[Federal Register Volume 86, Number 153 (Thursday, August 12, 2021)]
[Rules and Regulations]
[Pages 44267-44270]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-17050]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1026


Truth in Lending (Regulation Z); Impact of the 2021 Juneteenth 
Holiday on Certain Closed-End Mortgage Requirements

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Interpretive rule.

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
issuing this interpretive rule to provide guidance on certain 
Regulation Z timing requirements related to rescission of closed-end 
mortgages and the TILA-RESPA Integrated Disclosures (TRID). These 
timing requirements are based on a definition of ``business day'' that 
excludes days that are designated as legal public holidays under 
Federal law. The interpretive rule explains these timing requirements 
in light of recent legislation that designated ``Juneteenth National 
Independence Day, June 19'' (Juneteenth) as a Federal legal public 
holiday. It clarifies that, if the relevant closed-end rescission or 
TRID time period began on or before June 17, 2021, then June 19, 2021, 
was considered a business day, but nothing prohibits creditors from 
providing longer time periods. Therefore, it would also be compliant 
for creditors to have considered June 19, 2021, a Federal holiday for 
purposes of these provisions.

DATES: This interpretive rule is effective on August 12, 2021.

FOR FURTHER INFORMATION CONTACT: Pedro De Oliveira, Lanique Eubanks, 
Jaclyn Maier, or Priscilla Walton-Fein, Senior Counsels, Office of 
Regulations, at 202-435-7700. If you require this document in an 
alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    On June 17, 2021, the President signed legislation that amended 5 
U.S.C. 6103(a) to add ``Juneteenth National Independence Day, June 19'' 
(Juneteenth) to the list of Federal legal public holidays (Federal 
holidays).\1\ Various regulatory provisions cross-reference or 
otherwise refer to the Federal holidays listed in 5 U.S.C. 6103(a), 
including the Regulation Z definition of ``business day.'' In 
Regulation Z, ``business day'' is defined in Sec.  1026.2(a)(6) 
generally to mean ``a day on which the creditor's offices are open to 
the public for carrying on substantially all of its business 
functions.'' However, for purposes of certain specified Regulation Z 
provisions, Sec.  1026.2(a)(6) defines business day to mean: ``[A]ll 
calendar days except Sundays and the legal public holidays specified in 
5 U.S.C. 6103(a), such as New Year's Day, the Birthday of Martin Luther 
King, Jr., Washington's Birthday, Memorial Day, Independence Day, Labor 
Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.'' 
\2\ This is referred to herein as the ``specific business day'' 
definition.
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    \1\ Juneteenth National Independence Day Act, Public Law 117-17, 
135 Stat. 287 (2021).
    \2\ Comment 2(a)(6)-2 further provides that four Federal 
holidays are identified in 5 U.S.C. 6103(a) by a specific date: New 
Year's Day, January 1; Independence Day, July 4; Veterans Day, 
November 11; and Christmas Day, December 25. The comment states that 
when one of these holidays falls on a Saturday, Federal offices and 
other entities might observe the holiday on the preceding Friday 
but, nonetheless, the observed holiday is a business day for 
purposes of the specific business day definition. Like the four 
Federal holidays listed in comment 2(a)(6)-2, Juneteenth is 
identified in 5 U.S.C. 6103(a) by a specific date. For 2021, Federal 
offices observed the Juneteenth holiday on Friday, June 18, 2021. 
For purposes of the specific business day definition, June 18, 2021, 
was a business day.
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    The legislation that made Juneteenth a Federal holiday took effect 
immediately.\3\ Therefore, June 19 became a Federal holiday on June 17, 
2021. By virtue of the cross-reference to 5 U.S.C. 6103(a) in Sec.  
1026.2(a)(6), the days that are considered Federal holidays under the 
specific business day definition in Regulation Z also changed on June 
17, 2021. The Bureau understands that this presented interpretive 
questions and compliance challenges for the mortgage industry because 
the Juneteenth holiday occurred only two days after the date of the law 
change. Based on industry inquiries and outreach to the Bureau 
following the June 17, 2021, amendment to 5 U.S.C. 6103(a), the Bureau 
understands these issues were particularly acute for transactions that 
either (1) closed on or before June 17, 2021, but for which consumers' 
rescission periods had not yet expired or (2) were close to the

[[Page 44268]]

planned closing date on June 17, 2021, and subject to certain 
disclosure timing requirements of the TRID provisions of Regulation Z.
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    \3\ The law took effect when it was signed by the President on 
June 17, 2021. See, e.g., United States v. Casson, 434 F.2d 415 
(D.C. Cir. 1970) (indicating that a law that is effective on 
enactment goes into effect at the exact time that the President 
signs it).
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    This interpretive rule provides guidance on the 2021 Juneteenth 
holiday and the specific business day definition in these two 
situations.\4\
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    \4\ The Bureau is adopting this interpretation effective on the 
date of publication in the Federal Register. The interpretive rule 
explains the Bureau's view of the legal requirements that were 
applicable around the time of the Juneteenth holiday in June 2021.
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II. Discussion

Guidance on Determining the Applicable Specific Business Day Definition

    The specific business day definition applies to various timing 
requirements in Regulation Z, including rescission of closed-end 
mortgages and some TRID provisions.\5\ Regulation Z does not specify 
which version of the specific business day definition applies to these 
provisions when the definition changes during the relevant time 
period--the version of the definition in effect when the relevant time 
period begins, or the new version of the definition that takes effect 
before the relevant time period ends. The Bureau is issuing this 
interpretive rule to clarify that the version of the specific business 
day definition that applies to these provisions is the version of the 
definition in effect when the relevant time period begins.\6\ 
Accordingly, in the context of the 2021 Juneteenth Federal holiday and 
the affected closed-end rescission and TRID provisions, if the relevant 
time period began on or before June 17, 2021, then June 19, 2021, is a 
business day for purposes of the specific business day definition. If 
the relevant time period began after June 17, 2021, then June 19, 2021, 
is a Federal holiday for purposes of the specific business day 
definition.
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    \5\ With respect to rescission, the affected regulatory 
provisions are Sec.  1026.23(a)(3)(i) and (b)(1)(v). With respect to 
TRID, the affected regulatory provisions are Sec.  
1026.19(e)(1)(iii)(B), (e)(1)(iv), (e)(2)(i)(A), (e)(4)(ii), and 
(f)(1)(ii) and (iii). Other provisions of Regulation Z rely on the 
specific business day definition and therefore also were affected by 
the legislation. Those provisions are outside the scope of this 
interpretive rule.
    \6\ The Bureau understands that the law amending 5 U.S.C. 
6103(a) to add Juneteenth to the list of Federal holidays was signed 
by the President shortly after 4 p.m. EST on June 17, 2021. See 
Press Release, The White House, Remarks by President Biden at 
Signing of the Juneteenth National Independence Day Act (June 17, 
2021), https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/06/17/remarks-by-president-biden-at-signing-of-the-juneteenth-national-independence-day-act/. While the law took effect 
immediately, the Bureau is clarifying that the version of the 
specific business day definition in effect prior to June 17, 2021, 
applies where the relevant time period began at any time on June 17, 
2021. The requirements discussed in this interpretive rule generally 
apply with respect to the day that a particular event occurred, not 
the time of day. Accordingly, the Bureau believes it is more 
consistent with these provisions not to distinguish among actions 
taken at different times on June 17, 2021. Treating all actions 
taken on June 17, 2021, the same in the context of these provisions 
also serves the purposes of the regulation, by providing certainty 
to creditors and uniformity in the application of the specific 
business day definition across the mortgage market.
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    The Bureau concludes that this reading is consistent with the 
purposes of the specific business day definition, which are to provide 
certainty and uniformity to the timing requirements.\7\ When the 
Federal Reserve Board (Board) established the specific business day 
definition, it explained that creditors and consumers need certainty as 
to the length of the rescission period; otherwise, they risk a delay in 
the loan funding date to account for an extension of the rescission 
period.\8\ Similarly, in issuing the TRID requirements, the Bureau 
explained that creditors and consumers need certainty as to the length 
of the waiting and other time periods required under the TRID 
provisions in order to establish a closing date and reduce the 
potential for unexpected closing delays.\9\ Interpreting these 
provisions to require use of an amended specific business day 
definition that takes effect only after the relevant time period begins 
would undermine that certainty, as it may require a change in the 
timing of loan funding, closing, and other dates that are dependent on 
the definition.
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    \7\ See, e.g., 74 FR 23289, 23294 (May 19, 2009) (applying the 
specific business day definition to the seven-business-day waiting 
period prior to consummation after receipt of required disclosures, 
explaining that (1) doing so makes it easier for creditors to 
determine how to meet timing requirements, especially where the 
creditor has multiple offices not open on the same days; (2) the 
standard for determining when a waiting period ends will be the same 
for all creditors; and (3) whether a creditor's offices are open or 
closed will not affect the time that a consumer has to receive and 
review disclosures).
    \8\ The Board explained that it adopted the two-tier definition 
because transactions subject to the right of rescission need a more 
definite and uniform business day definition. See 46 FR 20848, 20850 
(Apr. 7, 1981). Regulatory authority for this provision was later 
transferred to the Bureau. See Dodd-Frank Wall Street Reform and 
Consumer Protection Act, Public Law 111-203, section 1061, 124 Stat. 
1376, 2036 (2010) (transferring to the Bureau the ``consumer 
financial protection functions'' previously vested in certain other 
Federal agencies, including the Board).
    \9\ The Bureau applied the specific business day definition to 
various TRID timing provisions to facilitate compliance for industry 
and to reduce the potential for closing delays. See 78 FR 79730, 
79770, 79837, 79851 (Dec. 31, 2013).
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    The Bureau notes that the affected closed-end rescission and TRID 
provisions do not prohibit creditors from providing longer time 
periods. Therefore, as discussed further below, it would also be 
compliant for creditors to have considered June 19, 2021, a Federal 
holiday for purposes of these provisions.

Application to Specific Rescission Provisions

    As noted above, the Bureau is clarifying that the version of the 
specific business day definition that applies to the provisions 
discussed in this interpretive rule is the version of the definition in 
effect when the relevant time period begins. This section discusses how 
that guidance applies to closed-end rescission provisions that 
reference the specific business day definition.
    Section 1026.23(a)(3)(i) provides that, for closed-end transactions 
covered by the right of rescission, the consumer may exercise the right 
to rescind until midnight of the third business day following the last 
of (1) delivery of all material disclosures; \10\ (2) consummation of 
the loan; \11\ and (3) delivery of the notice of the right to rescind 
to each consumer entitled to rescind.\12\ Pursuant to Sec.  
1026.23(b)(1)(v), the notice must include the date the rescission 
period expires.
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    \10\ The material disclosures are the required disclosures of 
the annual percentage rate, the finance charge, the amount financed, 
the total of payments, the payment schedule, and the disclosures and 
limitations referred to in Sec. Sec.  1026.32(c) and (d) and 
1026.43(g). See 12 CFR 1026.23(a)(3)(ii).
    \11\ ``Consummation'' is defined in Sec.  1026.2(a)(13) as the 
time that a consumer becomes contractually obligated on the credit 
transaction. Per comment 2(a)(13)-1, when a contractual obligation 
is created is determined by State law.
    \12\ A creditor is required to provide two copies of the notice 
of the right to rescind to each consumer entitled to rescind (one 
copy to each if the notice is delivered in electronic form in 
accordance with the consumer consent and other applicable provisions 
of the E-Sign Act). The notice must be on a separate piece of paper 
but may appear with other information such as the itemization of the 
amount financed. The creditor may deliver the notice after the 
transaction is consummated, but the rescission period will not begin 
to run until the notice is given. See 12 CFR 1026.23(b)(1) and 
comments 23(b)(1)-2 and -4.
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    For purposes of Sec.  1026.23(a)(3)(i), the rescission period is 
determined based on the version of the specific business day definition 
in effect when the rescission period begins. Similarly, for purposes of 
Sec.  1026.23(b)(1)(v), the rescission period expiration date disclosed 
on the notice of the right to rescind is determined based on the 
version of the specific business day definition in effect when the 
rescission period begins. Therefore, if the rescission period began on 
or before June 17, 2021, for purposes of determining the rescission 
period and

[[Page 44269]]

the disclosed rescission period expiration date, Saturday, June 19, 
2021, is a business day notwithstanding the addition of Juneteenth as a 
Federal holiday. For example, assume the rescission period began on 
Wednesday, June 16, 2021. Consistent with the version of the specific 
business day definition in effect when the rescission period began, the 
creditor disclosed June 19, 2021, as the rescission period expiration 
date on the notice of the right to rescind. Because the rescission 
period began on or before June 17, 2021, Saturday, June 19, 2021, is a 
business day for purposes of determining the rescission period and the 
disclosed rescission period expiration date. In this example, the 
rescission period expired on Saturday, June 19, 2021; the original 
rescission period expiration date did not change as a result of the 
addition of Juneteenth as a Federal holiday. The Bureau notes, however, 
that for purposes of compliance with Sec.  1026.23(a)(3)(i) and 
(b)(1)(v), a creditor may provide a longer rescission period.

Application to Specific TRID Provisions

    As noted above, the Bureau is clarifying that the version of the 
specific business day definition that applies to the provisions 
discussed in this interpretive rule is the version in effect when the 
relevant time period begins. This section discusses how that guidance 
applies to TRID provisions that reference the specific business day 
definition.
    Delivery of Loan Estimate prior to consummation. Section 
1026.19(e)(1)(iii)(B) provides that creditors generally must deliver or 
place in the mail the Loan Estimate to consumers no later than seven 
business days before consummation of the transaction.\13\ Consistent 
with the guidance described above, the Bureau concludes that the seven-
business-day waiting period in Sec.  1026.19(e)(1)(iii)(B) is 
determined based on the version of the specific business day definition 
in effect on the date the creditor delivers the Loan Estimate or places 
it in the mail. For example, if a creditor delivered or placed the Loan 
Estimate in the mail on Monday, June 14, 2021, the creditor complied 
with Sec.  1026.19(e)(1)(iii)(B) if consummation occurred on or after 
Tuesday, June 22, 2021, because the Loan Estimate was delivered or 
mailed seven business days (including June 19, 2021) before 
consummation. The Bureau notes, however, that it would also be 
compliant for creditors to have considered June 19, 2021, a Federal 
holiday for purposes of Sec.  1026.19(e)(1)(iii)(B) because creditors 
may provide the Loan Estimate earlier than seven business days before 
consummation.
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    \13\ The seven-business-day waiting period begins when the 
creditor delivers the Loan Estimate or places it in the mail, not 
when the consumer receives or is considered to have received the 
Loan Estimate. Comment 19(e)(1)(iii)-2.
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    Mailbox rules. Section 1026.19(e)(1)(iv), (e)(4)(ii), and 
(f)(1)(iii) provide that if the Loan Estimate or Closing Disclosure, as 
applicable, is not provided to the consumer in person, the consumer is 
considered to have received the Loan Estimate or Closing Disclosure 
three business days after it is delivered or placed in the mail when 
determining compliance with the disclosure timing requirements in those 
sections.\14\ These are referred to herein as ``mailbox rules.'' The 
Bureau concludes that, for purposes of Sec.  1026.19(e)(1)(iv), 
(e)(4)(ii), and (f)(1)(iii), the three-business-day period is 
determined based on the version of the specific business day definition 
in effect on the date the creditor delivers the disclosures or places 
them in the mail.\15\ For example, if a creditor did not provide the 
Loan Estimate or Closing Disclosure to the consumer in person but 
delivered or placed it in the mail on Thursday, June 17, 2021, the 
consumer is considered to have received the Loan Estimate or Closing 
Disclosure on Monday, June 21, 2021. It would also be compliant for 
creditors to have considered June 19, 2021, a Federal holiday for 
purposes of the mailbox rules in Sec.  1026.19(e)(1)(iv), (e)(4)(ii), 
and (f)(1)(iii).
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    \14\ In such circumstances, the creditor may, alternatively, 
rely on evidence that the consumer received the disclosures earlier. 
Comments 19(e)(1)(iv)-1 and -2 provide that if the Loan Estimate is 
not provided to the consumer in person (such as by mail or email), 
the creditor may, alternatively, rely on evidence that the consumer 
received the Loan Estimate earlier than three business days after it 
is delivered or placed in the mail. See also comments 19(e)(4)(ii)-1 
and 19(f)(1)(iii) 1 and -2.
    \15\ Relatedly, Sec.  1026.19(e)(2)(i)(A) provides that neither 
a creditor nor any other person may impose a fee on a consumer in 
connection with the consumer's application for a mortgage 
transaction before the consumer has, among other things, received 
the Loan Estimate. While Sec.  1026.19(e)(2)(i)(A) does not refer to 
business days when referencing the consumer receiving the Loan 
Estimate, Sec.  1026.2(a)(6) lists the specific business day 
definition as applying to Sec.  1026.19(e)(2)(i)(A). The same 
interpretation that applies to the mailbox rules for purposes of 
determining the receipt of disclosures also applies to Sec.  
1026.19(e)(2)(i)(A).
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    Receipt of revised Loan Estimate and Closing Disclosure prior to 
consummation. Section 1026.19(e)(4)(ii) provides, in part, that the 
consumer must receive any revised Loan Estimate no later than four 
business days prior to consummation.\16\ Section 1026.19(f)(1)(ii)(A) 
provides that the creditor must ensure that the consumer receives the 
Closing Disclosure no later than three business days before 
consummation. Unlike Sec.  1026.19(e)(1)(iii)(B), the Sec.  
1026.19(e)(4)(ii) and (f)(1)(ii)(A) timing requirements begin when the 
disclosures are received by the consumer and not when they are 
delivered or placed in the mail. However, as noted above, Sec.  
1026.19(e)(4)(ii) and (f)(1)(iii) provide that if the revised Loan 
Estimate or Closing Disclosure is not provided to the consumer in 
person, the consumer is considered to have received the revised Loan 
Estimate or Closing Disclosure three business days after it is 
delivered or placed in the mail.
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    \16\ This provision also prohibits a creditor from delivering a 
revised Loan Estimate on or after the date on which the creditor 
provides the Closing Disclosure. 12 CFR 1026.19(e)(4)(ii).
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    Thus, the Bureau concludes that the four- and three-business-day 
timing requirements in Sec.  1026.19(e)(4)(ii) and (f)(1)(ii)(A), 
respectively, are determined based on the version of the specific 
business day definition in effect on the date the creditor either 
provides the required disclosures to the consumer in person or, if not 
provided in person, the date the creditor delivers or places the 
required disclosures in the mail. For example, if a creditor provided 
the Closing Disclosure to the consumer in person on Thursday, June 17, 
2021, the creditor complied with Sec.  1026.19(f)(1)(ii)(A) if 
consummation occurred on or after Monday, June 21, 2021, because the 
Closing Disclosure was delivered in person no later than three business 
days (including June 19, 2021) before consummation. The Bureau notes, 
however, that it would also be compliant for creditors to have 
considered June 19, 2021, a Federal holiday for purposes of Sec.  
1026.19(e)(4)(ii) and (f)(1)(ii)(A) because creditors may provide the 
revised Loan Estimate or Closing Disclosure earlier than required.

III. Regulatory Matters

    This is an interpretive rule issued under the Bureau's authority to 
interpret Regulation Z, including under section 1022(b)(1) of the Dodd-
Frank Act, which authorizes guidance as may be necessary or appropriate 
to enable the Bureau to administer and carry out the purposes and 
objectives of Federal consumer financial laws.\17\
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    \17\ 12 U.S.C. 5512(b)(1).
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    By operation of section 130(f) of the Truth in Lending Act (TILA), 
no provision of TILA sections 130, 108(b), 108(c), 108(e), or 112 
imposing any liability applies to any act done or

[[Page 44270]]

omitted in good faith in conformity with this interpretive rule, 
notwithstanding that after such act or omission has occurred, the 
interpretive rule is amended, rescinded, or determined by judicial or 
other authority to be invalid for any reason.\18\
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    \18\ 15 U.S.C. 1640(f); see also 12 U.S.C. 2617(b), 12 CFR 
1024.4 (similar protection conferred by the Real Estate Settlement 
Procedures Act from certain liability).
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    As an interpretive rule, this rule is exempt from the notice-and-
comment rulemaking requirements of the Administrative Procedure 
Act.\19\ Because no notice of proposed rulemaking is required, the 
Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis.\20\ The Bureau has determined that 
this interpretive rule does not impose any new or revise any existing 
recordkeeping, reporting, or disclosure requirements on covered 
entities or members of the public that would be collections of 
information requiring Office of Management and Budget (OMB) approval 
under the Paperwork Reduction Act.\21\
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    \19\ 5 U.S.C. 553(b).
    \20\ 5 U.S.C. 603(a), 604(a).
    \21\ 44 U.S.C. 3501 et seq.
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    Pursuant to the Congressional Review Act,\22\ the Bureau will 
submit a report containing this interpretive rule and other required 
information to the United States Senate, the United States House of 
Representatives, and the Comptroller General of the United States prior 
to the rule's published effective date. The Office of Information and 
Regulatory Affairs has designated this interpretive rule as not a 
``major rule'' as defined by 5 U.S.C. 804(2).
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    \22\ 5 U.S.C. 801 et seq.
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IV. Signing Authority

    The Acting Director of the Bureau, David Uejio, having reviewed and 
approved this document, is delegating the authority to electronically 
sign this document to Laura Galban, a Bureau Federal Register Liaison, 
for purposes of publication in the Federal Register.

    Dated: August 5, 2021.
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2021-17050 Filed 8-11-21; 8:45 am]
BILLING CODE 4810-AM-P