reporting burden. It also helps the public understand our information collection requirements and provide the requested data in the desired format.
We are soliciting comments on the proposed ICR that is described below. We are especially interested in public comment addressing the following issues: (1) Is the collection necessary to the proper functions of the USGS; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the USGS enhance the quality, utility, and clarity of the information to be collected; and (5) how might the USGS minimize the burden of this collection on the respondents, including through the use of information technology.
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. 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 can 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.
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 authorities for this action are the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
U.S. Geological Survey (USGS), Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, we, the U.S. Geological Survey (USGS) are proposing to renew an Information Collection.
Interested persons are invited to submit comments on or before November 29, 2019.
Send your comments on this Information Collection Request (ICR) to the Office of Management and Budget's Desk Officer for the Department of the Interior by email at
To request additional information about this ICR, contact Elizabeth S. Sangine by email at
In accordance with the Paperwork Reduction Act of 1995, we provide the general public and other Federal agencies with an opportunity to comment on new, proposed, revised, and continuing collections of information. This helps us assess the impact of our information collection requirements and minimize the public's reporting burden. It also helps the public understand our information collection requirements and provide the requested data in the desired format.
A
We are again soliciting comments on the proposed ICR that is described below. We are especially interested in public comments addressing the following issues: (1) Is the collection necessary to the proper functions of the USGS; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the USGS enhance the quality, utility, and clarity of the information to be collected; and (5) how might the USGS minimize the burden of this collection on the respondents, including through the use of information technology.
Comments that you submit in response to this notice are a matter of public record. 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 can 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.
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 authorities for this action are the Paperwork Reduction Act of 1995 (44 U.S.C. 3501,
Notice is hereby given that, on September 10, 2019, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
On February 8, 2015, the IEEE Board of Directors approved an update of the IEEE patent policy for standards development, which became effective on 15 March 2015. The updated policy is available at
On September 17, 2004, IEEE filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the
The last notification was filed with the Department on April 13, 2015. A notice was published in the
Notice is hereby given that, on October 10, 2019, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
Also, Anritsu Company, Morgan Hill, CA; and INTERLATIN, Tlaquepaque, MÉXICO, have withdrawn as parties to this venture.
No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open, and PXI Systems intends to file additional written notifications disclosing all changes in membership.
On November 22, 2000, PXI Systems filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the
The last notification was filed with the Department on July 23, 2019. A notice was published in the
Notice is hereby given that, on October 8, 2019, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open, and AIM Photonics intends to file additional written notifications disclosing all changes in membership.
On June 16, 2016, AIM Photonics filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the
The last notification was filed with the Department on July 26, 2019. A notice was published in the
Notice is hereby given that, on October 16, 2019, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
Also, Alpha Proto, Casselberry, FL; and Presidio Networked Solutions LLC, Fulton, MD, have withdrawn as parties to this venture.
No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open, and IWRP intends to file additional written notifications disclosing all changes in membership.
On October 15, 2018, IWRP filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the
The last notification was filed with the Department on July 12, 2019. A notice was published in the
Notice is hereby given that, on September 16, 2019, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
Also, the following members have changed their names: Ernst & Young LLP to Ernst & Young, New York, NY; Vodafone Ukraine to PrJSC 'VF Ukraine', Kyiv, UKRAINE; Isoton to Isoton Pty Ltd, Adelaide, AUSTRALIA; and SAIC to Science Applications International Corporation, Reston, VA.
In addition, the following parties have withdrawn as parties to this venture: Accruent, LLC, Austin, TX; Agillis Satcom, 567710, SINGAPORE; APInf, Tampere, FINLAND; ArtOfArc, Dortmund, GERMANY; AVSystem, Kraków, POLAND; Beesion Technologies, Fort Lauderdale, FL; Brytlyt Limited, Maidstone, UNITED KINGDOM; CA IT Management Solution Spain S.L.U, Barcelona, SPAIN; Cartesian, Overland Park, VA; Cellos Software Limited, Melbourne, AUSTRALIA; CENX, Ottawa, CANADA; Dark Fibre Africa, Gauteng, SOUTH AFRICA; Deploy Partners Pty Ltd, Newport, AUSTRALIA; Dimension Data, Johannesburg, SOUTH AFRICA; Docomo Pacific, Tamuning, GUAM; EMC, Hopkinton, MA; Entel Peru SA, Lima, PERU; Ergon Informatik AG, Zurich, SWITZERLAND; FASTWEB, Milano, ITALY; ForgeRock Ltd., Bristol, UNITED KINGDOM; Freestone Ltd, London, UNITED KINGDOM; GEMALTO SA, Meudon, FRANCE; GE Smallworld, Chesterton, UNITED KINGDOM; Guavus, San Jose, CA; Hangzhou Eastcom Software Technology Co., Ltd, Guangzhou, PEOPLE'S REPUBLIC OF CHINA; Hortonworks Inc., Santa Clara, CA; Icaro Tech, Campinas, BRAZIL; Ideasoft Uruguay S.R.L., Montevideo CP, URUGUAY; Inabox Group Limited, Sydney, AUSTRALIA; Indra Sistemas S.A., Madrid, SPAIN; Inomial Pty Ltd, Melbourne, AUSTRALIA; ISPM, Rio de Janeiro, BRAZIL; Italtel S.p.A, Settimo Milane, ITALY; Juvo, San Francisco, CA; Knowesis Pte Ltd, Singapore, SINGAPORE; Millicom—Tigo—Paraguay, Fernando De La Mora, PARAGUAY; NW Consulting, Billericay, UNITED KINGDOM; Panamax Inc., New York, NY; Peritus j.d.o.o., Varaždin, CROATIA; Philips Electronics Nederland B.V., Eindhoven, THE NETHERLANDS; PT Telkomunikasi Indonesia, Bandung, INDONESIA; Simple Consulting, Santiago de Chile, CHILE; Simpledata Group S.A., Santiago, CHILE; Singapore Management University, Singapore, SINGAPORE; solvatio AG, Rimpar, GERMANY; Space Star Technology Co., Ltd., Beijing, PEOPLE'S REPUBLIC OF CHINA; SP Telecommunications Pte Ltd, Singapore, SINGAPORE; Stream Technologies Ltd, Glasgow, UNITED KINGDOM; Subex, Bangalore, INDIA; SunTec Business Solutions Pvt Ltd, Kerala, INDIA; Suomen Erillisverkot Oy, Espoo, FINLAND; Swiss Post Ltd, Berne, SWITZERLAND; Technology Transitions, Inc., Bound Brook, NJ; Teltech Communications LLC, Dallas, TX; Thunderhead, London, UNITED KINGDOM; Twinsec GmbH, Koln, GERMANY; University of Málaga, Málaga, SPAIN; UXP Systems, Toronto, CANADA; Windstream Communications, Little Rock, AR; Wind Tre S.P.A., Rome, ITALY; Wytec International, Inc., San Antonio, TX; Xpertnest, Biggleswade, UNITED KINGDOM; Zat Consulting, Lima, PERU; 100 Celsius AI, Frick, SWITZERLAND; Active Ticketing PLC, London, UNITED KINGDOM; AGGAROS, Barcelona, SPAIN; Agile Fractal Grid, Inc., Medway, MA; Airtel Africa, Nairobi, KENYA; Algorithmic Intuition Inc., Millbrae, CA; AMKB Cloud, Denver, CO; Andorra Telecom, Santa Coloma, ANDORRA; APIVERSITY, Madrid, SPAIN; Araxxe, Lyon, FRANCE; ARGELA Yazilim ve Bilisim Teknolojileri Sanayi ve Ticaret A.S., Istanbul, TURKEY; AsiaCell Communications LLC, Sulaymaniyah, IRAQ; Atilze Digital, Petaling Jaya, MALAYSIA; Axiros GmbH, Munich Hoehenkirchen, GERMANY; BaseN, Helsinki, FINLAND; Basildon Borough Council, Basildon, UNITED KINGDOM; Beyond Verbal, Tel Aviv, ISRAEL; Bharat Broadband Network Limited, Chhattarpur, INDIA; BOC, Dublin, IRELAND; BPS Service Consulting and Development SAS, Bogotá DC, COLOMBIA; BridgeWorx Ltd, Brighton, UNITED KINGDOM; Bring Labs, Lisbon, PORTUGAL; Bristol is Open, Bristol, UNITED KINGDOM; CableVision, SA, Buenos Aires, ARGENTINA; CallVU, Tel Aviv, ISRAEL; and Carphone Warehouse Ltd, London, UNITED KINGDOM.
No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open, and the Forum intends to file additional written notifications disclosing all changes in membership.
On October 21, 1988, the Forum filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the
The last notification was filed with the Department on January 29, 2019. A notice was published in the
Notice is hereby given that, on October 10, 2019, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open, and CUI-JIP intends to file additional written notifications disclosing all changes in membership.
On March 22, 2018, CUI-JIP filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the
The last notification was filed with the Department on October 4, 2018. A notice was published in the
U.S. Copyright Office, Library of Congress.
Notice of public symposium.
As directed by the Music Modernization Act, the U.S. Copyright Office is conducting a study to evaluate best practices that the Mechanical Licensing Collective should implement in the following areas: (1) To identify and locate musical work copyright owners and unclaimed accrued royalties held by the collective; (2) to encourage musical work copyright owners to claim the royalties of those owners; and (3) to reduce the incidence of unclaimed royalties. To initiate this effort, the Office is holding a one-day symposium to provide an educational foundation and facilitate public discussion on issues relevant to the study. Following this symposium, the Office will separately issue Notices of Inquiry soliciting written comments and announcing roundtables, both of which will provide opportunities for public input on the Unclaimed Royalties Study.
The symposium will be held on December 6, 2019. Registration will start at 8:30 a.m. and the event will run all day ending at 6:00 p.m. Additional information is available on the Copyright Office website at
Library of Congress Madison Building, 101 Independence Avenue SE, Washington, DC 20540.
John R. Riley, Assistant General Counsel, by email at
On October 11, 2018, the president signed into law the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (“MMA”).
The MMA amends this regime most significantly by establishing a new blanket license that digital music providers may obtain to make digital phonorecord deliveries (“DPDs”) of musical works, including in the form of permanent downloads, limited downloads, or interactive streams (referred to in the statute as “covered activity”).
This blanket license will cover all musical works available for compulsory licensing and will be centrally administered by a mechanical licensing collective (“MLC”), which has recently been designated by the Register of Copyrights.
As the legislative history explains, these responsibilities are intended to fill a gap in the music licensing marketplace:
[F]or far too long, it has been difficult to identify the copyright owner of most copy-righted works, especially in the music industry where works are routinely commercialized before all of the rights have been cleared and documented. This has led to significant challenges in ensuring fair and timely payment to all creators even when the licensee can identify the proper individuals to pay. . . . [T]here is no reliable, public database to link sound recordings with their
In designating the MLC, the Copyright Office accordingly noted that it is the MLC's “core project [to] encourag[e] musical work copyright owners with unclaimed accrued royalties to come forward and claim such monies” after identifying them based on the data ingested through uses of the license.
In recognition of the significant duties involved with respect to the potential distribution of unclaimed, accrued royalties for which the creators of such works will not be paid,
While the statute, legislative history, and indeed, prior Copyright Office policy studies are highly informative with respect to various aspects relevant to the policy study,
Because the section 115 license and the MLC's statutory duties are a relatively complex area of copyright that affects many in the music licensing ecosystem, the Copyright Office is electing to initiate its study with an educational public event. The public process for this study will roughly track that of the Office's recently-completed study on attribution and integrity rights.
The symposium will consist of three core panel discussions regarding: (1) Creating comprehensive databases (including discussions of past efforts); (2) matching musical works to sound recordings; and (3) education on unclaimed royalties across the industry. The symposium is also expected to include representatives from the MLC and the Digital Licensee Coordinator, as well as a breakout session to solicit artists' perspectives on relevant issues. The Office will also provide participants and observers with an opportunity to offer additional comments for the record, following the panel discussion.
The Office is currently finalizing its list of panelists. The finalized agenda for the symposium will be made available through the Office's website in the weeks prior to the event. The symposium hearing room will have a limited number of seats for participants and observers. For persons who wish to observe one or more of the roundtable sessions, the Office will provide public seating on a first-come, first-served basis on the day of the symposium.
National Aeronautics and Space Administration.
Notice of meeting.
In accordance with the Federal Advisory Committee Act, as amended, the National Aeronautics and Space Administration (NASA) announces a meeting of the Science Committee of the NASA Advisory Council (NAC). This Committee reports to the NAC. The meeting will be held for the purpose of soliciting, from the scientific community and other persons, scientific and technical information relevant to program planning.
Monday, November 18, 2019, 8:30 a.m.-4:15 p.m., and Tuesday, November 19, 2019, 8:30 a.m.-12:45 p.m., Local Time.
NASA Headquarters, Room 9H40, 300 E Street SW, Washington, DC 20546.
Ms. KarShelia Henderson, Science Mission Directorate, NASA Headquarters, Washington, DC 20546, (202) 358-2355, fax (202) 358-2779, or
The meeting will be open to the public up to the capacity of the room. This meeting will also be available telephonically and by WebEx. You must use a touch-tone phone to participate in this meeting. Any interested person may dial the toll free number 1-888-469-1762 or toll number 1-212-287-1653, passcode 8281293 followed by the # sign, on both days, to participate in this meeting by telephone. The WebEx link is
Attendees will be requested to sign a register and to comply with NASA Headquarters security requirements, including the presentation of a valid picture ID to Security before access to NASA Headquarters. Foreign nationals attending this meeting will be required to provide a copy of their passport and visa in addition to providing the following information no less than 10 days prior to the meeting: Full name; gender; date/place of birth; citizenship; passport information (number, country, telephone); visa information (number, type, expiration date); employer/affiliation information (name of institution, address, country, telephone); title/position of attendee. To expedite admittance, U.S. citizens and Permanent Residents (green card holders) are requested to provide full name and citizenship status no less than 3 working days in advance. Information should be sent to Ms. KarShelia Henderson, via email at
National Aeronautics and Space Administration.
Notice of meeting.
In accordance with the Federal Advisory Committee Act, as amended, the National Aeronautics and Space Administration (NASA) announces a meeting of the Aeronautics Committee of the NASA Advisory Council (NAC). The Committee reports the NAC. This meeting will be held for soliciting, from the aeronautics community and other persons, research and technical information relevant to program planning.
Thursday, November 21, 2019, 1:00 p.m.-5:30 p.m., and Friday, November 22, 2019, 9:00 a.m. to 12:30 p.m., Eastern Time.
National Institute of Aerospace, Room 101, 100 Exploration Way, Hampton, VA 23666.
Ms. Irma Rodriguez, Designated Federal Officer, Aeronautics Research Mission Directorate, NASA Headquarters, Washington, DC 20546, (202) 358-0984, or
The meeting will be open to the public up to the capacity of the room. This meeting is also available telephonically and by WebEx. You must use a touch-tone telephone to participate in this meeting. Any interested person may dial the USA toll-free conference number 1-888-769-8716, participant passcode: 6813159, followed by the # sign, on both days to participate in this meeting by telephone. The WebEx link is
For questions, please call Ms. Irma Rodriguez at (202) 358-0984. Attendees will be requested to sign a register to document meeting attendance. It is imperative that the meeting be held on these dates to accommodate the scheduling priorities of the key participants.
9:30 a.m., Tuesday, November 19, 2019.
1:30 p.m., Tuesday, November 19, 2019.
The two items are open to the public.
NTSB Conference Center, 429 L'Enfant Plaza SW, Washington, DC 20594.
Telephone: (202) 314-6100.
The press and public may enter the NTSB Conference Center one hour prior to the meeting for set up and seating.
Individuals requesting specific accommodations should contact Rochelle McCallister at (202) 314-6305 or by email at
The public may view the meeting via a live or archived webcast by accessing a link under “News & Events” on the NTSB home page at
Schedule updates, including weather-related cancellations, are also available at
LaSean McCray at (202) 314-6047 or by email at
Keith Holloway at (202) 314-6100 or by email at
Nuclear Regulatory Commission.
Order; modification.
The U.S. Nuclear Regulatory Commission (NRC) issued an order imposing a civil monetary penalty (Order) to Team Industrial Services, Inc., (licensee) on September 20, 2019. The purpose of the Order was to document the NRC's review of the licensee's response to the Notice of
The Order was issued on September 20, 2019.
Please refer to Docket ID NRC-2019-0206 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
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Casey Alldredge, Region IV, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 817-200-1217, email:
The text of the Order is attached.
For the Nuclear Regulatory Commission.
Team Industrial Services, Inc. (Licensee) is the holder of Materials License No. 42-32219-01 issued on January 10, 2000, by the U.S. Nuclear Regulatory Commission (NRC or Commission) pursuant to Part 30 of Title 10 of the
The NRC conducted an investigation of the Licensee's activities from October 12, 2017, to August 27, 2018. The results of this investigation indicated that the Licensee had not conducted its activities in full compliance with NRC requirements associated with transporting a radiographic device in a locked configuration. Specifically, two Team Industrial employees appeared to have deliberately failed to follow procedural requirements when unlocking and relocating a gamma exposure device, which caused Team Industrial to be in violation of Condition 25 of its license. A letter conveying the results of the NRC Investigation was issued to the Licensee on January 4, 2019 (ADAMS Accession ML19007A235), including a factual summary of the report. A written Notice of Violation and Proposed Imposition of Civil Penalty (Notice) was issued to the Licensee by letter dated March 8, 2019 (ADAMS Accession ML19066A206). The Notice stated the nature of the violation, the provision of the NRC's requirements that the Licensee violated, and the amount of the civil penalty proposed for the violation.
The Licensee responded to the Notice in a letter dated May 23, 2019. In its response, the Licensee did not dispute the violation, but stated that it conducted an internal investigation regarding the issues and did not consider the violation to be willful on the part of the radiographers. The Licensee also stated that the violation was not significant because there was no risk of exposure of the source due to the unlocked plunger because of redundant safety features of the device.
After considering the Licensee's explanation and argument for mitigation, the NRC staff has determined that, as set forth in the Appendix to this Order, the violation of License Condition 25 occurred as stated, and that an adequate basis does not exist for the reduction of the severity of the violation or mitigation of the civil penalty amount. Therefore, a civil penalty in the amount of $14,500 should be imposed.
In view of the foregoing and pursuant to Section 234 of the Atomic Energy Act of 1954, as amended (Act), 42 U.S.C. 2282, and 10 CFR 2.205,
The Licensee pay a civil penalty in the amount of $14,500 within 30 days of the issuance date of this Order, in accordance with NUREG/BR-0254 “Payment Methods” (
In accordance with 10 CFR 2.202 and 10 CFR 2.309, the Licensee must, and any other person adversely affected by this Order may, submit a response within 30 days of the issuance date of this Order. In addition, the Licensee or any other person adversely affected by this Order may request a hearing within 30 days of the issuance date of this Order. Where good cause is shown, consideration will be given to extending the time to respond or request a hearing. A request for extension of time must be directed to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission, Washington, DC 20555, and include a statement of good cause for the extension.
All documents filed in NRC adjudicatory proceedings, including a request for hearing, a petition for leave to intervene, any motion or other document filed in the proceeding prior to the submission of a request for hearing or petition to intervene (hereinafter “petition”), and documents filed by interested governmental entities
To comply with the procedural requirements of E-Filing, at least 10 days prior to the filing deadline, the participant should contact the Office of the Secretary by email at
Information about applying for a digital ID certificate is available on the NRC's public website at
A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC's Electronic Filing Help Desk through the “Contact Us” link located on the NRC's Public website at
Participants who believe that they have good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing stating why there is good cause for not filing electronically and requesting authorization to continue to submit documents in paper format. Such filings must be submitted by: (1) First class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemaking and Adjudications Staff; or (2) courier, express mail, or expedited delivery service to the Office of the Secretary, 11555 Rockville Pike, Rockville, Maryland 20852, Attention: Rulemaking and Adjudications Staff. Participants filing adjudicatory documents in this manner are responsible for serving the document on all other participants. Filing is considered complete by first-class mail as of the time of deposit in the mail, or by courier, express mail, or expedited delivery service upon depositing the document with the provider of the service. A presiding officer, having granted an exemption request from using E-Filing, may require a participant or party to use E-Filing if the presiding officer subsequently determines that the reason for granting the exemption from use of E-Filing no longer exists.
Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket which is available to the public at
The Commission will issue a notice or Order granting or denying a hearing request or intervention petition, designating the issues for any hearing that will be held and designating the Presiding Officer. A notice granting a hearing will be published in the
If a person other than the Licensee requests a hearing, that person shall set forth with particularity the manner in which their interest is adversely affected by this Order and shall address the criteria set forth in 10 CFR 2.309(d) and (f).
If a hearing is requested by the Licensee or a person whose interest is adversely affected, the Commission will issue an Order designating the time and place of any hearings. If a hearing is held, the issue to be considered at such hearing shall be whether this Order should be sustained. Pursuant to 10 CFR 2.202(c)(2)(i), the Licensee or any other person adversely affected by this Order, may, in addition to demanding a hearing, at the time the answer is filed or sooner, move the presiding officer to set aside the immediate effectiveness of the Order on the grounds that the Order, including the need for immediate effectiveness, is not based on adequate evidence but on mere suspicion, unfounded allegations, or error.
In the absence of any request for hearing, or written approval of an extension of time in which to request a hearing, the provisions specified in Section IV above shall be final 30 days from the issuance date of this Order without further order or proceedings. If an extension of time for requesting a hearing has been approved, the provisions specified in Section IV shall be final when the extension expires if a hearing or alternative dispute resolution (ADR) request has not been received. If
For the Nuclear Regulatory Commission.
Dated this 20th day of September 2019.
On March 8, 2019, the U.S. Nuclear Regulatory Commission (NRC) issued a Notice of Violation and Proposed Imposition of Civil Penalty (Notice) for a violation identified as the result of an investigation conducted by the NRC Office of Investigations (OI). Team Industrial Services, Inc., (Licensee) responded to the Notice on May 23, 2019. The Licensee did not dispute the violation but did dispute both the deliberateness associated with the violation and the significance of the violation. The NRC's evaluation and conclusion regarding the Licensee's request is documented below.
The Licensee stated an internal investigation determined that the violation was due to a human error made in completing the daily inspection process. The Licensee concluded that there was no intent to leave the device in an unlocked state prior to boarding the Navy vessel and there was no advantage to relocating the device in the partially unlocked condition.
The Licensee stated that an internal investigation was conducted which did not conclude that there was any deliberateness associated with the violation. Title 10 of the
The Licensee's investigation determined that the violation was the result of a human error made in the completion of the daily inspection process. However, the Licensee's description of the internal investigation did not include any additional information to support its conclusion that was not previously evaluated in the investigation conducted by OI. The NRC's position continues to be that the circumstances in this case support a willful violation. Based on the facts of this case and the testimony of the radiographers, the radiographers were: (1) Familiar with the Licensee's operating and emergency procedures, (2) aware that the device was required to be locked when relocated to a new location, and (3) aware that the device was unlocked at the time they relocated the device. Further, OI interviewed the Team Industrial Radiation Safety Officer, who testified that immediately after the incident, the radiographers explained that they had unlocked the device in order to save time. Therefore, the NRC found sufficient evidence to conclude that the radiographers deliberately transported an exposure device in an unlocked configuration.
The Licensee stated that the radiographic device has three independent locking mechanisms to prevent accidental movement or exposure of the source. The device has a tungsten shield which provides a shielding factor to reduce exposure from the source and provides an additional level of security because it prevents the source from projecting out of the device unless a guide tube is connected. The Licensee also indicated that its operating and emergency procedure is more restrictive than the regulation in 10 CFR 34.23(a), since it requires the device to be fully locked prior to movement to another location. Based on this, the Licensee concluded that the significance level of the violation should be reduced.
The Licensee also stated that the violation was not significant because additional barriers were in place to prevent inadvertent exposure. The Licensee included additional information about the design of the radiographic device, including a description of the three locking mechanisms that prevent accidental movement or exposure of the source. The Licensee stated that even in the unlocked configuration which occurred during the violation, the source was secured and met the intent of 10 CFR 34.23(a).
The Licensee's investigation did not provide any information that the NRC had not already considered as part of the enforcement process. The NRC Enforcement Policy Example 6.3.d.3 states, in part, that a failure to implement procedures including, but not limited to, recordkeeping, surveys, and inventories is a Severity Level IV violation. The NRC concluded that, absent deliberateness, based on the relatively short duration that the device was carried unlocked, the fact that the device was always under the direct surveillance and control of a radiographer, and the presence of the additional locking mechanisms, the significance of the Licensee failing to adequately implement the applicable section of its procedures should be characterized as a Severity Level IV violation.
However, the NRC Enforcement Policy Section 2.2.1.d states that a violation may be considered more significant than the underlying noncompliance if it includes indications of willfulness. The NRC considers factors such as the position, training, experience level, and responsibilities of the individuals involved in the violation. In this instance, the NRC determined that the violation should be increased to a Severity Level III violation, due to the conclusion that it involved deliberate misconduct by the radiographers.
Based on its evaluation, the NRC has concluded that the violation occurred as stated and the Licensee did not provide an adequate basis to reduce the severity of the violation or modify the willful determination.
Pension Benefit Guaranty Corporation.
Notice of request for OMB approval of revised collection of information.
The Pension Benefit Guaranty Corporation (PBGC) is requesting that the Office of Management and Budget (OMB) approve, under the Paperwork Reduction Act, a modified collection of
Comments must be submitted by November 29, 2019.
Comments should be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Pension Benefit Guaranty Corporation, via electronic mail at
A copy of the request will be posted on PBGC's website at:
Melissa Rifkin (
Section 4007 of title IV of the Employee Retirement Income Security Act of 1974 (ERISA) requires pension plans covered under title IV pension insurance programs to pay premiums to PBGC. All plans covered by title IV pay a flat-rate per-participant premium. An underfunded single-employer plan also pays a variable-rate premium based on the value of the plan's unfunded vested benefits.
Pursuant to section 4007, PBGC has issued its regulation on Payment of Premiums (29 CFR part 4007). Under § 4007.3 of the premium payment regulation, the plan administrator of each pension plan covered by title IV of ERISA is required to file a premium payment and information prescribed by PBGC for each premium payment year. Premium information is filed electronically using “My Plan Administration Account” (“My PAA”) through PBGC's website. Under § 4007.10 of the premium payment regulation, plan administrators are required to retain records about premiums and information submitted in premium filings.
Premium filings report (i) the flat-rate premium and related data (all plans), (ii) the variable-rate premium and related data (single-employer plans), and (iii) additional data such as identifying information and miscellaneous plan-related or filing-related data (all plans). PBGC needs this information to identify the plans for which premiums are paid, to verify whether the amounts paid are correct, to help PBGC determine the magnitude of its exposure in the event of plan termination, to help track the creation of new plans and transfer of participants and assets and liabilities among plans, and to keep PBGC's insured-plan inventory up to date. That information and the retained records are also needed for audit purposes.
PBGC is modifying the 2020 filing and instructions to require that plans offering a lump sum window
PBGC also is modifying the filing instructions for a plan that reports that a premium filing will be the last for the plan and checks the “cessation of covered status” box as the reason. Currently, such a plan must provide an explanation as to why they believe coverage has ceased and then PBGC typically contacts the plan to verify that coverage has ceased. PBGC is adding to the instructions that a plan that claims cessation of coverage status should complete a coverage determination request.
PBGC also is updating the premium rates and making conforming, clarifying, and editorial changes to the premium filing instructions.
On August 1, 2019, PBGC published in the
The collection of information has been approved through June 30, 2021, by OMB under control number 1212-0009. PBGC is requesting that OMB approve the revised collection of information for three years. 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.
PBGC estimates that it will receive 31,245 premium filings per year from 31,245 plan administrators under this collection of information. PBGC further estimates that the annual burden of this collection of information is 13,540 hours and $21,621,540.
Wednesday, November 13, 2019, at 10:30 a.m.; and Thursday, November 14, 2019, at 9:00 a.m.
Washington, DC, at U.S. Postal Service Headquarters, 475 L'Enfant Plaza SW, in the Benjamin Franklin Room.
Wednesday, November 13, 2019, at 10:30 a.m.—Closed. Thursday, November 14, 2019, at 9:00 a.m.—Open.
1. Strategic Issues.
2. Financial Matters.
3. Compensation and Personnel Matters.
4. Executive Session—Discussion of prior agenda items and Board governance.
1. Remarks of the Chairman of the Board of Governors.
2. Remarks of the Postmaster General and CEO.
3. Approval of Minutes of Previous Meetings.
4. Committee Reports.
5. Five-Year Strategic Plan.
6. FY2019 10K and Financial Statements, Annual Report and Comprehensive Statement.
7. FY2020 IFP and Financing Resolution.
8. FY2021 Appropriations Request.
9. Quarterly Service Performance Request.
10. Approval of Tentative Agenda for February Meetings.
11. Board Leadership.
A public comment period will begin immediately following the adjournment of the open session on November 14, 2019. During the public comment period, which shall not exceed 30 minutes, members of the public may comment on any item or subject listed on the agenda for the open session above. Registration of speakers at the public comment period is required. Speakers may register online at
Michael J. Elston, Acting Secretary of the Board, U.S. Postal Service, 475 L'Enfant Plaza SW, Washington, DC 20260-1000. Telephone: (202) 268-4800.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The proposed rule change consists of modifications to NSCC's Rules and Procedures (“Rules”)
In its filing with the Commission, the clearing agency included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
NSCC is proposing to modify the Rules in order to (1) define “Cybersecurity Confirmation” as a signed, written representation that addresses the submitting firm's cybersecurity program; (2) enhance the NSCC application requirements and ongoing requirements for Members to (a) require that a Cybersecurity Confirmation be provided as part of the application materials for all Members, and (b) require that all Members deliver to NSCC a complete, updated Cybersecurity Confirmation at least every two years; and (3) provide that NSCC may require a Cybersecurity Confirmation from organizations that report trade data to NSCC for comparison and trade recording.
The proposed change would require all Members and applicants to deliver to NSCC a signed, written Cybersecurity Confirmation, which includes representations regarding the submitting firm's cybersecurity program and framework. The Cybersecurity Confirmation would be required to be (1) delivered with the application materials for every applicant for membership, and (2) updated and re-delivered at least every two years by all Members. NSCC is also proposing to modify the Rules to provide that it may require any organization from which it may accept trade data for comparison and trade recording to deliver a Cybersecurity Confirmation.
As described in more detail below, the Cybersecurity Confirmation would help NSCC to assess the cybersecurity risks that may be introduced to it by Members and other entities that connect to NSCC either through the Securely Managed and Reliable Technology (“SMART”) network
NSCC believes it is prudent to better understand the cybersecurity risks that it may face through its interconnections to Members. As a designated systemically important financial market utility, or “SIFMU,” NSCC occupies a unique position in the marketplace such that a failure or a disruption to NSCC could increase the risk of significant liquidity problems spreading among
Currently, NSCC does not obtain any information regarding the security of a firm's systems or cybersecurity program prior to permitting that firm to connect either directly to the SMART network or to NSCC through another means, such as through a third party service provider, service bureau, network, or the internet. Given NSCC's critical role in the marketplace, NSCC is proposing to address the risks that could be posed by these connections.
Members may currently be subject to regulations that are designed, in part, to enhance the safeguards used by these entities to protect themselves against cyberattacks.
The proposed Cybersecurity Confirmation would require Members and applicants to represent that they have established adequate controls and security to help limit (1) cybersecurity risks to NSCC and to the other Members' networks and (2) access by unauthorized third parties while the firm is connected to NSCC either directly through the SMART network or through other connectivity such as a service provider, service bureau, network, or the internet.
NSCC is proposing to modify its Rules to (1) define “Cybersecurity Confirmation;” (2) require that firms deliver a completed Cybersecurity Confirmation (a) as part of their initial application with NSCC, and (b) on an ongoing basis, at least every two years; and (3) provide that NSCC may require a Cybersecurity Confirmation from organizations that report trade data to NSCC. Each of these proposed rule changes is described in greater detail below.
NSCC is proposing to adopt a definition of “Cybersecurity Confirmation.” Each Cybersecurity Confirmation would be required to be in writing on a form provided by NSCC and signed by a designated senior executive of the submitting firm who is authorized to attest to these matters. Based on the form provided by NSCC, each Cybersecurity Confirmation would contain representations regarding the submitting firm's cybersecurity program and framework. Such representations by the submitting firm would cover the two years prior to the date of the most recently provided Cybersecurity Confirmation.
NSCC is proposing to require that the following representations be included in the form of Cybersecurity Confirmation:
First, the Cybersecurity Confirmation would include a representation that the submitting firm has defined and maintains a comprehensive cybersecurity program and framework that considers potential cyber threats that impact the organization and protects the confidentiality, integrity and availability requirements of its systems and information.
Second, the Cybersecurity Confirmation would include a representation that the submitting firm has implemented and maintains a written enterprise cybersecurity policy or policies approved by the submitting firm's senior management or board of directors, and the organization's cybersecurity framework is in alignment with standard industry best practices and guidelines.
Third, the Cybersecurity Confirmation would include a representation that, if the submitting firm is using a third party service provider or service bureau(s) to connect or transact business or to manage the connection with NSCC, the submitting firm has an appropriate program to (a) evaluate the cyber risks and impact of these third parties, and (b) review the third party assurance reports.
Fourth, the Cybersecurity Confirmation would include a representation that the submitting firm's cybersecurity program and framework protect the segment of their system that connects to and/or interacts with NSCC.
Fifth, the Cybersecurity Confirmation would include a representation that the submitting firm has in place an established process to remediate cyber issues identified to fulfill the submitting firm's regulatory and/or statutory requirements.
Sixth, the Cybersecurity Confirmation would include a representation that the submitting firm's cybersecurity program's and framework's risk processes are updated periodically based on a risk assessment or changes to technology, business, threat ecosystem, and/or regulatory environment.
And, finally, the Cybersecurity Confirmation would include a representation that the review of the submitting firm's cybersecurity program and framework has been conducted by one of the following: (1) The submitting firm, if it has filed and maintains a current Certification of Compliance with the Superintendent of the New York State Department of Financial Services confirming compliance with its Cybersecurity Requirements for Financial Services Companies;
Together, the required representations are designed to provide NSCC with evidence of each Member's or applicant's management of cybersecurity with respect to their connectivity to NSCC. By requiring these representations from Members and applicants, the proposed Cybersecurity Confirmation would provide NSCC with information that it could use to make decisions about risks or threats, perform additional monitoring, target potential vulnerabilities, and protect the NSCC network.
NSCC is proposing to amend Rule 1 (Definitions and Descriptions) of the Rules to include a definition of “Cybersecurity Confirmation” as described above.
NSCC is proposing to require that a Cybersecurity Confirmation be submitted to NSCC by any applicant, as part of their application materials, and at least every two years by all Members. With respect to the requirement to deliver a Cybersecurity Confirmation at least every two years, NSCC would provide all Members with notice of the date on which such Cybersecurity Confirmations would be due no later than 180 calendar days prior to such due date.
In order to implement these proposed changes, NSCC would amend Rule 2A (Initial Membership Requirements), Section 1.C of the Rules to require applicants to complete and deliver a Cybersecurity Confirmation as part of their application materials. Further, NSCC would amend Rule 2B (Ongoing Membership Requirements and Monitoring), Section 2.A of the Rules to require each Member to complete and deliver a Cybersecurity Confirmation at least every two years, on a date that is set by NSCC and following notice that is provided no later than 180 calendar days prior to such due date.
NSCC is also proposing to modify the Rules to provide that, when determining whether to accept trade data from an organization for comparison and trade recording, as provided for under Rule 7 (Comparison and Trade Recording Operation) of the Rules, NSCC may require such organization to provide a Cybersecurity Confirmation. These organizations are not Members of NSCC and, as such, NSCC's relationship with these organizations is governed by a contract that is separate from the Rules. Therefore, this change would provide transparency regarding the steps NSCC may take when determining whether to accept trade data from another organization.
To implement this change, NSCC would amend Rule 7 (Comparison and Trade Recording Operation), Section 6 of the Rules to provide that NSCC may require organizations that deliver trade data to NSCC as described in that Rule to provide a Cybersecurity Confirmation before agreeing to accept such trade data.
Subject to approval by the Commission, the proposed rule change would become effective immediately. The proposed requirement that applicants deliver a Cybersecurity Confirmation with their application materials would be implemented immediately and would apply to applications that have been submitted at that time but have not yet been approved or rejected. Following the effective date of the proposed rule change, NSCC would provide Members with notice of the due date of their Cybersecurity Confirmations, no later than 180 days prior to such due date, and would provide such notice at least every two years going forward.
NSCC believes the proposed rule changes are consistent with the requirements of the Act and the rules and regulations thereunder applicable to a registered clearing agency. In particular, NSCC believes that the proposed rule changes are consistent with Section 17A(b)(3)(F) of the Act,
Section 17A(b)(3)(F) of the Act requires that the rules of NSCC be designed to, among other things, promote the prompt and accurate clearance and settlement of securities transactions and assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible.
As described above, the proposed requirement that Members and applicants provide a Cybersecurity Confirmation regarding their cybersecurity program that includes the representations described above would provide NSCC with evidence of each Member's or applicant's management of endpoint security with respect to the SMART network or other connectivity and would enhance the protection of NSCC against cyberattacks. The proposed Cybersecurity Confirmation would provide NSCC with information that it could use to make decisions about risks or threats, perform additional monitoring, target potential vulnerabilities, and protect the NSCC network. The proposed Cybersecurity Confirmation would give NSCC the ability to further identify its exposure and enable it to take steps to mitigate risks. These requirements would help reduce risk to NSCC's network with respect to its communications with Members and their submission of instructions and transactions to NSCC by requiring all entities connecting to NSCC to have appropriate cybersecurity programs in place.
Risks, threats and potential vulnerabilities could impact NSCC's ability to clear and settle securities transactions, or to safeguard the securities and funds which are in its custody or control, or for which it is responsible. Therefore, by implementing a tool that would help to mitigate these risks, NSCC believes the proposal would
Rule 17Ad-22(e)(17)(i) under the Act requires that each covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to manage the covered clearing agency's operational risks by identifying the plausible sources of operational risk, both internal and external, and mitigating their impact through the use of appropriate systems, policies, procedures, and controls.
Rule 17Ad-22(e)(17)(ii) under the Act requires that each covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to manage the covered clearing agency's operational risks by ensuring, in part, that systems have a high degree of security, resiliency, and operational reliability.
NSCC believes the proposed rule change could have an impact on competition. Specifically, NSCC believes that the proposed rule change could burden competition because it would require Members and applicants that do not already have cybersecurity programs that meet the standards set out in the Cybersecurity Confirmation to incur additional costs including, but not limited to, establishing a cybersecurity program and framework, engaging an internal audit function or appropriate third party to review that program and framework, and remediating any findings from such review. In addition, those Members and applicants that do not connect directly to the SMART network, but connect through a third party service provider or service bureau would have the additional burden of evaluating the cyber risks and impact of these third parties and reviewing the third party's assurance reports.
NSCC believes the above described burden on competition that could be created by the proposed changes would be both necessary and appropriate in furtherance of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the Act, for the reasons described below.
First, NSCC believes the proposed rule change would be necessary in furtherance of the Act, specifically Section 17A(b)(3)(F) of the Act, because the Rules must be designed to promote the prompt and accurate clearance and settlement of securities transactions and assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible.
The proposed changes are also necessary in furtherance of the purposes of Rules 17Ad-22(e)(17)(i) and (e)(17)(ii) under the Act.
Second, NSCC believes that the proposed rule change would be appropriate in furtherance of the purposes of the Act. The proposed rule change would apply equally to all Members and applicants. As described above, NSCC believes Members may already be subject to one or more regulatory requirements that include the implementation of a cybersecurity program, and these firms would already follow a widely recognized framework, guideline, or standard to guide and assess their organization's cybersecurity program to comply with these regulations. Therefore, NSCC believes any burden that may be imposed by the proposed rule change would be appropriate.
Further, while the proposed Cybersecurity Confirmation would identify certain standards and guidelines that would be appropriate, NSCC would consider requests by applicants and Members to allow other standards in accepting a Cybersecurity Confirmation. Additionally, the proposed Cybersecurity Confirmation would provide differing options to conduct the review of the applicant's or Member's cybersecurity program. As such, NSCC has endeavored to design the Cybersecurity Confirmation in a way that is reasonable and does not require one approach for meeting its requirements.
Finally, NSCC is proposing to provide Members with a minimum of 180 calendar days' notice before the deadline for providing a Cybersecurity Confirmation. This notice would allow Members to address any impact this change may have on their business. Applicants would be required to provide the Cybersecurity Confirmation as part of their application materials upon the effective date of this proposed rule change. This implementation schedule is designed to be fair and not disproportionately impact any Members more than others. The proposal is designed to provide all impacted Members with time to review their cybersecurity programs with respect to the required representations, and identify, if necessary, internal or third party cybersecurity reviewers.
For the reasons described above, NSCC believes any burden on competition that may result from the proposed rule change would be both necessary and appropriate in furtherance of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the Act.
NSCC has not solicited or received any written comments relating to this proposal. NSCC will notify the Commission of any written comments received.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. 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.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On August 22, 2019, NYSE National, Inc. (“NYSE National” or “Exchange”) 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 it 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.
Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94-409, that the Securities and Exchange Commission Fixed Income Market Structure Advisory Committee (“FIMSAC”) will hold a public meeting on Monday, November 4, 2019 at 9:00 a.m.
The meeting will be held in Room 443 at the Commission's New York Regional Office, 200 Vesey Street, New York, NY 10281.
The meeting will begin at 9:00 a.m. and will be open to the public. Members of the public that wish to attend the meeting in person must complete the registration form on the FIMSAC's web page at
On October 9, 2019, the Commission published notice of the Committee meeting (Release No. 34-87260), indicating that the meeting is open to the public and inviting the public to submit written comments to the Committee. This Sunshine Act notice is being issued because a majority of the Commission may attend the meeting.
The agenda for the meeting will include updates and presentations from the FIMSAC subcommittees and discussions on secondary market trading in government securities and the transition away from LIBOR.
For further information, please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551-5400.
On August 23, 2019, NYSE American LLC (“NYSE American” or “Exchange”) 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 it 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.
On August 22, 2019, NYSE Arca, Inc. (“NYSE Arca” or “Exchange”) 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 it 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.
On August 22, 2019, New York Stock Exchange LLC (“NYSE” or “Exchange”) 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 it 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) of the Securities Exchange Act of 1934 (“Act”)
The proposed rule change consists of modifications to the Rules, By-Laws and Organization Certificate of DTC (“Rules”)
In its filing with the Commission, the clearing agency included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
DTC is proposing to modify the Rules in order to (1) define “Cybersecurity Confirmation” as a signed, written representation that addresses the submitting firm's cybersecurity program; and (2) enhance the DTC application requirements and ongoing requirements for Participants and Pledgees to (a) require that a Cybersecurity Confirmation be provided as part of the application materials for all Participants and Pledgees, and (b) require that Participants and Pledgees deliver to DTC a complete, updated Cybersecurity Confirmation at least every two years.
The proposed change would require all Participants, Pledgees and applicants to deliver to DTC a signed, written Cybersecurity Confirmation, which includes representations regarding the submitting firm's cybersecurity program and framework. The Cybersecurity Confirmation would be required to be (1) delivered with the application materials for every applicant for membership as a Participant and applicant to be a Pledgee, and (2) updated and re-delivered at least every two years by all Participants and Pledgees.
As described in more detail below, the Cybersecurity Confirmation would help DTC to assess the cybersecurity risks that may be introduced to it by Participants and Pledgees that connect to DTC either through the Securely Managed and Reliable Technology (“SMART”) network
DTC believes it is prudent to better understand the cybersecurity risks that it may face through its interconnections to Participants and Pledgees. As a designated systemically important financial market utility, or “SIFMU,” DTC occupies a unique position in the marketplace such that a failure or a disruption to DTC could increase the risk of significant liquidity problems spreading among financial institutions or markets and thereby threaten the stability of the financial system in the United States.
Currently, DTC does not obtain any information regarding the security of a firm's systems or cybersecurity program prior to permitting that firm to connect either directly to the SMART network or to DTC through another means, such as through a third party service provider, service bureau, network, or the internet. Given DTC's critical role in the marketplace, DTC is proposing to address the risks that could be posed by these connections.
Participants and Pledgees may currently be subject to regulations that are designed, in part, to enhance the safeguards used by these entities to protect themselves against cyberattacks.
The proposed Cybersecurity Confirmation would require
DTC is proposing to modify its Rules to (1) define “Cybersecurity Confirmation;” and (2) require that firms deliver a completed Cybersecurity Confirmation (a) as part of their initial application with DTC, and (b) on an ongoing basis, at least every two years. Each of these proposed rule changes is described in greater detail below.
DTC is proposing to adopt a definition of “Cybersecurity Confirmation.” Each Cybersecurity Confirmation would be required to be in writing on a form provided by DTC and signed by a designated senior executive of the submitting firm who is authorized to attest to these matters. Based on the form provided by DTC, each Cybersecurity Confirmation would contain representations regarding the submitting firm's cybersecurity program and framework. Such representations by the submitting firm would cover the two years prior to the date of the most recently provided Cybersecurity Confirmation.
DTC is proposing to require that the following representations be included in the form of Cybersecurity Confirmation:
First, the Cybersecurity Confirmation would include a representation that the submitting firm has defined and maintains a comprehensive cybersecurity program and framework that considers potential cyber threats that impact the organization and protects the confidentiality, integrity and availability requirements of its systems and information.
Second, the Cybersecurity Confirmation would include a representation that the submitting firm has implemented and maintains a written enterprise cybersecurity policy or policies approved by the submitting firm's senior management or board of directors, and the organization's cybersecurity framework is in alignment with standard industry best practices and guidelines.
Third, the Cybersecurity Confirmation would include a representation that, if the submitting firm is using a third party service provider or service bureau(s) to connect or transact business or to manage the connection with DTC, the submitting firm has an appropriate program to (a) evaluate the cyber risks and impact of these third parties, and (b) review the third party assurance reports.
Fourth, the Cybersecurity Confirmation would include a representation that the submitting firm's cybersecurity program and framework protect the segment of their system that connects to and/or interacts with DTC.
Fifth, the Cybersecurity Confirmation would include a representation that the submitting firm has in place an established process to remediate cyber issues identified to fulfill the submitting firm's regulatory and/or statutory requirements.
Sixth, the Cybersecurity Confirmation would include a representation that the submitting firm's cybersecurity program's and framework's risk processes are updated periodically based on a risk assessment or changes to technology, business, threat ecosystem, and/or regulatory environment.
And, finally, the Cybersecurity Confirmation would include a representation that the review of the submitting firm's cybersecurity program and framework has been conducted by one of the following: (1) The submitting firm, if it has filed and maintains a current Certification of Compliance with the Superintendent of the New York State Department of Financial Services confirming compliance with its Cybersecurity Requirements for Financial Services Companies;
Together, the required representations are designed to provide DTC with evidence of each Participant's, Pledgee's or applicant's management of cybersecurity with respect to their connectivity to DTC. By requiring these representations from Participants, Pledgees and applicants the proposed Cybersecurity Confirmation would provide DTC with information that it could use to make decisions about risks or threats, perform additional monitoring, target potential vulnerabilities, and protect the DTC network.
DTC is proposing to amend the Rules to include a definition of “Cybersecurity Confirmation,” as described above, in a new Section 11 of Rule 2 (Participants and Pledgees).
DTC is proposing to require that a Cybersecurity Confirmation be submitted to DTC by any applicant, as part of their application materials, and at least every two years by all Participants and Pledgees. With respect
In order to implement these proposed changes, DTC would amend the Rules to include a new Section 11 of Rule 2 (Participants and Pledgees) to require that (1) applicants complete and deliver a Cybersecurity Confirmation as part of their application materials; and (2) each Participant and Pledgee complete and deliver a Cybersecurity Confirmation at least every two years, on a date that is set by DTC and following notice that is provided no later than 180 calendar days prior to such due date.
Subject to approval by the Commission, the proposed rule change would become effective immediately. The proposed requirement that applicants deliver a Cybersecurity Confirmation with their application materials would be implemented immediately and would apply to applications that have been submitted at that time but have not yet been approved or rejected. Following the effective date of the proposed rule change, DTC would provide Participants and Pledgees with notice of the due date of their Cybersecurity Confirmations, no later than 180 days prior to such due date, and would provide such notice at least every two years going forward.
DTC believes the proposed rule changes are consistent with the requirements of the Act and the rules and regulations thereunder applicable to a registered clearing agency. In particular, DTC believes that the proposed rule changes are consistent with Section 17A(b)(3)(F) of the Act,
Section 17A(b)(3)(F) of the Act requires that the rules of DTC be designed to, among other things, promote the prompt and accurate clearance and settlement of securities transactions and assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible.
As described above, the proposed requirement that Participants, Pledgees and applicants provide a Cybersecurity Confirmation regarding their cybersecurity program that includes the representations described above would provide DTC with evidence of each Participant's, Pledgee's or applicant's management of endpoint security with respect to the SMART network or other connectivity and would enhance the protection of DTC against cyberattacks. The proposed Cybersecurity Confirmation would provide DTC with information that it could use to make decisions about risks or threats, perform additional monitoring, target potential vulnerabilities, and protect the DTC network. The proposed Cybersecurity Confirmation would give DTC the ability to further identify its exposure and enable it to take steps to mitigate risks. These requirements would help reduce risk to DTC's network with respect to its communications with Participants and Pledgees and their submission of instructions and transactions to DTC by requiring all Participants and Pledgees connecting to DTC to have appropriate cybersecurity programs in place.
Risks, threats and potential vulnerabilities could impact DTC's ability to clear and settle securities transactions, or to safeguard the securities and funds which are in its custody or control, or for which it is responsible. Therefore, by implementing a tool that would help to mitigate these risks, DTC believes the proposal would promote the prompt and accurate clearance and settlement of securities transactions and assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible, consistent with the requirements of Section 17A(b)(3)(F) of the Act.
Rule 17Ad-22(e)(17)(i) under the Act requires that each covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to manage the covered clearing agency's operational risks by identifying the plausible sources of operational risk, both internal and external, and mitigating their impact through the use of appropriate systems, policies, procedures, and controls.
Rule 17Ad-22(e)(17)(ii) under the Act requires that each covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to manage the covered clearing agency's operational risks by ensuring, in part, that systems have a high degree of security, resiliency, and operational reliability.
DTC believes the proposed rule change could have an impact on competition. Specifically, DTC believes that the proposed rule change could burden competition because it would require Participants, Pledgees and applicants that do not already have cybersecurity programs that meet the standards set out in the Cybersecurity Confirmation to incur additional costs including, but not limited to, establishing a cybersecurity program and framework, engaging an internal audit function or appropriate third party to review that program and framework, and remediating any findings from such review. In addition, those Participants, Pledgees and applicants that do not connect directly to the SMART network, but connect through a third party service provider or service bureau would have the additional burden of evaluating the cyber risks and impact of these third parties and reviewing the third party's assurance reports.
DTC believes the above described burden on competition that could be created by the proposed changes would be both necessary and appropriate in furtherance of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the Act, for the reasons described below.
First, DTC believes the proposed rule change would be necessary in furtherance of the Act, specifically Section 17A(b)(3)(F) of the Act, because the Rules must be designed to promote the prompt and accurate clearance and settlement of securities transactions and assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible.
The proposed changes are also necessary in furtherance of the purposes of Rules 17Ad-22(e)(17)(i) and (e)(17)(ii) under the Act.
Second, DTC believes that the proposed rule change would be appropriate in furtherance of the purposes of the Act. The proposed rule change would apply equally to all Participants, Pledgees and applicants. As described above, DTC believes Participants and Pledgees may already be subject to one or more regulatory requirements that include the implementation of a cybersecurity program, and these firms would already follow a widely recognized framework, guideline, or standard to guide and assess their organization's cybersecurity program to comply with these regulations. Therefore, DTC believes any burden that may be imposed by the proposed rule change would be appropriate.
Further, while the proposed Cybersecurity Confirmation would identify certain standards and guidelines that would be appropriate, DTC would consider requests by applicants, Participants and Pledgees to allow other standards in accepting a Cybersecurity Confirmation. Additionally, the proposed Cybersecurity Confirmation would provide differing options to conduct the review of the applicant's, Participant's or Pledgee's cybersecurity program. As such, DTC has endeavored to design the Cybersecurity Confirmation in a way that is reasonable and does not require one approach for meeting its requirements.
Finally, DTC is proposing to provide Participants and Pledgees with a minimum of 180 calendar days' notice before the deadline for providing a Cybersecurity Confirmation. This notice would allow Participants and Pledgees to address any impact this change may have on their business. Applicants to be Participants or Pledgees would be required to provide the Cybersecurity Confirmation as part of their application materials upon the effective date of this proposed rule change. This implementation schedule is designed to be fair and not disproportionately impact any Participants or Pledgees more than others. The proposal is designed to provide all impacted Participants and Pledgees with time to review their cybersecurity programs with respect to the required representations, and identify, if necessary, internal or third party cybersecurity reviewers.
For the reasons described above, DTC believes any burden on competition that may result from the proposed rule change would be both necessary and appropriate in furtherance of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the Act.
DTC has not solicited or received any written comments relating to this proposal. DTC will notify the Commission of any written comments received.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. 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.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The proposed rule change consists of modifications to FICC's Government Securities Division (“GSD”) Rulebook (“GSD Rules”), FICC's Mortgage-Backed Securities Division (“MBSD”) Clearing Rules (“MBSD Rules”), and the Electronic Pool Notification (“EPN”) Rules of MBSD (“EPN Rules,” and, together with the GSD Rules and the MBSD Rules, the “Rules”)
In its filing with the Commission, the clearing agency included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
FICC is proposing to modify the Rules in order to (1) define “Cybersecurity Confirmation” as a signed, written representation that addresses the submitting firm's cybersecurity program; and (2) enhance the GSD and MBSD application requirements and ongoing requirements for Members to (a) require that a Cybersecurity Confirmation be provided as part of the application materials for all Members, and (b) require that all Members deliver to FICC a complete, updated Cybersecurity Confirmation at least every two years.
The proposed change would require all Members and applicants to deliver to FICC a signed, written Cybersecurity Confirmation, which includes representations regarding the submitting firm's cybersecurity program and framework. The Cybersecurity Confirmation would be required to be (1) delivered with the application materials for every applicant, and (2) updated and re-delivered at least every two years by all Members.
As described in more detail below, the Cybersecurity Confirmation would help FICC to assess the cybersecurity risks that may be introduced to it by Members that connect to FICC either through the Securely Managed and Reliable Technology (“SMART”) network
FICC believes it is prudent to better understand the cybersecurity risks that it may face through its interconnections to Members. As a designated systemically important financial market utility, or “SIFMU,” FICC occupies a unique position in the marketplace such that a failure or a disruption to FICC could increase the risk of significant liquidity problems spreading among financial institutions or markets and thereby threaten the stability of the financial system in the United States.
Currently, FICC does not obtain any information regarding the security of a firm's systems or cybersecurity program prior to permitting that firm to connect either directly to the SMART network or to FICC through another means, such as through a third party service provider, service bureau, network, or the internet. Given FICC's critical role in the marketplace, FICC is proposing to address the risks that could be posed by these connections.
Members may currently be subject to regulations that are designed, in part, to enhance the safeguards used by these entities to protect themselves against cyberattacks.
The proposed Cybersecurity Confirmation would require Members and applicants to represent that they have established adequate controls and security to help limit (1) cybersecurity risks to FICC and to the other Members' networks and (2) access by unauthorized third parties while the firm is connected to FICC either directly through the SMART network or through other connectivity such as a service provider, service bureau, network, or the internet.
FICC is proposing to modify its Rules to (1) define “Cybersecurity Confirmation;” and (2) require that firms deliver a completed Cybersecurity Confirmation (a) as part of their initial application with FICC, and (b) on an ongoing basis, at least every two years. Each of these proposed rule changes is described in greater detail below.
FICC is proposing to adopt a definition of “Cybersecurity Confirmation.” Each Cybersecurity Confirmation would be required to be in writing on a form provided by FICC and signed by a designated senior executive of the submitting firm who is authorized to attest to these matters. Based on the form provided by FICC, each Cybersecurity Confirmation would contain representations regarding the submitting firm's cybersecurity program and framework. Such representations by the submitting firm would cover the two years prior to the date of the most recently provided Cybersecurity Confirmation.
FICC is proposing to require that the following representations be included in the form of Cybersecurity Confirmation:
First, the Cybersecurity Confirmation would include a representation that the submitting firm has defined and maintains a comprehensive cybersecurity program and framework that considers potential cyber threats that impact the organization and protects the confidentiality, integrity and availability requirements of its systems and information.
Second, the Cybersecurity Confirmation would include a representation that the submitting firm has implemented and maintains a written enterprise cybersecurity policy or policies approved by the submitting firm's senior management or board of directors, and the organization's cybersecurity framework is in alignment with standard industry best practices and guidelines.
Third, the Cybersecurity Confirmation would include a representation that, if the submitting firm is using a third party service provider or service bureau(s) to connect or transact business or to manage the connection with FICC, the submitting firm has an appropriate program to (a) evaluate the cyber risks and impact of these third parties, and (b) review the third party assurance reports.
Fourth, the Cybersecurity Confirmation would include a representation that the submitting firm's cybersecurity program and framework protect the segment of their system that connects to and/or interacts with FICC.
Fifth, the Cybersecurity Confirmation would include a representation that the submitting firm has in place an established process to remediate cyber issues identified to fulfill the submitting firm's regulatory and/or statutory requirements.
Sixth, the Cybersecurity Confirmation would include a representation that the submitting firm's cybersecurity program's and framework's risk processes are updated periodically based on a risk assessment or changes to technology, business, threat ecosystem, and/or regulatory environment.
And, finally, the Cybersecurity Confirmation would include a representation that the review of the
Together, the required representations are designed to provide FICC with evidence of each Member's or applicant's management of cybersecurity with respect to their connectivity to FICC. By requiring these representations from Members and applicants, the proposed Cybersecurity Confirmation would provide FICC with information that it could use to make decisions about risks or threats, perform additional monitoring, target potential vulnerabilities, and protect the FICC network.
FICC is proposing to amend Rule 1 (Definitions) of the GSD Rules, Rule 1 (Definitions) of the MBSD Rules, and Rule 1 (Definitions) of Article I (Definitions and General Provisions) of the EPN Rules, to include a definition of “Cybersecurity Confirmation” as described above.
FICC is proposing to require that a Cybersecurity Confirmation be submitted to FICC by any applicant, as part of their application materials, and at least every two years by all Members. With respect to the requirement to deliver a Cybersecurity Confirmation at least every two years, FICC would provide all Members with notice of the date on which such Cybersecurity Confirmations would be due no later than 180 calendar days prior to such due date.
In order to implement these proposed changes, FICC would amend Section 5 of Rule 2A (Initial Membership Requirements) of the GSD Rules, Section 3 of Rule 3B (Centrally Cleared Institutional Triparty Service) of the GSD Rules, Section 4 of Rule 13 (Funds-Only Settlement) of the GSD Rules, Section 3 of Rule 2A (Initial Membership Requirements) of the MBSD Rules, Rule 3A (Cash Settlement Bank Members) of the MBSD Rules, and Section 2 of Rule 1 (Requirements Applicable to EPN Users) of Article III of the EPN Rules to require that applicants complete and deliver a Cybersecurity Confirmation as part of their application materials.
Further, FICC would amend Section 2 of Rule 3 (Ongoing Membership Requirements) of the GSD Rules, Section 5 of Rule 3B (Centrally Cleared Institutional Triparty Service) of the GSD Rules, Section 4 of Rule 13 (Funds-Only Settlement) of the GSD Rules, Section 2 of Rule 3 (Ongoing Membership Requirements) of the MBSD Rules, Rule 3A (Cash Settlement Bank Members) of the MBSD Rules and Section 8 of Rule 1 (Requirements Applicable to EPN Users) of Article III of the EPN Rules to require each Member to complete and deliver a Cybersecurity Confirmation at least every two years, on a date that is set by FICC and following notice that is provided no later than 180 calendar days prior to such due date.
Subject to approval by the Commission, the proposed rule change would become effective immediately. The proposed requirement that applicants deliver a Cybersecurity Confirmation with their application materials would be implemented immediately and would apply to applications that have been submitted at that time but have not yet been approved or rejected. Following the effective date of the proposed rule change, FICC would provide Members with notice of the due date of their Cybersecurity Confirmations, no later than 180 days prior to such due date, and would provide such notice at least every two years going forward.
FICC believes the proposed rule changes are consistent with the requirements of the Act and the rules and regulations thereunder applicable to a registered clearing agency. In particular, FICC believes that the proposed rule changes are consistent with Section 17A(b)(3)(F) of the Act,
Section 17A(b)(3)(F) of the Act requires that the rules of FICC be designed to, among other things, promote the prompt and accurate clearance and settlement of securities transactions and assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible.
As described above, the proposed requirement that Members and applicants provide a Cybersecurity Confirmation regarding their cybersecurity program that includes the representations described above would provide FICC with evidence of each Member's or applicant's management of endpoint security with respect to the SMART network or other connectivity and would enhance the protection of FICC against cyberattacks. The proposed Cybersecurity Confirmation would provide FICC with information that it could use to make decisions about risks or threats, perform additional monitoring, target potential vulnerabilities, and protect the FICC network. The proposed Cybersecurity Confirmation would give FICC the ability to further identify its exposure and enable it to take steps to mitigate risks. These requirements would help reduce risk to FICC's network with respect to its communications with Members and their submission of instructions and transactions to FICC by requiring all Members connecting to
Risks, threats and potential vulnerabilities could impact FICC's ability to clear and settle securities transactions, or to safeguard the securities and funds which are in its custody or control, or for which it is responsible. Therefore, by implementing a tool that would help to mitigate these risks, FICC believes the proposal would promote the prompt and accurate clearance and settlement of securities transactions and assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible, consistent with the requirements of Section 17A(b)(3)(F) of the Act.
Rule 17Ad-22(e)(17)(i) under the Act requires that each covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to manage the covered clearing agency's operational risks by identifying the plausible sources of operational risk, both internal and external, and mitigating their impact through the use of appropriate systems, policies, procedures, and controls.
Rule 17Ad-22(e)(17)(ii) under the Act requires that each covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to manage the covered clearing agency's operational risks by ensuring, in part, that systems have a high degree of security, resiliency, and operational reliability.
FICC believes the proposed rule change could have an impact on competition. Specifically, FICC believes that the proposed rule change could burden competition because it would require Members and applicants that do not already have cybersecurity programs that meet the standards set out in the Cybersecurity Confirmation to incur additional costs including, but not limited to, establishing a cybersecurity program and framework, engaging an internal audit function or appropriate third party to review that program and framework, and remediating any findings from such review. In addition, those Members and applicants that do not connect directly to the SMART network, but connect through a third party service provider or service bureau would have the additional burden of evaluating the cyber risks and impact of these third parties and reviewing the third party's assurance reports.
FICC believes the above described burden on competition that could be created by the proposed changes would be both necessary and appropriate in furtherance of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the Act, for the reasons described below.
First, FICC believes the proposed rule change would be necessary in furtherance of the Act, specifically Section 17A(b)(3)(F) of the Act, because the Rules must be designed to promote the prompt and accurate clearance and settlement of securities transactions and assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible.
The proposed changes are also necessary in furtherance of the purposes of Rules 17Ad-22(e)(17)(i) and (e)(17)(ii) under the Act.
Second, FICC believes that the proposed rule change would be appropriate in furtherance of the purposes of the Act. The proposed rule change would apply equally to all Members and applicants. As described above, FICC believes Members may already be subject to one or more
Further, while the proposed Cybersecurity Confirmation would identify certain standards and guidelines that would be appropriate, FICC would consider requests by applicants and Members to allow other standards in accepting a Cybersecurity Confirmation. Additionally, the proposed Cybersecurity Confirmation would provide differing options to conduct the review of the applicant's or Member's cybersecurity program. As such, FICC has endeavored to design the Cybersecurity Confirmation in a way that is reasonable and does not require one approach for meeting its requirements.
Finally, FICC is proposing to provide Members with a minimum of 180 calendar days' notice before the deadline for providing a Cybersecurity Confirmation. This notice would allow Members to address any impact this change may have on their business. Applicants would be required to provide the Cybersecurity Confirmation as part of their application materials upon the effective date of this proposed rule change. This implementation schedule is designed to be fair and not disproportionately impact any Members more than others. The proposal is designed to provide all impacted Members with time to review their cybersecurity programs with respect to the required representations, and identify, if necessary, internal or third party cybersecurity reviewers.
For the reasons described above, FICC believes any burden on competition that may result from the proposed rule change would be both necessary and appropriate in furtherance of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the Act.
FICC has not solicited or received any written comments relating to this proposal. FICC will notify the Commission of any written comments received.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. 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.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
U.S. Small Business Administration.
Notice.
This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of Florida (FEMA-4468-DR), dated 10/21/2019.
Issued on 10/21/2019.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
Notice is hereby given that as a result of the President's major disaster declaration on 10/21/2019, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications at the
The following areas have been determined to be adversely affected by the disaster:
The Interest Rates are:
The number assigned to this disaster for physical damage is 161628 and for economic injury is 161630.
Notice of request for emergency review and approval by OMB and public comment.
The Department of State (“Department”) has submitted the information collection request described below to the Office of Management and Budget (“OMB”) for review and approval in accordance with the emergency review procedures of the Paperwork Reduction Act of 1995. The purpose of this notice is to allow for public comment from all interested individuals and organizations. Emergency review and approval of this collection has been requested from OMB by November 1, 2019. If granted, the approval is only valid for 180 days. The Department is separately submitting a 3 year approval through OMB's normal PRA clearance process.
Direct any comments on this request to both the Department of State Desk Officer in the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB) and to the Department of State's Bureau of Consular Affairs, Office of Visa Services.
All public comments must be received by October 31, 2019.
You may submit comments to OMB by the following methods:
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You must include the DS form number (if applicable), information collection title, and the OMB control number in any correspondence.
Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed collection instrument and supporting documents to Megan Herndon, who may be reached at (202) 485-7586 or at
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We are soliciting public comments to permit the Department to:
• Evaluate whether the proposed information collection is necessary for the proper functions of the Department.
• Evaluate the accuracy of our estimate of the time and cost burden of this proposed collection, including the validity of the methodology and assumptions used.
• Enhance the quality, utility, and clarity of the information to be collected.
• Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology.
Please note that comments submitted in response to this Notice are public record. Before including any detailed personal information, you should be aware that your comments as submitted, including your personal information, will be available for public review
Consular officers will verbally ask immigrant visa applicants covered by PP 9945 whether they will be covered by health insurance in the United States within 30 days of entry to the United States and, if so, for details relating to such insurance. Proclamation No. 9945, 84 FR 53991 (Oct. 4, 2019). PP 9945 only applies to applicants seeking to enter the United States pursuant to an immigrant visa. If applicants answer affirmatively, consular officers will ask for applicants to identify the specific health insurance plan, the date coverage will begin, and such other information
PP 9945 does not apply to holders of valid immigrant visas issued before the effective date of the proclamation; aliens seeking to enter the United states pursuant to a Special Immigrant Visa, in either the SI or SQ classification; any alien who is seeking to enter the United States pursuant to an IR-2, CR-2, IR-3, IR-4, IH-3, or IH-4 visa; aliens seeking to enter pursuant to an IR-5 visa, provided the alien or alien's sponsor demonstrates to the satisfaction of consular officers that they will not impose a substantial burden on the United States healthcare system; aliens seeking to enter the United States pursuant to a SB-1 visa; any alien under the age of 18, except for any alien accompanying a parent who is also immigrating to the United States and subject to PP 9945; any alien whose entry would further important United States law enforcement objectives, as determined by the Secretary of State or his designee based on a recommendation from the Attorney General or his designee; or aliens whose entry would be in the national interest, as determined by the Secretary of State or his designee on a case-by-case basis.
Under part 211 of title 49 of the Code of Federal Regulations (CFR), this document provides the public notice that on October 16, 2019, the Northeast Illinois Regional Commuter Railroad Corporation (Metra) petitioned the Federal Railroad Administration (FRA) for a waiver of compliance from certain provisions of the Federal railroad safety regulations contained at 49 CFR 236.566,
Specifically, Metra requests to operate positive train control (PTC) equipped controlling locomotives with the automatic cab signals (ACS) cut-out. The relief is to be within a PTC revenue service demonstration (RSD) area on the Rock Island District, on which a PTC system (Interoperable Electronic Train Management System) is installed and operative; the PTC system is successfully initialized; and a locomotive engineer trained and qualified in the operation of PTC is present for the operation of the train with the ACS cut-out.
Locations of the requested relief on the Rock Island District are:
If the PTC system fails and/or is cut-out en route, the train crew will cut-in the ACS onboard system, perform a departure test, and if successful, continue the trip through the project limits under ACS operation. If the ACS onboard system cut-in and/or departure test are not completed successfully, the train will continue to operate under the provisions of § 236.567,
Metra notes that the ACS and PTC systems are not integrated on the locomotive, and their concurrent use would be potentially confusing and distracting to the train crew due to differences in the content of their displays, audible and visual alerts provided, and required acknowledgement protocols.
A copy of the petition, as well as any written communications concerning the petition, is available for review online at
Interested parties are invited to participate in these proceedings by submitting written views, data, or comments. FRA does not anticipate scheduling a public hearing in connection with these proceedings since the facts do not appear to warrant a hearing. If any interested parties desire an opportunity for oral comment and a public hearing, they should notify FRA, in writing, before the end of the comment period and specify the basis for their request.
All communications concerning these proceedings should identify the appropriate docket number and may be submitted by any of the following methods:
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Communications received by December 16, 2019 will be considered by FRA before final action is taken. Comments received after that date will be considered if practicable.
Anyone can search the electronic form of any written communications and comments received into any of our dockets by the name of the individual submitting the comment (or signing the document, if submitted on behalf of an association, business, labor union, etc.). Under 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its processes. DOT posts these comments, without edit, including any personal information the commenter provides, to
Issued in Washington, DC.
Federal Railroad Administration (FRA), U.S. Department of Transportation (DOT).
Notice of information collection; request for comment.
Under the Paperwork Reduction Act of 1995 (PRA) and its implementing regulations, this notice announces that FRA is forwarding the Information Collection Request (ICR) abstracted below to the Office of Management and Budget (OMB) for review and comment. The ICR describes the information collection and its expected burden. On August 30, 2019, FRA published a notice providing a 60-day period for public comment on the ICR.
Interested persons are invited to submit comments on or before November 29, 2019.
Submit written comments on the ICR to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street NW, Washington, DC 20503, Attention: FRA Desk Officer. Comments may also be sent via email to OMB at the following address:
Ms. Hodan Wells, Information Collection Clearance Officer, Office of Railroad Safety, Regulatory Analysis Division, Federal Railroad Administration, 1200 New Jersey Avenue SE, Washington, DC 20590 (telephone: (202) 493-0440) or Ms. Kim Toone, Information Collection Clearance Officer, Office of Information Technology, Federal Railroad Administration, 1200 New Jersey Avenue SE, Washington, DC 20590 (telephone: (202) 493-6132).
The PRA, 44 U.S.C. 3501-3520, and its implementing regulations, 5 CFR part 1320, require Federal agencies to issue two notices seeking public comment on information collection activities before OMB may approve paperwork packages.
Before OMB decides whether to approve this proposed collection of information, it must provide 30-days' notice for public comment. Federal law requires OMB to approve or disapprove paperwork packages between 30 and 60 days after the 30-day notice is published. 44 U.S.C. 3507(b)-(c); 5 CFR 1320.12(d);
The summary below describes the ICR that FRA will submit for OMB clearance as the PRA requires:
Under 44 U.S.C. 3507(a) and 5 CFR 1320.5(b) and 1320.8(b)(3)(vi), FRA informs all interested parties that it may not conduct or sponsor, and a respondent is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
Office of the Secretary, Department of Transportation.
No FEAR Act notice.
This Notice implements Title II of the Notification and Federal Employee Antidiscrimination and Retaliation Act of 2002 (No FEAR Act of 2002). It is the annual obligation for Federal agencies to notify all employees, former employees, and applicants for Federal employment of the rights and protections available to them under the Federal Anti-discrimination and Whistleblower Protection Laws.
Yvette Rivera, Associate Director of the Equity and Access Division (S-32), Departmental Office of Civil Rights, Office of the Secretary, U.S. Department of Transportation, 1200 New Jersey Avenue SE, Room W78-306, Washington, DC 20590, 202-366-5131 or by email at
You may retrieve this document online through the Federal Document Management System at
On May 15, 2002, Congress enacted the “Notification and Federal Employee Antidiscrimination and Retaliation Act of 2002,” now recognized as the No FEAR Act (Pub. L. 107-174). One purpose of the Act is to “require that Federal agencies be accountable for violations of antidiscrimination and
A Federal agency cannot discriminate against an employee or applicant with respect to the terms, conditions, or privileges of employment because of race, color, religion, sex, national origin, age, disability, marital status, genetic information, or political affiliation. One or more of the following statutes prohibit discrimination on these bases: 5 U.S.C. 2302(b)(1), 29 U.S.C. 631, 29 U.S.C. 633a, 29 U.S.C. 206(d), 29 U.S.C. 791, 42 U.S.C. 2000e-16 and 2000ff.
If you believe you have experienced unlawful discrimination on the bases of race, color, religion, sex, national origin, age, genetic information, and/or disability, you must contact an Equal Employment Opportunity (EEO) counselor within 45 calendar days of the alleged discriminatory action, or in the case of a personnel action, within 45 calendar days of the effective date of the action. A directory of EEO officers is available on the Departmental Office of Civil Rights website at
If you believe you experienced unlawful discrimination based on age, you must either contact an EEO counselor as noted above, or file a civil action in a United States district court under the Age Discrimination in Employment Act, against the head of an alleged discriminating agency. If you choose to file a civil action, you must give notice of intent to sue to the Equal Employment Opportunity Commission (EEOC) within 180 days of the alleged discriminatory action, and not less than 30 days before filing a civil action. You may file such notice in writing with the EEOC via mail at P.O. Box 77960, Washington, DC 20013, the EEOC website
If you are alleging discrimination based on marital status or political affiliation, you may file a written discrimination complaint with the U.S. Office of Special Counsel (OSC). Form OSC-11 is available online at the OSC website
If you are alleging compensation discrimination pursuant to the Equal Pay Act, and wish to pursue your allegations through the administrative process, you must contact an EEO counselor within 45 calendar days of the alleged discriminatory action, as such complaints are processed under EEOC's regulations at 29 CFR part 1614. Alternatively, you may file a civil action in a court of competent jurisdiction within two years, or if the violation is willful, three years of the date of the alleged violation, regardless of whether you pursued any administrative complaint processing. The filing of a complaint or appeal pursuant to 29 CFR part 1614 shall not toll the time for filing a civil action.
A USDOT employee with authority to take, direct others to take, recommend, or approve any personnel action must not use that authority to take, or fail to take, or threaten to take a personnel action against an employee or applicant because of a disclosure of information by that individual that is reasonably believed to evidence violations of law, rule, or regulation; gross mismanagement; gross waste of funds; an abuse of authority; or a substantial and specific danger to public health or safety, unless the disclosure of such information is specifically prohibited by law and such information is specifically required by Executive Order to be kept secret in the interest of national defense or the conduct of foreign affairs.
Retaliation against a USDOT employee or applicant for making a protected disclosure is prohibited (5 U.S.C. 2302(b)(8)). If you believe you are a victim of whistleblower retaliation, you may file a written complaint with the U.S. Office of Special Counsel at 1730 M Street NW, Suite 218, Washington, DC 20036-4505 using Form OSC-11. Alternatively, you may file online through the OSC website at
Under existing laws, USDOT retains the right, where appropriate, to discipline a USDOT employee who engages in conduct that is inconsistent with Federal Antidiscrimination and Whistleblower Protection laws up to and including removal from Federal service. If OSC initiates an investigation under 5 U.S.C. 1214, USDOT must seek approval from the Special Counsel to discipline employees for, among other activities, engaging in prohibited retaliation (5 U.S.C. 1214). Nothing in the No FEAR Act alters existing laws, or permits an agency to take unfounded disciplinary action against a USDOT employee, or to violate the procedural rights of a USDOT employee accused of discrimination.
For more information regarding the No FEAR Act regulations, refer to 5 CFR part 724, as well as the appropriate office(s) within your agency (
Pursuant to section 205 of the No FEAR Act, neither the Act nor this notice creates, expands, or reduces any rights otherwise available to any employee, former employee, or applicant under the laws of the United States, including the provisions of law specified in 5 U.S.C. 2302(d).
Departmental Offices, U.S. Department of the Treasury.
Notice.
The Department of the Treasury will submit the following information collection requests to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. The public is invited to submit comments on these requests.
Comments should be received on or before November 29, 2019 to be assured of consideration.
Send comments regarding the burden estimate, or any other aspect of the information collection, including suggestions for reducing the burden, to (1) Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Treasury, New Executive Office Building, Room 10235, Washington, DC 20503, or email at
Copies of the submissions may be obtained from Spencer W. Clark by emailing
Securities and Exchange Commission.
Proposed rule and concept release.
The Securities and Exchange Commission (the “SEC” or the “Commission”) is proposing amendments to 17 CFR 240.15c2-11 (the “Rule”) under the Securities Exchange Act of 1934 (the “Exchange Act”). The Rule governs the publication of quotations for securities in a quotation medium other than a national securities exchange,
Comments should be received by December 30, 2019.
Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
Studies, memoranda, or other substantive items may be added by the Commission or staff to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on the Commission's website. To ensure direct electronic receipt of such notifications, sign up through the “Stay Connected” option at
John Guidroz, Branch Chief, Laura Gold, Special Counsel, Theresa Hajost, Special Counsel, Quinn Kane, Attorney-Advisor, Sam Litz, Attorney-Advisor, Aaron Washington, Special Counsel, Elizabeth Sandoe, Senior Special Counsel, Timothy M. Riley, Branch Chief, Josephine Tao, Assistant Director, Office of Trading Practices, and Mark Wolfe, Associate Director, Office of Derivatives Policy and Trading Practices, Division of Trading and Markets, Securities and Exchange Commission, 100 F St. NE, Washington, DC 20549, at (202) 551-5777.
The Commission is proposing for comment amendments to Rule 15c2-11 [17 CFR 240.15c2-11] under the Securities Exchange Act of 1934 [15 U.S.C. 78a
Securities that trade on the OTC market are primarily owned by retail investors. Many issuers of quoted OTC securities publicly disclose current information about themselves. However, in other cases, there is no or limited current public information available about certain issuers of quoted OTC securities to allow investors or other market participants to make informed decisions regarding company fundamentals. The absence of current public information about such issuers can contribute to incidents of fraud and manipulation. The existing Rule is designed to ensure that a broker-dealer reviews basic information about a security and issuer prior to publishing a quotation in the OTC market. In practice, however, the Rule's exceptions permit broker-dealers to publish quotations in perpetuity even when there is no or limited current information about the issuer available to the public or the broker-dealer, and even when the issuer no longer exists or has ceased operations. The proposed amendments are intended to modernize the Rule and in so doing better protect retail investors from incidents of fraud and manipulation in OTC securities, particularly securities of issuers for which there is no or limited publicly available information, and facilitate more efficient trading in certain more widely followed OTC securities.
Adopted in 1971
Issuers of quoted OTC securities may range from large foreign issuers to small domestic companies, and some quoted OTC securities are thinly traded.
Because broker-dealers play an integral role in facilitating investor access to OTC securities and serve an important gatekeeper function under Rule 15c2-11, it is important that a broker-dealer reviews key, basic information about an issuer before initiating a quoted market to solicit retail investors to purchase and sell a security in the OTC market. The existing Rule prohibits a broker-dealer from publishing any quotation for a security in a quotation medium without first
While existing Rule 15c2-11 contains a requirement to review certain information, the Rule also provides exceptions from that requirement. Once a broker-dealer has published a quotation pursuant to the Rule, under specified exceptions to the Rule, other broker-dealers may publish quotations for that security (without being subject to the Rule's information review requirement). The Commission is concerned that market participants can take advantage of such exceptions from the information review requirement to the detriment of retail investors. For example, an active trading market, built upon broker-dealers' quotations, can give the market for the securities an appearance of credibility. Such a situation can facilitate the purchase or sale of securities even when there is no or limited current issuer information publicly available to investors. Without current public information about an issuer, it is difficult for an investor or other market participant to evaluate the issuer and the risks involved in purchasing or selling its securities.
When there is little or no current information about an issuer available to investors, they can fall victim to fraudsters that make false and misleading statements about an issuer to promote sales of a security. Without current public information about an issuer, investors may not have the ability to assess the validity of the claims in a promotion campaign due to the lack of information against which to compare the claims. A fraudster's promotional campaign with false claims and published quotations may generate trading volume for a thinly-traded security and the security's market price may rise to an artificially high level (“pumping” the security). However, when the fraudster ceases its promotional campaign, the market price of the security may drop due to the fraudster selling its shares into the market it created by “pumping” the share prices up with false claims (“dumping” the security). The remaining investors may be left owning an essentially worthless security or one for which the price is artificially inflated.
The proposed amendments to Rule 15c2-11 are a part of the Commission's ongoing effort to better address risks to retail investors and promote market efficiency. The proposed amendments seek to better protect retail investors from incidents of fraud and manipulation in OTC securities, by requiring that certain issuer information the broker-dealer is required to review be current and publicly available, while modernizing the Rule to be more efficient and effective.
First, the proposed amendments would provide greater transparency to the investing public regarding issuers of OTC securities by requiring that certain information about the issuer and the security be current and publicly available before a broker-dealer can publish a quote for the security. This proposed amendment would allow retail investors to more easily access basic information about an issuer. Additionally, the proposed amendments would require that information be current and publicly available before a broker-dealer may rely on certain exceptions from the review requirement. In the absence of current and publicly available information, such exceptions would either be unavailable or more limited.
Second, the Commission is proposing to modify existing exceptions and, taking into consideration the evolution of the OTC market over the past 30 years, add several new exceptions. The Commission is proposing to limit eligibility for an existing exception, commonly known as the “piggyback exception,” which allows broker-dealers to publish quotations for a security in reliance on the quotations of another broker-dealer that initially performed the review of the issuer's information. Under its existing formulation, this exception has been used by broker-dealers to continuously quote a security over many years, even when the issuer of the security no longer exists. The proposed amendments would limit the use of the exception in circumstances where issuer information is not current and publicly available.
The proposal would also limit the use of the existing unsolicited order exception for quotations on behalf of company insiders if information about the issuer is not current and publicly available.
The proposal would add an exception to allow broker-dealers to publish quotations of securities, without being required to conduct the information review required by the existing Rule, of certain issuers with significant assets and trading volume. The Commission believes that these types of issuers tend to be less susceptible to the type of fraud that the Rule is designed to prevent. The proposal would also add a new exception to reduce the burdens on broker-dealers that are quoting securities that were issued in an underwritten offering where the broker-dealer served as the underwriter. When a broker-dealer underwrites an offering of securities, it generally conducts a review of the same information that it must examine under the Rule. Thus, the Commission believes that continuing to require the broker-dealer to conduct a review under the Rule in this circumstance is redundant and unnecessary.
The Commission is also proposing new exceptions that would provide relief from the review requirement of the Rule, to permit a regulated entity, namely a qualified IDQS that meets the definition of an ATS, to conduct the information review that is currently only permitted to be conducted by broker-dealers that publish or submit quotations. A qualified IDQS or a national securities association also would be able to determine whether certain exceptions for broker-dealers are available. Finally, the proposed amendments would require that a broker-dealer, qualified IDQS, or registered national securities association keep records regarding the basis of its reliance on, or determination of availability of, any exception to the Rule
Finally, the Commission is proposing amendments to streamline the existing Rule, remove obsolete provisions without undermining the important investor protections of the Rule, and make technical, non-substantive changes. With respect to streamlining, the proposal would permit a broker-dealer to provide to an investor that requests issuer information appropriate instructions regarding how to obtain such information electronically. Finally, the Commission is proposing to remove paragraphs that have become obsolete. The proposal would remove an exception for quotations of Nasdaq securities because Nasdaq is now registered with the Commission as a national securities exchange. The Commission also proposes to remove a requirement that a broker-dealer send information to certain systems that disseminate quotation information because the Commission understands that such entities no longer rely on the broker-dealer sending such information. Further, the proposal would remove a requirement that a broker-dealer make an arrangement to receive certain issuer information that is now available on the Commission's Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”).
The proposed amendments are intended to promote investor protection, preserve the integrity of the OTC market, and promote capital formation for issuers that provide current and publicly available information to their investors. First, the proposed amendments are designed to provide the following benefits to investors, particularly retail investors. The proposed amendments would promote the public availability of current information about issuers with securities that are quoted in the OTC market. This should facilitate an investor's access to information about an issuer so that an investor is better able to understand and evaluate the issuer and the issuer's security prior to making an investment decision. The proposed amendments should also help promote a more level playing field so that all investors, not just company insiders and investors with a relationship with the issuer, have access to current issuer information. Further, the proposed amendments are intended to reduce the occurrence of investors making investment decisions based on false or misleading statements spread by fraudsters.
Second, the proposed amendments are intended to preserve the integrity of the OTC market. The proposed amendments would prohibit broker-dealers from continuing to quote a security in the absence of current and publicly available information about the issuer, which could reduce the risk of fraud and manipulation in this market. In addition, current and publicly available information about issuers would help to improve pricing efficiency in the OTC market.
Third, the proposed amendments are designed to promote capital formation for issuers that provide current and publicly available information to their investors. A hallmark of public markets in the United States is disclosure provided by issuers to investors. Investors that have access to current and publicly available issuer information are better equipped to make informed decisions about how to allocate their capital. Additionally, the proposed amendments broaden the type of entities that are permitted to conduct the information review required by the Rule while imposing requirements on those entities to help promote the accuracy of such information as well as help ensure that it is current. This may make it easier for issuers to identify a market participant that is willing and able to conduct the review in order to establish a quoted market for the issuer's securities. Further, as discussed above, the proposal would add certain specified exceptions from the requirement to conduct the information review under the proposed Rule and allow broker-dealers to start a quoted market for the securities of certain issuers where there is less concern regarding fraud or manipulation, which could reduce costs for broker-dealers seeking to establish a quoted market. These new exceptions would provide investors with more choices in the OTC market.
The Commission proposes to strengthen the existing Rule as follows:
• Require the documents and information that a broker-dealer must obtain and review under the Rule to be current and publicly available;
• Amend the “piggyback exception,” which is conditioned on continuous and frequent quotations, to:
○ Require issuer information to be current and publicly available;
○ Eliminate the ability of a broker-dealer to rely on the exception unless there are two-sided quotations that are published in an interdealer quotation system at specified prices;
○ Eliminate the ability of broker-dealers to rely on the exception during the first 60 calendar days after the termination of a Commission trading suspension under Section 12(k) of the Exchange Act;
○ Eliminate the ability of broker-dealers to rely on the exception for securities of “shell companies;”
○ Remove the requirement that a security be quoted for 12 business days during the previous 30 calendar days;
• Require that certain issuer information be current and publicly available for a broker-dealer to rely on the unsolicited quotation exception to publish quotations by or on behalf of company insiders; and
• Require documentation to support a broker-dealer's reliance on exceptions to the Rule.
The Commission also is proposing to reduce burdens on broker-dealers publishing quotations of securities of OTC issuers by providing new exceptions for broker-dealers to:
• Publish quotations for securities of well-capitalized issuers with actively traded securities;
• Publish quotations for securities where a qualified interdealer quotation system (“qualified IDQS”), conducts the proposed Rule's required review and makes known to others the quotation of a broker-dealer relying on the exception;
• Rely on publicly available determinations by a qualified IDQS or a registered national securities association that the requirements of certain exceptions have been met; and
• Publish quotations for a security without complying with the information review requirement if that broker-dealer was named as an underwriter in the security's registration statement or offering circular.
The Commission is proposing amendments to streamline certain requirements of the existing Rule that would:
• Modify the requirement that a broker-dealer make the information that it obtained and reviewed “reasonably available upon request” to investors seeking such information to permit the broker-dealer to direct the investors to the publicly-available information upon which the broker-dealer relied to comply with the information review requirement;
• Remove the Nasdaq security exception in light of Nasdaq's registration as a national securities exchange;
• Provide new definitions and make other technical, non-substantive changes to the Rule; and
• Remove the paragraphs regarding furnishing information to an IDQS and how a broker-dealer obtains annual, quarterly, and current reports filed by an issuer with the Commission.
Finally, the Commission is seeking comment about information repositories and a possible regulatory structure for such entities.
A core mission of the Commission is protecting investors. This proposal continues the Commission's focus on protecting retail investors from fraud and manipulation.
In addition to enhancing efforts to detect and address fraudulent conduct that has already occurred, such as through the Commission's examination and enforcement programs, the Commission has also been proactive in taking measures that are designed to prevent fraudulent activity before it occurs. Specifically, the Commission has developed initiatives that focus on investor education and research tools that can help investors to make better-informed investment decisions and avoid investing in fraudulent schemes.
For example, the Commission launched the “SEC Action Lookup for Individuals” (“SALI”), an online search feature that enables retail investors to research whether persons trying to sell them investments have a judgment or order entered against them in an enforcement action.
Last year, the Commission's Division of Trading and Markets hosted a roundtable on “Regulatory Approaches to Combating Retail Fraud” (the “Roundtable”).
Indeed, as the Chairman has stated, the lack of publicly available information about certain issuers “can be fertile ground for fraud.”
The OTC market provides numerous benefits for investors. For instance, some highly capitalized foreign securities are quoted on this market. Other foreign companies are also quoted on this market in the form of American Depository Receipts, providing investors with easy access to such foreign securities. The OTC market also can provide opportunities for retail investors to find securities of domestic issuers with future growth potential. Additionally, some larger U.S. companies may trade on the OTC market for various reasons.
When a broker-dealer publishes or submits a quotation for a security in a quotation medium, the broker-dealer may facilitate the creation or appearance of a market for the security, thereby increasing the security's availability and accessibility to investors. A broker-dealer's quotations could create the false appearance of an active market, including affecting the pricing, rather than an actual market that is based on independent forces of supply and demand. Thus, to help prevent fraud and manipulation,
Under existing Rule 15c2-11, a broker-dealer seeking to publish or submit a quotation in any quotation medium, including in an IDQS, must comply with the existing Rule's information review requirement for each quotation, unless it qualifies for an exception. Thus, generally, a broker-dealer must obtain and review information about the issuer enumerated in paragraph (a) of the existing Rule, such as basic financial information, and maintain records of the information that it reviewed. Certain exceptions to the Rule permit broker-dealers to publish or submit quotations without complying with the information review requirement. For instance, once a security has become eligible for the piggyback exception, any broker-dealer can quote the security without complying with the information review requirement so long as the requirements of the exception are met.
The OTC market has changed significantly since the Rule was adopted in 1971 and was last substantively amended in 1991. For example, the existing Rule was last substantively amended prior to the widespread use of the internet, when it was significantly more difficult to obtain information on issuers of OTC securities and to continuously update and widely disseminate quotations for OTC securities. The internet and other forms of electronic communication have made it less costly and less burdensome to access, update, and disseminate information on a global scale. Marketplaces have developed platforms that collect and provide information to the public through easily accessible websites, including information regarding the risks involving certain quoted OTC securities.
The Commission proposed to amend Rule 15c2-11 in February 1998
Commenters on the 1999 Reproposing Release stated that the adoption of the proposed amendments, including elimination of the piggyback exception, would severely constrain liquidity in the OTC market resulting in less competitive pricing, impair access to capital by issuers, and increase compliance costs for broker-dealers. Commenters, however, were generally supportive of certain proposed new exceptions in the 1999 Reproposing Release. Specifically, commenters were in favor of proposed new exceptions to exclude larger issuers and more liquid securities that are not prone to the abuses that are more likely in the microcap market. The Commission did not take further action on the proposals.
The existing Rule requires that a broker-dealer review certain information about the issuer of an OTC security prior to publishing a quotation for such security. The Rule requires that the broker-dealer form a reasonable basis for believing that such information about
Currently, Rule 15c2-11(a) requires that, prior to initially publishing or submitting quotations for a security in a quotation medium when no exception to the information review requirement is available (the “initial publication or submission”), a broker-dealer must have in its records the information and documentation specified in Rule 15c2-11(a)(1)-(5) (the “paragraph (a) information”).
The existing Rule requires particular information depending on the regulatory status of the issuer—
Under the existing Rule, catch-all issuer information that a broker-dealer obtains and reviews for the information review requirement is not required to be publicly available. Instead, Rule 15c2-11(a)(5) requires a broker-dealer that publishes or submits quotations for a security of a catch-all issuer when no exception is available to make such information reasonably available upon request to a person expressing an interest in a proposed transaction in the security with that broker-dealer.
The Commission is proposing changes to the existing Rule's information review requirement, which requires broker-dealers to review certain information prior to publishing a quotation in an OTC security.
The Commission is proposing to restructure the review requirement and include the requirement as applicable to broker-dealers in proposed paragraph (a)(1).
As discussed below, the Commission is proposing a new paragraph (a)(1)(ii) to add a new requirement that the issuer information required to be reviewed (except for information required by proposed paragraphs (b)(5)(i)(N) through (P)) must be current and publicly available.
The proposed Rule would not require a qualified IDQS to comply with the information review requirement as a condition to the qualified IDQS's making known to others the quotation of a broker or dealer that is published or submitted, unless it is published or submitted by a broker-dealer relying on paragraph (f)(7). The proposed Rule would permit a qualified IDQS to make known to others the publication or submission of quotations of a broker-dealer that relies on a qualified IDQS's compliance with the information review requirement pursuant to proposed paragraph (f)(7). The qualified IDQS requirements under proposed paragraph (a)(2) would mirror the requirements for broker-dealers under proposed paragraph (a)(1). The Commission is proposing to add this provision for qualified IDQSs because the Commission is proposing to except broker-dealers from the information review requirement where (1) a qualified IDQS complies with the information review requirement and (2) the broker-dealer relies on the qualified IDQS's review to publish or submit a quotation for that security.
The proposed Rule would require that issuer information relied upon by a broker-dealer be current and publicly available in order for a broker-dealer to publish or submit a quotation for that security. The proposed amendments to the Rule would provide an additional mechanism through which investors could have access to information about issuers with securities that are quoted by broker-dealers in the OTC market. Current and publicly available information could enable retail investors to make better-informed investment decisions and counteract misinformation. By requiring that certain issuer information be current and publicly available before a broker-dealer publishes or submits quotations in the OTC market without an exception, the proposed amendments could facilitate investors' research of issuers and their securities and help investors to be able to make better-informed investment decisions. The public availability of issuer information required under proposed paragraph (b) would help to alleviate concerns that limited or no information for certain issuers of quoted OTC securities exists or that such information is difficult for retail investors to find.
Proposed paragraphs (a)(1)(ii) and (a)(2)(ii) would require that proposed paragraph (b) information be current and publicly available for all issuers, without regard to the regulatory category they fall into, prior to a broker-dealer providing the initial publication or submission of a quotation for an issuer's OTC security. The Commission is proposing to exclude from that requirement information identified in proposed paragraphs (b)(5)(i)(N) through (P) because those paragraphs refer to information about the quotations and the entities providing them, not issuer-specific information.
The Commission is proposing to define the term “publicly available” to mean available on EDGAR or on the website of a qualified IDQS, a registered national securities association, the issuer, or a registered broker-dealer.
The Commission believes that many issuers already make publicly available proposed paragraph (b) information that is current because these issuers have a reporting obligation or voluntarily do so.
The Commission believes that requiring proposed paragraph (b) information to be current and publicly available in order for a broker-dealer to initiate and maintain a quoted market for OTC securities would impose costs but provide significant benefits to investors. In particular, retail investors, who might not have the same level of
Q1. Should the proposed Rule allow other entities besides a broker-dealer or qualified IDQS to comply with the information review requirement? Why, or why not? If a commenter believes an entity should be added, what entity should be added, and why?
Q2. Should proposed paragraph (b) information meet the definition of “publicly available” if, for example, access to such information requires payment of a fee or registration and provision of customer data to be allowed access to such information? Are there any other potential barriers to accessibility that the Commission should address? If so, what are they and how should the Commission address them in this rulemaking?
The proposed Rule would simplify the organization of information regarding reporting issuers by addressing each type of issuer in a separate paragraph in order to improve readability. The Commission is proposing to reorganize how the information for reporting issuers is arranged in paragraph (a)(3) of the existing Rule to group the required information that a broker-dealer must obtain and review into paragraphs by the type of issuer. Additionally, the Commission is proposing to apply paragraph (a)(3), which would be re-lettered to proposed paragraph (b)(3), to qualified IDQSs that make known to others the quotation of a broker-dealer pursuant to proposed paragraph (a)(2), so that the requirements (1) regarding when to obtain reports, and (2) to have a reasonable basis under the circumstances for believing that the issuer is current in filing reports, would apply to the qualified IDQS.
The proposed change to the Rule is not intended to change any substantive obligations for a broker-dealer under the existing Rule. The reorganization would remove references to Section 12(g)(2)(B), which exempts from registration under Section 12 of the Exchange Act securities issued by investment companies registered pursuant to Section 8 of the Investment Company Act of 1940. Under the existing Rule, to the extent that an issuer covered by 12(g)(2)(B) has a reporting obligation under the Exchange Act, a broker-dealer would be required to comply with the information review requirement and conduct a review of such issuer's annual, quarterly, and current reports. Given proposed paragraph (b)(3)(i), which would apply to issuers with a reporting obligation under Section 13 or 15(d) under the Exchange Act, the removal of the reference to Section 12(g)(2)(B) would not be a substantive change.
The Commission is proposing to incorporate into proposed paragraphs (b)(3)(i) through (iii), with some modification, paragraph (d)(2)(i) of the existing Rule, which provides a timing requirement for a broker-dealer to obtain current reports, such as Forms 8-K. The events triggering an issuer's filing of current reports with the Commission generally are material events affecting the issuer, such as a change in control, acquisition or disposition of assets, bankruptcy or receivership, change in accountants, or resignation of a director.
The proposed Rule would require that a broker-dealer or qualified IDQS obtain all current reports as of a date up to three business days prior to the initial publication or submission of a quotation.
The proposed Rule would require that information about certain issuers, including issuers that are not required to provide or file reports to the Commission, be current and publicly available, which is intended to benefit retail investors' decision-making process. Additionally, the Commission is proposing to revise some of the information required by the existing Rule to be reviewed by a broker-dealer. For example, compared to the existing Rule, the proposed Rule would require the identification of additional company officers as well as large shareholders of the company.
The Commission is proposing to amend existing paragraph (a)(5)(xi) (which would be re-lettered to proposed paragraph (b)(5)(i)(K)), to require the names of certain persons with relationships to the issuer, including the chief executive officer and members of the board of directors, to also require the names of officers or any person who is, directly or indirectly the beneficial owner of more than 10 percent of any class of any equity security of the issuer. The Commission proposes these additions to the list of persons that must be disclosed because the Commission believes that investors could benefit from knowing the identity of officers who manage the company as well as the identity of any large shareholders. For example, investors would be able to research the background of these persons to determine whether or not
The Commission is proposing to incorporate in proposed paragraph (b) the existing presumption regarding when catch-all issuer information is “reasonably current,” which is presently included in paragraph (g) of the existing Rule.
Similarly, the Commission is proposing to incorporate into proposed paragraph (b)(5) the existing presumption that “all other information specified” under the Rule for catch-all issuers is current if it is as of a date within 12 months prior to the publication or submission of the quotation.
The proposed Rule would modernize the Rule to permit broker-dealers to direct retail investors to electronically available information, which could make information about an issuer easier to find, compared to investors locating the information on their own, as discussed below. Consistent with the Rule's existing requirements, the proposed Rule would still require that a broker-dealer that complies with the information review requirement make certain information available to investors that request such information.
In such instances, to the extent the broker-dealer has information regarding proposed paragraphs (b)(5)(i)(N) through (P), the broker-dealer would be required to make such information available to persons who request the information pursuant to proposed paragraph (b)(5)(ii).
Consistent with the Commission's efforts to increase transparency about OTC securities for all investors, the proposed Rule would specify the required information that a broker-dealer must review depending on the circumstances and the type of issuer. In particular, the provisions of proposed paragraph (b)(5) for catch-all issuers would apply to the security of any issuer that is not included in proposed paragraphs (b)(1) through (b)(4). Accordingly, if a prospectus issuer, a Reg. A issuer, a reporting issuer, or an exempt foreign private issuer does not fit within the provisions of proposed paragraphs (b)(1) through (b)(4), the issuer would be, for purposes of the proposed Rule, a catch-all issuer.
The provisions of proposed paragraphs (b)(1) and (b)(2) include specific time frames during which certain issuer information (
When proposed paragraph (b) information is as of a date outside of the time frames identified in proposed paragraph (b)(1) or (b)(2), such as when the offering is authorized to commence 100 calendar days before the publication of a quotation, the issuer is not a prospectus issuer or a Reg. A issuer under the proposed Rule. At that time, proposed paragraphs (b)(1) and (b)(2) are no longer applicable and the issuer may be a reporting issuer or a catch-all issuer, depending on the issuer's reporting obligation. For example, an issuer that does not have an ongoing reporting obligation, such as a Reg. A issuer that has conducted a Tier 1 offering, would be a catch-all issuer, and a broker-dealer or qualified IDQS would be required to review information required by proposed paragraph (b)(5) (“proposed paragraph (b)(5) information”) if the issuer's offering has been authorized to commence more than 40 calendar days prior to the day on which a broker-dealer publishes or submits a quotation. If, however, an issuer has an ongoing reporting obligation, such as an issuer that filed a prospectus more than 90 calendar days prior to the day on which a broker-dealer publishes or submits a quotation, that issuer would be a reporting issuer and a broker-dealer or qualified IDQS would be required to review proposed paragraph (b)(3) information.
Proposed paragraphs (b)(3) and (b)(4) apply to issuers that have ongoing disclosure obligations. If the reporting issuer or exempt foreign private issuer has not filed, published, or disclosed information that is current within the time frames identified in proposed paragraphs (b)(3) or (b)(4), respectively, the issuer would be, for purposes of proposed Rule 15c2-11, a catch-all issuer and, therefore, quotations of the
As explained above, the proposed amendment—that the provisions of proposed paragraph (b)(5) would apply to the publication or submission by a broker-dealer of the securities of any issuer that is not included in proposed paragraphs (b)(1) through (b)(4)—would not change any issuer's statutory or rule-based disclosure obligation. Even if catch-all issuers are not subject to a statutory or rule-based disclosure obligation, the proposed Rule would require that catch-all issuer information be current and made publicly available for a broker-dealer prior to the initial publication or submission of a quotation for the security of a catch-all issuer. The proposed amendment to apply the provisions of proposed paragraph (b)(5) to an issuer that does not fit within the provisions of proposed paragraphs (b)(1) through (b)(4), if such issuer's information described in those paragraphs is not current, would not lead to a lower information review standard. Rather, a broker-dealer would still need to have a reasonable basis under the circumstances for believing that the proposed paragraph (b) information, based on a review of such information, together with any supplemental information required by proposed paragraph (c), is accurate in all material respects and from a reliable source. For example, regardless of whether a broker-dealer is complying with the information review requirement for the security of a reporting issuer under proposed paragraph (b)(3) or a catch-all issuer under proposed paragraph (b)(5), the required review standard is the same.
Under the existing Rule, an issuer's periodic report or statement is “reasonably available” when the report or statement is filed with the Commission.
Proposed paragraph (b)(5) would classify catch-all issuers the same way as does the existing Rule. Specifically, if a reporting issuer has timely filed reports with the Commission, the issuer is, for purposes of existing Rule 15c2-11, a reporting issuer. For purposes of the proposed Rule, if the issuer's periodic reports or statements are not timely filed with the Commission, the issuer would be a catch-all issuer and a broker-dealer would need to comply with proposed paragraph (b)(5).
While the Commission welcomes any public input on the proposed amendments, including input regarding the publication of proposed paragraph (b) information, the Commission asks commenters to consider the following questions:
Q3. Should the requirement to obtain current reports filed by a reporting issuer be less than, or more than, the three days as proposed in proposed paragraph (b)(3)? Why or why not? What would be the appropriate number of days for a broker-dealer or qualified IDQS to obtain current reports in advance of publishing or submitting a quotation or submitting paragraph (b)(3) information to a registered national securities association? Should the requirement to obtain current reports include reports furnished to, rather than solely filed with, the Commission?
Q4. Are there any advantages or disadvantages regarding the various permitted means of making proposed paragraph (b) information publicly available? If so, what are they? Are there other means of making proposed paragraph (b) information publicly available and easily accessible by investors, particularly retail investors, or should any of the proposed means be modified or eliminated? What are the potential costs to issuers, particularly small businesses, of requiring that information, including proposed paragraph (b)(5) information that is current, be made publicly available in a way that would be easily accessible to investors, particularly retail investors?
Q5. Are there any data privacy concerns the Commission should address with regard to issuers' proposed paragraph (b) information being made publicly available by someone other than the issuer? Please give examples of any concerns and how the Commission might address them in this rulemaking.
Q6. Are there any circumstances where proposed paragraph (b) information is unnecessary for an investor to be able to make an informed investment decision? What are they?
Q7. Do commenters agree that the Commission should remove references to Section 12(g)(2)(B) of the Exchange Act in proposed paragraph (b)(3)? Why or why not?
Q8. A person may violate the antifraud provisions of the securities laws by knowingly or recklessly disseminating, publishing, or republishing false or misleading information. This may include publicly available information (such as proposed paragraph (b) information), if the person knew, or was reckless in not knowing, that the information was materially false or misleading and nevertheless used that information to establish or maintain a quoted market for a security. Are there other alternatives, or additional or different approaches, that the Commission should adopt as a means reasonably designed to prevent persons from knowingly or recklessly using false information published or provided by another person to establish a quoted market for an OTC security? Commenters are invited to comment regarding any additional actions the Commission could take to further preserve the integrity of the OTC market.
Q9. Should proposed paragraph (b)(5) also require the ticker symbol of the security being quoted?
Q10. Currently, paragraph (a)(5)(ii) requires the address of the issuer's principal executive offices. Should proposed paragraph (b)(5)(i)(B) also require the address of the issuer's principal place of business if that address differs from the address of the issuer's principal executive offices?
Q11. Should proposed paragraph (b)(5)(i)(K) require additional information to help accurately identify individuals listed in proposed paragraph (b)(5)(i)(K), such as job title? Why or why not?
Q12. Should changes be made to proposed paragraph (b)(5)(i)(K) to include additional parties or persons, such as affiliates of the issuer, or promoters? For example, should proposed paragraph (b)(5)(i)(K) include the word “affiliate” as defined in Securities Act Rule 144(a)(1)? Please explain. Conversely, are there persons included in proposed paragraph (b)(5)(i)(K) that commenters believe should not be included? Please explain. Should the proposed Rule include a definition of beneficial owner? If so, how should the proposed Rule define beneficial owner? Should the definition
Q13. In addition to the information that is proposed to be required under proposed paragraph (b)(5), is there other information relating to an issuer or the trading of an issuer's security in the OTC market that could help investors to make better-informed investment decisions and, therefore, should be required to be made publicly available under proposed paragraph (b)(5)? If so, please describe this information and how it could be useful to investors.
Q14. Are there any concerns with the proposal to require that the information specified in proposed paragraph (b)(5)(i)(K) be publicly available, in particular, the name of any officer as well as any person who is, directly or indirectly, the beneficial owner of more than 10 percent of the outstanding units or shares of any class of any equity security of the issuer? Please explain. If yes, how should those concerns be resolved? Should proposed paragraph (b)(5)(i)(K) require a higher, or lower, percentage of beneficial ownership of the outstanding units or shares of any class of any equity security of the issuer? If so, what percentage of beneficial ownership should proposed paragraph (b)(5)(i)(K) use and why?
Q15. Is it useful to continue to require that the broker-dealer initiating the publication or submission of a quotation make the information it obtains and reviews reasonably available to an investor upon request even if such information must also be made publicly available, as proposed? Should this existing requirement be modified to require that any broker-dealer quoting the security must, upon request, instruct an investor as to how to access such information?
Q16. Are the time frames in proposed paragraph (b)(5)(i)(L) regarding when the balance sheet, profit and loss statement, and retained earnings statement would be current for purposes of this section clear? If not, how should the proposed Rule be modified to clarify the time frames for the balance sheet, profit and loss statement, and retained earnings statement? Please explain. How do broker-dealers calculate the dates for which the issuer's balance sheet, profit and loss statement, and retained earnings statement are reasonably current under existing paragraph (g)(1)? Is it difficult for broker-dealers to determine what information they need to review under existing paragraph (g)(1)? If so, please explain. Would the proposed Rule make it more difficult for broker-dealers to determine what information they need to review under proposed paragraph (b)(5)(i)(L)? Please explain.
Q17. Are there ways to reduce the administrative burdens associated with the proposed Rule? In particular, are there changes to proposed paragraph (b)(5)(i)(L) that would ease compliance with the proposed Rule without minimizing investor protection? If so, please explain.
Q18. Are there more streamlined requirements that could be used in the proposed Rule? In particular, could the financial statement requirements in proposed paragraph (b)(5)(i)(L) be simplified while remaining consistent with the Rule's objective? Should the timing requirements associated with the financial statements included in proposed paragraph (b)(5)(i)(L) be simplified (
Q19. How, and to what extent, would these proposed amendments affect liquidity, transparency, and capital formation, particularly for small issuers?
The existing Rule requires that a broker-dealer consider supplemental information about the issuer of an OTC security when evaluating whether the required information is materially accurate. In particular, paragraph (b) of the existing Rule requires a broker-dealer that complies with the information review requirement to have in its records (1) a record of the circumstances involved in the submission or publication of such quotation,
Existing paragraph (b) would be re-lettered to proposed paragraph (c) and further amended to (1) add qualified IDQSs to the list of market participants that must have in their records supplemental information as specified by the Rule, and (2) revise the supplemental information that broker-dealers and qualified IDQSs must have in their records of a transaction involving company insiders.
The proposal would extend the existing obligations regarding consideration of supplemental information to cover all market participants that conduct the required review, including broker-dealers and qualified IDQSs. This proposal is intended to preserve the integrity of the OTC market and to promote investor protection by helping to ensure that market participants consider material information prior to the beginning of a quoted market.
In light of the proposed review requirement for qualified IDQSs contained in proposed paragraph (a)(2), the Commission is proposing to add qualified IDQSs to the list of market participants that are required to have in
Similar to the existing Rule, proposed paragraph (c) would not require a broker-dealer or qualified IDQS to affirmatively seek additional information about the issuer. The proposed Rule would require, however, the broker-dealer or qualified IDQS to retain a copy or a written record of material information, including adverse information, regarding the issuer that comes to the knowledge or possession of the broker, dealer, or qualified IDQS before the initial publication or submission of a quotation.
In addition to applying to broker-dealers that provide the initial publication or submission of quotations for a an OTC security, proposed paragraph (c) would also apply to qualified IDQSs that make known to others the quotation of a broker-dealer pursuant to proposed paragraph (a)(2). If the provisions of proposed paragraph (c) were not to apply to a qualified IDQS, the qualified IDQS would not need to consider material information (including adverse information) of which it has knowledge or possession. This modification to the Rule is designed to help ensure that all market participants that comply with the information review requirement would be subject to the same requirements regarding supplemental information under the Rule, including any adverse information regarding the issuer in the market participant's knowledge or possession.
The Commission anticipates that, similar to a broker-dealer that conducts the required review, a qualified IDQS would be able to obtain the supplemental information required by proposed paragraph (c) for it to have in its records from several sources, including the issuer, broker-dealers, or investors that desire a quoted market for an OTC security. For example, a qualified IDQS might have a relationship with the issuer, such that it may obtain supplemental information directly from the issuer. Or, if a broker-dealer or investor requests that the qualified IDQS conduct the review in proposed paragraph (a)(2), the broker-dealer or investor could supply the qualified IDQS with supplemental information.
The proposal would require that company insiders be identified. The knowledge that a quotation is by or on behalf of a company insider could aid investors by alerting the broker-dealer conducting the required review to the possibility that the quotation is being made on behalf of a person who may have a heightened incentive to manipulate the price of the security.
The Commission is proposing to require, in proposed paragraph (c)(1), that the broker-dealer or qualified IDQS have a record of instances when the person or persons for whom the initial publication or submission of a quotation is being published is the issuer, chief executive officer, a member of the board of directors, officer, or any person, directly or indirectly, who is the beneficial owner of more than 10 percent of the outstanding units or shares of any class of any equity security of the issuer. The Commission believes that whether a quotation is being published or submitted by a broker-dealer on behalf of a company insider is important supplemental information for the broker-dealer or qualified IDQS to evaluate because a company insider might be able to influence or control the issuer of an OTC security.
Additionally, proposed paragraph (c)(1) would require broker-dealers and qualified IDQSs to retain a record of any information regarding the transactions provided to the broker-dealer or qualified IDQS by any person for whom the quotation is being published or submitted. Circumstances may arise in which a qualified IDQS does not have the supplemental information listed in proposed paragraph (c)(1) because such information is specific to a quotation or a transaction, and the qualified IDQS might not be involved in the publication or submission of a quotation or a transaction in such security. However, if a person provides this information to a qualified IDQS (
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q20. Proposed paragraph (c) would require that a broker-dealer submitting or publishing a quotation or any qualified IDQS that makes known to others the quotation of a broker-dealer pursuant to proposed paragraph (a)(2) have in its records documents and information concerning company insiders, trading suspensions, and any other material information regarding the issuer that comes to the knowledge or possession of the broker-dealer or qualified IDQS before the initial publication or submission of a quotation. Are there other documents and information that the broker-dealer or qualified IDQS should be required to have in its records? Please explain.
Q21. Currently, paragraph (b)(3) of the Rule requires that a broker-dealer submitting or publishing a quotation have in its records documents and information regarding material information (including adverse information) regarding the issuer which comes to the broker-dealer's knowledge or possession before the initial publication or submission of the quotation. We seek comment concerning the type of such information that most often falls within this existing paragraph and frequency of such occurrences.
Q22. Should proposed paragraph (c) require that a broker-dealer or qualified IDQS, affirmatively seek additional information about the issuer? Please explain. Should proposed paragraph (c)(3) use the terms “actual knowledge” or “physical possession” instead of the terms “knowledge or possession”? Please explain.
Currently, broker-dealers do not have to comply with the Rule's information review requirement if they can rely on the piggyback exception. Under the existing piggyback exception, the Rule's provisions do not apply when a broker-dealer publishes or submits, in an IDQS, a quotation for an OTC security that was already the subject of regular and frequent quotations in that IDQS (
There are three ways that a broker-dealer can rely on the piggyback exception to publish or submit quotations under the existing Rule. First, a broker-dealer can rely on the exception if (1) the IDQS identifies unsolicited customer quotations for a security as such and (2) the security is continuously quoted on each of at least 12 days within the first 30 calendar days after the initial publication of quotations, with no more than four business days in succession without a quotation.
As a result of the piggyback exception, the first broker-dealer publishing or submitting a quotation for a security is the only one that has to comply with the Rule's information review requirement; thereafter, any other broker-dealer can publish or submit quotations for the security indefinitely, without complying with the information review requirement, so long as the security is quoted in an IDQS on each of at least 12 days within the previous 30 calendar days, with no more than four consecutive business days without any quotations.
By relying on the existing piggyback exception to publish or submit quotations for securities of companies that no longer make information publicly available or that no longer exist, broker-dealers may sustain the false appearance of an active market in the securities of these issuers. In some cases, broker-dealers intentionally participate in improper activities. For example, unscrupulous company insiders may participate with a broker-dealer to publish quotations to perpetuate the company insiders' fraud, or fraudsters may usurp the identity of defunct or inactive publicly traded corporations.
Another example of improper activity that arises in part due to broker-dealers' ability to rely indefinitely on the piggyback exception for these types of companies is the pump-and-dump scheme. By publishing quotations, a broker-dealer raises the public profile of a security and makes the security more accessible to investors.
The amendments that the Commission is proposing are designed to help curtail the use of the piggyback exception in connection with potential manipulative and fraudulent schemes that are facilitated through having false, stale, or misleading information in the OTC market. The proposed amendments seek to address, among other things, a particular vulnerability of the existing piggyback exception: Once publications or submissions of quotations for securities meet the requirements of the piggyback exception, broker-dealers may rely on the piggyback exception to publish or submit quotations for those securities in perpetuity, even in the absence of current or publicly available information about the issuer of those securities.
The Commission is proposing amendments to the piggyback exception that are narrowly tailored to assist in reducing fraudulent and manipulative activity while allowing broker-dealers to rely on the piggyback exception when certain additional criteria are met. The proposed amendments would permit broker-dealers to rely on the piggyback exception for securities of catch-all issuers only when information about the issuer is current and made publicly available. The proposed amendments would also (1) restrict broker-dealers' ability to rely on the piggyback exception by limiting the exception to securities that have been the subject of both priced bid and priced ask quotations in an IDQS, (2) require a cooling-off period following a trading suspension to establish piggyback eligibility, (3) eliminate broker-dealers' ability to rely on the piggyback exception to publish or submit quotations for securities of “shell companies,” and (4) revise the frequency of quotation requirement.
The proposal would condition reliance on the piggyback exception by requiring that information for certain issuers, including issuers that are not required to provide or file reports to the Commission, be current and publicly available. This additional transparency is intended to help retail investors make better-informed investment decisions and more easily evaluate the issuer, its security, and the market for the security.
The existing disclosure requirements for prospectus issuers, Reg. A issuers, reporting issuers, and exempt foreign private issuers specify that the type of information required by proposed paragraphs (b)(1), (b)(2), (b)(3), and (b)(4) must be publicly available.
The Commission is proposing to include a proviso in proposed Rule 15c2-11(f)(3)(ii) such that a broker-dealer may rely on the piggyback exception to publish or submit a quotation for a catch-all issuer only where proposed paragraph (b)(5) information, excluding paragraphs (b)(5)(i)(N) through (P), is current and has been made publicly available within six months before the date of publication or submission of such quotation. The Commission is proposing to exclude paragraphs (b)(5)(i)(N) through (P) from the required catch-all issuer information that must be current and made publicly available for a broker-dealer to rely on the piggyback exception because such information pertains to individual quotations and broker-dealers and is not issuer-specific. In this context, the Commission is specifically focusing on catch-all issuer information because reporting issuers and exempt foreign private issuers already are subject to ongoing disclosure requirements under the federal securities laws.
As discussed above, however, an issuer that does not comply with its ongoing reporting or disclosure obligations would be, for purposes of proposed Rule 15c2-11, a catch-all issuer because that issuer would no longer fit within the provisions of proposed paragraphs (b)(3) or (b)(4). Thus, if a reporting issuer or exempt foreign private issuer fails to comply with its ongoing reporting or disclosure obligations, a broker-dealer may not rely on the piggyback exception to publish or submit quotations for a security of the issuer, unless the proposed paragraph (b)(5) information is otherwise current and made publicly available.
Requiring that proposed paragraph (b)(5) information, excluding paragraphs (b)(5)(i)(N) through (P), be current and made publicly available within the six months before the date of publication or submission of a quotation in an IDQS for a broker-dealer to rely on the piggyback exception would effectively require the publication of proposed paragraph (b)(5) information semiannually. This proposed requirement would help to improve transparency of information about catch-all issuers and, therefore, should aid investors in making investment decisions. As proposed, if catch-all issuer information were no longer current or made publicly available, broker-dealers would no longer be able to rely on the piggyback exception to quote the security of that issuer. In such case, broker-dealers would need to comply with the proposed Rule for each and every publication or submission of a quotation, unless another exception to the Rule applies.
The Commission believes that investors would benefit from the information, and that the new requirement would not impose an undue burden on broker-dealers. To mitigate the potential costs and burdens that this proposal might have on broker-dealers, however, the Commission is also proposing a new exception that would permit broker-dealers to rely on third party determinations that the requirements of an exception are met.
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q23. Certain issuers choose not to have reporting obligations for business purposes. The proposal, however, would require proposed paragraph (b)(5) information from a catch-all issuer, excluding paragraphs (b)(5)(i)(N) through (P), to be current and made publicly available within six months before the date of publication or submission of the broker-dealers' quotation in order for broker-dealers to rely on the piggyback exception to publish or submit quotations for the security of a catch-all issuer. Is six months the appropriate time frame within which a market participant must have published proposed paragraph (b)(5) information, excluding paragraphs (b)(5)(i)(N) through (P)? If so, why? If six months is too short or too long of a time frame, what should the time frame be and why? What are the potential costs and benefits to small issuers of this requirement? For reporting issuers that are delinquent in their reporting obligations (and are treated as catch-all issuers), should the piggyback exception require a shorter time frame, such as four months, for current information? Are there alternative methods that could be used that would protect investors while minimizing costs to issuers and broker-dealers?
Q24. Would the six month time frame place an undue burden on small issuers? Would the six month time frame discourage small issuers from raising capital in the public markets? What are the potential costs and benefits to small issuers of this six month time frame? What alternative methods could be used to encourage quoted public
Q25. Are there alternatives to limiting reliance on the piggyback exception to publish or submit quotations for securities of catch-all issuers when information is no longer made publicly available or current that would benefit investors of quoted OTC securities? If so, what are they?
Q26. Should the piggyback exception not apply to publications or submissions of quotations for securities of issuers that have declared bankruptcy, filed for corporate dissolution, or otherwise taken steps to wind down their business? Why or why not?
Q27. Should the piggyback exception not apply to publications or submissions of quotations for securities of issuers that have undergone a re-organization, any major mergers and acquisitions, reverse mergers, or other significant restructuring that affects their business or management? Why or why not?
Q28. As proposed, a reporting issuer that is not current in its filing obligations would become subject to proposed paragraph (b)(5), and broker-dealers could continue to quote the issuer's security if the proposed paragraph (b)(5) information were current and made publicly available within six months of the date of the publication or submission of the quotation. Should broker-dealers be prohibited from relying on the piggyback exception to publish or submit quotations for the securities of delinquent reporting companies? Why or why not? Are there any circumstances that would make it difficult for a broker-dealer that relies on the piggyback exception to know the issuer's regulatory status and identify which provision of proposed paragraph (b) applies? Please explain.
To further the Commission's goal of enhancing investor protection, the piggyback exception would be available only for securities that have both an offer to buy and offer to sell at specified prices. The Commission believes this is a characteristic of an independent and liquid market. The Commission proposes to amend the piggyback exception in proposed paragraph (f)(3)(i)(A) to allow broker-dealers to piggyback only on quotations for securities that have been the subject of both bid and ask quotations in an IDQS at specified prices—two-way priced quotations—but not on unpriced quotations.
The piggyback exception is premised on the recognition of supply and demand.
As proposed, once a broker-dealer publishes or submits the initial two-way priced quotations continuously for the requisite period of time, the initiating broker-dealer and other broker-dealers would be able to rely on the piggyback exception in proposed paragraph (f)(3)(i)(A) for priced quotations. Proposed paragraphs (f)(3)(i)(A) and (f)(3)(i)(B) would require the security to have been the subject of both bid and ask quotations in an IDQS at specified prices. Although the exception would permit broker-dealers to quote on either side once piggyback eligibility is established, a security must be the subject of both bid and ask quotations at specified prices (
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q29. How, and to what extent, would these proposed amendments affect liquidity, transparency, and capital formation, particularly for small issuers?
Q30. Do unpriced quotations provide any market signals that would warrant the continued reliance on the piggyback exception based on unpriced quotations? If so, what are they?
Q31. Should broker-dealers be permitted to rely on the piggyback exception if only a priced bid or a priced ask (
The Commission is proposing that the piggyback exception would not be available to a broker-dealer until 60 days after the expiration of a trading suspension. The proposal is intended to provide enough time for investors to consider new or additional information that may arise in the period following the conclusion of the issuer's trading suspension.
The Commission may suspend trading in any security for up to ten trading days if, in its opinion, the public interest and the protection of investors so require.
Further, the Commission has stated that “information in trading suspension orders is important for broker-dealers because they will be apprised of questions the Commission has raised regarding the issuer or its securities that should be considered when they determine to publish quotations.”
A trading suspension that exceeds more than four successive business days (
The Commission proposes to amend the Rule by adding a proviso to proposed paragraph (f)(3)(ii) so that a broker-dealer would not be able to rely on the piggyback exception until 60 calendar days after the expiration of a trading suspension order issued by the Commission pursuant to Section 12(k) of the Exchange Act.
The limitation of 60 calendar days in the proposed proviso is intended to incorporate the 30-day timing requirement of the existing piggyback exception and to reflect the specific policy rationale behind the piggyback exception: Regular and frequent quotations, including regular and frequent two-sided market making, reflect independent supply and demand forces, thereby indicating that sufficient information about the issuer of the quoted security is reaching the marketplace.
Further, the Commission believes that a longer period of 60 calendar days should provide investors with a better opportunity to consider new or additional information that may arise in the period following the conclusion of the issuer's trading suspension. The Commission believes that this proposed limitation would help to ensure that regular and frequent quotations for the securities of formerly suspended issuers generally reflect market supply and demand and are based on informed pricing decisions rather than on pricing decisions that are based on information that is no longer accurate or that (potentially) had led the issuer to be suspended.
The proposed amendments to the piggyback exception would prohibit broker-dealers from relying on the piggyback exception for shell companies. This proposed amendment is intended to help retail investors by preventing shell companies, which can be used as vehicles for fraud, from maintaining a quoted market. Currently, the piggyback exception may result in broker-dealers contributing to a quoted market in securities of shell companies, which may collaterally facilitate fraudulent and manipulative schemes involving “shell factories.”
To become a company with a publicly quoted market, a private company may engage in a reverse merger with a publicly traded shell company. In this
Although reverse mergers can take place for valid, non-fraudulent purposes, the Commission has noted that unregistered “reverse mergers” between privately held companies and publicly traded shell companies “commonly are used to develop a market for the merged entity's securities, often as part of a scheme to `pump-and-dump' those securities.”
The proviso in proposed paragraph (f)(3)(ii) would prohibit broker-dealers from relying on the piggyback exception to publish or submit quotations for securities of an issuer that meets the proposed definition of “shell company”: Any issuer, other than a business combination related shell company as defined in Rule 405 of Regulation C, or an asset-backed issuer, as defined in Item 1101(b) of Regulation AB, that has (1) no or nominal operations and (2) either (i) no or nominal assets, (ii) assets consisting solely of cash and cash equivalents, or (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets.
The Commission is mindful that the proposal could increase burdens for broker-dealers in determining whether the issuer has become a shell company within the proposed definition. To mitigate costs associated with this determination, the Commission proposes to allow broker-dealers to rely on a publicly available determination by a qualified IDQS or by a registered national securities association that the securities are eligible for the piggyback exception, as discussed further below.
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q32. Should broker-dealers be prohibited from relying on the piggyback exception to publish or submit quotations for securities of shell companies? Why or why not?
Q33. Are there specific types of shell companies that participate in reverse mergers and act as the surviving company such that broker-dealers should be able to rely on the piggyback exception to publish or submit quotations for securities of these shell companies? If so, how should the Commission define such shell companies?
Q34. How, and to what extent, would these proposed amendments affect liquidity, transparency, and capital formation, particularly for small issuers?
Q35. Please describe alternative approaches, as well as their costs and benefits, to address the problems that may arise in the context of Rule 15c2-11 concerning mergers and acquisitions between shell companies and private operating companies.
Q36. Is the proposed definition of “shell company” appropriate? Please explain why or why not. Should a definition of “shell company” that is different from the one that is being proposed today be used? If so, please explain and provide examples.
The proposal would eliminate the 12-day requirement in the piggyback exception to modernize the existing Rule in alignment with the current electronic OTC trading market. Currently, a broker-dealer may rely on the piggyback exception without complying with the Rule's information review requirement if the publication or submission of a quotation for a security meets the frequency requirements and is published in an IDQS on each of at least 12 days within the previous 30 calendar days, with no more than four business days in succession without a quotation.
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q37. Commenters are requested to provide views on whether maintaining the frequency requirements of 30 days and no more than four business days in succession without a quotation, as proposed, is necessary or effective to curtail fraud where the piggyback exception has been implicated. What are the costs and benefits of having these frequency requirements?
Q38. Should the 12-day requirement in the existing piggyback exception be retained? Please explain why or why not. What are the costs and benefits of continuing to require at least 12 days of quotations within the previous 30 calendar days?
Q39. Please discuss whether and how the elimination of the 12-day requirement could impact the integrity of the OTC market. In particular, please discuss whether the elimination of the 12-day requirement could contribute to a quoting environment that is more susceptible to fraudulent and manipulative schemes.
Q40. Are there alternative frequency requirements that would be more effective to achieve the objectives of the proposed Rule? Please explain.
Q41. We understand that quotations are often automated and can occur on a daily basis. Are there situations in which quotations that are published or submitted in reliance on the piggyback exception are not published or submitted on each trading day within the previous 30 calendar days? Please discuss.
Q42. Prior to the creation of electronic markets for OTC securities, a broker-dealer that complied with the information review requirement to initiate the publication or submission of quotations for a security, in essence, was the sole publisher of quotations for that security for 30 calendar days of publication, unless another broker-dealer also complied with the information review requirement for that security. The Commission understands that the process of initiating quotations before becoming eligible to rely on the piggyback exception has had the practical effect of incentivizing one broker-dealer to undertake the costs associated with initiating quotations for a security. Once reliance on the piggyback exception is established, other broker-dealers ride on the coattails of the broker-dealer that initiated quotations to comply with the Rule's provisions.
Q43. How, and to what extent, would the elimination of these frequency requirements help to facilitate or impede liquidity, transparency, and capital formation, particularly for small issuers?
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q44. Please discuss any concerns with the proposed paragraph (f)(3)(ii) proviso “that this paragraph (f)(3) shall apply to a publication or submission of a quotation concerning a security of an issuer included in paragraph (b)(5) of this section only where the information required by paragraph (b)(5) (excluding paragraphs (b)(5)(i)(N) through (P)) is current and has been made publicly available
Q45. Should proposed paragraph (f)(3)(ii) permit a grace period during which a security could continue to be quoted in reliance on proposed paragraph (f)(3) for a certain number of days following the expiration of such six-month period? What is the appropriate length of such a grace period? For example, is 15 days an appropriate grace period, or should such period be longer or shorter? Please explain. If the piggyback exception were to permit such a grace period, should proposed paragraph (f)(3)(ii) also include in the proviso, for example, that “proposed paragraph (f)(3) shall not apply to the publication or submission of a quotation concerning a security of an issuer included in proposed paragraph (b)(5) unless such quotation for such security is published or submitted in an IDQS that specifically identifies quotations concerning any security of an issuer for which proposed paragraph (b)(5) has not been made publicly available within six months before the date of publication or submission of such quotation”? Should such notice be in the form of a special “tag” on the quotation, similar to how unsolicited indications of interest are designated? Alternatively, should a notice be continuously and prominently posted on the IDQS's website throughout the grace period? Please explain.
Q46. Alternatively, instead of a grace period, should proposed paragraph (f)(3)(ii) include in the proviso that “proposed paragraph (f)(3) shall not apply to the publication or submission of a quotation concerning a security of an issuer included in proposed paragraph (b)(5) unless such quotation for such security is published or submitted in an interdealer quotation system that specifically identifies that such proposed paragraph (b)(5) information must be made current and publicly available within 30 calendar days for this paragraph (f)(3) to continue to apply”? Please explain.
Q47. To promote consistency in the operation of the proposed Rule and the expiration of piggyback eligibility, should proposed paragraph (f)(3)(ii) also include in the proviso that “proposed paragraph (f)(3) shall apply to the publication or submission of a quotation concerning a security of an issuer included in proposed paragraph (b)(5) until the end of the calendar month in which the proposed paragraph (b)(5) information ceases to be current and publicly available”? Please explain.
Q48. Please discuss the advantages or disadvantages of any of the above-discussed provisos to investors, issuers of OTC quoted securities, and other market participants. What, if any, impact would specifically identifying these types of quotations have on liquidity? Please explain. What would be the costs and benefits of including any of the above-discussed provisos? Please explain. Are any of these provisos workable? Are there suggestions to revise the proviso to improve workability; for example, should a broker-dealer be required to provide notice to the IDQS that the proposed paragraph (b)(5) information has not been made publicly available
Q49. Is there a certain price threshold below which the piggyback exception should not apply? Why or why not? Commenters are requested to please provide any data they might have. If so, how should such a price threshold be measured? For example, should the threshold amount apply to the 30-day weighted average price of the security if the security is priced below a certain amount for more than 12 months?
Q50. It is the Commission's understanding that broker-dealers tend to rely on the exception to the Rule provided in existing paragraph (f)(3)(i) and that broker-dealers tend not to rely on the exception in existing paragraphs (f)(3)(ii) and (f)(3)(iii). Should existing paragraph (f)(3)(ii), which allows broker-dealers to rely on the piggyback exception to publish or submit quotations in an IDQS that does not identify unsolicited customer indications of interest, be eliminated from the Rule? Why or why not? How, and to what extent, would such elimination affect liquidity, and capital formation, particularly for small issuers? Should proposed paragraphs (f)(3)(i)(A) and (f)(3)(i)(B) be combined? Why or why not? Should existing paragraph (f)(3)(iii), which allows market makers to piggyback off of their own quotations, be eliminated from the Rule? Why or why not? How, and to what extent, would such elimination affect liquidity and capital formation, particularly for small issuers? How would investors be affected? How, and to what extent, do market participants rely on these exceptions? Do market participants anticipate relying on them given the other amendments the Commission is proposing today? Why or why not?
Currently, broker-dealers can publish quotations for unsolicited customer quotations without complying with the information review requirement. The existing Rule excepts from the information review requirement the publication or submission of quotations by a broker-dealer where the quotations represent unsolicited customer orders.
Under the proposal, the unsolicited quotation exception would not be available for company insiders if the information required to be reviewed under the Rule was not current and publicly available. This proposed amendment is intended to help retail investors by encouraging corporate insiders to make publicly available current information about the company.
To rely on the proposed unsolicited quotation exception, a broker-dealer would need to determine whether proposed paragraph (b) information is current and publicly available. If so, a broker-dealer would not need to determine whether the quotation would be published or submitted by or on behalf of a company insider (
Proposed paragraph (f)(2)(ii) would permit a broker-dealer to publish or submit a quotation by or on behalf of certain company insiders in reliance on the unsolicited quotation exception only if proposed paragraph (b) information is current and publicly available, as defined under proposed paragraphs (e)(1) and (e)(4), respectively. This proposed requirement is intended to help prevent the potential misuse of the unsolicited quotation exception by company insiders who may take advantage of access to information about the company that is not available to non-insiders by, for example, creating the appearance of an active market in quoted OTC securities to entice new investors to invest, or to facilitate pump-and-dump schemes.
Further, the proposal should encourage greater transparency for investors. For instance, a company insider may be incentivized to use his or her status within the company to encourage the issuer to provide or publish information so that a broker-dealer could rely on the unsolicited quotation exception. In addition, the proposed amendments to the Rule would not preclude a company insider from engaging in trading activity; Rule 15c2-11 applies only to the publication and submission of quotations in a quotation medium. Thus, the Rule, as proposed, would not prevent a company insider's purchases or sales in response to quotations.
For purposes of proposed paragraph (f)(2)(ii), quotations published or submitted by or on behalf of company insiders would include quotations published or submitted, directly or indirectly, by or on behalf of the chief executive officer, members of the board of directors, officers, or any person, directly or indirectly, the beneficial owner of more than 10 percent of the outstanding units or shares of any class of any equity security of the issuer. Such company insiders may have a heightened incentive to engage in misconduct to artificially affect the price and trading volume of an OTC security; for example, company insiders may stand to profit by selling the company shares they own during a pump and-dump scheme. Such company insiders may also have the ability to control or influence the amount and type of information that an issuer provides to the public.
The chief executive officer, members of the board of directors, and officers
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q51. How frequently do broker-dealers rely on the unsolicited quotation exception? Commenters are requested to please provide data to support their answer if possible.
Q52. Please discuss whether, and to what extent, the proposed amendments to the unsolicited quotation exception, if adopted, would impact liquidity, capital formation, investor protection, and the integrity of the OTC market or other markets.
Q53. Please discuss whether, and to what extent, the proposed amendments to the unsolicited quotation exception, if adopted, would impact company insiders. Please discuss ways to mitigate any undue impact on company insiders while preventing misuse of the exception to facilitate fraudulent and manipulative schemes.
Q54. Should the Rule retain the unsolicited quotation exception in its existing form? Please explain why or why not.
Q55. Is there an alternative way to modify the exception that would help to prevent misuse of the exception to facilitate fraudulent and manipulative schemes? If so, please describe specific modifications to the exception and any resulting benefits and costs.
Q56. Please discuss any advantages and disadvantages of rescinding the unsolicited order exception.
Q57. The proposed amendments would make the unsolicited quotation exception unavailable for publications of quotations by or on behalf of certain persons—the chief executive officer, members of the board of directors, officers or any person, directly or indirectly, the beneficial owner of more than 10 percent of the outstanding units or shares of any class of equity security of the issuer—unless proposed paragraph (b) information is current and publicly available. Are there additional persons that should be included in this list (
Q58. Please describe how a broker-dealer would determine that a quotation is made by or on behalf of the chief executive officer, members of the board of directors, officers or any person, directly or indirectly, the beneficial owner of more than 10 percent of the outstanding units or shares of any class of equity security of the issuer.
Q59. Should beneficial ownership of an issuer's convertible bonds be included in the calculation of the percentage of ownership for purposes of determining whether a person is a company insider for purposes of the proposed unsolicited quotation exception? Please explain.
Currently, paragraph (f) of Rule 15c2-11 provides conditional exceptions to the Rule's information review requirement.
The Commission is proposing to add an exception to the Rule to except a broker-dealer from conducting the information review if the security is highly liquid and the issuer is well capitalized. This amendment may provide retail investors with greater price transparency because securities of issuers that may currently meet the exception, but are not quoted, may develop a quoted market. Furthermore, this proposed exception could facilitate capital formation by removing the required review for securities that are less susceptible to fraud and manipulation based on liquidity of the securities and size of the issuer. In addition, fraudulent and manipulative schemes, such as pump-and-dump schemes, or other abusive activities involving OTC securities, generally do not involve issuers with substantial assets.
A 2018 analysis of 318 quoted OTC securities that were the subject of recent Commission-ordered trading suspensions showed that the issuers, on average, had approximately $86.14 million in total assets, with a median of approximately $1.04 million of total assets. They also had an average of $10.42 million in shareholders' equity, with a median of approximately negative $0.26 million. Although the average total assets and shareholders' equity amounts are higher than the proposed thresholds for the asset test, as of the date of this proposal, no issuer subject to a trading suspension satisfied both the ADTV test and the asset test, the combination of which the Commission is proposing herein.
The first proposed exception, contained in proposed paragraph (f)(5), is conditioned on an OTC security satisfying a two-prong test based on (1) the security's average daily trading volume (“ADTV”) value during a specified measuring period (the “ADTV test”); and (2) the issuer's total assets and unaffiliated shareholders' equity (the “asset test”). To rely on the proposed new exception from complying with the Rule's information review requirement, a broker-dealer would need to determine that both prongs of the exception are met.
The first prong of the new exception in proposed paragraph (f)(5)(i)(A) would except publishing or submitting a quotation for a security with a worldwide ADTV value of at least $100,000 during the 60 calendar days immediately before the date of publishing such quotation.
The Commission believes that the majority of quoted OTC securities of U.S. companies without a published quotation in an IDQS trade infrequently and are unlikely to have an ADTV value of $100,000 or more during the 60-calendar-day measuring period to satisfy the first prong under proposed paragraph (f)(5)(i)(A). The Commission understands that quoted OTC securities involved in fraud and manipulation often are thinly traded and that the ADTV for such securities rarely reaches a value of $100,000 over an extended period of time. Thus, the Commission believes that the ADTV test should help to narrowly tailor the exception to exclude securities that are more likely to be involved in short-term price manipulation in the OTC market.
To satisfy the proposed ADTV test, a broker-dealer generally would be able to determine the value of a security's ADTV from information that is publicly available and that the broker-dealer has a reasonable basis for believing is reliable.
In addition to the ADTV test (first prong), the Commission is proposing to include a second prong to the exception in proposed paragraph (f)(5)(i)(B) that would limit the availability of the proposed exception to quoted OTC securities of issuers that have at least $50 million in total assets
To determine whether publishing or submitting a quotation for a quoted OTC security of a particular issuer would meet the required asset test under proposed paragraph (f)(5)(i)(B), a broker-dealer would need to look to an audited balance sheet issued by the issuer (within six months of the end of the issuer's most recent fiscal year) that has been audited by an independent public accountant who has prepared a report in accordance with the provisions of Rule 2-02 of Regulation S-X. For exempt foreign private issuers, a broker-dealer would make this determination using the balance sheet that is prepared in accordance with a comprehensive body of accounting principles, audited in compliance with requirements of the country of incorporation, and reported on by an accountant in good standing under the regulations of that jurisdiction.
A broker-dealer would be permitted to rely on this exception only where the issuer's recent publicly available audited balance sheet was issued within six months from the end of the issuer's most recent fiscal year. A broker-dealer could use an issuer's audited balance sheet from the prior fiscal year (
To qualify for the proposed exception, proposed paragraph (b) information must also be current and publicly available. These timing requirements should help to ensure that information available to investors is not stale, and the requirements align with existing industry standards with respect to when audited balance sheets must be issued. At the same time, because the typical pump-and-dump scheme often involves issuers with limited assets (in addition to having thinly traded securities), the Commission believes that the proposed two-prong exception (
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q60. How would market participants generally calculate ADTV value for the purposes of this exception? What data sources would they use, and what is the reliability and availability of these data sources? Please be specific. Is ADTV value an appropriate measure to use in the context of measuring a security's susceptibility to fraudulent or manipulative practices? Why or why not?
Q61. Should proposed paragraph (f)(5) include an additional requirement that the security that is the subject of the publication or submission of a quotation meet a certain minimum bid price? Why or why not? For such a requirement, what would be the appropriate minimum bid price?
Q62. Should the proposed exception's ADTV test prong, contained in proposed paragraph (f)(5)(i)(A), also include the ADTV value of convertible securities where the underlying security satisfies the proposed ADTV threshold? If so, commenters should explain their rationale. Should the proposed exception's ADTV test prong, contained in proposed paragraph (f)(5)(i)(A), exclude trading volume outside the U.S.? Please explain.
Q63. Should the dollar value of the ADTV test prong of the proposed exception be higher than $100,000 (
Q64. Should the proposed ADTV test measuring period be longer than 60 calendar days (
Q65. To meet the proposed exception, a broker-dealer would need to determine the value of a security's worldwide ADTV by doing a daily calculation over a 60-calendar-day measuring period. Should this calculation be less frequent? For example, should the proposed exception be modified to require a calculation done once a month? Would this alternative ADTV measuring standard be significantly less burdensome? Would this alternative ADTV measuring standard be as effective as a daily calculation over a longer period in determining which securities are less likely to be the subject of a Commission-ordered trading suspension or involved in manipulative conduct in the OTC market? Please explain.
Q66. Because a broker-dealer generally would be able to determine the value of a security's worldwide ADTV from information that is publicly available and that the broker-dealer has a reasonable basis for believing is reliable, as discussed above, should the proposed exception in paragraph (f)(5) be modified so as not to include the proviso that would limit the availability of the exception to those quoted OTC securities where proposed paragraph (b) information is current and publicly available? Would including the proviso render the exception less effective in focusing the proposed Rule on the more thinly traded microcap securities that are more likely to be involved in manipulative conduct in the OTC market? Why or why not?
Q67. Rule 101 of Regulation M includes an exception from the trading prohibitions in Regulation M for “actively-traded” securities (
Q68. If a quoted OTC security ceases to meet the requirements of either of the proposed ADTV test or the assets test, and if a broker-dealer may not rely on the piggyback exception, should the proposed exception continue for a period of time, such as 10 business days, to allow for a broker-dealer to review the required issuer information?
Q69. Should the threshold amount for the unaffiliated shareholders' equity test be higher than $10 million (
Q70. Should the exception in proposed paragraph (f)(5)(i)(B) be modified to include a public float value test, similar to that contained in Regulation M, instead of the combined asset test proposed? If so, should the public float value use Regulation M's $25 million threshold (for “actively-traded” securities) or some higher or lower amount? Would public float information be easy or difficult to obtain for broker-dealers trying to rely on this proposed exception?
Q71. Should the unaffiliated shareholders' equity test accommodate equity that is owned by shareholders that are affiliated with the issuer? Please explain why or why not. Would including equity that is owned by shareholders that are affiliated with the issuer increase the likelihood of the exception being misused or applied in cases where there may be a greater potential for fraudulent and manipulative conduct? In making the proposed unaffiliated shareholders' equity calculation, how difficult or burdensome would it be to identify equity that is owned by shareholders
Q72. Would a balance sheet, particularly a balance sheet for a catch-all issuer, contain sufficient information to permit broker-dealers to make the proposed unaffiliated shareholders' equity calculation?
Q73. Should the use of balance sheets of an exempt foreign private issuer be limited to balance sheets prepared in accordance with U.S. generally accepted accounting principles (“GAAP”)?
Q74. Should the exception in proposed paragraph (f)(5)(i)(B) be available to securities that may satisfy the ADTV test, but where the issuer of the security is a domestic issuer, that is not a prospectus issuer, Reg. A issuer, or a reporting issuer and there are no publicly available U.S. GAAP financials (
Q75. The Commission acknowledges that an exception conditioned on certain value thresholds could induce arbitrage for accounting purposes. Should the use of balance sheets of an exempt foreign private issuer that are not prepared in accordance with U.S. GAAP be limited to balance sheets prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB” or “IFRS-IASB”)? Is there a way to ensure that a broker-dealer does not “cherry pick” from accounting standards to take only the most beneficial figures from what is available so that the broker-dealer can rely on an exception conditioned on an asset test?
Q76. In evaluating foreign currency balance sheets, should the Commission modify the proposed assets prong of the exception in proposed paragraph (f)(5)(i)(B) to specify whether the equity balance is to be measured using today's current exchange rates or the rates in effect at the balance sheet date? Please explain why or why not. Commenters are requested to please also explain in their response whether it is more appropriate to use rates based on balance sheet date, or date of quotation publication.
Q77. For 20-F issuers filing IFRS-IASB or balance sheets under another standard that are reconciled to U.S. GAAP, should the proposed asset test in proposed paragraph (f)(5)(i)(B) be modified to specify whether the home country numbers or the reconciled numbers may be used for purposes of determining eligibility under the proposed exception? Please explain. If not, why not?
Q78. Alternatively, for those issuers not using IFRS-IASB but that have to reconcile to U.S. GAAP, should the asset test in proposed paragraph (f)(5)(i)(B) be modified to require such issuers to use the reconciled number for purposes of determining eligibility under the proposed exception? Please explain why or why not.
Q79. With respect to issuers that are not prospectus issuers or reporting issuers, for purposes of determining whether such issuers would meet the requirements of the proposed assets and the unaffiliated shareholders' equity prongs in proposed paragraph (f)(5)(i)(B) of the exception, should the Commission specify that the audit of the balance sheet may be performed in accordance with either the auditing standards applicable to such issuers (
Q80. With respect to issuers that are not prospectus issuers or reporting issuers, should the independence requirements of Rule 2-01 of Regulation S-X apply to the exception in proposed paragraph (f)(5)(i)(B)? For example, if a certain issuer is currently only required to obtain an audit that is subject to the audit and independence standards of the American Institute of Certified Public Accountants, should “independent” for purposes of this proposed exception also be determined by the AICPA's independence standards (
Q81. Should reliance on the exception be limited to those quoted OTC securities that satisfy the requirements of just one instead of both prongs of the proposed exception? Please explain why or why not. Are there alternative tests that should be considered? If so, please explain.
Q82. Should the exception be unavailable for securities of reporting issuers that are delinquent in their reporting obligations?
The proposal would add an exception to the Rule to allow a broker-dealer to publish a quotation of a security, without conducting the required information review, for an issuer with an offering that was underwritten by that broker-dealer. This proposal may potentially expedite the availability of securities to retail investors in the OTC market following an underwritten offering, which may facilitate capital formation.
Broker-dealers that act as underwriters in registered offerings or offerings conducted pursuant to Regulation A are subject to potential liability for misstatements and omissions in the related prospectus or offering circular. In a registered offering, they are subject to potential liability under Section 11 of the Securities Act for untrue statements of material facts or omissions of material facts required to be included in a registration statement or necessary to make the statements in the registration statement not misleading at the time the registration statement became effective. In registered offerings and Regulation A offerings, they are subject to potential liability under Section 12(a)(2) of the Securities Act for any prospectus or oral communication that includes an untrue statement of material fact or omits to state a material fact that makes the statements made, based on the circumstances under which they were made, not misleading.
Because of the liability attached to underwriting activity, an underwriter typically conducts a due diligence review to mitigate potential liability associated with underwriting an offering of securities. Depending on its breadth and quality, this review may permit an underwriter to assert a defense to liability under Section 11 or Section 12(a)(2).
Proposed Rule 15c2-11(a)(1) would prohibit the publication or submission for publication of a quotation unless (1) the broker-dealer has in its records the
With respect to quotations published or submitted less than 90 calendar days following effectiveness of a registration statement for a registered offering or less than 40 calendar days following qualification of the offering statement for offerings conducted pursuant to Regulation A, the required proposed paragraph (b) information would consist of the final prospectus for the registered offering or the offering circular for the Regulation A offering. Underwriters of such offerings would typically have in their records the final prospectus or offering circular, which would also be publicly available on the Commission's EDGAR system. In addition, given the liability underwriters assume under Section 12(a)(2) and, for registered offerings, Section 11, the Commission believes they would likely have a reasonable basis for believing, particularly for a limited period of time following effectiveness of the registration statement or qualification of the related Form 1-A, that the prospectus or offering circular is accurate in all material respects and that the sources of that information are reliable.
Thus, the Commission is proposing to add proposed paragraph (f)(6), which would except the publication or submission of a quotation concerning a security by a broker-dealer that is named as an underwriter in a registration statement for an offering of that class of security referenced in proposed paragraph (b)(1) of the Rule or in an offering circular for an offering of that class of security referenced in proposed paragraph (b)(2) of the Rule.
Because of a broker-dealer's involvement in the registered or Regulation A offering, including their assumption of liability for misstatements or omissions in the prospectus or offering circular and public availability of the proposed paragraph (b) information on EDGAR, the Commission believes that a subsequent information review requirement would be redundant and, thus, unnecessary. The public availability of the proposed paragraph (b) information is consistent with the policy goals of the Rule in addressing the heightened potential for fraudulent and manipulative conduct involving securities of little or lesser-known issuers or for which information is not publicly available.
Accordingly, the Commission believes that the proposed underwriter exception is appropriate and would provide comparable—if not greater—protections to investors as the review conducted by broker-dealers under Rule 15c2-11. While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q83. Are the liability standards and professional obligations of underwriters in registered and Regulation A offerings a sufficient basis for providing the proposed exception? Please explain.
Q84. An underwriter in a Regulation A offering is subject to a different liability standard than an underwriter in an offering registered under the Securities Act (
Q85. Should underwritten shelf offerings also be included in the exception for publications or submissions of quotations for securities issued in underwritten offerings, even though it is possible that the shelf takedown could occur up to three years after the effectiveness of the shelf registration statement? Please explain why underwritten shelf registration statements should be included in the exception or excluded from the exception.
Q86. Are there other categories of issuers or potentially other categories of securities, not otherwise discussed in this release, that are unlikely to be involved in fraud in the OTC market for which publications or submissions of quotations of their securities also should be excepted from the Rule's provisions? Please explain.
Q87. Are there publications or submissions of quotations for other securities (
The Commission is proposing to add an exception to the Rule that would except a broker-dealer from conducting the information review if a regulated third party conducts such review. This should increase the number of securities that are available to be quoted in the OTC market, providing retail investors with greater choices of securities in which to invest. The exception also may facilitate capital formation by reducing burdens on broker-dealers that are able to begin a quoted market in reliance on the exception.
In particular, the Commission is proposing to add a new exception in which a qualified IDQS may undertake to comply with the Rule's information review requirement and broker-dealers may rely on the review performed by the qualified IDQS.
To rely on the proposed exception, a broker-dealer would need to commence a quoted market by publishing or submitting a quotation within three business days after the qualified IDQS makes its determination (of compliance)
The proposed exception, however, would not be available if the issuer of the security to be quoted is a shell company, or 30 calendar days after a broker-dealer first publishes or submits such quotation, in the qualified IDQS, in reliance on this paragraph (f)(7).
The Commission does not believe that it would advance the Rule's purpose to allow broker-dealers to rely on this exception to publish or submit quotations for securities of shell companies or to rely on the exception indefinitely. The Commission believes that limiting the availability of the exception is appropriate where there is an increased risk for potential fraud and manipulation.
As discussed above, proposed paragraph (a)(2) would set forth the review requirement for a qualified IDQS to be able to make known to others the quotation of a broker-dealer that publishes or submits a quotation for a security. Thus, once the qualified IDQS has complied with the Rule's information review requirement and made a publicly available determination that the requirements of the proposed paragraph (f)(7) exception are met, any broker-dealer would be able to publish or submit quotations for the security without any delay. In other words, unlike the 30-day timing requirement under the piggyback exception, there would be no delay for this exception to apply, such that a broker-dealer would be able to rely on the exception immediately.
Moreover, broker-dealers would only be able to rely on the exception in proposed paragraph (f)(7) during the 30 calendar days after the
If, however, after 30 days, broker-dealers have not begun to publish or submit quotations on a continuous basis, there could be a break in quotations that would prevent broker-dealers from then being able to rely on the piggyback exception.
Similar to the other two new proposed exceptions (
The Commission believes that by providing this initial on ramp, broker-dealers will have the flexibility to rely on a qualified IDQS in complying with the Rule's provisions. The proposed exception is designed to reduce burdens on broker-dealers without undermining investor protections under the Rule.
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q88. How, and to what extent, would the proposed exception appropriately protect investors? Please explain.
Q89. How, and to what extent, would the limitation of the proposed exception regarding shell companies appropriately (or unduly) limit the application of the exception? Should broker-dealers also be permitted under the exception to rely on qualified IDQSs to comply with the Rule's requirements when publishing or submitting quotations for securities of shell companies? Please explain.
Q90. Should broker-dealers also be permitted under the exception to rely on qualified IDQSs to comply with the Rule's requirements when publishing or submitting quotations for securities of blank check companies? If so, what would be an appropriate definition for “blank check company” in this circumstance? Please explain.
Q91. The Commission seeks specific comment on whether the 30-calendar-day restriction in proposed paragraph
Q92. Should broker-dealers be able to rely upon any entities other than qualified IDQSs to perform the Rule's information review requirement? Please explain.
Q93. Should the proposed exception under proposed paragraph (f)(7) limit broker-dealers to only publishing or submitting quotations in the qualified IDQS that makes the publicly available determination that the requirements of an exception are met? Please explain. Would having only regulated entities that meet the definition of a “qualified IDQS” create an unfair competitive disadvantage in the OTC market? Why or why not?
Q94. Should the Commission place additional limitations on the proposed exception's availability, such as prohibiting application of the proposed exception to quotations for a security that is a penny stock? If so, please explain why such limitation would be appropriate.
Q95. Please discuss potential benefits or disadvantages to investors or other market participants if a qualified IDQS undertakes to perform the information review requirement. Please discuss whether and how any such benefits or disadvantages change if one qualified IDQS undertakes such action or if multiple qualified IDQSs undertake such action. Would having a regulated third party conduct the required review increase the number of OTC securities that could be quoted in the OTC market? In what way, if any, would this benefit investors, particularly retail investors? Please explain.
The Commission is proposing to allow broker-dealers to rely on determinations by regulated third parties that certain exceptions are available for a security or an issuer. This proposal is designed to make it easier for broker-dealers to maintain a market in securities, while at the same time providing the benefits that would result from such third party determinations, thereby providing retail investors with greater opportunity to buy and sell securities.
The Commission is proposing to amend the Rule by adding a new exception in proposed paragraph (f)(8) to allow a broker-dealer to rely on publicly available determinations by a qualified IDQS or a registered national securities association that (1) proposed paragraph (b) information is current and publicly available or (2) that a broker-dealer may rely on an exception contained in proposed paragraphs (f)(1), (f)(3)(i)(A), (f)(3)(i)(B), (f)(4), (f)(5), or (f)(7). Thus, for example, new proposed paragraph (f)(8) would permit broker-dealers to rely on a publicly available determination by a qualified IDQS or a registered national securities association that an issuer's proposed paragraph (b) information is current and publicly available for purposes of a proposed exception to the Rule, such as the piggyback exception or the unsolicited quotation exception. In this circumstance, to facilitate a broker-dealer's reliance, the qualified IDQS or registered national securities association must represent in a publicly available determination that it has reasonably designed written policies and procedures to determine whether proposed paragraph (b) information is current and publicly available, and that the conditions of an exception under proposed paragraph (f) are met.
The Commission anticipates that broker-dealers may encounter some additional costs in determining whether an exception would apply to the publication or submission of a quotation for an OTC security. For example, while there are certain situations in which a broker-dealer can readily know whether an exception applies (
The Commission believes that allowing broker-dealers to rely on a publicly available determination by a qualified IDQS that a broker-dealer may rely on an exception to the Rule strikes an appropriate balance between mitigating costs to broker-dealers in complying with the proposed Rule's provisions and promoting investor protection. In particular, a qualified IDQS should have an interest in facilitating a fair and efficient market to encourage more activity on such IDQS. The Commission does, however, recognize that profit motives might create an incentive for a qualified IDQS to make a determination that an exception applies to a particular publication or submission of a quotation for a security even when the determination is not appropriate, assuming that the IDQS would collect fees associated with quoting activity or transactions that occur after it makes the exception determination. In complying with the requirements of Regulation ATS, a qualified IDQS (which would be required to be an ATS) would have notice and reporting requirements, which would contribute to the Commission's ability to effectively oversee and effectively examine qualified IDQSs.
Similarly, the Commission believes that allowing broker-dealers to rely on a registered national securities association's determination that a broker-dealer may rely on an exception to the proposed Rule strikes an appropriate balance between mitigating costs to broker-dealers in complying with the Rule's provisions and promoting investor protection. A registered national securities association has obligations under Section 19 of the Exchange Act “to comply with provisions of the [Exchange Act], the rules and regulations thereunder, and its own rules, and . . . absent reasonable justification or excuse enforce compliance . . . with such provisions.”
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q96. Should a broker-dealer's reliance be limited to a determination by a registered national securities association and not a qualified IDQS? Why or why not? Should a broker-dealer's reliance be limited to a determination by a qualified IDQS and not a registered national securities association? Why or why not?
Q97. Are there concerns that would discourage a qualified IDQS from undertaking to comply with the proposed Rule's information review requirement? Please explain. If so, please describe how such concerns could be addressed.
Q98. Should proposed paragraph (f)(8) be expanded to allow broker-dealers to rely on publicly available determinations by entities other than qualified IDQSs or registered national securities associations? If so, what entities should be added to proposed paragraph (f)(8) and why?
Q99. How, and to what extent, do the proposed Rule's requirements that a qualified IDQS make a publicly available determination that it has reasonably designed written supervisory procedures, in conjunction with the Commission's oversight of the qualified IDQS as an ATS, appropriately mitigate the conflicts of interest that might arise based on a qualified IDQS's profit motives? If not, how should the Commission address such conflicts of interests?
Q100. How, and to what extent, would the exception in proposed paragraph (f)(8) impact liquidity for quoted OTC securities?
Q101. Should certain exceptions enumerated in proposed paragraph (f)(8) be removed from the paragraph? If so, which ones and why? Should certain exceptions not enumerated in proposed paragraph (f)(8) be added to the paragraph? If so, which ones and why?
Currently, the Rule requires broker-dealers to preserve the documents and information required under paragraphs (a) and (b) of the Rule for a period of not less than three years, the first two years in an easily accessible place.
The Commission is proposing that market participants keep certain records that support their information review or reliance on an exception. Providing the Commission with information to oversee this market would assist in maintaining the integrity of the OTC market.
Proposed paragraph (d)(1)(i)(A) would require broker-dealers that comply with the review requirement of proposed paragraph (a)(1) to preserve for a period of not less than three years, the first two years in an easily accessible place, the documents and information that are required under proposed paragraphs (a), (b) and (c) of the Rule.
The proposed recordkeeping requirement tracks the text of paragraph (c) of the existing Rule but adds a recordkeeping requirement for any qualified IDQSs that make known to others the quotation of a broker-dealer pursuant to proposed paragraph (a)(2). The Commission is adding this recordkeeping requirement to make clear that a qualified IDQS that makes known to others the quotation of a broker-dealer pursuant to proposed paragraph (a)(2) has the same recordkeeping requirement as a broker-dealer that complies with the information review requirement in proposed paragraph (a)(1).
If a broker-dealer or qualified IDQS obtains and reviews proposed paragraph (b) information that is available on EDGAR, the broker-dealer or qualified IDQS will not be required to preserve that information. The broker-dealer or qualified IDQS need only document the proposed paragraph (b) information that it reviewed. The Commission does not believe that it is necessary to require broker-dealers or qualified IDQSs to preserve records that are available on EDGAR because doing so would create redundant recordkeeping obligations.
Although the existing Rule does not contain a recordkeeping requirement for a broker-dealer that relies on an exception to the Rule, the Commission believes that most broker-dealers maintain records of their reliance on a particular exception to the Rule. There have been instances during examinations, however, where broker-dealers have not had records regarding the basis of their reliance on an exception to the existing Rule. The proposed recordkeeping requirement is intended to aid the Commission in its oversight of brokers-dealers that rely on exceptions to the Rule by requiring them to make, retain, and keep current records that support their reliance on that exception. Accordingly, any broker-dealer that relies on an exception to publish or submit a quotation would be required to preserve for a period of not less than three years, the first two years in an easily accessible place, the documents and information that demonstrate that the requirements of the relevant exception are met.
Further, as discussed above, the Commission is proposing to add the exception contained in proposed paragraph (f)(8), which would allow broker-dealers to publish or submit quotations for a security in reliance upon the publicly available determination of a qualified IDQS or a registered national securities association that the requirements of certain exceptions are met.
A broker-dealer that relies on a determination pursuant to proposed paragraph (f)(7) by a qualified IDQS or proposed paragraph (f)(8) by a qualified IDQS or a registered national securities association, however, is required only to document the exception upon which the broker-dealer is relying and the name of the qualified IDQS or registered national securities association that determined that the requirements of that exception
The proposed amendments do not require a broker-dealer to retain records supporting that every condition of an exception is met each time the broker-dealer publishes or submits a quotation. The various requirements of each exception likely would involve different types of records that would need to be created to establish reliance on an exception. However, many of these records may not need to be created every time a broker-dealer publishes or submits a quotation relying on an exception.
For example, making and keeping records to support reliance on one prong of an exception (
Additionally, a broker-dealer, qualified IDQS, or registered national securities association would not need to preserve records under proposed paragraph (d)(2) for reliance on exceptions under proposed paragraphs (f)(1) or (f)(4). These exceptions can be demonstrated without the need for a broker-dealer, qualified IDQS, or registered national securities association to preserve a separate record. With respect to proposed paragraph (f)(1), whether or not a security is traded on an exchange and thus subject to the proposed paragraph (f)(1) exception is widely known. Additionally, whether or not a security is a municipal security for purposes of reliance on the municipal securities exception in proposed paragraph (f)(4) is also widely known. Proposed paragraph (d)(2)(ii) would also include a proviso such that a broker-dealer, qualified IDQS, or registered national securities association would not be required to preserve records under proposed paragraph (d)(2) if such records are available on EDGAR.
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q102. What, if any, impact would the recordkeeping requirement have on liquidity in the secondary market for quoted OTC securities?
Q103. Is the preservation of records required by proposed paragraph (d) for a period of three years appropriate? If not, how long should the period be under proposed paragraph (d) to preserve records under proposed paragraph (a), (b), and (c) and why? Should proposed paragraph (d)(1) contain requirements specifying when the record preservation period begins for the records required to be preserved in proposed paragraph (d)? What are broker-dealers' current practices for deciding when to begin preserving the records required to be preserved under the existing rule? Would these practices need to be modified to comply with proposed paragraph (d)(1)? Is a recordkeeping requirement necessary, or will broker-dealers maintain the records of their own accord or pursuant to other regulatory recordkeeping obligations?
Q104. Are the preservation requirements regarding proposed paragraph (b) information and proposed paragraph (c) supplemental information under proposed paragraph (d)(1) unduly burdensome on broker-dealers or qualified IDQSs or overly costly? If so, in what ways could the proposed Rule reduce these burdens and costs? What are the costs to a broker-dealer to preserve proposed paragraph (b) information?
Q105. In addition to printing or electronically saving proposed paragraph (b) information and proposed paragraph (c) supplemental information, are there other ways that a broker-dealer or qualified IDQS would be able to document its review of proposed paragraph (b) information and proposed paragraph (c) supplemental information, including whether such proposed paragraph (b) information is current and publicly available? If so, what methods or means could a broker-dealer or qualified IDQS implement to document compliance with the information review requirement under proposed paragraph (a)? Should a broker-dealer, qualified IDQS, or registered national securities association be able to preserve a memorandum or other document contemporaneous to the review showing that it performed a review, rather than the documents it reviewed (so long as there is not otherwise a requirement, such as a Commission or SRO rule, that the entity make and keep such documents)?
Q106. Should a broker-dealer or qualified IDQS be able to document its review of proposed paragraph (b) information that is publicly available on the website of an issuer, broker-dealer, registered national securities association, or qualified IDQS by recording the website where the broker-dealer or qualified IDQS obtained such information? If so, how would a broker-dealer know that such information would continue to be publicly available for the required recordkeeping retention period, even after the date at which the broker-dealer or qualified IDQS complied with the review under proposed paragraph (a)?
Q107. Should broker-dealers publishing or submitting quotations in reliance on proposed paragraphs (f)(7) and (f)(8) be required to document information in addition to the proposed required documentation (
Q108. Should proposed paragraph (d)(2) contain requirements enumerating the frequency of recordkeeping or any other specific measures? Should broker-dealers specifically be required to preserve documents and information pursuant to proposed paragraph (d)(2) on a quotation by quotation basis for
Q109. Are there certain exceptions under proposed paragraph (f) that should be included in the proviso and not be subject to the recordkeeping requirement in proposed paragraph (d)(2)? If so, which ones and why? Are there certain requirements concerning exceptions under proposed paragraph (f) that should be added to the proviso under proposed paragraph (d)(2)(ii)? If so, what additional requirements should be considered and what are the characteristics of such requirements that would warrant its inclusion in the proviso?
Q110. Taken together, would the proposed changes described above regarding proposed paragraph (f) go far enough to mitigate the potential for fraud and other abuses, including the potential for broker-dealers' use of the piggyback exception to facilitate fraud and other abuses (whether intentional or inadvertent)? Are there other changes that the Commission should make to address the risk of fraud and abuse? For instance, should the piggyback exception be eliminated entirely? Please explain why or why not. How would elimination of the piggyback exception affect small issuers?
In light of the amendments that the Commission is proposing today, as discussed above, the Commission is also proposing to add definitions of certain terms that are referenced throughout these amendments.
The Commission proposes to define “current” as filed, published, or disclosed in accordance with the time frames identified in each of proposed paragraphs (b)(1) through (b)(5) of the Rule.
Determining whether reporting issuer information is current for purposes of proposed Rule 15c2-11 would depend on the issuer's regulatory status and its obligation to file or publish information pursuant to a statutory or rule-based requirement under the federal securities laws (
For a reporting issuer that files annual reports pursuant to Regulation A, the reporting issuer's information would be current if it were the issuer's most recent annual report and any periodic and current reports that the issuer has filed under Regulation A subsequent to that annual report. If the issuer has yet to file its first report, the offering circular that the issuer filed under Regulation A would be current if it were qualified within the prior 16 months.
For an insurance company that files an annual statement referred to in Section 12(g)(2)(G)(i) of the Exchange Act because it is required to file reports pursuant to Section 13 or 15(d) of the Exchange Act, the insurance company's information would be current if it were the issuer's annual statement and any periodic or current reports that the issuer has filed subsequent to that statement. If the insurance company has yet to file its first annual statement, the registration statement that the issuer filed under the Securities Act or Section 12 of the Exchange Act would be current if it became effective within the prior 16 months. Finally, information for an insurance company that is exempted from Section 12(g) of the Exchange Act would be current if it were the issuer's annual statement referred to in Section 12(g)(2)(G)(i) of the Exchange Act.
Exempt foreign private issuer information (
This definition would provide clarity to market participants as to the time frames within which issuer information must be filed, published, or disclosed for the issuer's information to be current solely for purposes of broker-dealer and qualified IDQS compliance with proposed Rule 15c2-11. The proposed definition of “current” does not change the requirements of any issuer to file or
The Commission proposes to define “shell company” as any issuer, other than a business combination related shell company as defined in Rule 405 of Regulation C, or an asset-backed issuer as defined in Item 1101(b) of Regulation AB, that has (1) no or nominal operations and (2) either (i) no or nominal assets, (ii) assets consisting solely of cash and cash equivalents, or (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets.
The proposed definition of a shell company for purposes of Rule 15c2-11, however, is not limited to companies that have filed a registration statement or have an obligation to file reports under Section 13 or Section 15(d) of the Exchange Act. Rather, the proposed definition of a shell company under Rule 15c2-11 would cover all issuers of securities because the provisions of Rule 15c2-11 apply to publications and submissions of quotations for securities of reporting issuers as well as catch-all issuers. Accordingly, the Commission is proposing a definition of a shell company for purposes of Rule 15c2-11 that applies more broadly, to a greater breadth of issuers, than do the definitions in Rule 405 of Regulation C and Rule 12b-2.
The Commission believes that the proposed definition of a shell company is appropriate in the context of Rule 15c2-11 because it would capture the breadth of issuers of quoted OTC securities. The Commission has stated that startup companies that have limited operating history do not meet the condition of having “no or nominal operations” for the purposes of the public resale of restricted and control securities, and the Commission also believes that this approach is appropriate in the context of broker-dealers determining whether a company fits within the meaning of “shell company” as defined in proposed paragraph (e)(8) when deciding whether they may rely on the piggyback exception.
The Commission is proposing a definition of the term “publicly available” that is intended to be broad and to account for the ease with which investors or other market participants can obtain issuer information. The Commission proposes to define the term “publicly available” to mean available on EDGAR or on the website of a qualified IDQS, a registered national securities association, the issuer, or a registered broker-dealer. Further, publicly available shall not mean where access to proposed paragraph (b) information is restricted by user name, password, fees, or other constraints; this language is included as a proviso to the definition of “publicly available.”
The Commission proposes to define the term “qualified interdealer quotation system” to mean any IDQS that meets the definition of an ATS as defined under Rule 300(a) of Regulation ATS and operates pursuant to the exemption from the definition of an “exchange” under Rule 3a1-1(a)(2) of the Exchange Act. Accordingly, the proposed definition would exclude any IDQS that is not an ATS (a “non-ATS IDQS”).
As proposed, the Rule would permit a qualified IDQS to comply with the information review requirement to determine if the requirements of an exception are met, allowing a broker-dealer to publish or submit quotations in reliance on that qualified IDQS's determination.
The Commission believes that the regulatory requirements for an IDQS that operates as an ATS under the Exchange Act—and the concomitant Commission oversight—would help to ensure investor protection and to prevent fraud and manipulation. The notice and reporting requirements under Regulation ATS contribute to the Commission's effective oversight of ATSs, which helps to prevent fraud and manipulation. For example, ATSs, including those that make known to others broker-dealers' publications of quotations concerning quoted OTC
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q111. Are the proposed definitions accurate? Please explain. What alternative definitions might be more effective in light of the purpose of the Rule?
Q112. Company insiders are described in proposed paragraphs (b)(5)(i)(K), (c)(1), and (f)(2)(ii). Should we add a definition for “company insiders” that would include such persons or different persons? Please explain. Should any other terms be defined? If so, are there existing definitions in other rules or regulations that could be used in this context? Why would the use of such other definitions be appropriate?
Q112. Should non-ATS IDQSs be permitted to conduct the review under the proposed amendments, or should the review be limited to qualified IDQSs as proposed? Why or why not? Commenters are requested to please include any data and analysis that they have to support their response.
Q114. Are there concerns with not proposing a definition of “nominal” in the context of the proposed definition of “shell company”? Please explain any concerns and provide examples.
Currently, Rule 15c2-11(f)(5) excepts from the provisions of the Rule the publication or submission of a quotation for a Nasdaq security where such security's listing is not suspended, terminated, or prohibited.
The Nasdaq security exception is obsolete in light of Nasdaq's registration as a national securities exchange. The publication or submission of quotations by a broker-dealer for securities listed on a national securities exchange are covered already by a separate exception under existing Rule 15c2-11(f)(1). Thus, the Commission proposes to rescind the Nasdaq security exception.
The existing Rule requires that broker-dealers that publish or submit quotations for securities of catch-all issuers provide the Rule's required information to the IDQS at least three business days before the quotation is published or submitted.
The existing Rule provides that a broker-dealer complies with the requirement to obtain annual, quarterly, and current reports filed by the issuer if the broker-dealer has made arrangements to receive such reports when they are filed by the issuer and it has regularly received reports from the issuer on a timely basis.
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q115. Rule 15c2-11(d)(1) requires that a broker-dealer publishing or submitting a quotation for a security of a catch-all issuer furnish to an IDQS, at least three business days before the quotation is published or submitted, the required information regarding the security and the issuer. Should this requirement be retained? Why, or why not?
Q116. Should the Commission retain Rule 15c2-11(d)(2)(ii)? Why, or why not?
The Commission is proposing modifications to existing paragraph (h), which would be re-lettered to proposed paragraph (g), regarding the Commission's grant of exemptions from the Rule to correspond to Section 36 of the Exchange Act.
Q117. Should the existing requirement that, before granting an exemption, the Commission find that the quotation will not “constitut[e] a fraudulent, manipulative, or deceptive practice comprehended within the purpose of this section” be retained? Why or why not?
Currently, the Rule includes a “Preliminary Note” that incorporates guidance issued with the Rule in the 1991 Adopting Release. Specifically, the Preliminary Note advises that broker-dealers “may wish to refer to Securities Exchange Act Release No. 29094 (April 17, 1991), for a discussion of procedures for gathering and reviewing the information required by [Rule 15c2-11] and the requirement that a broker-dealer have a reasonable basis for believing that the information is accurate and obtained from reliable sources.” The Commission is proposing to remove the Preliminary Note from the Rule and instead reiterate the guidance, with targeted updates, to accompany the proposed Rule. The proposed guidance is discussed in Part V below.
Q118. Should the Preliminary Note be retained in its current form, in the form of guidance as proposed, or in a different form?
The Commission is proposing technical, non-substantive amendments to the Rule that do not change the meaning or operation of any of the Rule's provisions. As discussed above, because the Commission is proposing to separate the review requirement from the Rule's required information provisions, the Commission is proposing to re-letter the Rule's provisions and make conforming edits to all cross-references within the Rule to reflect the proposed re-lettering. The Commission is also proposing to alphabetize defined terms under the Rule's definitional section and to re-letter the Rule's definitional provisions.
In addition, the Commission is proposing grammatical edits to the Rule. For example, the Commission is proposing to (1) amend the Rule's definition of “quotation” in proposed paragraph (e)(6) by replacing the word “he” with “its,” (2) replace the word “which” with the word “that” where appropriate, (3) add and delete commas in proposed paragraph (b)(5)(i)(P) to provide clarity, and (4) fix typographical errors. In addition, the Commission is proposing to spell out all numbers that are less than 10 (
Further, the Commission is proposing amendments to aid in the Rule's readability. For example, the Commission is proposing to amend the Rule by adding headings before certain of the Rule's provisions and by addressing instances of inconsistent letter capitalization (
The Commission also is proposing amendments to streamline and clarify the Rule's text. For example, the Commission is proposing to replace the phrase “a record of the circumstance involved in” with the phrase “records related to” in proposed paragraph (c)(1). The Commission also proposes to replace “customer's indication of interest and does not involve the solicitation of the customer's interest” in paragraph (f)(2) with “customer's unsolicited indication of interest” in proposed paragraph (f)(2). Finally, the Commission proposes to delete the word “exact” from existing paragraphs (a)(5)(i) and (iv) and replace the phrase “the nature” with the phrase “a description” in paragraphs (a)(5)(viii), (ix), and (x).
The Commission also is proposing amendments to avoid redundancy in the Rule's text. For example, the Commission is proposing to remove from the Rule all instances of the phrase “as defined in this section” because the text of the Rule's definitional section, proposed paragraph (f), makes it sufficiently clear that all instances where a particular defined term is mentioned are for the purposes of the Rule, unless as otherwise specified. In addition, the Commission is proposing to delete the word “said” from existing paragraph (d)(1) because the words “of this section” also would appear in the text of the proposed Rule.
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following question:
Q119. Are there other technical amendments that would be appropriate? Please explain. Are there additional technical edits that the Commission should make to improve the effectiveness and clarity of the proposed Rule? For example, should the requirement regarding information about an issuer's address be modified to require the issuer's “physical” address to differentiate it from a post office box or other possible mailing or alternative addresses that issuers may have, such as addresses of branch offices, prior or obsolete addresses, or other non-
Q120. Is there language in the proposed Rule that should be revised to improve the effectiveness and clarity of the Rule? In particular, we seek commenters' input regarding whether there is language in proposed paragraph (b) that should be revised. If so, how? For example, proposed paragraphs (b)(4) and (b)(5) would keep the existing requirement that information be made available upon the request of “a person expressing an interest about a proposed transaction in the issuer's security.” Is there alternative language that would be more clear or effective in light of the purpose of the Rule? For example, should the language be replaced with “a person seeking information about the issuer's security” or “a person inquiring about an issuer's security”? Please explain. Is it clear what type of information that a broker-dealer must provide to any person expressing an interest in the security of an exempt foreign private issuer or catch-all issuer where it is required to provide “appropriate” instructions? If not, what alternative standard would be clear and effective, if any? Please explain.
Currently, Rule 144(c)(2)
The Commission solicits comment on all aspects of the proposed amendments to Rule 15c2-11 and any other matter that might have an impact on the proposal discussed above. In particular, the Commission asks commenters to consider the following questions:
Q121. Are there additional or different ways to amend the Rule that would help reduce fraud and manipulation in the OTC market? Please explain.
Q122. Should the Rule be limited to only equity securities? Please explain.
Q123. How might the proposal positively or negatively impact investor protection, the maintenance of a fair, orderly, and efficient OTC market, and capital formation?
Q124. Should each exception to the Rule require that a broker-dealer establish, maintain, and enforce written policies and procedures that are reasonably designed to prevent violations of the Rule by the broker-dealer? Please explain why or why not.
Q125. We seek commenters' views about the potential for changes to Rule 15c2-11 to help investors track quoted OTC issuers through corporate events such as reverse mergers and reorganizations. For example, should Rule 15c2-11's publicly available information requirement for a quoted OTC security issuer's name and its predecessor (if any) also require the public availability of such issuer's unique entity identifiers (if any)? What would the costs and benefits associated with such a requirement be? Please discuss whether such a requirement should be limited to certain types of issuers,
Comments are of greatest assistance to the Commission's rulemaking initiative if they are accompanied by supporting data and analysis of the issues addressed in those comments and if they are accompanied by alternative suggestions to the proposal where appropriate.
The Commission is proposing the following guidance to accompany the proposed Rule and intends to include such guidance in any adopting release.
The proposed Rule requires that the broker-dealer or qualified IDQS must have a reasonable basis for believing that any source of the proposed paragraph (b) information is reliable. In the absence of any red flag (
Occasionally, a broker-dealer or qualified IDQS may receive Rule 15c2-11 information about an issuer from another broker-dealer, someone other than the issuer or its agents, or an independent information service. In these situations, while the broker-dealer or qualified IDQS might be aware of the identity of the immediate source of the specified information, it might not have any knowledge about the person that compiled the Rule 15c2-11 information. However, to comply with the proposed Rule's requirements regarding source reliability, the broker-dealer or qualified IDQS is required to ascertain the reliability of the sources of the Rule 15c2-11 information.
Where the broker-dealer or qualified IDQS receives the information, however, from an independent and objective source that represents that it received the information directly from the issuer, the broker-dealer or qualified IDQS typically could rely on that representation absent countervailing information. When a red flag regarding the source's reliability exists, the broker-dealer or qualified IDQS should conduct the inquiry called for by the circumstances to reasonably assess
Once the broker-dealer or qualified IDQS has a reasonable belief as to the source's reliability, it should examine the materials in its records to make certain that all of the required information has been obtained. Next, the broker-dealer or qualified IDQS should review the proposed paragraph (b) information in the context of all other information, including supplemental information under proposed paragraph (c), about the issuer that it has in its knowledge or possession. Ordinarily, the broker-dealer or qualified IDQS need not take any further steps (for example
Examples of red flags would include a qualified auditor's opinion resulting from management's failure to provide all of the information relevant to prepare the financial statements, or financial statements of a development stage issuer that lists as the principal component of its net worth an asset wholly unrelated to the issuer's lines of business. Warning signs such as these may call into question whether the accuracy of the information can be relied upon by a broker-dealer or a qualified IDQS to satisfy the proposed Rule's requirements.
Where no red flags appear during this review process, the broker-dealer or qualified IDQS could have a reasonable basis for believing that the information is accurate. If red flags appear, the broker-dealer or qualified IDQS could attempt to reasonably address any red flags. The specific efforts by the broker-dealer or qualified IDQS to satisfy the proposed reasonable basis standard with respect to the accuracy of the information and the reliability of sources can vary with the circumstances and may require the broker-dealer or qualified IDQS to obtain additional information or seek to verify the accuracy of existing information. For example, the broker-dealer or qualified IDQS may have a reasonable basis to believe that the information is accurate in all material respects after questioning the issuer directly. When information from the issuer is not adequate, or raises reasonable doubts to the broker-dealer or qualified IDQS, the broker-dealer or qualified IDQS may wish to consult independent sources, such as an attorney or accountant.
The proposed Rule would require that a broker-dealer or qualified IDQS have a reasonable basis under the circumstances for believing that proposed paragraph (b) information, in light of any other documents and information required by the proposed Rule, such as proposed paragraph (c) information, is accurate in all material respects. However, the requirements of the proposed Rule amendments do not contemplate that, before submitting or publishing quotations for a security, a broker-dealer or qualified IDQS must conduct any independent “due diligence” investigation concerning the issuer or its business operations and financial condition such as the investigation expected to be conducted by an underwriter. A broker-dealer or qualified IDQS publishing quotations may have no relationship with the issuer of the security. The proposed Rule would not demand that the broker-dealer or qualified IDQS develop such a relationship to obtain information about the issuer. Rather, as described above, the proposed Rule specifies the information that must be gathered, and the proposed Rule's requirements would be satisfied if the broker-dealer or qualified IDQS had a reasonable basis for believing that the information is accurate in all material respects and obtained from a reliable source, after reviewing that information. In short, a reasonable basis for belief in the accuracy of the proposed paragraph (b) information can be founded solely on a careful review of the proposed paragraph (b) information together with proposed paragraph (c) information, provided that the proposed paragraph (b) information was obtained from sources reasonably believed to be reliable and there are no red flags. When red flags are initially present, the broker-dealer or qualified IDQS may, upon inquiry, obtain additional information that provides a reasonable basis for believing that the information is accurate in all material respects and that the sources are reliable.
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q126. Are further substantive changes needed to ensure this guidance reflects the current state of technology and industry practice? Should the substance of this guidance be incorporated into the rule text and, if so, are there any changes that should be made?
Q127. Are changes to this guidance needed to address the specific responsibilities with respect to the information review requirement of a qualified IDQS that makes known to others the quotation of a broker-dealer?
Q128. In 1999, the Commission re-proposed amendments to Rule 15c2-11.
This section discusses regulatory, policy, and other issues (in addition to those discussed above), and seeks comment to identify, where appropriate, possible regulatory actions to address those issues.
The amendments the Commission is proposing today would require that proposed paragraph (b) information be current and publicly available, prior to the initial publication or submission of a quotation regarding a security, in order for a broker-dealer to: Rely on the unsolicited quotation exception in certain instances, rely on certain new exceptions under proposed paragraph (f), and continue to rely on the piggyback exception. In the 1999 Reproposing Release, the Commission proposed to establish a mechanism to designate as an information repository an entity that retains and provides access to paragraph (a) information
Significant developments in the OTC market have taken place since the publication of the 1999 Reproposing Release. For example, certain IDQSs have developed information repositories that provide access to proposed paragraph (b) information to the investing public.
• Collects information about a substantial segment of issuers of securities subject to the Rule;
• Maintains current and accurate information about such issuers;
• Has effective acquisition, retrieval, and dissemination systems;
• Places no inappropriate limits on the issuers from or about which it will accept or request information;
• Provides access to the documents deposited with it to anyone willing and able to pay the applicable fees; and
• Charges reasonable fees.
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q129. Would access to proposed paragraph (b) information on an issuer's website provide sufficient access and notice to investors? What if the issuer does not maintain the information on its website for the requisite recordkeeping period?
Q130. Would investors and other market participants benefit from having access to proposed paragraph (b) information solely through a centralized location, such as an information repository?
Q131. Have any entities that currently publish proposed paragraph (b) information engaged in any actions that would warrant Commission intervention? If so, what activities has the entity engaged in and what would the appropriate regulatory action be?
Q132. The Commission is committed to ensuring that all investors and market participants can access the information necessary to make informed financial decisions. One way that the Commission lowers the burden of accessing and analyzing issuer data is through the use of structured data. Machine-readable disclosures provide easily accessible financial statement information that investors and other market participants can use to compare and analyze issuers, whether they elect to analyze condensed data sets themselves or analyze data downstream through a data aggregator service. Regarding actions that the Commission might propose at a later date, the Commission is interested in commenters' views on whether or not the financial information required by proposed paragraph (b)(5)(i)(L) regarding an issuer's balance sheet, profit and loss statement, and retained earnings statement should be published in a machine readable format? Is there other proposed paragraph (b) information that should be machine-readable, if the Commission were to propose to require that proposed paragraph (b) information be machine-readable at a later date? How burdensome and costly would it be for a broker-dealer, qualified IDQS, or an issuer to provide such information in a machine-readable format? What are the additional burdens or costs associated with providing such information in a machine-readable format? For example, would there be additional costs with respect to complying with documentation and recordkeeping requirements, specifically those included in the proposed amendments to the Rule, as a result of information being machine-readable? How significant are those potential costs relative to the potential benefits in facilitating an analysis of an issuer's financial data by investors or other market participants? Please quantify your answers, to the extent feasible.
The Commission is also interested in the public's views on the following question regarding short selling in the OTC market:
Q133. At least one commenter to the SEC Investor Advisory Committee has suggested that amending Regulation SHO to extend the time period required to close out fails to deliver would enhance liquidity in the OTC market.
Certain provisions of the Rule and proposed amendments impose “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
The Commission is submitting the proposed amendments to the Office of Management and Budget (“OMB”) for review in accordance with the PRA.
The Rule is intended to prevent broker-dealers from publishing or submitting quotations for quoted OTC securities that may facilitate a fraudulent or manipulative scheme. Subject to certain exceptions, the Rule prohibits broker-dealers from publishing or submitting a quotation for a security, or submitting a quotation for publication, in a quotation medium unless they have reviewed specified information concerning the issuer. The Commission is proposing amendments that would focus the Rule more closely on those quoted OTC securities that the Commission believes are more likely to be prone to fraud and manipulation by addressing the lack of transparency of some issuers. The Commission is also proposing amendments to reduce regulatory burdens on broker-dealers for quotations concerning OTC securities that appear to present lower risk.
Generally, the Rule applies to broker-dealers that participate in the quoted market for OTC securities. The proposed amendments would modify some of the existing information collection burdens on broker-dealers and create new record retention obligations on broker-dealers that rely on exceptions to the Rule. The Commission believes that approximately 32 broker-dealers would be subject to the burdens associated with the publishing or submitting a quotation without an exception,
Proposed paragraph (f)(7) would permit a qualified IDQS to comply with the information review requirement in certain circumstances. A qualified IDQS must meet the definition of an alternative trading system under Rule 300(a) of Regulation ATS and operate pursuant to the exemption from the definition of an “exchange” under Rule 3a1-1(a)(2) of the Act. As such, a qualified IDQS must be registered as a broker-dealer.
For the purposes of this analysis, as described below, the Commission has made assumptions regarding how respondents would comply with the proposed amendments.
The information collections associated with the initial publication or submission of a quotation is intended to prevent broker-dealers from publishing or submitting quotations for OTC securities that may facilitate a fraudulent or manipulative scheme. Additionally, under the proposed amendments, the information collections are intended to alleviate the potential for quoted OTC Securities to be used as vehicles to defraud investors and to help ensure compliance with the Rule's exceptions.
Absent an exception, broker-dealers under the existing Rule must comply with the information review requirement of the Rule prior to initiating the publication or submission of a quotation for an OTC security. The Commission believes that the information collections associated with the information review requirement and recordkeeping requirement under the Rule, as well as the proposed Rule, involve conducting a review of and maintaining the required information.
FINRA Rule 6432 requires broker-dealers to file a Form 211 when the Rule requires them to comply with the information review requirement. Given the alignment of this FINRA requirement and the Rule, the Commission believes that the number of Forms 211 filed with FINRA in 2018 provides a reasonable baseline from which to estimate the burdens associated with the information review
The proposed amendments change the information review requirement only by re-lettering the applicable paragraphs
As discussed above, the proposed amendments would modify the piggyback exception in various ways, and these amendments would, in turn, impact the burdens associated with the information review requirement.
Proposed paragraph (f)(3)(i)(A) would limit broker-dealers' reliance on the piggyback exception to both bid and ask quotations at specified prices in an IDQS, which could reduce the number of securities that are eligible for the piggyback exception. Broker-dealers would be required to comply with the information review requirement prior to the initial publication or submission of quotations on securities that would lose piggyback eligibility due to this provision. According to estimates based on data from OTC Markets Group for 2018, the securities of 879 issuers, out of 9,912 issuers, would lose piggyback eligibility under this proposed amendment because they did not have both bid and ask quotations for four business days in succession on one or more occasions during that year. Based on the lack of quotes by broker-dealers, it is unclear whether broker-dealers would conduct the required review for most of these securities that would lose piggyback eligibility due to the adoption of this proposed requirement.
It is possible, however, that broker-dealers would begin to publish both bid and ask quotations for some of these securities to ensure that they remain piggyback eligible. While, as stated above, it is unclear whether broker-dealers would comply with the information review requirement as proposed for these issuers, the Commission is estimating that broker-dealers would comply with the information review requirement once annually for each security that would lose piggyback eligibility to make the most conservative estimate of burden that may arise under this proposed amendment.
The Commission is increasing the estimated overall burdens related to the information review requirement based on the proviso in proposed paragraph (f)(3)(ii), which would allow broker-dealers to rely on the piggyback exception for the securities of catch-all issuers if proposed paragraph (b)(5) information is current and has been made publicly available within six months prior to the date of publication or submission of the quotation. Proposed paragraphs (a)(1)(ii) and (a)(2)(ii) would require that proposed paragraph (b) information be current and publicly available as a component of the review requirement, and thus a broker-dealer would not conduct the required review of the proposed Rule for these securities after they lose piggyback eligibility based on the lack of proposed paragraph (b) information that is current and publicly available.
On the one hand, to the extent proposed paragraph (b) information becomes current and publicly available after the loss of the piggyback exception, pursuant to proposed paragraph (a), a broker-dealer or qualified IDQS would need to comply with the information review requirement for a broker-dealer to be able to publish or submit a quotation for such OTC security. On the other hand, if there is no current and publicly available proposed paragraph (b) information for a security after the loss of the piggyback exception, the broker-dealer or qualified IDQS would
The Commission is not revising the estimates of current burdens of the information review requirement based on the proviso in proposed paragraphs (f)(3)(ii), which eliminate piggyback eligibility for shell companies and eliminate piggyback eligibility for 60 calendar-days following a trading suspension under Section 12(k) of the Act. With respect to shell companies, as noted in the Economic Analysis, the Commission believes that there are roughly 421 shell companies that are quoted in the OTC market. Since broker-dealers would not be able to rely on the piggyback exception for shell companies, the Commission believes broker-dealers would not conduct the required review for shell companies. As such, the Commission does not believe that the proposed elimination of a broker-dealer's ability to rely on the piggyback exception for shell companies would change the burdens of the information review requirement. With respect to securities that have been subject to a trading suspension under 12(k) of the Act, this proposed amendment would impact when a broker-dealer may conduct the required review, but it would not affect the substance of the information review requirement itself.
In summary, the proposed amendments to the piggyback exception would impact the burdens associated with the information review requirement in various ways. The proposed amendment to proposed paragraph (f)(3)(i)(A) would allow broker-dealers to piggyback only on bid and ask quotations at specified prices and the Commission estimates that this amendment would increase the annual burden by 4,545 hours. The proviso in proposed paragraph (f)(3) would allow broker-dealers only to piggyback quotations of the securities of catch-all issuers if proposed paragraph (b)(5) information is current and has been made publicly available within six months prior to the date of publication or submission of the quotation and the Commission estimates that this proposed amendment would increase the annual burden by 22,477 hours.
Proposed paragraph (f)(5) would create a new exception to the Rule that is intended to reduce burdens related to publishing or submitting quotations for OTC securities the Commission believes are less susceptible to fraud or manipulation. Specifically, proposed paragraph (f)(5) would provide an exception for securities with a worldwide ADTV value of at least $100,000 during the 60 calendar days immediately before the date of the publication of a quotation for such security and the issuer of such security has $50 million in total assets and $10 million unaffiliated shareholder's equity as reflected in the issuer's publicly available audited balance sheet issued within six months after the end of the most recent fiscal year. Broker-dealers would not be required to comply with the information review requirement when publishing or submitting quotations for these securities, so these amendments would reduce the burden of the information collection. The Commission believes that excepting certain types of OTC securities from the Rule's provisions would decrease the burden associated with the information review requirement in a manner that is consistent with these securities' percentage of the overall OTC market.
Based on data pulled from Bloomberg's equity screening function on April 12, 2019, 37 issuers with securities trading on OTC Markets Group's systems meet the exception in proposed paragraph (f)(5). Thirty-one of these 37 issuers (roughly 80 percent) are reporting issuers, and six (roughly 20 percent) are catch-all issuers.
The Commission believes that, other than as discussed above, the proposed amendments to the Rule do not impact the burden of the information review requirement. For example, proposed paragraph (f)(2)(ii), which would provide an exception for a broker-dealer to publish or submit a quotation by or on behalf of certain company insiders in reliance on the unsolicited quotation exception only if proposed paragraph (b) information is current and publicly available,
Out of an abundance of caution due to a lack of granular data, the Commission is not reducing the overall burden estimate of the information review requirement as a result of
Some provisions of the proposed amendments would create burdens other than those directly related to the initial publication or submission of a quotation.
Proposed paragraph (d)(2) would require that certain broker-dealers, qualified IDQSs, or registered national securities associations preserve documents and information that demonstrate that the requirements for an exception under proposed paragraph (f) are met. As noted above, rather than specifically direct that market participants would need to document every condition of the basis of their reliance on an exception for each quotation, the proposed Rule instead requires broker-dealers, qualified IDQSs, and registered national securities associations to preserve documents and information “that demonstrate that the requirements for an exception under paragraph (f)” are met. Additionally, proposed paragraph (f)(8) would allow broker-dealers that publish or submit quotations based on an exception to rely on publicly available determinations made by a qualified IDQS or registered national securities association. If a qualified IDQS or registered national securities association makes a publicly available determination that the requirements of an exception are met, or that the proposed paragraph (b) information is current and publicly available, the broker-dealer would need to document only the exception upon which the broker-dealer relies and the name of the qualified IDQS or registered national securities association that made the determination that the requirements of the exception are met.
The types of documentation that a broker-dealer, qualified IDQS, or registered national securities association would need to maintain would vary based upon the exception. Certain exceptions, however, such as the unsolicited quotation exception, and the ADTV value and asset test exception, require that proposed paragraph (b) information be current and publicly available. Additionally, the piggyback exception requires that proposed paragraph (b)(5) information be current and publicly available within six months before the date of publication or submission of a quotation in an IDQS. The Commission believes that the requirement in these exceptions to have current and publicly available proposed paragraph (b) information would create ongoing recordkeeping burdens for broker-dealers under proposed paragraph (d)(2). A proviso to proposed paragraph (d)(2)(ii), however, does not require that a broker-dealer, qualified IDQS, or registered national securities association preserve proposed paragraph (b) information if such information is available on EDGAR. As shown in the Table 3 of the Economic Analysis, there are 9,913 unique issuers of quoted OTC securities for which broker-dealers would be required to maintain records to establish that proposed paragraph (b) information is current and publicly available.
Proposed paragraph (f)(2)(ii) eliminates broker-dealers' reliance on the unsolicited quotation exception for certain company insiders if proposed paragraph (b) information is not current and publicly available. Beyond the requirement that proposed paragraph (b) information be publicly available as discussed above, the Commission believes that this proposed amendment would create ongoing recordkeeping burdens for broker-dealers relying on the unsolicited quotation exception. Based on data from OTC Markets Group, there were 3,043,214 quotations published in reliance on the unsolicited quotation exception in 2018. Although there is current and publicly available information for many issuers of securities involving unsolicited customer order quotations, out of an abundance of caution the Commission is including all unsolicited customer quotations in its estimate and estimating that the number would remain consistent on an annual basis for the purpose of this analysis. Therefore, it is estimated that there would be 3,043,214 quotations published in reliance on the unsolicited quotation exception annually that would require documentation and information to demonstrate that the quotation is not by or on behalf of an insider.
It is estimated that it would take a broker-dealer approximately one minute to create a record regarding such unsolicited customer quotation. Accordingly, it is estimated that, after rounding, broker-dealers would spend roughly 50,720 hours
The proviso in proposed paragraph (f)(3)(ii) would eliminate eligibility for the piggyback exception for securities of issuers that are shell companies. Accordingly, to comply with the recordkeeping requirement in proposed paragraph (d)(2), each broker-dealer, qualified IDQS, and registered national securities association that is relying on, or making publicly available determinations that a broker-dealer may rely on, the piggyback exception would need to preserve documents and information regarding its determination that the issuer of a security is not a shell company. The Commission estimates
The Commission estimates that broker-dealers, qualified IDQSs, and registered national securities associations would each spend one minute making a determination and preserving documents and information that demonstrate that an issuer of the OTC security is not a shell company. As noted in the Economic Analysis, there are 10,167 quoted OTC securities.
As noted above, it is estimated that there would be approximately 37 securities that would meet the proposed paragraph (f)(5) ADTV and asset tests. Beyond preserving documents and information that demonstrate proposed paragraph (b) information is current and publicly available, as discussed above, the broker-dealer, qualified IDQS, or registered national securities association would need to preserve documents and information that demonstrate that the various requirements of the ADTV test and asset test have been met. It is estimated it would take one minute to create documentation supporting the broker-dealer's reliance on the asset test prong of the exception and that broker-dealers would do this once annually per issuer.
Proposed paragraph (f)(6) would except from the information review requirement quotations concerning a security by a broker-dealer that is named as underwriter in a security's registration statement referenced in proposed paragraph (b)(1) or in an offering circular referenced in proposed paragraph (b)(2), subject to the time limitations contained in those sections. Registration statements and offering circulars are filed in EDGAR. Since the proviso to proposed paragraph (d)(2)(ii) would not require broker-dealers to preserve proposed paragraph (b) information that is available on EDGAR, the Commission is not estimating any initial or ongoing burden with respect to this exception.
Proposed paragraph (f)(7) would except from the Rule's issuer information and review and document collection provisions in proposed paragraphs (a) through (c), and (d)(1), the publication or submission, in a qualified IDQS, of a quotation concerning a security where that qualified IDQS complies with the requirements of proposed paragraphs (a) through (c) of the proposed Rule. Any broker-dealer would be able to publish or submit quotations for such security and would be required to document the reliance on this exception under proposed paragraph (d)(2). It is unclear how many securities would be eligible for this exception. As discussed above, this proposed exception is intended to except certain securities from the information review requirement that are less likely to be targeted for fraudulent activity (
Under the proposed amendments, proposed paragraph (f)(8) would be contingent upon the qualified IDQS or registered national securities association representing that it has reasonably designed written policies and procedures to determine whether proposed paragraph (b) information is publicly available and current and the requirements of an exception under proposed paragraph (f) of this section are met. Accordingly, these entities would be required to update their written policies and procedures to make this representation. The Commission estimates that it would take one qualified IDQS and one registered national securities association subject to the Rule approximately 18 hours of initial burden each to initially prepare these written policies and procedures, and an ongoing annual burden of 10 hours each to review and update policies and procedures. Given the sophistication of the qualified IDQS and the registered national securities association, the Commission estimates that this burden would be borne internally. Accordingly, the total industry-wide burden for this documentation requirement would be 56 hours for the first year, and 20 hours annually going forward.
Proposed paragraphs (f)(1) and (f)(4) are exceptions for quotations concerning a security admitted to trading on a national securities exchange and which is traded on such an exchange on the same day as, or on the business day immediately preceding, the day of the quote and the publication or submission of a quotation concerning a municipal security, respectively. The Commission is not estimating any initial or ongoing burden with respect to these exceptions because the proviso to proposed paragraph (d)(2) does not require broker-dealers, qualified IDQSs, or registered national securities association to preserve records under paragraph (d)(2) for the proposed paragraphs (f)(1) or (f)(4) exceptions.
The information collections for the information review requirement and recordkeeping requirement are mandatory under the proposed amendments if a broker-dealer wishes to provide the initial publication or submission of a quotation for an OTC security. Additionally, the information collections involving documentation and information that demonstrate that the requirements for an exception have been met are mandatory under the proposed amendments if a broker-dealer submits or publishes quotations that rely on an exception in proposed paragraph (f).
The Commission would not typically receive confidential information as a result of this collection of information. The collection of information is expected to be, for the most part, publicly available information. To the extent that the Commission receives records related to such disclosures or other records from a qualified IDQS or registered broker-dealer that are not publicly available concerning the information review requirement through the Commission's examination and oversight program, through an investigation, or some other means, such information would be kept confidential, subject to the provisions of an applicable law. To the extent that the Commission receives records that are not publicly available from a qualified IDQS, registered national securities association, or registered broker-dealer concerning the records related to a reliance on an exception contained in proposed paragraph (f) of the proposed Rule through the Commission's examination and oversight program, or through an investigation, or some other means, such information would be kept confidential, subject to the provisions of applicable law.
Pursuant to proposed paragraph (d)(1), a broker-dealer publishing or
The Commission requests comment on whether the estimates for burden hours and costs are reasonable. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits comments to (1) evaluate whether the proposed collections of information are necessary for the proper performance of the functions of the Commission, including whether the information would have practical utility; (2) evaluate the accuracy of the Commission's estimate of the burden of the proposed collections of information; (3) determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; and (4) determine whether there are ways to minimize the burden of the collections of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology.
While the Commission welcomes any public input on this topic, the Commission asks commenters to consider the following questions:
Q134. Is the burden associated with the review required to comply with the information review requirement generally, and, in particular, whether three hours for reporting issuers and seven hours for exempt foreign private and catch-all issuers is reasonably accurate?
Q135. Is the Commission adequately capturing the respondents that would be subject to the burdens under the proposed Rule? Are there more than 39, or fewer than 39, broker-dealers that conduct the required review to provide the initial publication or submission of a quotation? Are there more than 89, or fewer than 89, broker-dealers that publish or submit quotations in reliance on exceptions to the Rule?
Q136. What is the impact of the proposed amendments on the number of times broker-dealers would comply with the information review requirement?
Q137. What are any other hourly burdens associated with complying with the proposed amendments?
Q138. Would any of the proposed amendments that are not discussed in this PRA Analysis impact the burden associated with the collection of information?
Persons wishing to submit comments on the collection of information requirements should direct the comments to the Office of Management and Budget, Attention: Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and send a copy to Vanessa Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090, with reference to File No. S7-14-19. OMB is required to make a decision concerning the collection of information between 30 and 60 days after publication of this release. Consequently, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. Requests for materials submitted to OMB by the Commission with regard to these collections of information should be in writing, refer to File No. S7-14-19, and be submitted to the Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549-2736.
The proposed amendments are intended to better protect retail investors from incidents of fraud and manipulation in OTC securities, particularly securities of issuers for which there is no or limited publicly available information. These amendments are also intended to reduce regulatory burdens on broker-dealers for publication of quotations of certain OTC securities that may be less susceptible to potential fraud and manipulation, such as securities of certain issuers with higher capitalization and securities that were issued in offerings underwritten by the broker-dealer publishing a quote.
The Commission is mindful of the costs imposed by and the benefits obtained from the Commission's rules. Exchange Act Section 3(f) requires the Commission, when engaging in rulemaking that requires consideration or determination of whether an action is necessary or appropriate in the public interest, also to consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation. Additionally, Exchange Act Section 23(a)(2) requires the Commission, when adopting rules under the Exchange Act, to consider the impact that any new rule will have on competition and not to adopt any rule that will impose a burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act.
The discussion below addresses the expected economic effects of the proposed amendments, including the likely benefits and costs, as well as the likely effects of the proposed amendments on efficiency, competition, and capital formation. The Commission has, where possible, quantified the economic effects that are expected to result from the proposed amendments in the analysis below. However, the Commission is unable to quantify some of the potential effects discussed below.
First, it is unclear to what extent publicly available proposed paragraph (b) information would influence retail investors' investment decisions and how these decisions might affect the welfare of these investors.
The proposed amendments would affect broker-dealers that publish or submit quotations for OTC securities. Besides broker-dealers and qualified IDQSs, affected parties include issuers of quoted OTC securities and investors in these securities. The Commission assesses the economic effects of the proposed amendments relative to the baseline of existing requirements and practices in the OTC market. Registered broker-dealers participate in the market for quoted OTC securities by publishing priced and unpriced quotations representing customer interest in trading, executing customer orders, and acting as market makers.
Securities quoted on the OTC market differ from those listed on national securities exchanges. In particular, the average OTC security issuer is smaller, and these securities trade less, on average. Table 1 below compares quoted OTC securities to those listed on the New York Stock Exchange (NYSE) or Nasdaq.
Table 2 provides more detail on the characteristics of quoted OTC securities and their issuers for the 2018 calendar year.
All statistics in Table 1 represent characteristics of OTC securities and OTC issuers on a typical trading day and are computed by averaging across all trading days for the 2018 calendar year. The Commission identified 18,964 unique OTC securities for 15,851 unique companies from aggregated OTC Markets Group data for the calendar year 2018. Of these, 11,534 unique OTC securities had at least one published quotation and 9,913 unique companies had a security that was quoted at least once during the calendar year 2018. The Commission believes that OTC Markets Group data are reasonably representative of all OTC quoting and trading activity in the U.S.
Some OTC securities are traded on the grey market. Broker-dealers might not publicly quote these securities due to a lack of available issuer information necessary to satisfy the information review requirement or due to insufficient investor interest. The Commission estimates that 5,155 OTC securities were traded at some point during 2018 without having published quotations, with 522 securities of 517 issuers traded on the grey market on average per day during 2018. Despite not having published quotations, some grey market OTC securities were actively traded, with two percent having an ADTV value greater than $100,000.
Table 3 below provides detail on issuers of quoted OTC securities.
The Commission observed several instances in which issuers of quoted OTC securities changed their reporting standard during 2018. In these instances, for the computation of statistics in Table 3, the Commission attributed a reporting standard that the issuer followed for the majority of the days that its securities had published quotations during 2018.
Although current FINRA and Commission rules do not require the financial statements of non-SEC reporting OTC securities issuers to be audited, OTC Markets Group requires audited financials from
The Commission is only able to observe total shareholder equity and not affiliated shareholder equity on the balance sheets of issuers of quoted OTC securities. Since total shareholder equity serves as an upper bound on affiliated shareholder equity, the number of issuers with affiliated shareholder equity greater than $10 million must be no greater than the number of issuers with total shareholder equity greater than $10 million.
The OTC market may attract those seeking to engage in fraudulent practices, such as pump-and-dump schemes, due to a lack of publicly available current information about certain issuers of quoted OTC securities. Two academic studies have found that market manipulation and pump-and-dump cases are concentrated among issuers of OTC securities relative to exchange-listed securities.
To highlight characteristics of securities and issuers in the OTC market that tend to involve risk of fraud and manipulation, the Commission examined quoted OTC securities that had been the subject of Commission-ordered trading suspensions and those that have been assigned a “caveat emptor” designation by OTC Markets Group during the 2018 calendar year.
Overall, 318 quoted OTC securities were the subject of Commission-ordered trading suspensions over the calendar year 2018. Relative to the characteristics of the overall quoted OTC security market, broker-dealers were more likely to be able to rely on the piggyback exception to publish or submit quotations for quoted OTC securities subject to trading suspensions. Although issuers of suspended quoted OTC securities tended to be mostly reporting companies, they were less likely to have current public information available relative to the full sample of quoted OTC securities because many failed to file required reports.
In addition, the Commission examined 357 instances in which quoted OTC securities were flagged with the “caveat emptor” designation by OTC Markets Group to inform investors to exercise additional care when considering whether to transact in these securities. Most of these companies had Commission-ordered trading suspensions.
Increasing the availability of information about OTC issuers has the potential to counteract misinformation, which can proliferate through promotions and other channels. Several recent studies have examined the effects of stock promotions on investor trading in the OTC market.
An academic study has found that OTC stocks tend to be owned primarily by retail investors rather than institutional investors.
In this section, the Commission discusses the expected costs and benefits of the proposed amendments to Rule 15c2-11. These amendments generally seek to increase the availability of current company financial information within the quoted OTC market and modify rule requirements to account for developments in this market.
The amendments would impact OTC investors, issuers, and intermediaries such as broker-dealers. The Commission anticipates the principal economic effects of the proposed amendments to be as follows. First, the transparency requirements could enable investors to learn more about the fundamental value of certain companies in the OTC market, which may direct their funds toward higher-return investments. In addition, other investors could benefit from more efficient prices that are less susceptible to manipulation as a result of the trading activity of better-informed investors who acquire this information. Second, the amendments may reduce the incidence of fraudulent schemes, such as pump-and-dump activity, as a result of heightened disclosure requirements and restrictions on the piggyback exception being applied to non-transparent and illiquid securities. Finally, broker-dealers could bear additional costs from the information review requirement as well as filing FINRA Forms 211 more frequently (
In specific circumstances, other provisions of the proposed amendments seek to relieve broker-dealers of costs related to the information review requirement and filing FINRA Form 211. For example, the exception for issuers with ADTV value greater than $100,000, total assets greater than $50 million, and unaffiliated shareholder equity greater than $10 million will relieve broker-dealers of the information review requirement for larger, more liquid issuers which are potentially less susceptible to fraud.
Broker-dealers could also incur costs and benefits associated with possible migration in trading activity from certain issuers and markets to others (
The costs and benefits discussed below pertain to the general requirements for proposed paragraph (b) information to be publicly available and current to publish or submit quotations for, or to maintain a quoted market in, quoted OTC securities. They also pertain to the new public disclosure requirements for the unsolicited quotation exception. The Commission expects that investors would benefit from easier access to proposed paragraph (b) information through public mediums, such as EDGAR or the website of a qualified IDQS, a registered national securities association, the issuer, or a registered broker-dealer that publishes proposed paragraph (b) information related to quoted OTC securities.
Presently, not all issuers of quoted OTC securities publicly disclose current financial information.
Higher quality issuers (
Broker-dealers may incur costs or accrue benefits from changes in the liquidity of quoted OTC securities as a result of changes in demand associated with new disclosures within quoted markets. For example, there may be changes in trading volume which alter the number of transactions from which broker-dealers earn fees. As discussed below, there may be migration from the quoted market to the grey market for OTC issuers avoiding these requirements. Therefore, the proportion of rents earned by broker-dealers from the grey market for OTC securities may increase relative to the quoted market. The net effect of these changes on the profits of trading intermediaries is unclear. Some of these costs and benefits to broker-dealers may be passed on to investors in the form of higher or lower transaction costs and account fees. The Commission anticipates that costs and benefits would be passed on more readily as competition increases
The following proposed amendments to the piggyback exception would serve to limit the circumstances under which the exception would apply relative to the baseline: The requirement for proposed paragraph (b)(5) information to be current and publicly available within six months before the date of publication or submission of quotation in an IDQS in order for broker-dealers to continue to rely on the piggyback exception; the requirement that reliance on the piggyback exception be based upon quotations with both bid and ask prices; and the inability of broker-dealers to rely on the piggyback exception to publish or submit quotations for securities of shell companies or for securities within 60 calendar days of a trading suspension. These amendments generally would serve to draw quotation and trading activity away from less liquid and less transparent quoted OTC securities.
Currently, broker-dealers may rely on the piggyback exception to publish or submit quotations for the vast majority of quoted OTC securities, but many issuers of these securities do not provide current publicly available financial disclosures.
Generally, these amendments could benefit investors by drawing their trading activity away from less liquid and less transparent quoted OTC securities that could attract fraudulent activity. Issuers in the OTC market could benefit from greater access to capital.
These amendments could also cause broker-dealers to incur additional costs. In particular, broker-dealers may need to comply with the information review requirement as well as file FINRA Forms 211 more often to maintain a quoted market for securities under these restrictions. The Commission estimates that it will take broker-dealers four hours to complete the information review and file Form 211 for prospectus issuers, Reg. A issuers, and reporting issuers and eight hours to do so for exempt foreign private issuers or catch-all issuers whenever a broker-dealer initiates the publication or submission of a quotation for an OTC security.
Of the 3,696 securities that would lose piggyback eligibility under the proposed amendments, 1,447 were securities of prospectus issuers, Reg. A issuers, and reporting issuers, 238 were of exempt foreign private issuers, and 2,011 were of catch-all issuers.
Broker-dealers may also incur costs related to determining whether or not these conditions apply to the issuer (
The proposed requirement that reliance on the piggyback exception be conditioned on quotations with both bid and ask prices could also impose costs on broker-dealers and issuers of quoted OTC securities by possibly limiting the formation of an active quoted market for OTC securities for which broker-dealers initially publish quotes with only either a bid or ask price or no prices at all. The Commission estimates that, out of 431 quoted OTC securities for which broker-dealers could start relying on the piggyback exception to publish or submit quotations during the calendar year 2018, 45 (10 percent) OTC securities had quotes with only either a bid or ask price for the entire first 30-days of being quoted and 14 (three percent) had unpriced quotes only.
In contrast, eliminating from the piggyback exception the requirement for 12 days of quotations within the previous 30 calendar days has the potential to widen the circumstances under which broker-dealers may rely on the piggyback exception relative to the baseline. This proposed amendment could make publishing quotations and trading easier in less liquid securities. Therefore, this amendment could, in principle, mitigate both the benefits and costs of the amendments described above. However, the Commission expects that eliminating the 12-day publication-of-quotations requirement would have an insignificant effect on the OTC market as it should only impact a small fraction of quoting activity. In particular, of all quoted OTC securities in the calendar year 2018, the Commission estimates that only nine of more than 10,000 securities had fewer than 12 days of published quotations within the 30 previous calendar days, with no more than four business days in succession without a quotation.
These proposed amendments also include changes to the exception for unsolicited customer quotations. In particular, the amendments limit reliance on the unsolicited quotation exception on behalf of company insiders when proposed paragraph (b) information is not current and publicly available. These amendments could increase costs for broker-dealers because they may need to verify whether proposed paragraph (b) information is current and publicly available. Broker-dealers could also be required to document and record the circumstances involved in an unsolicited customer quotation. The Commission estimates that the cost of establishing systems to document and record these circumstances would be included in the $81,900 systems cost discussed previously. In addition, the Commission estimates that it would take a broker-dealer one minute to document and record these circumstances for each customer order arising from a distinct customer and circumstance, resulting in a monetary cost of $89.
These costs could be passed on to OTC investors. For example, OTC investors may be required to provide documentation supporting the fact that they are not a prohibited person within this exception, and may experience reduced liquidity in certain securities in which they are invested. The magnitude of this potential cost to OTC investors could vary significantly depending on the manner in which it is or is not acquired by broker-dealers. However, the Commission believes that this cost could be minimal because there are means to provide documentation such as through attestations which would require minimal resources on the part of the investor.
There could also be benefits to OTC investors from the requirement for broker-dealers to obtain and review proposed paragraph (b) information when the unsolicited quotation exception does not apply. For example, the review of proposed paragraph (b) information in order to provide a quotation for an unsolicited customer quotation of a company insider could deter fraud by alerting broker-dealers to potential sales by company insiders related to fraud. In addition, as discussed above in relation to proposed limitations on the piggyback exception, the costs and benefits to investors, issuers and broker-dealers would be qualitatively similar. Issuers in the OTC market could benefit from greater access to capital if capital flows away from fraudulent investments. Broker-dealers could also incur costs and benefits associated with possible migration in trading activity if unsolicited customer orders move from quoted to non-quoted markets. These costs and benefits could be passed on to OTC investors. Finally, there would be benefits and costs associated with the requirements pertaining to public disclosure of proposed paragraph (b) information, as the unsolicited quotation exception for a company insider would be contingent on this information being current and publicly available.
These amendments propose three new exceptions to except publications of quotations for certain OTC securities from the provisions of Rule 15c2-11, primarily the requirement for broker-dealers to obtain and review proposed paragraph (b) information. The first of the three new exceptions would apply to securities with (1) a $100,000 ADTV value and where (2) the issuer of such security has $50 million total assets value and $10 million unaffiliated shareholders' equity on the issuer's publicly available audited balance sheet issued within six months after the end of the most recent fiscal year. This exception would apply only to securities for which proposed paragraph (b) information is current and publicly available. This exception is meant to target more visible quoted OTC securities for which current and reliable information about the issuer is publicly available to investors, specifically for larger issuers, and for more liquid securities. This exception is expected to reduce the broker-dealer burden of complying with the Rule with respect to publishing quotations for securities for a subset of issuers of OTC securities. The analysis in the baseline revealed no
This analysis pertains to total shareholder equity which serves as an upper bound for unaffiliated shareholder equity. Therefore, any firms which fall below $10 million in shareholder equity fall below this threshold for unaffiliated shareholder equity.
Because delinquent filings may be the reason for the trading suspension, the Commission is aware that the Commission's analysis using data on total assets and shareholder equity of issuers with suspended OTC securities may rely on information which is outdated and no longer representative of issuer fundamentals.
The main economic effect of this proposed exception regarding ADTV and assets tests should be to relieve broker-dealers from the information review requirement and filing a FINRA Form 211 to publish quotations in a quotation medium. As before, the Commission estimates that broker-dealers will incur relief from a monetized cost of $240 for prospectus issuers, Reg. A issuers, and reporting issuers, $480 for exempt foreign private and catch-all issuers whenever a broker-dealer publishes or submits a quotation for issuers satisfying these requirements. According to the Commission's estimates from the PRA, two issuers would be reporting issuers while one would be a catch-all issuer per year so that the total cost savings would be $960.
There could be additional relief as a result of the ADTV and assets exceptions for broker-dealers quoting securities that end up losing piggyback eligibility under the proposed paragraph (g)(3) exception. The Commission estimates that out of the 3,696 securities that would lose piggyback eligibility under the proposed amendments, four securities of prospectus issuers, Reg. A issuers, and reporting issuers and three securities of exempt foreign private issuers would have satisfied the ADTV value and assets thresholds. The ability of broker-dealers to rely on the proposed paragraph (g)(5) exception for securities for which they could no longer rely on the proposed paragraph (g)(3) exception could lead to an additional relief of four × $240 + 3 × $480 = $2,400.
The second of the three proposed new exceptions would apply to quotations following a registered or Regulation A offering, where the broker-dealer was named as an underwriter in the registration statement or offering circular and publishes or submits quotations for the same class of security in an IDQS within certain specified time frames. This exception is targeted towards those OTC securities that were recently offered in a transaction in which a regulated entity may have conducted a due diligence review. Because of the liability attached to underwriting activity, an underwriter typically conducts a due diligence review to mitigate potential liability associated with underwriting an offering of securities. Depending on its breadth and quality, this review may permit an underwriter to assert a defense to liability under Section 11 or Section 12(a)(2) of the Securities Act. As a result, underwriters of registered and Regulation A offerings are incentivized to confirm that the information provided to investors in the prospectus for a registered offering and offering circular for a Regulation A offering is materially accurate and obtained from a reliable source. Thus, excepting these quotations from the Rule's provisions is expected to reduce the burden of complying with the Rule for certain broker-dealers without sacrificing investor protection. The Commission does not currently have data that allow it to estimate the propensity with which broker-dealers are underwriting offerings for the same securities for which they are publishing quotations and thus quantify the effect of this exception on broker-dealers.
In addition, the Commission is also proposing an exception for publications or submissions of quotations respecting securities where a qualified IDQS complies with the Rule's provisions, so long as the issuer of the security is not a shell company. Broker-dealers could also rely on a publicly available determination by a qualified IDQS that proposed paragraph (b) information is current and publicly available for a given security. This exception is expected to reduce the burden on some broker-dealers with respect to publishing or submitting quotations for certain OTC securities. However, broker-dealers may incur additional costs related to determining certain characteristics about the issuer (
Lastly, the Commission is also proposing an exception for publications or submissions of quotations by broker-dealers that rely on publicly available determinations by a qualified IDQS or a registered national securities association that proposed paragraph (b) information is current and publicly available, as well as whether a broker-dealer may rely on certain proposed exceptions to the Rule. The Commission expects the main economic effect of this proposed exception to be mitigating costs broker-dealers are expected to incur associated with determining certain characteristics about an issuer (
In this section, the Commission discusses the impact that the proposed amendments to Rule 15c2-11 may have on efficiency, competition, and capital formation. As discussed above, these amendments generally would increase transparency by requiring public availability of proposed paragraph (b) information that is current to enable broker-dealers to publish or submit quotations for OTC securities. As a result, the proposed amendments may cause capital to migrate from opaque to more transparent companies. A transfer of capital could occur as a result of non-disclosing OTC issuers either exiting OTC market altogether or migrating from the quoted OTC market to the grey market. This transfer of capital would occur where OTC issuers opt not to make existing paragraph (b) information publicly available. Less liquid OTC securities could also migrate away from the quoted OTC market as a result of the proposed restrictions on the piggyback exception pertaining to (1) shell companies, (2) recently suspended securities, and (3) securities without a sufficient prior history of both bid and ask prices. One academic study finds that valuations decrease when firms migrate from more liquid markets to less liquid markets, possibly as a result of decreased access to capital.
In addition, the transparency of the market for quoted OTC securities should generally improve, particularly for non-disclosing issuers that decide to start publicly disclosing proposed paragraph (b) information to remain on the quoted OTC market. Capital formation could improve as investors allocate funds toward more productive investments based on enhanced availability of proposed paragraph (b) information in the quoted market for OTC securities. In particular, investors may be able to better discern the value of an OTC security from the financial and qualitative data contained in proposed paragraph (b) information. As a result of these effects, these proposed amendments could generally enhance the efficiency of capital allocation,
The efficiency of prices (
The heightened transparency that would arise from the proposed amendments could increase competition among both broker-dealers and issuers of quoted OTC securities. For example, broker-dealers could access proposed paragraph (b) information at a low cost and establish more competitive prices. Prior to these proposed amendments, broker-dealers could have had differential access to proposed paragraph (b) information in quoted the OTC market and potentially benefited from non-competitive pricing as a result. As mentioned previously, some broker-dealers may withdraw from quoting certain OTC securities (
Issuers of quoted OTC securities may also need to price seasoned equity offerings more competitively because investors would have improved access to information and might be able to more easily compare the financials of OTC issuers when allocating their investment dollars. This information could again enable OTC investors to divert funds more easily from higher to lower cost issues. As a result, OTC issuers would have less ability to price their issues high relative to the fundamental value of the securities being offered.
In this section, reasonable alternatives to the proposed amendments to Rule 15c2-11 are discussed.
The 1999 Reproposing Release proposed to eliminate the piggyback exception from Rule 15c2-11. This amendment would have required all broker-dealers to complete the information review requirement and file FINRA Form 211 before publishing or submitting a quotation in a quotation medium. Relative to the baseline (
First, review of proposed paragraph (b) information could help broker-
The Commission preliminarily believes that the proposed Rule more appropriately meets the Commission's policy goals because the alternative places the additional burdens upon broker-dealers and OTC issuers relative to the proposed amendments, while it fails to target OTC securities most vulnerable to fraud and manipulation. In particular, broker-dealers would incur additional costs associated with review of proposed paragraph (b) information and filing FINRA Form 211 for all OTC securities they wish to quote. In addition, this alternative could raise the cost of capital for OTC issuers relative to the proposed amendments again without targeting those issuers most vulnerable to fraud and manipulation.
These amendments to Rule 15c2-11 propose to eliminate the piggyback exception for publications or submissions of quotations for shell companies, which could inhibit pump-and-dump schemes that can be targeted toward shell companies. One possible alternative would be to more narrowly target pump-and-dump schemes by eliminating the piggyback exception for publications or submissions of shell companies only during a fixed period after a reverse merger between a shell company and an operating company. Because there is often no public information about the post-merger company, eliminating the piggyback exception at that point would require the issuer to make proposed paragraph (b) information publicly available for a broker-dealer to maintain an actively quoted market. The economic effect of this alternative would be directionally similar to that of the proposed restriction on publications or submissions of quotations for securities of all shell companies.
In particular, this alternative could improve the welfare of investors by helping them avoid fraud perpetrated through shell companies following a reverse merger. Second, issuers in the OTC market could benefit from greater access to capital.
The 1999 Reproposing Release proposed to except publications of quotations from the provision of Rule 15c2-11 for OTC securities with at least: (1) $100,000 ADTV value, (2) $50 million total assets value and $10 million shareholders' equity on the issuer's audited balance sheet or (3) $50 bid price. These exceptions were less restrictive than the ones in the current proposed amendments as the exception would apply if an OTC security could conform to only one of these three conditions. Therefore, one possible alternative would be to establish thresholds which conform to these conditions from the 1999 Reproposing Release.
Relative to the baseline, the main economic effect of this alternative would be to relieve broker-dealers from complying with the Rule's provisions and filing FINRA Form 211 to publish quotations in a quotation medium. Some of these benefits may be passed on to OTC investors. Certain issuers or securities that would qualify for these exceptions but currently trade in the grey market may benefit from a broker-dealer establishing a quoted market without incurring costs associated with complying with the Rule's provisions. This migration may result in a benefit to investors to the extent that it may establish a new quoted market that facilitates price discovery and liquidity for quality securities previously trading in the grey market.
Relative to the proposed amendments, however, this alternative is more likely to except securities that may be targeted for fraudulent activity from the Rule's review and document collection provisions. For example, there were five suspended OTC securities in 2018 with ADTV value in excess of $100,000 and 11 issuers of suspended OTC securities that exceeded the thresholds for $50 million in total assets and $10 million in shareholders' equity. Therefore, investors may incur costs from greater exposure to fraud and manipulation relative to the proposed amendments. As a result, the Commission preliminarily believes the proposed Rule is better than the alternative. However, investors in higher quality OTC issuers could benefit in that a greater number would qualify for the quoted market relative to the proposed amendments. In addition, broker-dealers would benefit from even greater relief from the Rule's provisions and from filing FINRA Form 211.
The proposed amendments condition the piggyback exception on quotations with both bid and ask prices for the prior 30 calendar days with no gap in quoting of more than four days. One alternative would be to condition the exception on quotations with either a bid or ask price. Relative to the proposed amendments, this alternative would allow more securities to become eligible for the piggyback exception. As such, broker-dealers would incur less cost associated with the Rule's review, document collection, and record-keeping provisions (as well as filing FINRA Form 211) before publishing or submitting a quotation for an OTC security relative to the proposed amendments. The Commission has estimated that 879 OTC securities for which broker-dealers could publish quotations relying on the piggyback exception during 2018 did not have quotations with both bid and ask prices for four days one or more times in a year. Of these securities, 402 were of prospectus, Reg. A, and reporting issuers, 187 were of exempt foreign private issuers, and 290 were of catch-all issuers. Therefore, the Commission estimates that the additional dollar benefit to broker-dealers from this relief would be $325,440.
The Commission has sought to align the proposed Rule with existing regulatory requirements for publicly available information, as well as with private market solutions that have developed since the Commission last proposed to amend the Rule. Notwithstanding this, an alternative to the proposed amendments would be to define proposed paragraph (b) disclosures as “current” for catch-all issuers based on a different length of time (
However, OTC issuers would face increased costs of providing disclosures more frequently under such an alternative. In particular, OTC issuers with no reporting obligations or minimal reporting obligations would effectively be subject to a more frequent reporting obligation under such an alternative. Some OTC issuers that wish to have quoted securities may find themselves effectively subject to a reporting framework that requires more frequent public disclosures than their current annual or semiannual reporting obligations as an issuer under the federal securities laws, such as reporting requirements under the Securities Act or exchange listing requirements under the Exchange Act. Broker-dealers, IDQSs, and national securities associations may also be required to review proposed paragraph (b) information more frequently under this alternative in order to initially publish or submit, or maintain, quotes in the OTC market. The Commission preliminarily believes the proposed Rule is better than the alternative because the additional benefits from more frequently disclosed information are likely to be minor, while the costs for issuers, broker-dealers, and other market participants could increase in proportion to the required frequency of disclosures.
Decreasing the frequency of required disclosures could have effects opposite to those discussed above. The Commission is not proposing such an alternative because a significant decrease in the frequency of required disclosures could make the disclosures less relevant for decision making purposes, driving down their potential benefit to investors.
While the Commission welcomes any public input on its economic analysis, the Commission asks commenters to consider the following questions:
Q139. The Commission requests information including data that would help quantify the costs and the value of the benefits of the proposed amendments described above. The Commission seeks estimates of these costs and benefits, as well as any costs and benefits not already defined, that may result from the proposed amendments. The Commission also requests qualitative feedback on the nature of the benefits and costs described above and any benefits and costs the Commission may have overlooked.
Q140. In particular, the Commission requests information including data on the costs to issuers associated with preparing and providing publicly proposed paragraph (b) information, especially for issuers that do not currently have a reporting obligation under the Exchange Act or other federal securities laws or rules. To what extent are these costs mitigated by offering alternatives for releasing proposed paragraph (b) materials?
Q141. What types of investors typically invest in quoted OTC securities in terms of demographics such as age, income, wealth, education, gender and other characteristics such as financial literacy and behavior? What types of investors typically invest in OTC security promotions or pump-and-dump schemes? What are the typical outcomes from investment in quoted OTC securities, promotions, and pump-and-dump schemes for investors with different demographics and characteristics?
Q142. To what extent do investors consider already publicly available information about quoted OTC securities when making investment decisions? Would requiring all quoted OTC securities to have proposed paragraph (b) information publicly available increase investor reliance on issuer information (perhaps because it would become easier to compare among issuers)?
Q143. To what extent would the proposed amendments change the number of quoted securities? In particular, which types of quoted OTC securities will be likely to move away from the quoted OTC market to the grey market? Which types of OTC securities previously trading on the grey market are likely to move to the quoted market? Are there frictions to moving between the quoted OTC market and the grey market?
Q144. Which types of securities are likely to have significant discrepancies when comparing worldwide trading volume and trading volume reported to FINRA? Which data on trading will broker-dealers likely use when establishing eligibility for relying on the ADTV prong of the proposed ADTV and asset test exception?
Q145. What impact would the proposed amendments have on competition? Would the proposed amendments put issuers of quoted OTC securities, or particular types of issuers of quoted OTC securities, at a competitive advantage or disadvantage?
Q146. What impact would the proposed amendments have on efficiency? Has the Commission overlooked any positive or negative effects on efficiency?
Q147. What impact would the proposed amendments have on capital formation? Would there be any positive or negative effects on capital formation that the Commission may have overlooked?
Q148. To what degree would the costs of the proposed Rule's provisions be borne by a qualified IDQS on behalf of broker-dealers? To what degree would a qualified IDQS or registered national securities association make publicly available determinations that the requirements of an exception are met?
Q149. How common is it for broker-dealers to initiate quotations for OTC securities that were underwritten by them? To what extent would broker-dealers rely on the proposed exception for securities issued in offerings that were underwritten?
Q150. To what extent do certain broker-dealers have information systems in place to assess whether certain conditions (
Q151. What is the degree of competition among broker-dealers that publish quotations for OTC securities? Is it the case that there is a handful of dominant broker-dealers publishing quotations for OTC securities or is this activity spread across many broker-dealers of varying size? Do certain broker-dealers publish quotations for a specific subset of OTC securities and not others (
Q152. For issuers of quoted OTC securities that do not currently have a reporting or disclosure obligation outside of the existing Rule, could requiring disclosures to be publicly available lead to changes in the nature or the quality of disclosures these companies provide? For these same issuers, which method of distribution would they likely choose for making proposed paragraph (b) information publicly available?
Q153. To what extent are quoted OTC securities subjects of promotion campaigns? How is the propensity of a quoted OTC security to be the subject of a promotion campaign related to there being a lack of publicly available information about its issuer?
Q154. Are there alternatives the Commission should consider other than those discussed in this release? What are the costs and benefits of those alternatives relative to the regulatory baseline and relative to the proposed amendments?
The Regulatory Flexibility Act (“RFA”)
Based on a review of data involving the 89 broker-dealers that publish quotations for OTC securities, the Commission does not believe that any of the 89 broker-dealers impacted by the Rule are small entities under the above definition because they either exceed $500,000 in total capital or are affiliated with a person that is not a small entity as defined in Rule 0-10.
For the foregoing reason, the Commission certifies that the proposed amendments to Exchange Act Rule 15c2-11 would not have a significant economic impact on a substantial number of small entities for purposes of the RFA. The Commission encourages written comments regarding this certification, and requests that commenters describe the nature of any impact on small entities and provide empirical data to illustrate the extent of the impact.
For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996, the Commission is also requesting information regarding the potential impact of the proposed amendments on the economy on an annual basis. In particular, comments should address whether the proposed changes, if adopted, would have a $100,000,000 annual effect on the economy, cause a major increase in costs or prices, or have a significant adverse effect on competition, investment, or innovations. Commenters should provide empirical data to support their views.
The rule amendments are being proposed pursuant to Sections 3, 10(b), 15(c), 15(h), 17(a), and 23(a) of the Securities Exchange Act of 1934, 15 U.S.C. 78c, 78j(b), 78o(c), 78o(g), 78q(a), and 78w(a).
Administrative practice and procedure, Reporting and recordkeeping requirements, Securities.
For the reasons set out in the preamble, the Commission is proposing to amend title 17, chapter II of the Code of the Federal Regulations as follows.
15 U.S.C. 77b, 77b note, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78
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, 78l, 78m, 78n, 78n-1, 78o, 78o-4, 78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, and 7201
(a)
(1) A broker or dealer to publish any quotation for a security or, directly or indirectly, to submit any such quotation for publication, in any quotation medium, unless:
(i) Such broker or dealer has in its records the documents and information required by paragraph (b) of this section;
(ii) Such documents and information required by paragraph (b) of this section (excluding paragraphs (b)(5)(i)(N) through (P) of this section) are current and publicly available; and
(iii) Based upon a review of the documents and information required by paragraph (b) of this section, together with any other documents and information required by paragraph (c) of this section, such broker or dealer has a reasonable basis under the circumstances for believing that:
(A) The documents and information required by paragraph (b) of this section are accurate in all material respects; and
(B) The sources of the documents and information required by paragraph (b) of this section are reliable; or
(2) A qualified interdealer quotation system to make known to others the quotation of a broker or dealer that is published or submitted pursuant to paragraph (f)(7) of this section, unless:
(i) Such qualified interdealer quotation system has in its records documents and information required by paragraph (b) of this section (excluding paragraphs (b)(5)(i)(N) through (P) of this section except where the qualified interdealer quotation system has knowledge or possession of this information);
(ii) Such documents and information required by paragraph (b) of this section (excluding paragraphs (b)(5)(i)(N) through (P) of this section) are current and publicly available; and
(iii) Based upon a review of the documents and information required by paragraph (b) of this section (excluding paragraphs (b)(5)(i)(N) through (P) of this section except where the qualified interdealer quotation system has knowledge or possession of this information), together with any other documents and information required by paragraph (c) of this section, such qualified interdealer quotation system has a reasonable basis under the circumstances for believing that:
(A) The documents and information required by paragraph (b) of this section are accurate in all material respects; and
(B) The sources of the documents and information required by paragraph (b) of this section are reliable.
(b)
(2) A copy of the offering circular provided for under Regulation A under the Securities Act of 1933 for an issuer that has filed a notification under Regulation A and was authorized to commence the offering less than 40 calendar days prior to the day on which such broker or dealer publishes or submits the quotation to the quotation medium;
(3) A copy of the:
(i) Issuer's most recent annual report filed pursuant to section 13 or 15(d) of the Act, together with any periodic and current reports that have been filed thereafter under the Act by the issuer, except for current reports filed during the three business days prior to the publication or submission of the quotation;
(A) Until such issuer has filed its first such annual report, the broker, dealer, or qualified interdealer quotation system has in its records a copy of the registration statement filed by the issuer under the Securities Act of 1933, other than a registration statement on Form F-6, that became effective within the prior 16 months, or a copy of any registration statement filed by the issuer under section 12 of the Act that became effective within the prior 16 months, together with any periodic and current reports filed thereafter under section 13 or 15(d) of the Act, and
(B) The broker, dealer, or qualified interdealer quotation system has a reasonable basis under the circumstances for believing that the issuer is current in filing such reports described in this paragraph (b)(3)(i);
(ii) Issuer's most recent annual report filed pursuant to Regulation A (§§ 230.251 through 230.263 of this chapter), together with any periodic and current reports filed thereafter under Regulation A by the issuer, except for current reports filed during the three business days prior to the publication or submission of the quotation;
(A) Until such issuer has filed its first such annual report, the broker, dealer, or qualified interdealer quotation system has in its records a copy of the offering circular filed by the issuer under Regulation A, that was qualified within the prior 16 months, together with any periodic and current reports filed thereafter under Regulation A, and
(B) The broker, dealer, or qualified interdealer quotation system has a reasonable basis under the circumstances for believing that the issuer is current in filing such reports described in this paragraph (b)(3)(ii);
(iii) Annual statement referred to in section 12(g)(2)(G)(i) of the Act (in the case of an issuer required to file reports pursuant to section 13 or 15(d) of the Act), together with any periodic and current reports filed thereafter under the Act by the issuer, except for current reports filed during the three business days prior to the publication or submission of the quotation;
(A) Until such issuer has filed its first such annual statement, the broker, dealer, or qualified interdealer quotation system has in its records a copy of the registration statement filed by the issuer
(B) The broker, dealer or qualified interdealer quotation system has a reasonable basis under the circumstances for believing that the issuer is current in filing such reports described in this paragraph (b)(3)(iii); or
(iv) Annual statement referred to in section 12(g)(2)(G)(i) of the Act (in the case of an issuer of a security that falls within the provisions of section 12(g)(2)(G) of the Act);
(4) A copy of the information that, since the beginning of its last fiscal year, the issuer has published pursuant to § 240.12g3-2(b), which the broker or dealer must make available upon the request of a person expressing an interest in a proposed transaction in the issuer's security with the broker or dealer, such as by providing the requesting person with appropriate instructions regarding how to obtain the information electronically; or
(5)(i) The following information, which must be made publicly available (excluding paragraphs (b)(5)(i)(N) through (P) of this section) and be current as of a date within 12 months prior to the publication or submission of the quotation, unless otherwise specified:
(A) The name of the issuer and its predecessor (if any);
(B) The address of the issuer's principal executive offices;
(C) The state of incorporation or registration;
(D) The title and class of the security;
(E) The par or stated value of the security;
(F) The number of shares or total amount of the securities outstanding as of the end of the issuer's most recent fiscal year;
(G) The name and address of the transfer agent;
(H) A description of the issuer's business;
(I) A description of products or services offered by the issuer;
(J) A description and extent of the issuer's facilities;
(K) The name of the chief executive officer, members of the board of directors, and officers, as well as any person who is, directly or indirectly, the beneficial owner of more than 10 percent of the outstanding units or shares of any class of any equity security of the issuer;
(L) The issuer's most recent balance sheet (as of a date less than 16 months before the publication or submission of the quotation) and profit and loss and retained earnings statements (for the 12 months preceding the date of the most recent balance sheet);
(M) Similar financial information for such part of the two preceding fiscal years as the issuer or its predecessor has been in existence;
(N) Whether the broker or dealer or any associated person of the broker or dealer is affiliated, directly or indirectly, with the issuer;
(O) Whether the quotation is being published or submitted on behalf of any other broker or dealer and, if so, the name of such broker or dealer; and
(P) Whether the quotation is being submitted or published, directly or indirectly, by or on behalf of the issuer or persons identified in paragraph (b)(5)(i)(K) of this section and, if so, the name of such person and the basis for any exemption under the federal securities laws for any sales of such securities on behalf of such person.
(ii) The broker or dealer must make information required by paragraph (b)(5)(i) of this section available upon the request of a person expressing an interest in a proposed transaction in the issuer's security with the broker or dealer, such as by providing the requesting person with appropriate instructions regarding how to obtain publicly available information electronically. If such information is made available to others upon request pursuant to this paragraph, such delivery, unless otherwise represented, shall not constitute a representation by such broker or dealer that such information is accurate, but shall constitute a representation by such broker or dealer that the information is current in relation to the day the quotation is submitted, that the broker or dealer has a reasonable basis under the circumstances for believing the information is accurate in all material respects, and that the information was obtained from sources that the broker or dealer has a reasonable basis for believing are reliable. Paragraph (b)(5)of this section shall apply to any security of an issuer that is not included in paragraphs (b)(1) through (b)(4) of this section. Paragraph (b)(5) of this section shall apply to any security of an issuer if information described in paragraphs (b)(1) through (b)(4) of this section is not current.
(c)
(1) Records related to the submission or publication of such quotation, including the identity of the person or persons for whom the quotation is being published or submitted, whether such person or persons is the issuer, chief executive officer, any members of the board of directors, officers, or any person, directly or indirectly, the beneficial owner of more than 10 percent of the outstanding units or shares of any class of equity security of the issuer, and any information regarding the transactions provided to the broker, dealer or qualified interdealer quotation system by such person or persons;
(2) A copy of any trading suspension order issued by the Commission pursuant to section 12(k) of the Act concerning any securities of the issuer or its predecessor (if any) during the 12 months preceding the date of the publication or submission of the quotation or a copy of the public release issued by the Commission announcing such trading suspension order; and
(3) A copy or a written record of any other material information (including adverse information) regarding the issuer that comes to the knowledge or possession of the broker, dealer, or qualified interdealer quotation system before the publication or submission of the quotation.
(d)
(A) Any broker or dealer publishing or submitting a quotation pursuant to paragraph (a)(1) of this section concerning a security; or
(B) Any qualified interdealer quotation system that makes known to others the quotation of a broker or dealer pursuant to paragraph (a)(2) of this section concerning a security;
(ii)
(2)(i) The following persons shall preserve for a period of not less than three years, the first two years in an easily accessible place, the documents and information that demonstrate that the requirements for an exception under paragraphs (f)(2), (f)(3), (f)(5), (f)(6), (f)(7), and (f)(8) of this section are met:
(A) Any qualified interdealer quotation system or registered national securities association that makes the publicly available determinations described in paragraph (f)(8) of this section; and
(B) Any broker or dealer publishing or submitting a quotation pursuant to paragraph (f) of this section;
(ii)
(e)
(1)
(2)
(3)
(4)
(5)
(6) Except as otherwise specified in this rule,
(7)
(8)
(i) No or nominal operations; and
(ii) Either:
(A) No or nominal assets;
(B) Assets consisting solely of cash and cash equivalents; or
(C) Assets consisting of any amount of cash and cash equivalents and nominal other assets.
(f)
(1) The publication or submission of a quotation concerning a security that is admitted to trading on a national securities exchange and that is traded on such an exchange on the same day as, or on the business day next preceding, the day the quotation is published or submitted.
(2) The publication or submission by a broker or dealer, solely on behalf of a customer (other than a person acting as or for a dealer), of a quotation that represents the customer's unsolicited indication of interest;
(i) Consisting of both a bid and an offer, each of which is at a specified price, unless the quotation medium specifically identifies the quotation as representing such an unsolicited customer interest; or
(ii) Published or submitted, directly or indirectly, by or on behalf of the chief executive officer, members of the board of directors, officers, or any person who is, directly or indirectly, the beneficial owner of more than 10 percent of the outstanding units or shares of any class of any equity security of the issuer, unless documents and information required by paragraph (b) of this section are current and publicly available.
(3)(i)(A) The publication or submission, in an interdealer quotation system that specifically identifies as such unsolicited customer indications of interest of the kind described in paragraph (f)(2) of this section, of a quotation concerning a security that has been the subject of both bid and ask quotations (exclusive of any identified customer interests) in such a system at specified prices within the previous 30 calendar days, with no more than four business days in succession without such a quotation;
(B) The publication or submission, in an interdealer quotation system that does not so identify any such unsolicited customer indications of interest, of a quotation concerning a security that has been the subject of both bid and ask quotations in an interdealer quotation system at specified prices within the previous 30 calendar days, with no more than four business days in succession without such a quotation; or
(C) A dealer acting in the capacity of market maker, as defined in section 3(a)(38) of the Act, that has published or submitted a quotation concerning a security in an interdealer quotation system and such quotation has qualified for an exception provided in this paragraph (f)(3), may continue to publish or submit quotations for such security in the interdealer quotation system without compliance with this section, unless and until such dealer ceases to submit or publish a quotation
(ii)
(4) The publication or submission of a quotation concerning a municipal security.
(5)(i) The publication or submission of a quotation concerning:
(A) A security with a worldwide average daily trading volume value of at least $100,000 during the 60 calendar days immediately before the publication of the quotation of such security; and
(B) The issuer of such security has at least $50 million in total assets and $10 million in unaffiliated shareholders' equity as reflected in the issuer's publicly available audited balance sheet issued within six months after the end of its most recent fiscal year;
(ii)
(6) The publication or submission of a quotation concerning a security by a broker or dealer that is named as an underwriter in a registration statement for an offering of that class of security referenced in paragraph (b)(1) of this section or in an offering circular for an offering of that class of security referenced in paragraph (b)(2) of this section;
(7) The publication or submission of a quotation by a broker or dealer, in a qualified interdealer quotation system, concerning a security where such qualified interdealer quotation system complies with the requirements of paragraphs (a) through (c) of this section and also makes a publicly available determination of such compliance, and a broker or dealer publishes or submits a quotation in reliance on this exception within three business days after such publicly available determination;
(i) If the issuer of such security is a shell company; or
(ii) After the first 30 calendar days of publication or submission of such quotation by a broker or dealer in reliance on this paragraph (f)(7).
(8) The publication or submission of a quotation by a broker or dealer that relies on publicly available determinations by a qualified interdealer quotation system or registered national securities association that:
(i) Documents and information required by paragraph (b) are current and publicly available;
(ii) A broker or dealer may rely on an exception contained in paragraph (f)(1), (f)(3)(i)(A), (f)(3)(i)(B), (f)(4), (f)(5), or (f)(7) of this section;
(iii) The qualified interdealer quotation system or registered national securities association has reasonably designed written policies and procedures to determine whether documents and information required by paragraph (b) of this section are current and publicly available and that the requirements of an exception under paragraph (f) of this section are met.
(g)
By the Commission.
Environmental Protection Agency (EPA).
Proposed rule.
The U.S. Environmental Protection Agency (EPA) is proposing amendments to the National Emission Standards for Hazardous Air Pollutants (NESHAP) for the Rubber Tire Manufacturing source category. The proposal addresses the results of the residual risk and technology review (RTR) conducted as required under the Clean Air Act (CAA). The proposed amendments address the startup, shutdown, and malfunction (SSM) provisions of the rule and amend provisions regarding electronic reporting of certain notifications, performance test results, and semiannual reports.
You may send comments, identified by Docket ID No. EPA-HQ-OAR-2019-0392, by any of the following methods:
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For questions about this proposed action, contact Mr. Korbin Smith, Sector Policies and Programs Division (D243-04), Office of Air Quality Planning and Standards, U.S. Environmental Protection Agency, Research Triangle Park, North Carolina 27711; telephone number: (919) 541-2416; fax number: (919) 541-4991; and email address:
The EPA may publish any comment received to its public docket. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission (
The
Table 1 of this preamble lists the NESHAP and associated regulated industrial source category that is the subject of this proposal. Table 1 is not intended to be exhaustive, but rather provides a guide for readers regarding the entities that this proposed action is likely to affect. The proposed standards, once promulgated, will be directly applicable to the affected sources. Federal, state, local, and tribal
In addition to being available in the docket, an electronic copy of this action is available on the internet. Following signature by the EPA Administrator, the EPA will post a copy of this proposed action at
A redline version of the regulatory language that incorporates the proposed changes in this action is available in the docket for this action (Docket ID No. EPA-HQ-OAR-2019-0392).
The statutory authority for this action is provided by sections 112 and 301 of the CAA, as amended (42 U.S.C. 7401
In the first stage of the CAA section 112 standard setting process, the EPA promulgates technology-based standards under CAA section 112(d) for categories of sources identified as emitting one or more of the HAP listed in CAA section 112(b). Sources of HAP emissions are either major sources or area sources, and CAA section 112 establishes different requirements for major source standards and area source standards. “Major sources” are those that emit or have the potential to emit 10 tons per year (tpy) or more of a single HAP or 25 tpy or more of any combination of HAP. All other sources are “area sources.” For major sources, CAA section 112(d)(2) provides that the technology-based NESHAP must reflect the maximum degree of emission reductions of HAP achievable (after considering cost, energy requirements, and non-air quality health and environmental impacts). These standards are commonly referred to as MACT standards. CAA section 112(d)(3) also establishes a minimum control level for MACT standards, known as the MACT “floor.” The EPA must also consider control options that are more stringent than the floor. Standards more stringent than the floor are commonly referred to as beyond-the-floor standards. In certain instances, as provided in CAA section 112(h), the EPA may set work practice standards where it is not feasible to prescribe or enforce a numerical emission standard. For area sources, CAA section 112(d)(5) gives the EPA discretion to set standards based on generally available control technologies or management practices (GACT standards) in lieu of MACT standards.
The second stage in standard-setting focuses on identifying and addressing any remaining (
The approach incorporated into the CAA and used by the EPA to evaluate
CAA section 112(d)(6) separately requires the EPA to review standards promulgated under CAA section 112 and revise them “as necessary (taking into account developments in practices, processes, and control technologies)” no less often than every 8 years. In conducting this review, which we call the “technology review,” the EPA is not required to recalculate the MACT floor.
The Rubber Tire Manufacturing NESHAP was promulgated on July 9, 2002 (67 FR 45588), and codified at 40 CFR part 63, subpart XXXX. As promulgated, the Rubber Tire Manufacturing NESHAP applies to affected sources of HAP at rubber materials manufacturing facilities that are major sources of HAP. The affected source covered by this subpart is each new, reconstructed, or existing facility that manufactures rubber tires.
The Rubber Tire Manufacturing source category is subcategorized into four subcategories, which include rubber processing, tire production, tire cord production, and puncture sealant application. Components of rubber tires include, but are not limited to, rubber compounds, sidewalls, tread, tire beads, tire cord, and liners. Other components often associated with rubber tires but not integral to the tire, such as wheels, inner tubes, tire bladders, and valve stems, are not components of rubber tires or tire cord and are not subject to this subpart. At the time of this proposal we did not identify any major source facilities of tire cord production or puncture sealant application.
Emissions limits in the 2002 NESHAP for the Rubber Tire Manufacturing source category were set for each subcategory separately:
There are no emission limits for rubber processing affected sources.
There are two options for compliance under this subcategory. First is a HAP constituent option, which states that emissions of each HAP in Table 16 to 40 CFR part 63, subpart XXXX, must not exceed 1,000 grams HAP per megagram (2 pounds per ton) of total cements and solvents used at the tire production affected source, and that emissions of each HAP not in Table 16 to 40 CFR part 63, subpart XXXX, must not exceed 10,000 grams HAP per megagram (20 pounds per ton) of total cements and solvents used at the tire production affected source.
The second emission limit option is a production-based option. For this option, emissions of HAP must not exceed 0.024 grams per megagram (0.00005 pounds per ton) of rubber used at the tire production affected source.
There are three options for compliance under this subcategory. The first option is a production-based option for existing tire cord production affected sources. As part of this option, emissions must not exceed 280 grams HAP per megagram (0.56 pounds per ton) of fabric processed at the tire cord production affected source.
The second option is a production-based option for new or reconstructed tire cord production affected sources. As part of this option, emissions must not exceed 220 grams HAP per megagram (0.43 pounds per ton) of fabric processed at the tire cord production affected source.
The third option is a HAP constituent option available to both existing and new or reconstructed tire cord production affected sources. As part of this option, emissions of each HAP in Table 16 to 40 CFR part 63, subpart XXXX, must not exceed 1,000 grams HAP per megagram (2 pounds per ton) of total coatings used at the tire cord production affected source, and emissions of each HAP not in Table 16 to 40 CFR part 63, subpart XXXX, must not exceed 10,000 grams HAP per megagram (20 pounds per ton) of total coatings used at the tire cord production affected source.
There are three options for compliance under this subcategory. The first option is a percent reduction option for existing puncture sealant application spray booths. As part of this option, facilities are required to reduce spray booth HAP (measured as volatile organic compounds (VOC)) emissions by at least 86 percent by weight.
The second option is a percent reduction option for new or reconstructed puncture sealant application spray booths. As part of this option, facilities are required to reduce spray booth HAP (measured as VOC) emissions by at least 95 percent by weight.
The third option is a HAP constituent option for both existing and new or reconstructed puncture sealant application spray booths. As part of this option, emissions of each HAP in Table 16 to 40 CFR part 63, subpart XXXX, must not exceed 1,000 grams HAP per megagram (2 pounds per ton) of total puncture sealants used at the puncture sealant affected source, and emissions of each HAP not in Table 16 to 40 CFR part 63, subpart XXXX, must not exceed 10,000 grams HAP per megagram (20 pounds per ton) of total puncture sealants used at the puncture sealant affected source.
The three subcategories subject to emission limits (tire production, tire cord production, and puncture sealant application) offer compliance alternatives to meet the above-mentioned emission limits. For more information, a detailed breakdown of
For the residual risk assessment, the EPA received data from a voluntary data gathering effort led by the United States Tire Manufacturing Association (USTMA). USTMA worked with its major source facility members to provide information to the Agency regarding the rubber tire manufacturing process and the associated air emissions. The information received included description of HAP-emitting processes, information on the HAP-containing materials used, estimates of emissions, and descriptions of control technologies, if present.
For all major sources who are not members of USTMA, data was collected from the 2014 National Emissions Inventory (NEI). The NEI is a database that contains information about sources that emit criteria air pollutants, their precursors, and HAP. The database includes estimates of annual air pollutant emissions from point, nonpoint, and mobile sources in the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands. The EPA collects this information and releases an updated version of the NEI database every 3 years. The NEI includes data necessary for conducting a risk assessment, including annual HAP emissions estimates from individual emission points at facilities and the related emissions release parameters.
The EPA used NEI emissions and the voluntary data gathered by USTMA as the primary data to develop the model input files for the residual risk assessment for the Rubber Tire Manufacturing source category. Additional information on the development of the modeling file for the Rubber Tire Manufacturing source category can be found in the document,
For both the risk assessment and technology review in this action, the EPA visited three rubber tire manufacturing facilities. During the visits, the EPA discussed process operations, compliance with the existing NESHAP, description of the emission points, process controls, unregulated emissions, and other aspects of facility operations. The EPA used the information provided by the facilities to understand the various operations, existing controls, and new developments in practices, processes, and control technologies for the source category. Additional information can be found in the site visit reports,
For both the risk assessment and technology review, the EPA also gathered data from facility construction and operating permits regarding emission points, air pollution control devices, and process operations. We collected permits and supporting documentation from state permitting authorities through state-maintained online databases. The facility permits were also used to confirm that the facilities were major sources of HAP and were subject to the Rubber Tire NESHAP. In certain cases, we contacted facility owners or operators to confirm and clarify the sources of emissions that were reported.
For the technology review, we collected information from the Reasonably Available Control Technology, Best Available Control Technology, and Lowest Achievable Emission Rate Clearinghouse (RBLC). This is a database that contains case-specific information on air pollution control technologies that have been required to reduce the emissions of air pollutants from stationary sources. Under the EPA's New Source Review (NSR) program, if a facility is planning new construction or a modification that will increase the air emissions above certain defined thresholds, an NSR permit must be obtained. The RBLC promotes the sharing of information among permitting agencies and aids in case-by-case determinations for NSR permits. We examined information contained in the RBLC to determine what technologies are currently used for these source categories to reduce air emissions.
Additional information about these data collection activities for the technology review is contained in the technology review memorandum titled
In this section, we describe the analyses performed to support the proposed decisions for the RTR and other issues addressed in this proposal.
As discussed in section II.A of this preamble and in the Benzene NESHAP, in evaluating and developing standards under CAA section 112(f)(2), we apply a two-step approach to determine whether or not risks are acceptable and to determine if the standards provide an ample margin of safety to protect public health. As explained in the Benzene NESHAP, the first step judgment on acceptability cannot be reduced to any single factor and, thus, the Administrator believes that the acceptability of risk under section 112 is best judged on the basis of a broad set of health risk measures and information. 54 FR 38046, September 14, 1989. Similarly, with regard to the ample margin of safety determination, the Agency again considers all of the health risk and other health information considered in the first step. Beyond that information, additional factors relating to the appropriate level of control will also be considered, including cost and economic impacts of controls, technological feasibility, uncertainties, and any other relevant factors.
The Benzene NESHAP approach provides flexibility regarding factors the EPA may consider in making determinations and how the EPA may weigh those factors for each source category. The EPA conducts a risk assessment that provides estimates of the MIR posed by the HAP emissions from each source in the source category, the hazard index (HI) for chronic exposures to HAP with the potential to cause noncancer health effects, and the hazard quotient (HQ) for acute exposures to HAP with the potential to cause noncancer health effects.
The EPA notes that it has not considered certain health information to date in making residual risk determinations. At this time, we do not attempt to quantify the HAP risk that may be associated with emissions from other facilities that do not include the source category under review, mobile source emissions, natural source emissions, persistent environmental pollution, or atmospheric transformation in the vicinity of the sources in the category.
The EPA understands the potential importance of considering an individual's total exposure to HAP in addition to considering exposure to HAP emissions from the source category and facility. We recognize that such consideration may be particularly important when assessing noncancer risk, where pollutant-specific exposure health reference levels (
In response to the SAB recommendations, the EPA incorporates cumulative risk analyses into its RTR risk assessments, including those reflected in this proposal. The Agency (1) conducts facility-wide assessments, which include source category emission points, as well as other emission points within the facilities; (2) combines exposures from multiple sources in the same category that could affect the same individuals; and (3) for some persistent and bioaccumulative pollutants, analyzes the ingestion route of exposure. In addition, the RTR risk assessments consider aggregate cancer risk from all carcinogens and aggregated noncancer HQs for all noncarcinogens affecting the same target organ or target organ system.
Although we are interested in placing source category and facility-wide HAP risk in the context of total HAP risk from all sources combined in the vicinity of each source, we are concerned about the uncertainties of doing so. Estimates of total HAP risk from emission sources other than those that we have studied in depth during this RTR review would have significantly greater associated uncertainties than the source category or facility-wide estimates. Such aggregate or cumulative assessments would compound those uncertainties, making the assessments too unreliable.
Our technology review focuses on the identification and evaluation of developments in practices, processes, and control technologies that have occurred since the MACT standards were promulgated. Where we identify such developments, we analyze their technical feasibility, estimated costs, energy implications, and non-air environmental impacts. We also consider the emission reductions associated with applying each development. This analysis informs our decision of whether it is “necessary” to revise the emissions standards. In addition, we consider the appropriateness of applying controls to new sources versus retrofitting existing sources. For this exercise, we consider any of the following to be a “development”:
• Any add-on control technology or other equipment that was not identified and considered during development of the original MACT standards;
• Any improvements in add-on control technology or other equipment (that were identified and considered during development of the original MACT standards) that could result in additional emissions reduction;
• Any work practice or operational procedure that was not identified or considered during development of the original MACT standards;
• Any process change or pollution prevention alternative that could be broadly applied to the industry and that was not identified or considered during development of the original MACT standards; and
• Any significant changes in the cost (including cost effectiveness) of applying controls (including controls the EPA considered during the development of the original MACT standards).
In addition to reviewing the practices, processes, and control technologies that were considered at the time we originally developed the NESHAP, we review a variety of data sources in our investigation of potential practices,
In this section, we provide a complete description of the types of analyses that we generally perform during the risk assessment process. In some cases, we do not perform a specific analysis because it is not relevant. For example, in the absence of emissions of HAP known to be persistent and bioaccumulative in the environment (PB-HAP), we would not perform a multipathway exposure assessment. Where we do not perform an analysis, we state that we do not and provide the reason. While we present all of our risk assessment methods, we only present risk assessment results for the analyses actually conducted (see section IV.B of this preamble).
The EPA conducts a risk assessment that provides estimates of the MIR for cancer posed by the HAP emissions from each source in the source category, the HI for chronic exposures to HAP with the potential to cause noncancer health effects, and the HQ for acute exposures to HAP with the potential to cause noncancer health effects. The assessment also provides estimates of the distribution of cancer risk within the exposed populations, cancer incidence, and an evaluation of the potential for an adverse environmental effect. The seven sections that follow this paragraph describe how we estimated emissions and conducted the risk assessment. The docket for this rulemaking contains the following document which provides more information on the risk assessment inputs and models:
The estimated actual emissions and the emission release characteristics for each facility in the source category were obtained from USTMA's voluntary data gathering and the 2014 NEI database. In addition, the EPA provided draft actual emissions data and stack parameters to facilities for review and confirmation. In some cases, facilities were contacted to confirm emissions that appeared to be outliers, otherwise inconsistent with our understanding of the industry, or associated with high risk values in our initial risk screening analyses. Where appropriate, emission values and release characteristics were corrected, based on revised stack parameter information provided by the facilities. Additional information on the development of the modeling file for each source category, including the development of the actual emissions and emissions release characteristics, can be found in the document,
The available emissions data in the RTR emissions dataset include estimates of the mass of HAP emitted during a specified annual time period. These “actual” emission levels are often lower than the emission levels allowed under the requirements of the current MACT standards. The emissions allowed under the MACT standards are referred to as the “MACT-allowable” emissions. We discussed the consideration of both MACT-allowable and actual emissions in the final Coke Oven Batteries RTR (70 FR 19998-19999, April 15, 2005) and in the proposed and final Hazardous Organic NESHAP RTR (71 FR 34428, June 14, 2006, and 71 FR 76609, December 21, 2006, respectively). In those actions, we noted that assessing the risk at the MACT-allowable level is inherently reasonable since that risk reflects the maximum level facilities could emit and still comply with national emission standards. We also explained that it is reasonable to consider actual emissions, where such data are available, in both steps of the risk analysis, in accordance with the Benzene NESHAP approach. (54 FR 38044, September 14, 1989.)
In order to calculate allowable emissions, a detailed analysis of the source category was conducted to determine how each major source facility meets the emissions standards of the Rubber Tire NESHAP. All major sources comply with NESHAP by utilizing the purchasing alternative (40 CFR 63.5985(a)) or the monthly average alternative, without using an add-on control device (40 CFR 63.5985(b)). The purchasing alternative allows a facility to use only cements and solvents that, as purchased, contain no more HAP than allowed by the emission limits in Table 1 of the NESHAP (40 CFR part 63, subpart XXXX, option 1, HAP constituent option). The monthly average alternative, without using an add-on control device, allows a facility to use cements and solvents in such a way that the monthly average HAP emissions do not exceed the emission limits in Table 1 of the NESHAP to this subpart, option 1 or option 2. Calculating allowable emissions was challenging because certain HAP (those in Table 16 of 40 CFR part 63, subpart XXXX) have lower emission limits than others (those not in Table 16 of 40 CFR part 63, subpart XXXX). Since raw ingredients used in tire production vary for each company and type of tire, the allowable emissions are also variable. This variability makes calculating allowable emissions impractical. It is, however, reasonable to assume that 16 years after promulgation of the MACT standards, tire manufacturers have optimized their use of cements and solvents, and their current emissions, per unit of production, are a good reflection of what the MACT standard allows. For additional information, see
Additionally, due to engineering advancements resulting in less cement/solvent usage for this source category, we expect that majority of major source facilities use less than 1 ton of cement/solvent. For facilities using the HAP constituent option (purchasing alternative), the emission limit results in an allowance of less than 2 pounds of HAP for those HAP listed in Table 16 of 40 CFR part 63, subpart XXXX, and less than 20 pounds for HAP not in Table 16 of this subpart. Due to the complexity of calculating allowable emissions for this source category, we solicit comments on calculating allowable emissions.
Since the two utilized options of the standard cannot effectively be used to calculate representative allowable emissions, production data were used to determine production output from 2007 to 2016. These data are presented in Table 2 of the
Both long-term and short-term inhalation exposure concentrations and health risk from the source category addressed in this proposal were estimated using the Human Exposure Model (HEM-3).
The air dispersion model AERMOD, used by the HEM-3 model, is one of the EPA's preferred models for assessing air pollutant concentrations from industrial facilities.
In developing the risk assessment for chronic exposures, we use the estimated annual average ambient air concentrations of each HAP emitted by each source in the source category. The HAP air concentrations at each nearby census block centroid located within 50 km of the facility are a surrogate for the chronic inhalation exposure concentration for all the people who reside in that census block. A distance of 50 km is consistent with both the analysis supporting the 1989 Benzene NESHAP (54 FR 38044, September 14, 1989) and the limitations of Gaussian dispersion models, including AERMOD.
For each facility, we calculate the MIR as the cancer risk associated with a continuous lifetime (24 hours per day, 7 days per week, 52 weeks per year, 70 years) exposure to the maximum concentration at the centroid of each inhabited census block. We calculate individual cancer risk by multiplying the estimated lifetime exposure to the ambient concentration of each HAP (in micrograms per cubic meter (μg/m
To estimate individual lifetime cancer risks associated with exposure to HAP emissions from each facility in the source category, we sum the risks for each of the carcinogenic HAP
To assess the risk of noncancer health effects from chronic exposure to HAP, we calculate either an HQ or a target organ-specific hazard index (TOSHI). We calculate an HQ when a single noncancer HAP is emitted. Where more than one noncancer HAP is emitted, we sum the HQ for each of the HAP that affects a common target organ or target organ system to obtain a TOSHI. The HQ is the estimated exposure divided by the chronic noncancer dose-response value, which is a value selected from one of several sources. The preferred chronic noncancer dose-response value is the EPA RfC, defined as “an estimate (with uncertainty spanning perhaps an order of magnitude) of a continuous inhalation exposure to the human population (including sensitive subgroups) that is likely to be without an appreciable risk of deleterious effects during a lifetime” (
For each HAP for which appropriate acute inhalation dose-response values are available, the EPA also assesses the potential health risks due to acute exposure. For these assessments, the EPA makes conservative assumptions about emission rates, meteorology, and exposure location. In this proposed rulemaking, as part of our efforts to continually improve our methodologies to evaluate the risks that HAP emitted from categories of industrial sources pose to human health and the environment,
To assess the potential acute risk to the maximally exposed individual, we use the peak hourly emission rate for each emission point,
To characterize the potential health risks associated with estimated acute inhalation exposures to a HAP, we generally use multiple acute dose-response values, including acute RELs, acute exposure guideline levels (AEGLs), and emergency response planning guidelines (ERPG) for 1-hour exposure durations, if available, to calculate acute HQs. The acute HQ is calculated by dividing the estimated acute exposure concentration by the acute dose-response value. For each HAP for which acute dose-response values are available, the EPA calculates acute HQs.
An acute REL is defined as “the concentration level at or below which no adverse health effects are anticipated for a specified exposure duration.”
ERPGs are “developed for emergency planning and are intended as health-based guideline concentrations for single exposures to chemicals.”
An acute REL for 1-hour exposure durations is typically lower than its corresponding AEGL-1 and ERPG-1. Even though their definitions are slightly different, AEGL-1s are often the same as the corresponding ERPG-1s, and AEGL-2s are often equal to ERPG-2s. The maximum HQs from our acute inhalation screening risk assessment typically result when we use the acute REL for a HAP. In cases where the maximum acute HQ exceeds 1, we also report the HQ based on the next highest acute dose-response value (usually the AEGL-1 and/or the ERPG-1).
Rubber tires are manufactured via a continuous batch operation. In a continuous batch operation, manufacturing operations take place continuously, but occur in batches. On any single production line, a batch must complete the manufacturing process before the next batch may begin the manufacturing process on that production line. Since rubber tire facilities are large and have significant production capacities, there are multiple production lines operating simultaneously. This results in relatively consistent emissions. As discussed in the allowable emissions section (III.C.2) above, we do expect there to be some variability in emissions depending on the type of tire a facility is manufacturing. To account for this variability, we have selected a multiplier of two based upon the continuous nature of the batch processes, to use in assessing acute risks.
We believe two is a conservative acute multiplier for this source category. Since the operation is a continuous batch process that operates around the clock, we do not expect there to be significant changes in hour-to-hour emissions such as those that may occur in industries that do not continuously operate their production lines. Slight variation in batch ingredients is accounted for by using the multiplier of two. A further discussion of why this factor was chosen can be found in the memorandum,
In our acute inhalation screening risk assessment, acute impacts are deemed negligible for HAP for which acute HQs are less than or equal to 1, and no further analysis is performed for these HAP. In cases where an acute HQ from the screening step is greater than 1, we consider additional site-specific data to develop a more refined estimate of the potential for acute exposures of concern. These refinements are discussed more fully in,
The EPA conducts a tiered screening assessment examining the potential for significant human health risks due to exposures via routes other than inhalation (
For the Rubber Tire Manufacturing source category, we identified PB-HAP emissions of polycyclic organic matter (POM), cadmium, and lead, so we proceeded to the next step of the evaluation. Except for lead, the human health risk screening assessment for PB-HAP consists of three progressive tiers. In a tier 1 screening assessment, we determine whether the magnitude of the facility-specific emissions of PB-HAP warrants further evaluation to characterize human health risk through ingestion exposure. To facilitate this step, we evaluate emissions against previously developed screening threshold emission rates for several PB-HAP that are based on a hypothetical upper-end screening exposure scenario developed for use in conjunction with the EPA's Total Risk Integrated Methodology, Fate, Transport, and Ecological Exposure (TRIM.FaTE) model. The PB-HAP with screening threshold emission rates are arsenic compounds, cadmium compounds, chlorinated dibenzodioxins and furans, mercury compounds, and POM. Based on the EPA estimates of toxicity and bioaccumulation potential, the pollutants represent a conservative list for inclusion in multipathway risk assessments for RTR rules. (See Volume 1, Appendix D at
We derive the Tier 1 screening threshold emission rates for these PB-HAP (other than lead compounds) to correspond to a maximum excess lifetime cancer risk of 1-in-1 million (
In the Tier 2 screening assessment, the location of each facility that exceeds a Tier 1 screening threshold emission rate is used to refine the assumptions associated with the Tier 1 fisher and farmer exposure scenarios at that facility. A key assumption in the Tier 1 screening assessment is that a lake and/or farm is located near the facility. As part of the Tier 2 screening assessment, we use a U.S. Geological Survey (USGS) database to identify actual waterbodies within 50 km of each facility and assume the fisher only consumes fish from lakes within that 50 km zone. We also examine the differences between local meteorology near the facility and the meteorology used in the Tier 1 screening assessment. We then adjust the previously-developed Tier 1 screening threshold emission rates for each PB-HAP for each facility based on an understanding of how exposure concentrations estimated for the screening scenario change with the use of local meteorology and USGS lakes database.
In the Tier 2 farmer scenario, we maintain an assumption that the farm is located within 0.5 km of the facility and that the farmer consumes meat, eggs, dairy, vegetables, and fruit produced near the facility. We may further refine the Tier 2 screening analysis by assessing a gardener scenario to characterize a range of exposures, with the gardener scenario being more plausible in RTR evaluations. Under the gardener scenario, we assume the gardener consumes home-produced eggs, vegetables, and fruit products at
There are several analyses that can be included in a Tier 3 screening assessment, depending upon the extent of refinement warranted, including validating that the lakes are fishable, locating residential/garden locations for urban and/or rural settings, considering plume-rise to estimate emissions lost above the mixing layer, and considering hourly effects of meteorology and plume-rise on chemical fate and transport (a time-series analysis). If necessary, the EPA may further refine the screening assessment through a site-specific assessment.
In evaluating the potential multipathway risk from emissions of lead compounds, rather than developing a screening threshold emission rate, we compare maximum estimated chronic inhalation exposure concentrations to the level of the current National Ambient Air Quality Standard (NAAQS) for lead.
For further information on the multipathway assessment approach, see the
The EPA conducts a screening assessment to examine the potential for an adverse environmental effect as required under section 112(f)(2)(A) of the CAA. Section 112(a)(7) of the CAA defines “adverse environmental effect” as “any significant and widespread adverse effect, which may reasonably be anticipated, to wildlife, aquatic life, or other natural resources, including adverse impacts on populations of endangered or threatened species or significant degradation of environmental quality over broad areas.”
The EPA focuses on eight HAP, which are referred to as “environmental HAP,” in its screening assessment: Six PB-HAP and two acid gases. The PB-HAP included in the screening assessment are arsenic compounds, cadmium compounds, dioxins/furans, POM, mercury (both inorganic mercury and methyl mercury), and lead compounds. The acid gases included in the screening assessment are hydrochloric acid (HCl) and hydrogen fluoride (HF).
HAP that persist and bioaccumulate are of particular environmental concern because they accumulate in the soil, sediment, and water. The acid gases, HCl and HF, are included due to their well-documented potential to cause direct damage to terrestrial plants. In the environmental risk screening assessment, we evaluate the following four exposure media: Terrestrial soils, surface water bodies (includes water-column and benthic sediments), fish consumed by wildlife, and air. Within these four exposure media, we evaluate nine ecological assessment endpoints, which are defined by the ecological entity and its attributes. For PB-HAP (other than lead), both community-level and population-level endpoints are included. For acid gases, the ecological assessment evaluated is terrestrial plant communities.
An ecological benchmark represents a concentration of HAP that has been linked to a particular environmental effect level. For each environmental HAP, we identified the available ecological benchmarks for each assessment endpoint. We identified, where possible, ecological benchmarks at the following effect levels: Probable effect levels, lowest-observed-adverse-effect level, and no-observed-adverse-effect level. In cases where multiple effect levels were available for a particular PB-HAP and assessment endpoint, we use all of the available effect levels to help us to determine whether ecological risks exist and, if so, whether the risks could be considered significant and widespread.
For further information on how the environmental risk screening assessment was conducted, including a discussion of the risk metrics used, how the environmental HAP were identified, and how the ecological benchmarks were selected, see Appendix 9 of the
For the environmental risk screening assessment, the EPA first determined whether any facilities in the Rubber Tire Manufacturing source category emitted any of the environmental HAP. For the Rubber Tire Manufacturing source category, we identified emissions of cadmium and POM. Because one or more of the environmental HAP evaluated cadmium and POM are emitted by at least one facility in the source category, we proceeded to the second step of the evaluation.
The environmental screening assessment includes six PB-HAP, arsenic compounds, cadmium compounds, dioxins/furans, POM, mercury (both inorganic mercury and methyl mercury), and lead compounds. With the exception of lead, the environmental risk screening assessment for PB-HAP consists of three tiers. The first tier of the environmental risk screening assessment uses the same health-protective conceptual model that is used for the Tier 1 human health screening assessment. TRIM.FaTE model simulations were used to back-calculate Tier 1 screening threshold emission rates. The screening threshold emission rates represent the emission rate in tons of pollutant per year that results in media concentrations at the facility that equal the relevant ecological benchmark. To assess emissions from each facility in the category, the reported emission rate for each PB-HAP was compared to the Tier 1 screening
In Tier 2 of the environmental screening assessment, the screening threshold emission rates are adjusted to account for local meteorology and the actual location of lakes in the vicinity of facilities that did not pass the Tier 1 screening assessment. For soils, we evaluate the average soil concentration for all soil parcels within a 7.5-km radius for each facility and PB-HAP. For the water, sediment, and fish tissue concentrations, the highest value for each facility for each pollutant is used. If emission concentrations from a facility do not exceed the Tier 2 screening threshold emission rate, the facility “passes” the screening assessment and typically is not evaluated further. If emissions from a facility exceed the Tier 2 screening threshold emission rate, we evaluate the facility further in Tier 3.
As in the multipathway human health risk assessment, in Tier 3 of the environmental screening assessment, we examine the suitability of the lakes around the facilities to support life and remove those that are not suitable (
To evaluate the potential for an adverse environmental effect from lead, we compared the average modeled air concentrations (from HEM-3) of lead around each facility in the source category to the level of the secondary NAAQS for lead. The secondary lead NAAQS is a reasonable means of evaluating environmental risk because it is set to provide substantial protection against adverse welfare effects which can include “effects on soils, water, crops, vegetation, man-made materials, animals, wildlife, weather, visibility and climate, damage to and deterioration of property, and hazards to transportation, as well as effects on economic values and on personal comfort and well-being.”
The environmental screening assessment for acid gases evaluates the potential phytotoxicity and reduced productivity of plants due to chronic exposure to HF and HCl. The environmental risk screening methodology for acid gases is a single-tier screening assessment that compares modeled ambient air concentrations (from AERMOD) to the ecological benchmarks for each acid gas. To identify a potential adverse environmental effect (as defined in section 112(a)(7) of the CAA) from emissions of HF and HCl, we evaluate the following metrics: The size of the modeled area around each facility that exceeds the ecological benchmark for each acid gas, in acres and km
To put the source category risks in context, we typically examine the risks from the entire “facility,” where the facility includes all HAP-emitting operations within a contiguous area and under common control. In other words, we examine the HAP emissions not only from the source category emission points of interest, but also emissions of HAP from all other emission sources at the facility for which we have data. For this source category, we conducted the facility-wide assessment using a dataset compiled from the 2014 NEI. For this source category, we conducted the facility-wide assessment using a dataset compiled from the 2014 NEI. The source category records of that NEI dataset were removed, evaluated, and updated as described in section II.C of this preamble: What data collection activities were conducted to support this action? Once a quality assured source category dataset was available, it was placed back with the remaining records from the NEI for that facility. The facility-wide file was then used to analyze risks due to the inhalation of HAP that are emitted “facility-wide” for the populations residing within 50 km of each facility, consistent with the methods used for the source category analysis described above. For these facility-wide risk analyses, we made a reasonable attempt to identify the source category risks, and these risks were compared to the facility-wide risks to determine the portion of facility-wide risks that could be attributed to the source category addressed in this proposal. We also specifically examined the facility that was associated with the highest estimate of risk and determined the percentage of that risk attributable to the source category of interest. The
Uncertainty and the potential for bias are inherent in all risk assessments, including those performed for this proposal. Although uncertainty exists, we believe that our approach, which used conservative tools and assumptions, ensures that our decisions are health and environmentally protective. A brief discussion of the uncertainties in the RTR emissions dataset, dispersion modeling, inhalation exposure estimates, and dose-response relationships follows below. Also included are those uncertainties specific to our acute screening assessments, multipathway screening assessments, and our environmental risk screening assessments. A more thorough discussion of these uncertainties is included in the
Although the development of the RTR emissions dataset involved quality assurance/quality control processes, the accuracy of emissions values will vary depending on the source of the data, the degree to which data are incomplete or missing, the degree to which assumptions made to complete the datasets are accurate, errors in emission estimates, and other factors. The emission estimates considered in this analysis generally are annual totals for certain years, and they do not reflect short-term fluctuations during the course of a year or variations from year to year. The estimates of peak hourly emission rates for the acute effects screening assessment were based on an emission adjustment factor applied to the average annual hourly emission rates, which are intended to account for emission fluctuations due to normal facility operations.
We recognize there is uncertainty in ambient concentration estimates associated with any model, including the EPA's recommended regulatory dispersion model, AERMOD. In using a model to estimate ambient pollutant concentrations, the user chooses certain options to apply. For RTR assessments, we select some model options that have the potential to overestimate ambient air concentrations (
Although every effort is made to identify all of the relevant facilities and emission points, as well as to develop accurate estimates of the annual emission rates for all relevant HAP, the uncertainties in our emission inventory likely dominate the uncertainties in the exposure assessment. Some uncertainties in our exposure assessment include human mobility, using the centroid of each census block, assuming lifetime exposure, and assuming only outdoor exposures. For most of these factors, there is neither an under nor overestimate when looking at the maximum individual risk or the incidence, but the shape of the distribution of risks may be affected. With respect to outdoor exposures, actual exposures may not be as high if people spend time indoors, especially for very reactive pollutants or larger particles. For all factors, we reduce uncertainty when possible. For example, with respect to census-block centroids, we analyze large blocks using aerial imagery and adjust locations of the block centroids to better represent the population in the blocks. We also add additional receptor locations where the population of a block is not well represented by a single location.
There are uncertainties inherent in the development of the dose-response values used in our risk assessments for cancer effects from chronic exposures and noncancer effects from both chronic and acute exposures. Some uncertainties are generally expressed quantitatively, and others are generally expressed in qualitative terms. We note, as a preface to this discussion, a point on dose-response uncertainty that is stated in the EPA's
Cancer UREs used in our risk assessments are those that have been developed to generally provide an upper bound estimate of risk.
Many of the UFs used to account for variability and uncertainty in the development of acute dose-response values are quite similar to those developed for chronic durations. Additional adjustments are often applied to account for uncertainty in extrapolation from observations at one exposure duration (
Uncertainty also exists in the selection of ecological benchmarks for the environmental risk screening assessment. We established a hierarchy of preferred benchmark sources to allow selection of benchmarks for each environmental HAP at each ecological assessment endpoint. We searched for benchmarks for three effect levels (
Although we make every effort to identify appropriate human health effect dose-response values for all pollutants emitted by the sources in this risk assessment, some HAP emitted by this source category are lacking dose-response assessments. Accordingly, these pollutants cannot be included in the quantitative risk assessment, which could result in quantitative estimates understating HAP risk. To help to alleviate this potential underestimate, where we conclude similarity with a HAP for which a dose-response value is available, we use that value as a surrogate for the assessment of the HAP for which no value is available. To the extent use of surrogates indicates appreciable risk, we may identify a need to increase priority for an IRIS assessment for that substance. We additionally note that, generally speaking, HAP of greatest concern due to environmental exposures and hazard are those for which dose-response assessments have been performed, reducing the likelihood of understating risk. Further, HAP not included in the quantitative assessment are assessed qualitatively and considered in the risk characterization that informs the risk management decisions, including consideration of HAP reductions achieved by various control options.
For a group of compounds that are unspeciated (
In addition to the uncertainties highlighted above, there are several factors specific to the acute exposure assessment that the EPA conducts as part of the risk review under section 112 of the CAA. The accuracy of an acute inhalation exposure assessment depends on the simultaneous occurrence of independent factors that may vary greatly, such as hourly emission rates, meteorology, and the presence of a person. In the acute screening assessment that we conduct under the RTR program, we assume that peak emissions from the source category and reasonable worst-case air dispersion conditions (
For each source category, we generally rely on site-specific levels of PB-HAP or environmental HAP emissions to determine whether a refined assessment of the impacts from multipathway exposures is necessary or whether it is necessary to perform an environmental screening assessment. This determination is based on the results of a three-tiered screening assessment that relies on the outputs from models—TRIM.FaTE and AERMOD—that estimate environmental pollutant concentrations and human exposures for five PB-HAP (dioxins, POM, mercury, cadmium, and arsenic) and two acid gases (HF and HCl). For lead, we use AERMOD to determine ambient air concentrations, which are then compared to the secondary NAAQS standard for lead. Two important types of uncertainty associated with the use of these models in RTR risk assessments and inherent to any assessment that relies on environmental modeling are model uncertainty and input uncertainty.
Model uncertainty concerns whether the model adequately represents the actual processes (
Input uncertainty is concerned with how accurately the models have been configured and parameterized for the assessment at hand. For Tier 1 of the multipathway and environmental screening assessments, we configured the models to avoid underestimating exposure and risk. This was accomplished by selecting upper-end values from nationally representative datasets for the more influential parameters in the environmental model, including selection and spatial configuration of the area of interest, lake location and size, meteorology, surface water, soil characteristics, and structure of the aquatic food web. We also assume an ingestion exposure scenario and values for human exposure factors that represent reasonable maximum exposures.
In Tier 2 of the multipathway and environmental screening assessments, we refine the model inputs to account for meteorological patterns in the vicinity of the facility versus using upper-end national values, and we identify the actual location of lakes near the facility rather than the default lake location that we apply in Tier 1. By refining the screening approach in Tier 2 to account for local geographical and meteorological data, we decrease the likelihood that concentrations in environmental media are overestimated, thereby increasing the usefulness of the screening assessment. In Tier 3 of the screening assessments, we refine the model inputs again to account for hour-by-hour plume-rise and the height of the mixing layer. We can also use those hour-by-hour meteorological data in a TRIM.FaTE run using the screening configuration corresponding to the lake location. These refinements produce a more accurate estimate of chemical concentrations in the media of interest, thereby reducing the uncertainty with those estimates. The assumptions and the associated uncertainties regarding the selected ingestion exposure scenario are the same for all three tiers.
For the environmental screening assessment for acid gases, we employ a single-tiered approach. We use the modeled air concentrations and compare those with ecological benchmarks.
For all tiers of the multipathway and environmental screening assessments, our approach to addressing model input uncertainty is generally cautious. We choose model inputs from the upper end of the range of possible values for the influential parameters used in the models, and we assume that the exposed individual exhibits ingestion behavior that would lead to a high total exposure. This approach reduces the likelihood of not identifying high risks for adverse impacts.
Despite the uncertainties, when individual pollutants or facilities do not exceed screening threshold emission rates (
The EPA evaluates the following HAP in the multipathway and/or environmental risk screening assessments, where applicable: Arsenic, cadmium, dioxins/furans, lead, mercury (both inorganic and methyl mercury), POM, HCl, and HF. These HAP represent pollutants that can cause adverse impacts either through direct exposure to HAP in the air or through exposure to HAP that are deposited from the air onto soils and surface waters and then through the environment into the food web. These HAP represent those HAP for which we can conduct a meaningful multipathway or environmental screening risk assessment. For other HAP not included in our screening assessments, the model has not been parameterized such that it can be used for that purpose. In some cases, depending on the HAP, we may not have appropriate multipathway models that allow us to predict the concentration of that pollutant. The EPA acknowledges that other HAP beyond these that we are evaluating may have the potential to cause adverse effects and, therefore, the EPA may evaluate other relevant HAP in the future, as modeling science and resources allow.
Table 2 of this preamble provides an overall summary of the inhalation risk results. The results of the chronic baseline inhalation cancer risk assessment indicate that, based on estimates of current actual and allowable emissions, the MIR posed by the Rubber Tire Manufacturing source category is 4-in-1 million. The risk drivers include several organic and metallic HAP from mixing, curing, and extruding operations. The total estimated cancer incidence from rubber tire manufacturing emission sources based on actual and allowable emission levels is 0.002 excess cancer cases per year, or one case in every 500 years. Based upon actual or allowable emissions, 4,500 people are estimated to be exposed to cancer risks greater than or equal to 1-in-1 million. The maximum chronic noncancer HI (TOSHI) values for the source category, based on actual and allowable emissions, are estimated to be less than 1 (0.2), with aniline emissions from mixing and curing processes driving the TOSHI value.
Worst-case acute HQs were calculated for every HAP for which there is an acute health benchmark using actual emissions. Our screening analysis for worst-case acute impacts based on actual emissions indicates that no pollutants exceed an acute HQ value of 1 (0.4). Acute HQs are not calculated for allowable or whole facility emissions.
Results of the worst-case Tier 1 screening analysis indicate that PB-HAP emissions (based on estimates of actual emissions) from facilities within the source category did not exceed the Tier 1 cancer screening value of 1 for POM emissions, while one facility exceeded the Tier 1 noncancer screening value by a factor of 10 for cadmium emissions.
For the one facility that did not screen out at Tier 1 for cadmium, we conducted a Tier 2 screening analysis. The Tier 2 screen replaces some of the assumptions used in Tier 1 with site-specific data, the location of fishable lakes, and local wind direction and speed. The Tier 2 screen continues to rely on high-end assumptions about consumption of local fish and locally grown or raised foods (adult female angler at 99th percentile consumption for fish
The Tier 2 noncancer screening analysis for the single facility emitting cadmium above a Tier 1 screening value of 1 resulted in a Tier 2 noncancer screening value of 1 for the fisher
We conducted an environmental risk screening assessment for the Rubber Tire Manufacturing source category for the following pollutants: Cadmium, lead, and POM.
In the Tier 1 screening analysis for PB-HAP (other than lead, which was evaluated differently), POM emissions had no Tier 1 exceedances for any ecological benchmark. Cadmium emissions at one facility had Tier 1 exceedances for the surface soil threshold levels (no observed adverse effect level (NOAEL) mammalian insectivores (shrew) by a maximum screening value of 3.
A Tier 2 screening assessment was performed for cadmium with no exceedances for any ecological benchmark. For lead, we did not estimate any exceedances of the primary lead NAAQS.
Results of the assessment of facility-wide emissions indicate that, of the 21 facilities, 13 facilities have a facility-wide MIR greater than or equal to 1-in-1 million. The maximum facility-wide cancer risk is 8-in-1 million, mainly driven by chromium (VI) compounds and metal emissions from sources outside of the source category which include mixing, extruding, calendaring, and finishing operations; refer to Table 2. The total estimated cancer incidence from the whole facility is 0.002 excess cancer cases per year, or one case in every 500 years. Approximately 9,200 people are estimated to have cancer risks greater than 1-in-1 million. The maximum facility-wide chronic noncancer TOSHI is estimated to be less than 1 (0.2), mainly driven by emissions of aniline from mixing and curing processes.
To examine the potential for any environmental justice issues that might be associated with the source category, we performed a demographic analysis, which is an assessment of risk to individual demographic groups of the populations living within 5 km and within 50 km of the facilities. In the analysis, we evaluated the distribution of HAP-related cancer and noncancer risk from the Rubber Tire Manufacturing source category across different demographic groups within the populations living near facilities.
The results of the demographic analysis are summarized in Table 3 below. These results, for various demographic groups, are based on the estimated risk from actual emissions levels for the population living within 50 km of the facilities.
The results of the Rubber Tire Manufacturing source category demographic analysis indicate that emissions from the source category expose approximately 4,500 people to a cancer risk at or above 1-in-1 million and no people to a chronic noncancer TOSHI greater than 1. The percentages of the at-risk population indicate that the demographic groups White, African American, people below the poverty level, and people over 25 with a high school diploma that are living within 50 km of facilities in the source category exceed the corresponding national percentage for the same demographic groups.
The methodology and the results of the demographic analysis are presented in a technical report,
As noted in section III of this preamble, the EPA sets standards under CAA section 112(f)(2) using “a two-step standard-setting approach, with an analytical first step to determine an `acceptable risk' that considers all health information, including risk estimation uncertainty, and includes a presumptive limit on MIR of approximately 1-in-10 thousand” (54 FR 38045, September 14, 1989). In this proposal, the EPA estimated risks based on actual and allowable emissions from rubber tire manufacturing facilities, and we considered these in determining acceptability.
For the Rubber Tire Manufacturing source category, the risk analysis indicates that the cancer risk to the individual most exposed is 4-in-1 million from actual and allowable emissions. The risk analysis also estimates a cancer incidence of 0.002 excess cancer cases per year, or 1 case every 500 years, as well as a maximum chronic noncancer TOSHI value of 0.2 for both actual and allowable emissions. The results of the acute screening analysis also estimate a maximum acute noncancer HQ screening value of less than 1 based on the acute REL. By definition, the acute REL represents a health-protective level of exposure, with effects not anticipated below those levels, even for repeated exposures. Based on the results of the multipathway cancer screening analyses of POM emissions, we conclude that the maximum cancer risk from ingestion exposure to the individual most exposed is less than 1-in-1 million for the Tier 1 farmer and fisher scenario. The maximum multipathway noncancer TOSHI screen value for cadmium is equal to 1 based upon the Tier 2 fisher scenario. Multipathway screening values were below a level of concern for both carcinogenic and non-carcinogenic PB-HAP as well as emissions of lead compounds. No additional screens or site-specific assessment was conducted since the multipathway screening values were deemed sufficient to demonstrate protection of public health based upon the conservative nature of our model design. The cancer risk for both inhalation and ingestion is considerably less than 100-in-1 million, which is the presumptive upper limit of acceptable risk. Considering all the health risk information and factors discussed above, including the uncertainties discussed in section III of this preamble, we propose that the risks from the Rubber Tire Manufacturing source category are acceptable.
As directed by CAA section 112(f)(2), we conducted an analysis to determine whether the current emissions standards provide an ample margin of safety to protect public health. Under the ample margin of safety analysis, we evaluated the cost and feasibility of available control technologies and other measures (including the controls, measures, and costs reviewed under the technology review) that could be applied to this source category to further reduce the risks (or potential risks) due to emissions of HAP identified in the risk assessment. In this analysis, we considered the results of the technology review, risk assessment, and other aspects of the MACT rule review to determine whether there are any cost-effective controls or other measures that would reduce emissions further.
The risks from this source category were deemed acceptable with a cancer risk to the individual most exposed of 4-in-1 million. Our risk analysis indicated the inhalation risks from this source category are low for both cancer and noncancer health effects, and, therefore, any risk reductions to control process emissions from rubber tire manufacturing operations would result in minimal health benefits. Mixing, extruding, and buffing emissions result in 88 percent of the cancer incidence for this source category with metal emissions contributing to 40 percent of the cancer incidence. The inhalation chronic and acute noncancer risks were also below a HI and a HQ of 1, respectively. In addition, the multipathway screening analyses for PB-HAP and lead emissions also demonstrate a low potential for risks for cancer and noncancer health effects. The ingestion cancer risk also is less than 1-in-1 million based upon for the Tier 1 farmer and fisher scenario and the ingestion noncancer HI is less than 1 based upon the Tier 2 fisher scenario.
Our review of post-control options for the Rubber Tire Manufacturing source category identified regenerative thermal oxidizers (RTOs) as an option for reducing organic HAP emissions. The use of RTOs to control organic HAP emissions was evaluated and determined to not be cost effective during the original NESHAP. Upon review, we do not believe the associated costs for installing and operating an RTO have changed significantly since the original NESHAP. When evaluating the cost effectiveness of installing RTOs during the 2002 Rubber Tire Manufacturing NESHAP, a model facility was used. The model facility estimated a mean reduction of 103 tons of HAP by using an RTO (Docket: A-97-14 Document: II-B-12). The current mean total HAP emitted per facility within the Rubber Tire Manufacturing source category is 18.8 tons of total HAP. This significant reduction in total HAP emitted for the source category, coupled with similar associated costs for installing and operating an RTO, leads to the conclusion that RTOs would be less cost effective now. Thus, we still find the use of an RTO to not be cost effective. We solicit comment on the cost effectiveness of using an RTO to control HAP emissions.
If RTOs were installed, the MIR would change from 4-in-1 million to 3-in-1 million and would result in an estimated 50-percent reduction in cancer incidence from 0.002 excess cancer cases per year to 0.001 cases per year. This control option would reduce excess cancer cases from one in every 500 years to one in every 1,000 years based upon actual emissions from controlled HAP emission sources.
The source category is already controlling particulate matter or metal HAP with all facilities utilizing fabric filters/baghouses to control emissions, and we did not identify additional measures that could be used to control these HAP. As noted above, any further control of process emissions from rubber tire manufacturing operations would result in minimal health benefits. Based upon the low baseline risks, minimal available risk reductions, and lack of cost-effective control options to reduce organic and metal emissions from mixing, extrusion, and other process operations, we are proposing that the current NESHAP provides an ample margin of safety to protect the public health.
As described in section III.A of this document, we conducted an environmental risk screening assessment for the Rubber Tire Manufacturing source category. In the Tier 1 screening analysis for PB-HAP (other than lead, which was evaluated differently), POM emissions had no exceedances of any of the ecological benchmarks evaluated. Cadmium
A Tier 2 screening analysis was performed for cadmium emissions for this one facility, with no exceedances of any of the ecological benchmarks. For lead, we did not estimate any exceedances of the secondary lead NAAQS. Based on the results of the environmental risk screening analysis, we do not expect an adverse environmental effect as a result of HAP emissions from this source category and, therefore, propose that it is not necessary to set more stringent standards to prevent an adverse environmental effect.
As described in section III.B of this preamble, the technology review focused on the identification and evaluation of developments in practices, processes, and control technologies that have occurred since the MACT standards were promulgated. In conducting the technology review, we reviewed various informational sources regarding the emissions from the Rubber Tire Manufacturing source category. The review included a search of the RBLC database, reviews of air permits for rubber tire manufacturing facilities, and meetings with industry and the trade association (summarized in the docket for this action). We reviewed these data sources for information on practices, processes, and control technologies that were not considered during the development of the Rubber Tire Manufacturing NESHAP. We also looked for information on improvements in practices, processes, and control technologies that have occurred since the development of the Rubber Tire Manufacturing NESHAP.
After reviewing information from the aforementioned sources, we did not identify any cost-effective developments in practices, processes, or control technologies used at rubber tire manufacturing facilities since promulgation of the MACT standard.
Based on the technology review, we have determined that there are no new control technologies. Additional information of our technology review can be found in the memorandum,
In addition to the proposed decisions described above, we are proposing revisions to the Rubber Tire Manufacturing NESHAP related to SSM and electronic reporting. We are proposing revisions to the SSM provisions of the rule in order to ensure that it is consistent with the Court decision in
In its 2008 decision in
We are proposing the elimination of the SSM exemption, which currently appears at 40 CFR 63.5990, and any reference to SSM requirements in 40 CFR part 63, part A (General Provisions). Consistent with the Court's decision in
The EPA has attempted to ensure that the provisions we are proposing to eliminate are inappropriate, unnecessary, or redundant in the absence of the SSM exemption. We are specifically seeking comment on whether we have successfully done so.
In proposing the standards in this rule, the EPA has taken into account startup and shutdown periods and, for the reasons explained below, has not proposed alternate standards for those periods.
All facilities subject to this rulemaking comply with the emission limits by either using the HAP constituent option (purchase alternative) found in 40 CFR 63.5985(a), or the monthly average alternative without using an add-on control device (40 CFR 63.5985(b)). Due to the continuous batch operation utilized across this source category, the EPA has no reason to believe that emissions are significantly different during periods of startup and shutdown from those during normal operations.
Periods of startup, normal operations, and shutdown are all predictable and routine aspects of a source's operations. Malfunctions, in contrast, are neither predictable nor routine. Instead, they are, by definition, sudden, infrequent, and not reasonably preventable failures of emissions control, process or monitoring equipment. (40 CFR 63.2) (containing regulatory definition of “malfunction”). The EPA interprets CAA section 112 as not requiring emissions that occur during periods of malfunction to be factored into development of CAA section 112 standards. The EPA's interpretation has been upheld as reasonable. See
As the Court recognized in
Although no statutory language compels the EPA to set standards for malfunctions, the EPA has the discretion to do so where feasible. For example, in the Petroleum Refinery Sector RTR, the EPA established a work practice standard for unique types of malfunction that result in releases from pressure relief devises or emergency flaring events because the EPA had information to determine that such work practices reflected the level of control that applies to the best performers. 80 FR 75178, 75211-14 (December 1, 2015). The EPA will consider whether circumstances warrant setting standards for a particular type of malfunction and, if so, whether the EPA has sufficient information to identify the relevant best performing sources and establish a standard for such malfunctions. We also encourage commenters to provide any such information.
The EPA anticipates that it is unlikely that a malfunction will result in a violation of the standards at this time. At the time of this proposal, there are no major source facilities using control devices to comply with the emissions limits of this standard. However, the NESHAP contains the option to use a control device for compliance with the emission limits. Thus, while a malfunction event leading to increased emissions is unlikely at this time, it is possible if a facility were to use a control device in the future.
In the event that a source fails to comply with the applicable CAA section 112(d) standards as a result of a malfunction event, the EPA would determine an appropriate response based on, among other things, the good faith efforts of the source to minimize emissions during malfunction periods, including preventative and corrective actions, as well as root cause analyses to ascertain and rectify excess emissions. The EPA would also consider whether the source's failure to comply with the CAA section 112(d) standard was, in fact, sudden, infrequent, not reasonably preventable, and was not instead caused, in part, by poor maintenance or careless operation. 40 CFR 63.2 (definition of malfunction).
If the EPA determines in a particular case that an enforcement action against a source for violation of an emission standard is warranted, the source can raise any and all defenses in that enforcement action and the federal district court will determine what, if any, relief is appropriate. The same is true for citizen enforcement actions. Similarly, the presiding officer in an administrative proceeding can consider any defense raised and determine whether administrative penalties are appropriate.
In summary, the EPA interpretation of the CAA and, in particular, section 112, is reasonable and encourages practices that will avoid malfunctions. Administrative and judicial procedures for addressing exceedances of the standards fully recognize that violations may occur despite good faith efforts to comply and can accommodate those situations. See
We are proposing to revise the General Provisions table (Table 17) entry for 40 CFR 63.6(e)(1)(i) by changing the “yes” in column 4 and 5 to a “no.” Section 63.6(e)(1)(i) describes the general duty to minimize emissions. Some of the language in that section is no longer necessary or appropriate in light of the elimination of the SSM exemption. We are proposing instead to add general compliance requirement regulatory text at 40 CFR 63.5990 that reflects the general duty to minimize emissions while eliminating the reference to periods covered by an SSM exemption. The current language in 40 CFR 63.6(e)(1)(i) characterizes what the general compliance requirement entails during periods of SSM. With the elimination of the SSM exemption, there is no need to differentiate between normal operations, startup and shutdown, and malfunction events in describing the general compliance requirement. Therefore, the language the EPA is proposing at 40 CFR 63.5990(b) does not include that language from 40 CFR 63.6(e)(1).
We are also proposing the General Provisions table (Table 17) entry for 40 CFR 63.6(e)(1)(ii) by changing the “yes” in column 4 and 5 to a “no.” Section 63.6(e)(1)(ii) imposes requirements that are not necessary with the elimination of the SSM exemption or are redundant
We are proposing to revise the General Provisions table (Table 17) entry for 40 CFR 63.6(e)(3) by changing the “yes” in column 4 to a “no.” Generally, these paragraphs require development of an SSM plan and specify SSM recordkeeping and reporting requirements related to the SSM plan. As noted, the EPA is proposing to remove the SSM exemptions. Therefore, affected units will be subject to an emission standard during such events. The applicability of a standard during such events will ensure that sources have ample incentive to plan for and achieve compliance and, thus, the SSM plan requirements are no longer necessary.
We are proposing to revise the General Provisions table (Table 17) entry for 40 CFR 63.6(f)(1) by changing the “yes” in column 4 to a “no.” The current language of 40 CFR 63.6(f)(1) exempts sources from non-opacity standards during periods of SSM. As discussed above, the Court in
We are proposing to revise the General Provisions table (Table 17) entry for 40 CFR 63.7(e)(1) by changing the “yes” in column 4 to a “no.” Section 63.7(e)(1) describes performance testing requirements. The EPA is instead proposing to add performance testing requirement at 40 CFR 63.5993. The performance testing requirements we are proposing to add differ from the General Provisions performance testing provisions in several respects. The regulatory text does not include the language in 40 CFR 63.7(e)(1) that restated the SSM exemption and language that precluded startup and shutdown periods from being considered “representative” for purposes of performance testing. The proposed performance testing provisions may not be performed during startup, shutdown, or malfunction, as specified in 40 CFR 63.7(e)(1). The EPA is proposing to add language that requires the owner or operator to record the process information that is necessary to document operating conditions during the test and include in such record an explanation to support that such conditions represent normal operation. Section 63.7(e) requires that the owner or operator make available to the Administrator such records “as may be necessary to determine the condition of the performance test” available to the Administrator upon request but does not specifically require the information to be recorded. The regulatory text the EPA is proposing to add to this provision builds on that requirement and makes explicit the requirement to record the information.
We are proposing to revise the General Provisions table (Table 17) entry for 40 CFR 63.8(c)(1)(iii) by changing the “yes” in columns 4 and 5 to a “no.” The cross-references to the general duty and SSM plan requirements in those subparagraphs are not necessary in light of other requirements of 40 CFR 63.8 that require good air pollution control practices (40 CFR 63.8(c)(1)) and that set out the requirements of a quality control program for monitoring equipment (40 CFR 63.8(d)).
We are proposing to revise the General Provisions table (Table 17) entry for 40 CFR 63.8(d)(3) by changing the “Applies as modified by § 63.5990(e) and (f)” in column 4 to a “no.” The final sentence in 40 CFR 63.8(d)(3) refers to the General Provisions' SSM plan requirement which is no longer applicable. The EPA is proposing to add to the rule at 40 CFR 63.5990(f)(3) text that is identical to 40 CFR 63.8(d)(3) except that the final sentence is replaced with the following sentence: “The program of corrective action should be included in the plan required under § 63.8(d)(2).”
We are proposing to revise the General Provisions table (Table 17) entry for 40 CFR 63.10(b)(2)(i) by changing the “yes” in column 4 to a “no.” Section 63.10(b)(2)(i) describes the recordkeeping requirements during startup and shutdown. These recording provisions are no longer necessary because the EPA is proposing that recordkeeping and reporting applicable to normal operations will apply to startup and shutdown. Special provisions applicable to startup and shutdown, such as a startup and shutdown plan, have been removed from the rule (with exceptions discussed below), thereby reducing the need for additional recordkeeping for startup and shutdown periods.
We are proposing to revise the General Provisions table (Table 17) entry for 40 CFR 63.10(b)(2)(ii) by changing the “yes” in column 4 to a “no.” When applicable, the provision requires sources to record actions taken during SSM events when actions were inconsistent with their SSM plan. The requirement is no longer appropriate because SSM plans will no longer be required.
We are proposing to revise the General Provisions table (Table 17) entry for 40 CFR 63.10(d)(5) by changing the “yes” in column 4 to a “no.” Section 63.10(d)(5) describes the reporting requirements for startups, shutdowns, and malfunctions. To replace the General Provisions reporting requirement for malfunctions, the EPA is proposing to replace the SSM report under 40 CFR 63.10(d)(5) with the existing reporting requirements under 40 CFR 63.4720(a). The replacement language differs from the General Provisions' requirement in that it eliminates periodic SSM reports as a stand-alone report. We are proposing language that requires sources that fail to meet an applicable standard at any time to report the information concerning such events in the semiannual report to be required under the proposed rule. We are proposing that the report must contain the number, date, time, duration, and the cause of such events (including unknown cause, if applicable), a list of the affected source or equipment, an estimate of the quantity of each regulated pollutant emitted over any emission limit, and a description of the method used to estimate the emissions.
Examples of such methods would include mass balance calculations, measurements when available, or engineering judgment based on known process parameters. The EPA is proposing this requirement to ensure that there is adequate information to determine compliance, to allow the EPA to determine the severity of the failure to meet an applicable standard, and to provide data that may document how the source met the general duty to minimize emissions during a failure to meet an applicable standard.
We will no longer require owners or operators to determine whether actions taken to correct a malfunction are consistent with an SSM plan, because plans would no longer be required. The proposed amendments, therefore, eliminate the cross-reference to 40 CFR
The proposed amendments also eliminate the cross-reference to 40 CFR 63.10(d)(5)(ii). Section 63.10(d)(5)(ii) describes an immediate report for startups, shutdown, and malfunctions when a source failed to meet an applicable standard, but did not follow the SSM plan. We will no longer require owners and operators to report when actions are taken during a startup, shutdown, or malfunction.
Through this proposal, the EPA is proposing that owners and operators of Rubber Tire Manufacturing NESHAP facilities submit electronic copies of the required notification of compliance status reports required in 40 CFR 63.9(h) and 63.6009(k), performance test reports required in 40 CFR 63.6010(h), and semiannual compliance reports required in 40 CFR 63.6010(g) through the EPA's Central Data Exchange (CDX) using the Compliance and Emissions Data Reporting Interface (CEDRI). A description of the electronic data submission process is provided in the memorandum, “
For the performance test reports required in 40 CFR 63.6010(h), the proposed rule requires that performance test results collected using test methods that are supported by the EPA's Electronic Reporting Tool (ERT) as listed on the ERT website
For semiannual compliance reports required in 40 CFR 63.6010(g), the proposed rule requires that owners and operators use the appropriate spreadsheet report form to submit information to CEDRI, 1 year after finalizing this proposed action. A draft version of the proposed electronic spreadsheet reporting template for this report is included in the docket for this action (Docket ID No. EPA-HQ-OAR-2019-0392). The EPA specifically requests comment on the content, layout, and overall design of the template. Prior to availability of the final spreadsheet report template in CEDRI, owners and operators of affected sources will be required to submit the semiannual compliance report as currently required by the rule. When the EPA finalizes the spreadsheet report template, rubber tire sources will be notified about its availability via the CEDRI website. We plan to finalize a required reporting template with the final rule. The owner or operator would begin submitting reports electronically with the next report that is due, once the electronic spreadsheet report template has been available for at least 1 year.
For the electronic submittal of notification of compliance status reports required in 40 CFR 63.9(h) and 63.6009(k), the final spreadsheet report template discussed above, which will reside in CEDRI, will also contain the information required for the notification of compliance status report and will satisfy the requirement to provide the notifications of compliance status information electronically, eliminating the need to provide a separate notification of compliance status report. As stated above, the final spreadsheet report template will be available after finalizing this proposed action and sources will be required to use the spreadsheet report template after 1 year. Prior to the availability of the final spreadsheet report template in CEDRI, owners and operators of affected sources will be required to submit notice of compliance status reports as currently required by the rule. As stated above, we will notify sources about the availability of the final spreadsheet report template via the CEDRI website.
Additionally, the EPA has identified two broad circumstances in which an extension of time for electronic reporting may be requested from the EPA. In both circumstances, the decision to grant additional time to report is within the discretion of the Administrator, and reporting should occur as soon as possible. The EPA is providing a mechanism for requesting extensions of time for electronic reporting to protect owners and operators from noncompliance in cases where they cannot successfully submit a report by the reporting deadline for reasons outside of their control. An extension of time may be requested due to outages of the EPA's CDX or CEDRI where an owner or operator is precluded from accessing the system and submitting required reports is addressed in 40 CFR 63.6010. The situation where an extension may be warranted due to a force majeure event, which is defined as an event that will be or has been caused by circumstances beyond the control of the affected facility, its contractors, or any entity controlled by the affected facility that prevents an owner or operator from complying with the requirement to submit a report electronically as required by this rule is addressed in 40 CFR 63.6010. Examples of force majeure events may include acts of nature, acts of war or terrorism, or equipment failure or safety hazards beyond the control of the facility.
The electronic submittal of the reports addressed in this proposed rulemaking will increase the usefulness of the data contained in those reports, is in keeping with current trends in data availability and transparency, will further assist in the protection of public health and the environment, will improve compliance by facilitating the ability of regulated facilities to demonstrate compliance with requirements and by facilitating the ability of delegated state, local, tribal, and territorial air agencies and the EPA to assess and determine compliance, and will ultimately reduce burden on regulated facilities, delegated air agencies, and the EPA. Electronic reporting also eliminates paper-based, manual processes, thereby saving time and resources, simplifying data entry, eliminating redundancies, minimizing data reporting errors, and providing data quickly and accurately to the affected facilities, air agencies, the EPA, and the public. Moreover, electronic reporting is consistent with the EPA's plan
The EPA is proposing that affected sources that commenced construction or reconstruction on or before [DATE OF PUBLICATION OF THE FINAL RULE IN THE
For existing sources, we are proposing two changes that would impact ongoing compliance requirements for 40 CFR part 63, subpart XXXX. As discussed elsewhere in this preamble, we are proposing to add a requirement that notifications, performance test results, and compliance reports be submitted electronically. We are also proposing to change the requirements for SSM by removing the exemption from the requirements to meet the standard during SSM periods and by removing the requirement to develop and implement an SSM plan. Our experience with similar industries that are required to convert reporting mechanisms to install necessary hardware and software, become familiar with the process of submitting performance test results electronically through the EPA's CEDRI, test these new electronic submission capabilities, and reliably employ electronic reporting shows that a time period of a minimum of 90 days, and, more typically, 180 days is generally necessary to successfully accomplish these revisions. Our experience with similar industries further shows that this sort of regulated facility generally requires a time period of 180 days to read and understand the amended rule requirements; to evaluate their operations to ensure that they can meet the standards during periods of startup and shutdown as defined in the rule and make any necessary adjustments; and to update their operation, maintenance, and monitoring plan to reflect the revised requirements. The EPA recognizes the confusion that multiple different compliance dates for individual requirements would create and the additional burden such an assortment of dates would impose. From our assessment of the time frame needed for compliance with the entirety of the revised requirements, the EPA considers a period of 180 days to be the most expeditious compliance period practicable and, thus, is proposing that all affected sources that commenced construction or reconstruction on or before [DATE OF PUBLICATION OF THE FINAL RULE IN THE
We solicit comment on the proposed compliance periods, and we specifically request submission of information from sources in this source category regarding specific actions that would need to be undertaken to comply with the proposed amended requirements and the time needed to make the adjustments for compliance with any of the revised requirements. We note that information provided may result in changes to the proposed compliance dates.
The EPA estimates that there are 21 rubber tire manufacturing facilities that are subject to the Rubber Tire Manufacturing NESHAP affected by the proposed amendments to 40 CFR part 63, subpart XXXX. The bases of our estimates of affected facilities are provided in the memorandum,
We are not finalizing revisions to the emission limits other than to make them applicable during SSM periods, we do not anticipate any air quality impacts as a result of the proposed amendments, since facilities are already in compliance with emission limits during all periods, including SSM.
The one-time cost associated with reviewing the revised rule and becoming familiar with the electronic reporting requirements is estimated to be $6,740 (2017$). The total cost per facility is estimated to be $321 per facility to review the final rule requirements and become familiar with the electronic reporting requirements. All other costs associated with notifications, reporting, and recordkeeping are believed to be unchanged because the facilities in each source category are currently required to comply with notification, reporting, and recordkeeping requirements and will continue to be required to comply with those requirements. The number of personnel-hours required to develop the materials in support of reports required by the NESHAP remain unchanged.
Economic impact analyses focus on changes in market prices and output levels. If changes in market prices and output levels in the primary markets are significant enough, impacts on other markets may also be examined. Both the magnitude of costs needed to comply with a proposed rule and the distribution of these costs among affected facilities can have a role in determining how the market will change in response to a proposed rule. The total cost associated with this proposed rule is estimated to be $6,740, which is a one-time cost associated with reviewing the revised rule and becoming familiar with the electronic reporting requirements. The estimated cost per facility is $321. These costs are not expected to result in a significant market impact, regardless of whether they are passed on to the purchaser or absorbed by the firms.
The EPA does not anticipate reductions in HAP emissions as a result of the proposed amendments to the Rubber Tire Manufacturing NESHAP. However, the proposed amendments would improve the rule by ensuring that the standards apply at all times and by requiring electronic submittal of initial notifications, performance test results, and semiannual reports that would increase the usefulness of the data and would ultimately result in less burden on the regulated community. Because
We solicit comments on this proposed action. In addition to general comments on this proposed action, we are also interested in additional data that may improve the risk assessments and other analyses. We are specifically interested in receiving any improvements to the data used in the site-specific emissions profiles used for risk modeling. Such data should include supporting documentation in sufficient detail to allow characterization of the quality and representativeness of the data or information. Section VII of this preamble provides more information on submitting data.
The site-specific emissions profiles used in the source category risk and demographic analyses and instructions are available for download on the RTR website at
If you believe that the data are not representative or are inaccurate, please identify the data in question, provide your reason for concern, and provide any “improved” data that you have, if available. When you submit data, we request that you provide documentation of the basis for the revised values to support your suggested changes. To submit comments on the data downloaded from the RTR website, complete the following steps:
1. Within this downloaded file, enter suggested revisions to the data fields appropriate for that information.
2. Fill in the commenter information fields for each suggested revision (
3. Gather documentation for any suggested emissions revisions (
4. Send the entire downloaded file with suggested revisions in Microsoft® Access format and all accompanying documentation to Docket ID No. EPA-HQ-OAR-2019-0392 (through the method described in the
5. If you are providing comments on a single facility or multiple facilities, you need only submit one file for all facilities. The file should contain all suggested changes for all sources at that facility (or facilities). We request that all data revision comments be submitted in the form of updated Microsoft® Excel files that are generated by the Microsoft® Access file. These files are provided on the project website at
Additional information about these statutes and Executive Orders can be found at
This action is not a significant regulatory action and was, therefore, not submitted to OMB for review.
This action is not expected to be an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866.
The information collection activities in this proposed rule have been submitted for approval to OMB under the PRA. The Information Collection Request (ICR) document that the EPA prepared has been assigned EPA ICR number 1982.03. You can find a copy of the ICR in the docket for this rule, and it is briefly summarized here.
We are proposing changes to the recordkeeping and reporting requirements associated with 40 CFR part 63, subpart XXXX, in the form of eliminating the SSM plan and reporting requirements; including reporting requirements for deviations in the semiannual report; and including the requirement for electronic submittal of reports. In addition, the number of facilities subject to the standards changed. The number of respondents was reduced from 23 to 21 based on consultation with industry representatives and state/local agencies.
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 OMB control numbers for the EPA's regulations in 40 CFR are listed in 40 CFR part 9.
Submit your comments on the Agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden to the EPA using the dockets identified at the beginning of this rule. You may also send your ICR-related comments to OMB's Office of Information and Regulatory Affairs via email to
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities, since there are no small entities in the source category.
This action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications as specified in Executive Order 13175. No tribal facilities are known to be engaged in the Rubber Tire Manufacturing source category, and would not be affected by this action. Thus, Executive Order 13175 does not apply to this action.
This action is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866, and because the EPA does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. This action's health and risk assessments are contained in sections III.A and IV.A and B of this preamble.
This action is not subject to Executive Order 13211 because it is not a significant regulatory action under Executive Order 12866.
This rulemaking does not involve technical standards.
The EPA believes that this action does not have disproportionately high and adverse human health or environmental effects on minority populations, low-income populations, and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994).
The documentation for this decision is contained in sections IV.A, IV.B, IV.F, and IV.G of this preamble. As discussed in sections IV.A, IV.B, IV.F, and IV.G of this preamble, we performed a demographic analysis for each source category, which is an assessment of risks to individual demographic groups, of the population close to the facilities (within 50 km and within 5 km). In our analysis, we evaluated the distribution of HAP-related cancer risks and noncancer hazards from the Rubber Tire Manufacturing source category across different social, demographic, and economic groups within the populations living near operations identified as having the highest risks.
Results of the demographic analysis performed for the Rubber Tire Manufacturing source category indicate that, for four of the 10 demographic groups, White, African American, people living below the poverty level, and adults over 25 without a high school diploma that reside within 5 km of facilities in the source category is greater than the corresponding national percentage for the same demographic groups. When examining the risk levels of those exposed to emissions from rubber manufacturing facilities, we find 4,500 people exposed to a cancer risk at or above 1-in-1 million and nobody exposed to a chronic noncancer TOSHI greater than 1.
The results of the Rubber Tire Manufacturing source category demographic analysis indicate that emissions from the source category expose approximately 4,500 people to a cancer risk at or above 1-in-1 million and no people to a chronic noncancer TOSHI greater than 1. The percentages of the at-risk population for four of the 10 demographic groups; White people, people living below the poverty level, adults with a high school diploma, and African Americans that reside within 50 km of facilities in the source category is greater than the corresponding national percentage for the same demographic groups.
Environmental protection, Air pollution control, Hazardous substances, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the EPA proposes to amend 40 CFR part 63 as follows:
42 U.S.C. 7401,
The revisions and addition read as follows:
(a) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(b) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(d) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(f) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(2) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(3) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(4) After [DATE 180 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(c) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(d) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
The revisions read as follows:
(d) For any other control device, or for other capture systems, ensure that the CPMS is operated according to a monitoring plan submitted to the Administrator with the Notification of Compliance Status report required by § 63.9(h). The monitoring plan must meet the requirements in paragraphs (a) and (d)(1) through (3) of this section. Conduct monitoring in accordance with the plan submitted to the Administrator unless comments received from the Administrator require an alternate monitoring scheme.
(e) * * *
(2) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(k) You must submit to the Administrator notification reports of the following recorded information. Beginning on [DATE 181 DAYS AFTER
The revisions and additions read as follows:
(b) * * *
(2) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(4) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(c) * * *
(4) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(d) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(1) Before [DATE 180 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(2) Before [DATE 180 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(3) After [DATE 180 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(g) Before [DATE 1 YEAR AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(h) After [DATE 180 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(1) Data collected using test methods supported by the EPA's Electronic Reporting Tool (ERT) as listed on the EPA's ERT website (
(2) Data collected using test methods that are not supported by the EPA's ERT as listed on the EPA's ERT website at the time of the test. The results of the performance test must be included as an attachment in the ERT or an alternate electronic file consistent with the XML schema listed on the EPA's ERT website. Submit the ERT generated package or alternative file to the EPA via CEDRI.
(3) Confidential business information (CBI). If you claim some of the information submitted under paragraph (h) of this section is CBI, you must submit a complete file, including information claimed to be CBI, to the EPA. The file must be generated through the use of the EPA's ERT or an alternate electronic file consistent with the XML schema listed on the EPA's ERT website. Submit the file on a compact disc, flash drive, or other commonly used electronic storage medium and clearly mark the medium as CBI. Mail the electronic medium to U.S. EPA/OAQPS/CORE CBI Office, Attention: Group Leader, Measurement Policy Group, MD C404-02, 4930 Old Page Rd., Durham, NC 27703. The same file with the CBI omitted must be submitted to the EPA via the EPA's CDX as described in paragraph (h) of this section.
(i) After [DATE 180 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(1) You must have been or will be precluded from accessing CEDRI and submitting a required report or notification within the time prescribed due to an outage of either the EPA's CEDRI or CDX systems.
(2) The outage must have occurred within the period of time beginning 5 business days prior to the date that the submission is due.
(3) The outage may be planned or unplanned.
(4) You must submit notification to the Administrator in writing as soon as possible following the date you first knew, or through due diligence should have known, that the event may cause or has caused a delay in reporting.
(5) You must provide to the Administrator a written description identifying:
(i) The date(s) and time(s) when CDX or CEDRI was accessed and the system was unavailable;
(ii) A rationale for attributing the delay in reporting beyond the regulatory deadline to EPA system outage;
(iii) Measures taken or to be taken to minimize the delay in reporting; and
(iv) The date by which you propose to report, or if you have already met the reporting requirement at the time of the notification, the date you reported.
(6) The decision to accept the claim of EPA system outage and allow an extension to the reporting deadline is solely within the discretion of the Administrator.
(7) In any circumstance, the report or notification must be submitted electronically as soon as possible after the outage is resolved.
(j) After [DATE 180 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(1) You may submit a claim if a force majeure event is about to occur, occurs, or has occurred or there are lingering effects from such an event within the period of time beginning five business days prior to the date the submission is due. For the purposes of this section, a force majeure event is defined as an event that will be or has been caused by circumstances beyond the control of the affected facility, its contractors, or any entity controlled by the affected facility that prevents you from complying with the requirement to submit a report electronically within the time period prescribed. Examples of such events are acts of nature (
(2) You must submit notification to the Administrator in writing as soon as possible following the date you first knew, or through due diligence should have known, that the event may cause or has caused a delay in reporting.
(3) You must provide to the Administrator:
(i) A written description of the force majeure event;
(ii) A rationale for attributing the delay in reporting beyond the regulatory deadline to the force majeure event;
(iii) Measures taken or to be taken to minimize the delay in reporting; and
(iv) The date by which you propose to report, or if you have already met the reporting requirement at the time of the notification, the date you reported.
(4) The decision to accept the claim of force majeure and allow an extension to the reporting deadline is solely within the discretion of the Administrator.
(5) In any circumstance, the reporting must occur as soon as possible after the force majeure event occurs.
(a) * * *
(3) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
(e) After [DATE 180 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
Deviation means any instance in which an affected source, subject to this subpart, or an owner or operator of such a source:
(1) Fails to meet any requirement or obligation established by this subpart including, but not limited to, any emission limitation (including any operating limit) or work practice standard;
(2) Fails to meet any term or condition that is adopted to implement an applicable requirement in this subpart and that is included in the operating permit for any affected source required to obtain such a permit; or
(3) Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
Before [DATE 181 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE
After [DATE 180 DAYS AFTER DATE OF PUBLICATION OF FINAL RULE IN THE