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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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Federal Aviation Administration (FAA), DOT.
Final rule.
The FAA is adopting a new airworthiness directive (AD) for certain Saab AB, Support and Services Model SAAB 340B airplanes. This AD was prompted by a report that the circuit breaker for the emergency cabin lighting tripped without fault in the system. This AD requires replacing a certain circuit breaker with a part having a higher rating, as specified in a European Union Aviation Safety Agency (EASA) AD, which is incorporated by reference. The FAA is issuing this AD to address the unsafe condition on these products.
This AD is effective January 5, 2022.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of January 5, 2022.
For EASA material incorporated by reference (IBR) in this AD, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
You may examine the AD docket at
Shahram Daneshmandi, Aerospace Engineer, Large Aircraft Section, International Validation Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3220; email
EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2021-0058, dated March 1, 2021 (EASA AD 2021-0058) (also referred to as the Mandatory Continuing Airworthiness Information, or the MCAI), to correct an unsafe condition for certain Saab AB, Support and Services Model SAAB 340B airplanes.
The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Saab AB, Support and Services Model SAAB 340B airplanes. The NPRM published in the
The FAA is issuing this AD to address the low rating of the 2LN circuit breaker during maximum charging conditions. This condition, if not corrected, could lead to an insufficiently charged emergency battery, with consequent loss of cabin emergency lighting, possibly resulting in injury to occupants during an evacuation. See the MCAI for additional background information.
The FAA received no comments on the NPRM or on the determination of the cost to the public.
The FAA reviewed the relevant data and determined that air safety requires adopting this AD as proposed. Except for minor editorial changes, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator. Accordingly, the FAA is issuing this AD to address the unsafe condition on these products.
EASA AD 2021-0058 describes procedures for replacing the 2LN circuit breaker having a rating of 5A with a new breaker having a current rating of 7.5A.
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
The FAA estimates that this AD affects 27 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:
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 AD will not have federalism implications under Executive Order 13132. This AD will 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 that this AD:
(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 amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This airworthiness directive (AD) is effective January 5, 2022.
None.
This AD applies to Saab AB, Support and Services (Formerly Known as Saab AB, Saab Aeronautics) Model SAAB 340B airplanes, certificated in any category, as identified in European Union Aviation Safety Agency (EASA) AD 2021-0058, dated March 1, 2021 (EASA AD 2021-0058).
Air Transport Association (ATA) of America Code 33, Lights.
This AD was prompted by a report that the circuit breaker for the emergency cabin lighting tripped without fault in the system. The FAA is issuing this AD to address the low rating of the 2LN circuit breaker during maximum charging conditions. This condition, if not corrected, could lead to an insufficiently charged emergency battery, with consequent loss of cabin emergency lighting, possibly resulting in injury to occupants during an evacuation.
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 2021-0058.
(1) Where EASA AD 2021-0058 refers to its effective date, this AD requires using the effective date of this AD.
(2) The “Remarks” section of EASA AD 2021-0058 does not apply to this AD.
The following provisions also apply to this AD:
(1)
(2)
For more information about this AD, contact Shahram Daneshmandi, Aerospace Engineer, Large Aircraft Section, International Validation Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3220; email
(1) The Director of the Federal Register approved the incorporation by reference of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) European Union Aviation Safety Agency (EASA) AD 2021-0058, dated March 1, 2021.
(ii) [Reserved]
(3) For EASA AD 2021-0058, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
(4) You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(5) You may view this material that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, email
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule.
The FAA is adopting a new airworthiness directive (AD) for certain De Havilland Aircraft of Canada Limited Model DHC-8-401 and -402 airplanes. This AD was prompted by reports of loss of hydraulic fluid and annunciation of the check fire detect light. This AD requires doing a detailed visual inspection for chafing and proper clearance of the left-hand (LH) and right-hand (RH) main landing gear (MLG) primary zone advanced pneumatic detector (APD) sensing lines, the hydraulic tube assemblies, and the surrounding structure, and doing all applicable corrective action. The FAA is issuing this AD to address the unsafe condition on these products.
This AD is effective January 5, 2022.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of January 5, 2022.
For service information identified in this final rule, contact De Havilland Aircraft of Canada Limited, 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
Chirayu Gupta, Aerospace Engineer, Mechanical Systems and Administrative Services Section, FAA, New York ACO Branch, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7300; fax 516-794-5531; email
Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued TCCA AD CF-2021-12, dated April 14, 2021 (also referred to as the Mandatory Continuing Airworthiness Information, or the MCAI), to correct an unsafe condition for certain De Havilland Aircraft of Canada Limited Model DHC-8-401 and -402 airplanes. You may examine the MCAI in the AD docket on the internet at
The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain De Havilland Aircraft of Canada Limited Model DHC-8-401 and -402 airplanes. The NPRM published in the
The FAA gave the public the opportunity to participate in developing this final rule. The FAA has considered the comment received. The Air Line Pilots Association, International (ALPA) stated that it supports the NPRM.
The FAA reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. The FAA has determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM.
De Havilland Aircraft of Canada Limited has issued Service Bulletin 84-26-20, Revision A, dated March 9, 2021. This service information describes procedures for doing a detailed visual inspection for chafing and proper clearance of the LH and RH MLG primary zone APD sensing lines, the hydraulic tube assemblies and the surrounding structure, and doing all applicable corrective actions. Corrective actions include repair and replacement of the APD sensing line and the hydraulic tube assembly.
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
The FAA estimates that this AD affects 54 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:
The FAA estimates the following costs to do any necessary on-condition actions that would be required based on the results of any required 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 AD will not have federalism implications under Executive Order 13132. This AD will 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 that this AD:
(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 amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This airworthiness directive (AD) is effective January 5, 2022.
None.
This AD applies to De Havilland Aircraft of Canada Limited Model DHC-8-401 and -402 airplanes, certificated in any category, serial numbers 4001 and 4003 through 4614 inclusive.
Air Transport Association (ATA) of America Code 26, Fire protection.
This AD was prompted by reports of loss of hydraulic fluid and annunciation of the check fire detect light. The FAA is issuing this AD to address insufficient separation between the advanced pneumatic detector (APD) sensing line and surrounding components, which could lead to a hydraulic leak, loss of hydraulic systems and loss of fire detection in the main landing gear (MLG) primary zone should prolonged contact occur.
Comply with this AD within the compliance times specified, unless already done.
Within 48 months or 8,000 flight hours, whichever occurs first after the effective date of this AD: Do a detailed visual inspection for chafing and proper clearance of the left- and right-hand MLG primary zone APD sensing lines, the hydraulic tube assemblies and the surrounding structure, and do all applicable corrective actions, in accordance with paragraph 3.B. of the Accomplishment Instructions of De Havilland Aircraft of Canada Limited Service Bulletin 84-26-20, Revision A, dated March 9, 2021. Do all applicable corrective actions before further flight.
This paragraph provides credit for actions required by paragraph (g) of this AD, if those actions were performed before the effective date of this AD using De Havilland Aircraft of Canada Limited Service Bulletin 84-26-20, dated October 21, 2020.
The following provisions also apply to this AD:
(1)
(2)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) TCCA AD CF-2021-12, dated April 14, 2021, for related information. This MCAI may be found in the AD docket on the internet at
(2) For more information about this AD, contact Chirayu Gupta, Aerospace Engineer, Mechanical Systems and Administrative Services Section, FAA, New York ACO Branch, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7300; fax 516-794-5531; email
(3) Service information identified in this AD that is not incorporated by reference is available at the addresses specified in paragraphs (k)(3) and (4) of this AD.
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) De Havilland Aircraft of Canada Limited Service Bulletin 84-26-20, Revision A, dated March 9, 2021.
(ii) [Reserved]
(3) For service information identified in this AD, contact De Havilland Aircraft of Canada Limited, Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416-375-4000; fax 416-375-4539; email
(4) You may view this service information at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, email
Federal Aviation Administration (FAA), DOT.
Final rule.
The FAA is adopting a new airworthiness directive (AD) for all Airbus SAS Model A330-200, -200 Freighter, -300, and -900 series airplanes; and Model A340-200, -300, -500, and -600 series airplanes. This AD was prompted by a report that during the frame of flight test clearance process, a detailed analysis of air data reference (ADR) failure scenarios led to the identification that compliance requirements for loads and handling qualities throughout the flight envelope could be impaired in case of dispatch with one ADR inoperative (master minimum equipment list (MMEL) item 34-10-01) during the maximum interval allowed by the current MMEL. This AD requires revising the operator's existing FAA-approved minimum equipment list (MEL) for the air data/inertial reference system, as specified in a European Union Aviation Safety Agency (EASA) AD, which is incorporated by reference. The FAA is issuing this AD to address the unsafe condition on these products.
This AD is effective January 5, 2022.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of January 5, 2022.
For material incorporated by reference (IBR) in this AD, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
You may examine the AD docket at
Vladimir Ulyanov, Aerospace Engineer, Large Aircraft Section, International Validation Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax: 206-231-3229; email
EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2021-0103, dated April 13, 2021 (EASA AD 2021-0103) (also referred to as the MCAI), to correct an unsafe condition for all Airbus SAS Model A330-200, -200 Freighter, -300, and -900 series airplanes; Model A340-200 and -300 series airplanes; and Model A340-541, -542, -642, and -643 airplanes. Model A340-542 and -643 airplanes are not certificated by the FAA and are not included on the U.S. type certificate data sheet; this AD therefore does not include those airplanes in the applicability.
The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus SAS Model A330-200, -200 Freighter, -300, and -900 series airplanes; and Model A340-200, -300, -500, and -600 series airplanes. The NPRM published in the
The FAA is issuing this AD to address the possibility of in-flight loss of a second ADR combined with erroneous low speed data provided by the remaining functional ADR, which could result in loss of control of the airplane. See the MCAI for additional background information.
The FAA received a comment from the Air Line Pilots Association, International (ALPA) who supported the NPRM without change.
The FAA reviewed the relevant data, considered the comment received, and determined that air safety requires adopting this AD as proposed. Except for minor editorial changes, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator. Accordingly, the FAA is issuing this AD to address the unsafe condition on these products.
EASA AD 2021-0103 describes procedures for revising the air data/inertial reference system for MMEL item 34-10-01. 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
The FAA estimates that this AD affects 130 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:
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 AD will not have federalism implications under Executive Order 13132. This AD will 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 that this AD:
(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 amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This airworthiness directive (AD) is effective January 5, 2022.
None.
This AD applies to all Airbus SAS airplanes specified in paragraphs (c)(1) through (8) of this AD, certificated in any category.
(1) Model A330-201, -202, -203, -223, and -243 airplanes.
(2) Model A330-223F and -243F airplanes.
(3) Model A330-301, -302, -303, -321, -322, -323, -341, -342, and -343 airplanes.
(4) Model A330-941 airplanes.
(5) Model A340-211, -212, and -213 airplanes.
(6) Model A340-311, -312, and -313 airplanes.
(7) Model A340-541 airplanes.
(8) Model A340-642 airplanes.
Air Transport Association (ATA) of America Code 34, Navigation.
This AD was prompted by a report that during the frame of flight test clearance process, a detailed analysis of air data reference (ADR) failure scenarios led to the identification that compliance requirements for loads and handling qualities throughout the flight envelope could be impaired in case of dispatch with one ADR inoperative (master minimum equipment list (MMEL) item 34-10-01) during the maximum interval allowed by the current MMEL. The FAA is issuing this AD to address the possibility of in-flight loss of a second ADR combined with erroneous low speed data provided by the remaining functional ADR, which could result in loss of 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
(1) Where EASA AD 2021-0103 refers to its effective date, this AD requires using the effective date of this AD.
(2) Where EASA AD 2021-0103 specifies to implement certain information in “the MMEL MER” into the “operational documentation,” this AD requires revising the operator's existing FAA-approved minimum equipment list (MEL) to incorporate that information.
(3) Where EASA AD 2021-0103 specifies to “inform all flight crews, and, thereafter, operate the aeroplane accordingly,” this AD does not require those actions as those actions are already required by existing FAA operating regulations.
(4) The “Remarks” section of EASA AD 2021-0103 does not apply to this AD.
The following provisions also apply to this AD:
(1)
(2)
(3)
For more information about this AD, contact Vladimir Ulyanov, Aerospace Engineer, Large Aircraft Section, International Validation Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax: 206-231-3229; email
(1) The Director of the Federal Register approved the incorporation by reference of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) European Union Aviation Safety Agency (EASA) AD 2021-0103, dated April 13, 2021.
(ii) [Reserved]
(3) For EASA AD 2021-0103, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
(4) You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(5) You may view this material that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, email
Securities and Exchange Commission.
Publication of Staff Accounting Bulletin.
This staff accounting bulletin expresses the views of the staff regarding the estimation of the fair value of share-based payment transactions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718,
Effective December 1, 2021.
Dan Janiak, Professional Accounting Fellow, Office of the Chief Accountant at (202) 551-5300 or Todd E. Hardiman, Associate Chief Accountant, Division of Corporation Finance at (202) 551-3400, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.
The statements in staff accounting bulletins are not rules or interpretations of the Commission, nor are they published as bearing the Commission's official approval. They represent interpretations and practices followed by the Division of Corporation Finance and the Office of the Chief Accountant in administering the disclosure requirements of the federal securities laws.
Accordingly, Part 211 of Title 17 of the Code of Federal Regulations is amended as follows:
15 U.S.C. 77g, 15 U.S.C. 77s(a), 15 U.S.C. 77aa(25) and (26), 15 U.S.C. 78c(b), 17 CFR 78l(b) and 13(b), 17 CFR 78m(b) and 15 U.S.C. 80a-8, 30(e) 15 U.S.C. 80a-29(e), 15 U.S.C. 80a-30, and 15 U.S.C. 80a-37(a).
The text of Staff Accounting Bulletin No. 120 will not appear in the Code of Federal Regulations.
This staff accounting bulletin (“SAB”) adds interpretive guidance for public companies to consider when entering into share-based payment transactions while in possession of material non-public information, including share-based payment transactions that are commonly referred to as being “spring-loaded.” Specifically, the staff is updating the Series to provide additional guidance to companies estimating the fair value of share-based payment transactions in accordance with Topic 718 regarding the determination of the current price of the underlying share and the estimation of the expected volatility of the price of the underlying share for the expected term when the company is in possession of material non-public information.
Additionally, this SAB rescinds portions and conforms portions of the interpretive guidance included in the Series in order to make the relevant staff interpretive guidance consistent with the latest U.S. generally accepted accounting principles (“U.S. GAAP”) as issued by the FASB. Specifically, the staff is updating the Series in order to bring existing guidance into conformity with Topic 718. The FASB has undertaken various projects to update share-based payment accounting in Topic 718 including, but not limited to, issuing:
• Accounting Standards Update (“ASU”) 2019-08,
• ASU 2018-07,
• ASU 2016-09,
The rescissions and conforming changes bring existing guidance into conformity with Topic 718, as updated by these ASUs.
The following describes the additional interpretive guidance, rescissions, and conforming edits made to the Series that are presented at the end of this release:
Topic 14 includes Securities and Exchange Commission staff views on a variety of share-based payment topics. This SAB makes the following updates to Topic 14:
a. Amendment and replacement of Topic 14.D:
b. Rescission of Subtopic 14.A:
c. Conforming edits to Subtopics 14.B:
Subtopic 5.T:
Accordingly, the staff hereby amends the Staff Accounting Bulletin Series as follows:
The interpretations in this SAB express views of the staff regarding the interaction between FASB ASC Topic 718, Compensation—Stock Compensation, and certain SEC rules and regulations and provide the staff's views regarding the valuation of share-based payment arrangements for public companies. FASB ASC Topic 718 is based on the underlying accounting principle that compensation cost resulting from share-based payment transactions be recognized in financial statements at fair value.
FASB ASC Topic 718 addresses a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.
FASB ASC Topic 718 replaced guidance originally issued in 1995 that established as preferable, but did not require, a fair-value-based method of accounting for share-based payment transactions with employees. It also replaced guidance originally issued in 1996 that provided different recognition and measurement requirements for share-based payment awards granted to nonemployees than for those granted to employees.
The staff believes the guidance in this SAB will assist issuers in their application of FASB ASC Topic 718 and enhance the information received by investors and other users of financial statements, thereby assisting them in making investment and other decisions. This SAB includes interpretive guidance related to the transition from nonpublic to public entity
The staff recognizes that there is a range of conduct that a reasonable issuer might use to make estimates and valuations and otherwise apply FASB ASC Topic 718, and the interpretive guidance provided by this SAB. Thus, throughout this SAB the use of the terms “reasonable” and “reasonably” is not meant to imply a single conclusion or methodology, but to encompass the full range of potential conduct, conclusions or methodologies upon which an issuer may reasonably base its valuation decisions. Different conduct, conclusions or methodologies by different issuers in a given situation does not of itself raise an inference that any of those issuers is acting unreasonably. While the zone of reasonable conduct is not unlimited, the staff expects that it will be rare, except when observable market prices of identical or similar equity or liability instruments in active markets are available, when there is only one acceptable choice in estimating the fair value of share-based payment arrangements under the provisions of FASB ASC Topic 718 and the interpretive guidance provided by this SAB in any given situation. In addition, as discussed in the Interpretive Response to Question 1 of Section C, Valuation Methods, estimates of fair value are not intended to predict actual future events, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made under FASB ASC Topic 718.
FASB ASC paragraph 718-10-30-6 (Compensation—Stock Compensation Topic) indicates that the measurement objective for equity instruments awarded to grantees is to estimate at the grant date the fair value of the equity instruments the entity is obligated to issue when grantees have delivered the good or rendered the service and satisfied any other conditions necessary to earn the right to benefit from the instruments.
The chosen valuation technique or model must meet all three of the requirements stated above. In valuing a particular instrument, certain techniques or models may meet the first and second criteria but may not meet the third criterion because the techniques or models are not designed to reflect certain characteristics contained in the instrument. For example, for a share option in which the exercisability is conditional on a specified increase in the price of the underlying shares, the Black-Scholes-Merton closed-form model would not generally be an appropriate valuation model because, while it meets both the first and second criteria, it is not designed to take into account that type of market condition.
Further, the staff understands that a company may consider multiple techniques or models that meet the fair value measurement objective before making its selection as to the appropriate technique or model. The staff would not object to a company's choice of a technique or model as long as the technique or model meets the fair value measurement objective. For example, a company is not required to use a lattice model simply because that model was the most complex of the models the company considered.
FASB ASC Topic 718's (Compensation—Stock Compensation Topic) fair value measurement objective for equity instruments awarded to grantees for goods or services is to estimate the grant-date fair value of the equity instruments that the entity is obligated to issue when grantees have delivered the good or rendered the service and satisfied any other conditions necessary to earn the right to benefit from the instruments.
FASB ASC paragraph 718-10-55-36 states, “Volatility is a measure of the amount by which a financial variable, such as share price, has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. Option-pricing models require an estimate of expected volatility as an assumption because an option's value is dependent on potential share returns over the option's term. The higher the volatility, the more the returns on the share can be expected to vary—up or down. Because an option's value is unaffected by expected negative returns on the shares, other things [being] equal, an option on a share with higher volatility is worth more than an option on a share with lower volatility.”
The staff believes that companies should make good faith efforts to identify and use sufficient information in determining whether taking historical volatility, implied volatility or a combination of both into account will result in the best estimate of expected volatility. The staff believes companies that have appropriate traded financial instruments from which they can derive an implied volatility should generally consider this measure. The extent of the ultimate reliance on implied volatility will depend on a company's facts and circumstances; however, the staff believes that a company with actively traded options or other financial instruments with embedded options
The process used to gather and review available information to estimate expected volatility should be applied consistently from period to period. When circumstances indicate the availability of new or different information that would be useful in estimating expected volatility, a company should incorporate that information.
The staff believes the method selected by Company B to compute its historical volatility should produce an estimate that is representative of a marketplace participant's expectations about Company B's future volatility over the expected (if using a Black-Scholes-Merton closed-form model) or contractual (if using a lattice model)
FASB ASC subparagraph 718-10-55-37(a) indicates entities should consider historical volatility over a period generally commensurate with the expected or contractual term, as applicable, of the share option. The staff believes Company B could utilize a period of historical data longer than the expected or contractual term, as applicable, if it reasonably believes the additional historical information will improve the estimate. For example, assume Company B decided to utilize a Black-Scholes-Merton closed-form model to estimate the value of the share options granted on January 2, 20X6 and determined that the expected term was six years. Company B would not be precluded from using historical data longer than six years if it concludes that data would be relevant.
FASB ASC subparagraph 718-10-55-37(d) indicates an entity should use appropriate and regular intervals for price observations based on facts and circumstances that provide the basis for a reasonable fair value estimate. Accordingly, the staff believes Company B should consider the frequency of the trading of its shares and the length of its trading history in determining the appropriate frequency of price observations. The staff believes using daily, weekly or monthly price observations may provide a sufficient basis to estimate expected volatility if the history provides enough data points on which to base the estimate.
The objective in estimating expected volatility is to ascertain the assumptions that marketplace participants would likely use in determining an exchange price for an option.
The staff believes that careful consideration is required to determine whether material non-public information is currently available (or would be available) to the issuer that would be considered by a marketplace participant in estimating the expected volatility.
In some instances, due to a company's particular business situations, a period of historical volatility data may not be relevant in evaluating expected volatility.
The staff believes Company B should consider the volume of trading in its underlying shares as well as the traded options. For example, prices for instruments in actively traded markets are more likely to reflect a marketplace participant's expectations regarding expected volatility.
Company B should synchronize the variables used to derive implied volatility. For example, to the extent reasonably practicable, Company B should use market prices (either traded prices or the average of bid and asked quotes) of the traded options and its shares measured at the same point in time. This measurement should also be synchronized with the grant of the share options; however, when this is not reasonably practicable, the staff believes Company B should derive implied volatility as of a point in time as close to the grant of the share options as reasonably practicable.
The staff believes that when valuing an at-the-money share option, the implied volatility derived from at- or near-the-money traded options generally would be most relevant.
The staff believes that when valuing a share option with a given expected or contractual term, as applicable, the implied volatility derived from a traded option with a similar term would be the most relevant. However, if there are no traded options with maturities that are similar to the share option's contractual or expected term, as applicable, then the staff believes Company B could consider traded options with a remaining maturity of six months or greater.
When a company is in possession of material non-public information, the staff believes that the related guidance in the interpretive response to Question 2 above would also be relevant in determining whether the implied volatility appropriately reflects a marketplace participant's expectations of future volatility.
The staff believes Company B's evaluation of the factors above should assist in determining whether the implied volatility appropriately reflects the market's expectations of future volatility and thus the extent of reliance that Company B reasonably places on the implied volatility.
The staff would not object to Company B placing exclusive reliance on implied volatility when the following factors are present, as long as the methodology is consistently applied:
• Company B utilizes a valuation model that is based upon a constant volatility assumption to value its share options;
• The implied volatility is derived from options that are actively traded;
• The market prices (trades or quotes) of both the traded options and underlying shares are measured at a similar point in time to each other and on a date reasonably close to the fair value measurement date of the share options;
• The traded options have exercise prices that are both (a) near-the-money and (b) close to the exercise price of the share options;
• The remaining maturities of the traded options on which the estimate is based are at least one year, and
• Material nonpublic information that would be considered in a marketplace participant's expectation of future volatility does not exist.
The staff would not object to Company B placing exclusive reliance on historical volatility when the following factors are present, so long as the methodology is consistently applied:
• Company B has no reason to believe that its future volatility over the expected or contractual term, as applicable, is likely to differ from its past;
• The computation of historical volatility uses a simple average calculation method;
• A sequential period of historical data at least equal to the expected or contractual term of the share option, as applicable, is used; and
• A reasonably sufficient number of price observations are used, measured at a consistent point throughout the applicable historical period.
In addition, Company B should consider the requirements of Regulation S-K Item 303(b)(3) regarding critical accounting estimates in MD&A. A company should determine whether its evaluation of any of the factors listed in Questions 2 and 3 of this section, such as consideration of future events in estimating expected volatility, resulted in an estimate that involves a significant level of estimation uncertainty and has had or is reasonably likely to have a material impact on the financial condition or results of operations of the company.
The staff would not object to Company C looking to an industry sector index (
After similar entities have been identified, Company C should continue to consider the volatilities of those entities unless circumstances change such that the identified entities are no longer similar to Company C. Until Company C has sufficient information available, the staff would not object to Company C basing its estimate of expected volatility on the volatility of similar entities for those periods for which it does not have sufficient information available.
FASB ASC paragraph 718-10-55-29 states, “The fair value of a traded (or transferable) share option is based on its contractual term because rarely is it economically advantageous to exercise, rather than sell, a transferable share option before the end of its contractual term. Employee share options generally differ from transferable [or tradable] share options in that employees cannot sell (or hedge) their share options—they can only exercise them; because of this, employees generally exercise their options before the end of the options' contractual term. Thus, the inability to sell or hedge an employee share option effectively reduces the option's value [compared to a transferable option] because exercise prior to the option's expiration terminates its remaining life and thus its remaining time value.” Accordingly, FASB ASC Topic 718 requires that when valuing an employee share option under the Black-Scholes-Merton framework the fair value of employee share options be based on the share options' expected term rather than the contractual term.
FASB ASC paragraph 718-10-55-29A states, “On an award-by-award basis, an entity may elect to use the contractual term as the expected term when estimating the fair value of a nonemployee award to satisfy the measurement objective in paragraph 718-10-30-6. Otherwise, an entity shall apply the guidance in [Topic 718] in estimating the expected term of a nonemployee award, which may result in a term less than the contractual term of the award. If an entity does not elect to use the contractual term as the expected term, similar considerations discussed in paragraph 718-10-55-29, such as the inability to sell or hedge a nonemployee award, apply when estimating its expected term.”
The staff believes the estimate of expected term should be based on the facts and circumstances available in each particular case. Consistent with our Topic 14 introductory guidance regarding reasonableness, the fact that other possible estimates are later determined to have more accurately reflected the term does not necessarily mean that the particular choice was unreasonable. The staff reminds registrants of the expected term disclosure requirements described in FASB ASC subparagraph 718-10-50-2(f)(2)(i).
A company may also conclude that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term. This may be the case for a variety of reasons, including, but not limited to, the life of the company and its relative stage of development, past or expected structural changes in the business, differences in terms of past equity-based share option grants,
FASB ASC Topic 718 describes other alternative sources of information that might be used in those cases when a company determines that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term. For example, a lattice model (which by definition incorporates multiple price paths) can be used to estimate expected term as an input into a Black-Scholes-Merton closed-form model.
• The share options are granted at-the-money;
• Exercisability is conditional only on performing service through the vesting date;
• If an employee terminates service prior to vesting, the employee would forfeit the share options;
• If an employee terminates service after vesting, the employee would have a limited time to exercise the share options (typically 30-90 days); and
• The share options are nontransferable and nonhedgeable.
Company E utilizes the Black-Scholes-Merton closed-form model for valuing its employee share options.
Examples of situations in which the staff believes that it may be appropriate to use this simplified method include the following:
• A company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded.
• A company significantly changes the terms of its share option grants or the types of employees that receive share option grants such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term.
• A company has or expects to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term.
The staff understands that a company may have sufficient historical exercise data for some of its share option grants but not for others. In such cases, the staff will accept the use of the simplified method for only some but not all share option grants. The staff also does not believe that it is necessary for a company to consider using a lattice model before it decides that it is eligible to use this simplified method. Further, the staff will not object to the use of this simplified method in periods prior to the time a company's equity shares are traded in a public market.
If a company uses this simplified method, the company should disclose in the notes to its financial statements the use of the method, the reason why the method was used, the types of share option grants for which the method was used if the method was not used for all share option grants, and the periods for which the method was used if the method was not used in all periods. Companies that have sufficient historical share option exercise experience upon which to estimate expected term may not apply this simplified method. In addition, this simplified method is not intended to be applied as a benchmark in evaluating the appropriateness of more refined estimates of expected term.
The staff does not expect that such a simplified method would be used for share option grants when more relevant detailed information is available to the company.
FASB ASC paragraph 718-10-55-21 states that “if an observable market price is not available for a share option or similar instrument with the same or similar terms and conditions, an entity shall estimate the fair value of that instrument using a valuation technique or model that meets the requirements in paragraph 718-10-55-11,” and requires such valuation technique or model to take into account, at a minimum a number of factors including the current price of the underlying share.
FASB ASC paragraph 718-10-55-27 states, “Assumptions used to estimate the fair value of equity and liability instruments granted in share-based payment transactions shall be determined in a consistent manner from period to period. For example, an entity might use the closing share price or the share price at another specified time as the current share price on the grant date in estimating fair value, but whichever method is selected, it shall be used consistently.”
For a valuation technique to be consistent with the fair value measurement objective and the other requirements of Topic 718, the staff believes that a consistently applied method to determine the current price of the underlying share should include consideration of whether adjustments to observable market prices (
Determining whether an adjustment to the observable market price is necessary, and if so, the magnitude of any adjustment, requires significant judgment. The staff acknowledges that companies generally possess non-public information when entering into share-based payment transactions. The staff believes that an observable market price on the grant date is generally a reasonable and supportable estimate of the current price of the underlying share in a share-based payment transaction, for example, when estimating the grant-date fair value of a routine annual grant to employees that is not designed to be spring-loaded.
However, companies should carefully consider whether an adjustment to the observable market price is required, for example, when share-based payments arrangements are entered into in contemplation of or shortly before a planned release of material non-public information, and such information is expected to result in a material increase in share price. The staff believes that non-routine spring-loaded grants merit particular scrutiny by those charged with compensation and financial reporting governance. Additionally, when a company has a planned release of material non-public information within a short period of time after the measurement date of a share-based payment, the staff believes a material increase in the market price of the company's shares upon release of such information indicates marketplace participants would have considered an adjustment to the observable market price on the measurement date to determine the current price of the underlying share.
In estimating the grant-date fair value of share options in this fact pattern, absent an adjustment to the closing share price to reflect the impact of Company D's new material contract with a customer, the staff believes the closing share price would not be a reasonable and supportable estimate and, without an adjustment the valuation of the award would not meet the fair value measurement objective of FASB ASC Topic 718 because the closing share price would not reflect a price that is unbiased for marketplace participants at the time of the grant.
Accordingly, the staff expects that, at a minimum, Company D would disclose in a footnote to its financial statements how it determined the current price of shares underlying share options for purposes of determining the grant-date fair value of its share options in accordance with FASB ASC Topic 718. For example, the staff would expect Company D to disclose its accounting policy related to how it identifies when an adjustment to the closing price is required, how it determined the amount of the adjustment to the closing share price, and any significant assumptions used to determine such adjustment, if material. Further, the characteristics of the share options, including their spring-loaded nature, may differ from Company D's other share-based payment arrangements to such an extent Company D should disclose information regarding these share options separately from other share-based payment arrangements to allow investors to understand Company D's use of share-based compensation.
Additionally, Company D should consider the applicability of MD&A and other disclosure requirements, including those related to liquidity and capital resources, results of operations, critical accounting estimates, executive compensation, and transactions with related persons.
Certain financial instruments awarded in conjunction with share-based payment arrangements have redemption features that require settlement by cash or other assets upon the occurrence of events that are outside the control of the issuer.
When an instrument ceases to be subject to FASB ASC Topic 718 and becomes subject to the recognition and measurement requirements of other applicable GAAP, the staff believes that the company should reassess the classification of the instrument as a liability or equity at that time and consequently may need to reconsider the applicability of ASR 268.
The staff believes that such a transaction is similar to those described in FASB ASC paragraph 718-10-15-4 (Compensation—Stock Compensation Topic), which states that “share-based payments awarded to a grantee by a related party or other holder of an economic interest
The staff believes that the problem of separating the benefit to the principal stockholder from the benefit to the company cited in FASB ASC Topic 718 is not limited to transactions involving stock compensation. Therefore, similar accounting is required in this and other
Some registrants and their accountants have taken the position that since FASB ASC Topic 850, Related Party Disclosures, applies to these transactions and requires only the disclosure of material related party transactions, the staff should not analogize to the accounting called for by FASB ASC paragraph 718-10-15-4 for transactions other than those specifically covered by it. The staff notes, however, that FASB ASC Topic 850 does not address the measurement of related party transactions and that, as a result, such transactions are generally recorded at the amounts indicated by their terms.
The transactions for which FASB ASC Topic 850 requires disclosure generally are those in which a company receives goods or services directly from, or provides goods or services directly to, a related party, and the form and terms of such transactions may be structured to produce either a direct or indirect benefit to the related party. The participation of a related party in such a transaction negates the presumption that transactions reflected in the financial statements have been consummated at arm's length. Disclosure is therefore required to compensate for the fact that, due to the related party's involvement, the terms of the transaction may produce an accounting measurement for which a more faithful measurement may not be determinable.
However, transactions of the type discussed in the facts given do not have such problems of measurement and appear to be transacted to provide a benefit to the stockholder through the enhancement or maintenance of the value of the stockholder's investment. The staff believes that the substance of such transactions is the payment of an expense of the company through contributions by the stockholder. Therefore, the staff believes it would be inappropriate to account for such transactions according to the form of the transaction.
Coast Guard, DHS.
Final rule.
The Coast Guard is issuing regulations to expand vessel financial responsibility to apply to all tank vessels greater than 100 gross tons as required by statute, and to make other amendments that clarify and update reporting requirements, reflect current practice, and remove unnecessary regulations. These regulations ensure that the Coast Guard has current information when there are significant changes in a vessel's operation, ownership, or evidence of financial responsibility, and reflects current best practices in the Coast Guard's management of the Certificate of Financial Responsibility program.
This final rule is effective January 3, 2022.
To view documents mentioned in this preamble as being available in the docket, go to
For information about this document call or email Benjamin H. White, National Pollution Funds Center, Coast Guard; telephone 202-795-6066, email
Responsible parties for certain vessels must establish and maintain evidence of financial responsibility, under both the Oil Pollution Act of 1990 (OPA 90), as amended, (specifically, 33 U.S.C. 2716) and the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) (specifically, 42 U.S.C. 9608). The evidence of financial responsibility must meet the maximum amount of liability under 33 U.S.C. 2704(a) or (d). Violators of those requirements are subject to various penalties under 33 U.S.C. 2716a and 42 U.S.C. 9609.
The 2010 Coast Guard Authorization Act (Pub. L. 111-281, 124 Stat. 2988 (October 15, 2010)) expands OPA 90 by adding any tank vessel greater than 100 gross tons but less than or equal to 300 gross tons using any place subject to U.S. jurisdiction to the population of vessels subject to the evidence of financial responsibility requirements. The Coast Guard is amending the Code of Federal Regulations (CFR) to reflect that statutory change.
The Coast Guard had previously issued Certificate of Financial Responsibility (COFR) regulations at 33 CFR part 138, subpart A, which apply to vessels over 300 gross tons, as well as certain other vessels depending on how and where they are operated. The Coast Guard has modernized and simplified its COFR program since those regulations were established. Certain aspects of the COFR program are improved, particularly in the COFR requirements for reporting changes in vessel operation, ownership, or evidence of financial responsibility that affected the basis of the Coast Guard's decision to issue a COFR. Finally, the structure of the COFR regulations and some of their provisions, including the rules for applying vessel gross tonnage, have been modernized to reflect changes in the law and Coast Guard practice, since OPA 90's initial legislation.
Under OPA 90, each responsible party (owners, operators, and demise charters) for a vessel from which oil is discharged, or which poses the substantial threat of a discharge of oil, into or upon the navigable waters or adjoining shorelines or the exclusive economic zone (EEZ), is jointly and severally liable for the specified removal costs and damages up to prescribed limits of liability.
Under OPA 90 and CERCLA, the responsible parties for certain categories of vessels must establish and maintain evidence of financial responsibility in accordance with regulations promulgated by the Secretary. The purpose of this requirement is to ensure that, in advance of an oil pollution incident or a hazardous substance release, the responsible parties for the vessels in the specified categories have the financial ability to meet their potential liabilities under OPA 90 and CERCLA up to the applicable limits of liability.
Under 33 U.S.C. 2716 evidence of financial responsibility is required for the following categories:
(1) Vessels greater than 300 gross tons (except a non-self-propelled vessel that does not carry oil as cargo or fuel) using any place subject to the jurisdiction of the United States.
(2) Vessels using the waters of the EEZ to transship or lighter oil destined for a place subject to the jurisdiction of the United States (U.S.).
(3) Tank vessels greater than 100 gross tons using any place subject to the jurisdiction of the United States.
Initially, the Coast Guard established COFR regulations in 33 CFR part 138 with an interim rule published July 1, 1994 (59 FR 34210) followed by a final rule published March 7, 1996 (61 FR 9264). In 2008 the Coast Guard amended the COFR regulations and placed them in a newly created subpart A of part 138 (73 FR 53691, September 17, 2008).
This 2021 rule follows our consideration of comments on a Notice of Proposed Rulemaking (NPRM) published on May 13, 2020 (85 FR
The Coast Guard added part 135, titled “Offshore Oil Pollution Compensation Fund,” to 33 CFR in 1979 (44 FR 16860, March 19, 1979) and it added subpart D, titled “Administration of the Pollution Fund,” to 33 CFR part 153 in 1971 (36 FR 7009, April 13, 1971). This rule removes 33 CFR part 135 and subpart D of 33 CFR part 153, which concern management of two pollution funds for which OPA 90 repealed the authorities. The two defunct funds are the Offshore Oil Pollution Compensation Fund (OSCLA Fund) in 33 CFR part 135 and the Federal Water Pollution Control Act (FWPCA) Section 311(k) Fund (311(k) Fund) in subpart D of 33 CFR part 153.
On November 1, 2011, the Coast Guard published a notice of inquiry (76 FR 67385) soliciting public comment on whether to remove 33 CFR part 135.
The Coast Guard received six comment submissions raising seven issues during the 90-day public comment period for the proposed rule, which closed on August 11, 2020. The letters we received during the public comment period were from three COFR guarantors, a regional citizen group, an insurance trade association and an insurance underwriter. The following discussion summarizes the public comments we received and our responses to the comments. In general, commenters were very supportive of the changes. Three regulatory changes from those we proposed were made based on the comments received.
The same commenter states that while it has no objection to having to establish continued acceptability of asset levels each year as set forth in section 138.110(b)(2)(ii), any requirement that guarantors report on themselves is vague and nebulous. Without guidance in the proposed rule, guarantors will be unable to determine what constitutes material changes in financial condition that need to be reported. We disagree with this commenter. A guarantor should know if their financial situation has changed or if other major changes have occurred that should be reported, such as a change that would impair their ability to fully satisfy their financial responsibility obligations under OPA 90, or a material condition that affects their ability to pay claims, or incur the expense of paying for cleanup. If there is no change, the guarantor should be able to report “no change.”
We disagree with this commenter. The scenario that this commenter describes does not apply to the revised 138.150. The 21-day notifications in 138.150(b) requiring issuance of a new COFR and 3-day notification in 138.150(c) not requiring issuance of a new COFR refer to pre-existing COFRs, which must now be either replaced, or updated, based on a change of circumstances in the pre-existing COFR. The scenario of a foreign vessel without a COFR requiring a COFR prior to entry into a U.S. port will follow the procedures set forth in 138.60 and 138.70 for issuance of a new COFR. A “waiver” is still available under 138.60(e)(3), permitting the Director to grant an exception to a deadline for good cause shown.
Two commenters allege that the reporting requirements in 138.150(b) are duplicative. One commenter states that COFR guarantors should not be required to report changes that have already been reported to the Director by a COFR Operator, even though the COFR guarantor will receive notice of such changes (and thus in the ordinary course of its business) pursuant to section 138.150(b). Otherwise an unnecessary double reporting requirement will exist in the new regulations. The other commenter almost reiterates the previous commenter, stating that it is noted that COFR Operators are required by section 138.150(b) to give notice to their COFR guarantors, at the same time that they give notice to the Director, of changes that may require issuance of a new COFR. The commenter continues by saying that COFR guarantors should not be required to report the same changes, which have already been reported to the Director by a COFR Operator. Finally, the commenter says that otherwise, an unnecessary and redundant reporting requirement will exist in the new regulations. The commenters presume that the operator has reported the information to the Coast Guard. If the Coast Guard receives the information from two different sources, it will validate the information received.
Four commenters expressed concern with the reporting requirement imposed on them in proposed section 138.150(d). The commenters' principal concern is that the new reporting requirement requires guarantors to report changes to vessels that the guarantor can't possibly give notice until they themselves are given notice by the vessel operator. A secondary concern held by the commenters is that the new reporting requirement will require guarantors to breach non-disclosure agreements in place with customers should it take effect. NPFC agrees with the group of commenters regarding section 138.150(d). As a result, we are amending the regulatory text to limit a guarantor's obligation to report material changes in prior COFR Applications to information of which it becomes aware in the ordinary course of its business. We have inserted “once known, or should have known, in the ordinary course of business,” after the phrase “explaining the reason for the intended termination.” The final sentence “In addition, each guarantor (or, if there are multiple guarantors, each lead guarantor) must give the Director notice by email or other electronic means as soon as possible before any other change occurs that would require new evidence of financial responsibility or issuance of a new COFR under paragraph (b) of this section.” has been deleted.
Several suggestions were made that were outside of the scope of this rulemaking, and therefore we will not address them here.
After considering these comments received on the NPRM published May 13, 2020 (85 FR 28802), we are issuing this final rule that revises 33 CFR part 138, subpart A, and removes the superseded regulations in 33 CFR parts 135 and 153. We explain specific changes this final rule introduces below.
Following is an overview of revisions to 33 CFR part 138, subpart A:
(1)
(2)
This set of changes—including § 138.150, which is dedicated to reporting requirements and expressly links those requirements to enforcement provisions—aims to address instances in which COFR Operators fail to report changes to their status, as was previously required by 33 CFR 138.90(e). These failures included failing to report a vessel's financial changes in a timely manner, failing to report a vessel transfer to a new owner, and failing to secure a guaranty and apply for a new COFR—and had resulted in compliance gaps. These previous gaps compromised emergency responses where an inability to confirm financial responsibility had caused untimely responses to oil spills and undermined the COFR program.
Lastly, these revisions ensure that the Director receives the most current and accurate information when issuing a COFR. These revisions improve the Coast Guard's ability to verify vessel compliance with COFR regulations. For example, if an owner sells a vessel located in a place subject to U.S. jurisdiction, the new owner is now a responsible party and is immediately subject to the COFR program. However, enforcing compliance with the COFR program's requirements depends on the Coast Guard knowing about the vessel transfer. The regulatory revisions mitigate the risk of uninsured responsible parties and derelict vessels.
(3)
• Expressly authorizes COFR Operators, guarantors, and agents for service of process to submit signed scanned documents;
• Permits COFR Operators submitting Applications or requests for COFR renewal by email or fax to pay the COFR Application and certification fees up to 21 days after submission. This method replaces the requirement to pay certification fees before the NPFC issues the COFR;
• Updates and simplifies the provisions that detail how to apply gross tonnage assigned under different measurement systems. This reflects changes in the law since OPA 90's initial legislation and conforms the regulatory text to the Coast Guard's “Tonnage Regulations Amendments” final rule (81 FR 18701, March 31, 2016), which amended the U.S. tonnage regulations in 46 CFR part 69;
• Adds new provisions describing the COFR program's procedures for determining the acceptability of COFR guarantors; and
• Implements the Electronic COFR (eCOFR). These regulatory changes help manage the COFR program more effectively, reduce the burden to the public, and accommodate the frequent changes in vessel operation during the normal course of maritime commerce.
(4)
Table 1 provides a section-number crosswalk between the existing COFR regulations and those in this final rule. The crosswalk assists the reader in comparing those currently in the CFR with those that will become effective January 3, 2022. Following table 1 is a discussion of the substantive changes, including new requirements or updates to the rule that match current Coast Guard practice. We applied plain language doctrine required by Executive Order 13563 to make these regulations easier to understand.
The scope of subpart A § 138.10(a)(2) includes the standards and procedures the Coast Guard uses to determine guarantor acceptability. In addition, the scope of subpart A § 138.10(a)(3) includes the reporting requirements for guarantors. These changes for submitting evidence of financial responsibility on behalf of the COFR Operator reflect current practice.
As required by statute, § 138.20(a)(1) extends the applicability of the rule to include tank vessels greater than 100 gross tons but less than or equal to 300 gross tons, regardless of whether it is transshipping or lightering oil. This provision expands the population of vessels under 300 gross tons that are required to establish and maintain evidence of financial responsibility under 33 U.S.C. 2716. The existing regulation includes any tank vessel using the waters of the EEZ to transship or lighter oil destined for a place subject to the jurisdiction of the United States, but if a tank vessel is not engaged in transshipping or lightering, the existing regulation has an exception for those that are 300 gross tons or less.
In § 138.20(a)(2) through (a)(4), we extend the applicability of the rule to include guarantors, responsible parties other than the COFR Operator, and agents of process. This action is in accordance with current practice.
We cross-referenced additional statutory and regulatory definitions, added new regulatory definitions, amended regulatory definitions, and removed definitions that were not used.
The following definitions reflect substantive changes from existing regulations:
The previous COFR regulations provided instructions to apply different gross tonnage measurements for three different purposes: (1) To determine whether a tonnage threshold applies; (2) to calculate a vessel's OPA 90 and CERCLA applicable amounts of financial responsibility; and (3) to determine the vessel's OPA 90 and COFR limits of liability. However, these provisions were complex, and had been difficult to apply, in part because they were developed and established prior to the full coming into force of the International Convention on Tonnage Measurement of Ships (June 23, 1969) on July 18, 1994. Furthermore, the 2010 Coast Guard Authorization Act included amendments that updated, clarified, and eliminated inconsistencies in the tonnage measurement law. The Coast Guard implemented these amendments in the 2016 rule,
This rule separates provisions for applying vessel gross tonnage in § 138.50 and clarifies and simplifies the language while conforming with the 2016 amendments to the U.S. tonnage regulations. We added a table to illustrate use of gross tonnages assigned under the two overarching tonnage measurement systems provided for by U.S. law.
In § 138.50(f), regardless of the tonnage reported on the Application, the appropriate tonnage-certifying document as provided for under the U.S. tonnage regulations, such as a tonnage certificate or completed Simplified measurement application, governs in determining the evidence of financial responsibility applicable amounts, except when the responsible parties or guarantors knew or should have known that the applicable tonnage certificate was incorrect. In the event of an oil pollution incident or hazardous substance release, the tonnage-certifying document governs the applicable limit of liability. This information is vital to the COFR program because the guaranty is to the certified tonnage at the time of the incident, and addresses what happens if a vessel undergoes a modification that affects the tonnage after a COFR Operator submits an Application. This approach also creates certainty by removing the implication that a tonnage re-measurement at the time of an incident can supersede liability and financial responsibility as reflected on the tonnage-certifying document.
The addition in § 138.50(g) also requires COFR Operators to submit, upon request, the original or a copy of the tonnage certifying document(s). The rule captures the fact that, in some circumstances, vessels may be assigned tonnage under both measurement systems.
To remain consistent with current practice, § 138.60(a) notes that forms can be completed online or downloaded. This is the Coast Guard's preference for submitting eCOFR Applications. If you submit electronic images, please note that, currently, our system only accepts the following imaging programs: PDF, JPEG, and TIFF. Because of delays associated with mail processing and security, submission of forms by mail is discouraged.
Section 138.60(c)(2) also removes the option for hand-delivering submissions because of the prohibition of hand delivery under U.S. Government mail security restrictions. Also, § 138.60(e) makes clear that the timeliness of submissions is solely the responsibility of the person making the submission.
Section 138.60(e)(3) was revised after comment to continue waivers, which permit the Director to grant an exception to a deadline for good cause shown.
Section 138.70(b) removes the express requirement to pay fees before the issuance of a COFR. This reflects the NPFC's current business practice when the COFR Operator submits the application via fax or email.
Section 138.70(e) states that certain tonnage information will be posted to the NPFC's COFR website, including the measurement system(s) used, which under § 138.80(a)(1), the applicant is required to provide.
Section 138.80 reflects the removal of a requirement to pay fees before the issuance of a COFR when Applications are submitted by email or fax by cross-referencing § 138.120's new paragraph (a)(3)(i) that allows payment to be made within 21 days of the Application. This allows flexibility for the Director to issue COFRs when the Application is complete and evidence of financial responsibility has been established, and before the NPFC receives payment. The COFR Operator must, however, ensure the fees are paid within 21 days of submission of the Application to avoid adverse consequences specified in § 138.120(a)(4).
Section 138.80(a)(1)(i)(C) also clarifies that Master Certificates do not name any specific vessel, but do state the maximum tonnages for the largest vessel for which the COFR Operator may be responsible. Without that requirement, we will not have a record of coverage if an incident occurs in the intervening period between the Application and the first periodic report of covered vessels.
Section 138.80(a)(1)(iv) requires the COFR Operator to include a report with the Application providing information on the vessels covered by the Master Certificate. The rule also explains what information the COFR Operator must provide to the Director if a vessel has been assigned tonnages under both measurement systems. The inclusion of both assigned tonnages for vessels with more than one should avoid delay of the application process and the effective date of the guaranty.
Additionally, § 138.80(a)(1)(iv)(B) requires that certain Master Certificate application information be updated, including a listing of vessels that are no longer covered. This establishes the termination of the guaranty date. Finally, to assist in keeping this information up to date, if during a 6-month reporting period a vessel is transferred to another responsible party, the updated report must list the date and place of transfer and the contact information of the responsible party to whom the vessel was transferred.
Unlike the previous application instruction section, § 138.60, § 138.80(d) does not require an original signature page for applications submitted by email or fax. Instead, the COFR Operator may submit a legible scan of the signature page.
Section 138.100(c) states that when statute or regulation adjusts limits of liability, the COFR Operator must establish and maintain evidence of financial responsibility in an amount equal to or greater than the amended total applicable amount, as provided in § 138.240(a).
The rule removes from the regulation the surety bond as a specifically mentioned method for establishing and maintaining evidence of financial responsibility. This method is still permitted as falling under the “other method” provision in paragraph (f).
Section 138.110(a) explains that the guarantor continues to be liable and must provide coverage for 30 days following NPFC receipt of a notice of cancellation and not from the date the guarantor issues the notice. The rule moves this provision previously contained on the COFR guaranty forms into the regulation and reflects a current and important NPFC business practice. The guarantor will provide the reason for termination as part of its notice of cancellation, if known. Additionally, § 138.110(a) requires COFR Operators, guarantors, and self-insurers to notify the Director of any material change in submitted information, including any material change in the guarantor or self-insurer's financial position. A material change is a change that will affect the basis of the Director's approval of the guarantor or evidence of financial responsibility. This notification is required immediately when a change occurs, rather than within 10 days of the change as specified in the previous rule.
Section 138.110(b) describes the current practice for establishing and maintaining the acceptability of COFR insurance guarantors. This will entail the guarantor submitting information on its structure, business practices, history, financial strength, and other information as requested by the Director. This process involves an initial determination followed by annual submission by each COFR insurance guarantor.
Section 138.110(c) clarifies the net worth and working capital requirements for financial guarantors to reflect current practice. Previously, the NPFC did not add the total applicable amount of each vessel owned by one operator; rather, it based evidence of financial responsibility on the operator's vessel with the greatest total applicable amount. This rule requires net worth and working capital be based on the aggregate total applicable amounts.
Section 138.110(f) changes the submission date for requesting another guaranty method for establishing evidence of financial responsibility from 45 to 90 days prior to the date the COFR is required. The NPFC needs this additional 45 days to review the financial documentation and communicate with the potential guarantor.
Section 138.120 eliminates a previous requirement that the application fee must be paid before the Director will issue a COFR. This adds flexibility and convenience for COFR Operators, especially if they are underway and want to enter U.S. navigable waters or U.S. EEZ. It further explains that failure to pay fees in a timely manner may result in denial or revocation of COFR, debt collection, or other enforcement. Finally, it amends the fee refund procedures in the case of overpayment. The Director will refund overpayments, because the NPFC will not credit overpayments for the operator's future use or for transfer to another operator anymore.
Section 138.130(d) shortens the notification period for a COFR Operator or Guarantor to notify the Director of a new agent for service of process from 10 days to 5 days. This shortened period reflects efficiencies relating to electronic notifications in place of mailed notifications.
Section 138.140 is revised to reflect current business practice. It adds a provision noting that the COFR Operator, or anyone authorized to act on their behalf, may withdraw an Application at any time before issuance of the COFR. It also includes the failure to designate and maintain a U.S. agent for service of process to the list of cases in which the Director may deny an Application or revoke a COFR. The section revision also clarifies that the Director may deny an Application or revoke a COFR after obtaining additional information, such as transfer to a new operator, vessel renaming, guaranty termination or cancellation, or disapproval of the guarantor, and it adds a duty to remedy violations where a COFR for a vessel expires. Finally, it adds a provision specifying that where a COFR is revoked because 30 days have elapsed following the date the Director receives a guarantor's notice of termination, the Director may reinstate the COFR if the guarantor promptly notifies the Director that the guarantor rescinded the termination and there was no gap in coverage. This will align the regulation to the COFR guaranty forms.
The rule merges reporting requirements into this one section. It also revises the regulatory text to emphasize prior notices of changes that will require a new COFR before the change occurs. Section 138.150 identifies the information that must be reported to the Director no later than 21 business days before a new COFR is required for permanent vessel transfers and other changes requiring issuance of a new COFR, and information that need only be reported 3 business days before implementing the change for changes not requiring issuance of a new COFR. Changes that require issuance of a new COFR include, but are not limited to: A permanent vessel transfer, change of COFR Operator, vessel name change, change in the vessel's gross tonnage, or termination of guaranty. As a result of comments, § 138.150(d) was revised to require that each guarantor (or, if there are multiple guarantors, each lead guarantor) must give the Director 30 days notice before terminating a guaranty as provided in § 138.110(a)(3), explaining the reason for the intended termination, once known, or should have known, in the ordinary course of business. The further requirement to give the Director notice before any other change occurs that will require new evidence of financial responsibility or issuance of a new COFR under paragraph (b) has been eliminated.
Existing paragraph § 138.90(f) contains a non-regulatory provision dealing with the temporary transfer of custody of an unmanned barge that has a COFR issued under subpart A of part 138. The COFR Operator who transfers the barge continues to be liable under OPA 90, CERCLA, or both, and continues to maintain on file with the Director acceptable evidence of financial responsibility with respect to the barge. The provision encourages the temporary transferee to require the transferring COFR Operator to acknowledge in writing that the transferring COFR Operator agrees to remain responsible for pollution liabilities. Since we received no adverse comments, we have removed § 138.90(f) because the existing COFR remains in effect in respect to that vessel, and a temporary new COFR is not required.
This document removes 33 CFR part 135 and subpart D of 33 CFR part 153 because OPA 90 repealed the legal authorities for them. These rules are outdated and are removed.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on these statutes or Executive orders.
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 both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Office of Management and Budget (OMB) has not designated this rule a significant regulatory action under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed it. A regulatory analysis (RA) follows.
As explained in this section, this rule imposes some quantified costs, and create qualitative benefits, which the Coast Guard believes justifies the costs.
The “No Action” alternative makes no regulatory changes to the evidence of financial responsibility regulations in 33 CFR part 138, subpart A. The “No Action” alternative is not viable because the statute requires evidence of financial responsibility regulations for tank vessels greater than 100 gross tons but less than or equal to 300 gross tons. At a minimum, a regulation implementing this requirement is required. This alternative reflects the status quo and
Alternative 2 reflects the absolute minimum rulemaking effort to address the statutory requirement in Section 712 of the Coast Guard Authorization Act of 2010. However we did not choose this alternative because, there are other aspects of the Coast Guard's evidence of financial responsibility program that the Coast Guard wants to address such as removing outdated regulatory text, providing updates that reflect current practices and taking into account technological improvements that will provide better clarity to the public as well as reduce confusion. This alternative has the least net benefits of all of the proposed alternatives. This alternative reflects the most costly aspect of the rulemaking and is included in all of the proposed alternatives because it is a statutory provision.
Alternative 3 adds promulgating evidence of financial responsibility regulations for deepwater ports to Alternative 2. The Coast Guard considered proposing financial responsibility regulations for deepwater ports as part of this rulemaking. The deepwater port industry is experiencing increased activity in the liquefied natural gas deepwater port industry sector, raising questions about how existing laws and policies regarding these facilities would apply. These issues do not impact vessel evidence of financial responsibility, however, and could create complexity and potentially delay the mandated regulation of tank vessels greater than 100 gross tons but less than or equal to 300 gross tons. In addition, currently only one liquefied natural gas deepwater port is in operation and it uses less than 100 gallons of oil, whereas other designs might pose a greater risk of oil spills. Additional time is necessary to analyze the effects of liquefied natural gas regulation on the economy, maritime safety, and the environment. The only other deepwater port in operation, an oil deepwater port called the Louisiana Offshore Oil Port, is self-insured, and provides evidence of financial responsibility sufficient to meet its maximum liability under OPA 90 under grandfathered requirements of the Deepwater Port Act of 1974.
After evaluating this alternative, the Coast Guard decided not to develop deepwater port financial responsibility regulations at this time. Postponing evidence of financial responsibility regulations for deepwater ports will not impact maritime safety or the environment. Currently, there is no established market that provides and maintains evidence of financial responsibility for deepwater ports. If the market decides to pursue these ventures in the future, the costs and benefits will be analyzed accordingly as part of a future rulemaking.
Alternative 4 addresses the statutory requirement to require tank vessels greater than 100 gross tons but less than or equal to 300 gross tons to establish and maintain financial responsibility. It also provides necessary updates to the current financial responsibility regulations to reflect current practices that have evolved over the past two decades, taking into account technological improvements as well as changes in policy. Lastly, this alternative removes 33 CFR part 135 and subpart D of 33 CFR part 153, both of which regulate two defunct funds, the OCSLA Fund and the 311(k) Fund.
In addition to the regulatory costs and benefits associated with Alternative 2, this alternative adds two aspects with no cost: Conforming regulations to current practice and removing two defunct portions of the CFR, providing intangible benefits of eliminating confusion for the public, as well as ensuring that the regulations reflect how the Coast Guard's financial responsibility program currently operates. Additionally, a small amount of regulatory cost is associated with the requirement to require COFR Operators and guarantors to provide additional information to the Coast Guard. Although the benefits of this alternative are qualitative, they will help to eliminate confusion and provide more clarity to the public while providing much needed information to the Coast Guard.
We are amending the vessel evidence of financial responsibility regulations at 33 CFR part 138, subpart A, to:
1. Require financial responsibility to now include all tank vessels greater than 100 gross tons but less than or equal to 300 gross tons.
2. Require additional information from the COFR Operator and guarantor. The revisions include:
• Reporting of gross tonnage measurement system used and submission of a copy of the tonnage certifying document, upon request;
• Electronic submissions;
• Reporting of reason for termination of guaranty by a guarantor, if known; and
• Reporting vessel name change and increased reporting on location of vessel when there is a change in ownership on date of change.
3. Conform regulations to current practice. The revisions include:
• How to apply vessel gross tonnages;
• Removal of requirement to pay fees before issuance of a COFR;
• Moving surety bond method to “other methods” for establishing and maintaining evidence of financial responsibility;
• Clarification on continuation of guarantor's liability and requirement to provide coverage for 30 days after cancellation of guaranty; and
• Process for establishing and maintaining acceptability of COFR insurance guarantors.
In addition, for the reasons discussed above, we are removing 33 CFR part 135 and subpart D of 33 CFR part 153 which concern management of two defunct pollution funds.
Table 2 shows whether a category of regulatory amendments have a regulatory cost, regulatory benefit, or both. Those amendments that have a regulatory cost or benefit are discussed in detail following the table.
There are two regulatory costs identified for this rule:
• Regulatory Cost 1: Require the additional tank vessels greater than 100 gross tons but less than or equal to 300 gross tons to establish and maintain evidence of financial responsibility (statutory requirement).
• Regulatory Cost 2: Require additional information from the COFR Operator and guarantor (discretionary requirement).
The rule requires tank vessels greater than 100 gross tons but less than or equal to 300 gross tons to establish and maintain evidence of financial responsibility.
• Application and certification costs; and
• COFR premium costs.
This rule requires additional information from the COFR Operator and guarantor that result in three types of costs:
• Reporting of gross tonnage measurement systems used and submission of copy of tonnage certifying document, upon request;
• Reporting of reason for termination of guaranty by a guarantor, if known; and
• Reporting vessel name change and increased reporting on location of vessel when there is a change in ownership on date of change.
Master Certificate and Fleet Certificate holders also are required to provide the gross tonnage measurement systems used for the largest vessel covered by the Application. According to the COFR database, there are currently 8 Master Certificates and 12 Fleet Certificates.
COFR Operators also provide a copy of the tonnage certifying document, upon request. We assume that the Coast Guard may request a copy of the tonnage certifying document when there is an incident. According to incident data from the Coast Guard's Case Information Management System (CIMS) database, there was an average of 12 incidents per year involving vessels with COFRs and vessels that are required to have COFRs under this rule over the five year period 2016-2020. We assume that for the analysis period, the number of incidents remains constant with this average.
Based on estimates received from COFR insurance guarantors who will submit, upon request, a copy of the tonnage certifying document on behalf of the COFR Operator, COFR Operators requires 15 minutes (0.25 hours) per submission.
There are four qualitative benefits identified for this rule:
• Regulatory Benefit 1: Require Tank Vessels Greater than 100 Gross Tons to 300 Gross Tons to Establish and Maintain Evidence of Financial Responsibility (statutory requirement).
• Regulatory Benefit 2: Require additional information from the COFR Operator and guarantor (discretionary requirement).
• Regulatory Benefit 3: Conform Regulations to Current Practice (discretionary requirement).
• Regulatory Benefit 4: Removal of 33 CFR part 135 and subpart D of 33 CFR part 153 (discretionary requirement).
Oil pollution removal costs and damages for incidents have substantially increased since 1990, even for relatively small-sized discharges. When there is no evidence of financial responsibility, it becomes more likely that the OSLTF will have to pay for at least some of the costs resulting from the incident.
Of the 10,000 incidents sampled from the Coast Guard's CIMS database during the “1990 to 2020” period, 4.99 percent were COFRed vessels and 30.27 percent were non-COFRed vessels.
The requirement ensures that the costs are internalized because parties responsible for oil spills are more fully responsible for (moving from less than
Providing this additional information with respect to gross tonnage allows the Coast Guard to determine more effectively the limit of liability and applicable amounts of financial responsibility for the incident. In some cases, vessels have tonnage determined under more than one measurement system, depending on a variety of factors, including the vessel's flag, length, voyage type, keel laid, or substantial alteration date, and whether it is self-propelled. This has caused confusion with respect to which measurement system to use to determine the limit of liability and amount of financial responsibility.
Regardless of the tonnage reported on the Application, the tonnage certifying document governs the required evidence of financial responsibility and the limit of liability at the time of the incident (except when the responsible parties or guarantors knew or should have known that the tonnage certificate information was incorrect). Using the tonnage certifying document provides the following benefits: (1) It ensures that the Coast Guard has the most accurate tonnage measurements; (2) it provides the method used to determine tonnage, as well as the tonnage amount; (3) it provides information for foreign flagged vessels that is oftentimes difficult to obtain; and (4) without the applicable tonnage certifying document, if an incident occurred, a re-measurement of tonnage could alter the already determined financial responsibility and limit of liability.
These regulations concern management of two pollution funds—the Offshore Oil Pollution Compensation Fund and the FWPCA Section 311(k) Fund. These provisions are no longer authorized. On November 1, 2011, the Coast Guard published a notice of inquiry (76 FR 67385) soliciting public comment on removing 33 CFR part 135 and we received no adverse comments. This aspect of the rulemaking is necessary to remove unauthorized regulatory requirements and to eliminate potential confusion to the public.
Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have considered whether this rule will 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.
An Initial Regulatory Flexibility Analysis (IRFA) was developed in the NPRM (85 FR 28802). There were no public comments received on the IRFA.
The IRFA determined that there are two potential direct costs to small entities that result from this rule:
• Regulatory Cost 1: Require Tank Vessels Greater than 100 Gross Tons to 300 Gross Tons to Establish and Maintain Evidence of Financial Responsibility (Statutory Requirement).
• Regulatory Cost 2: Require Additional Information from COFR Operators and Guarantors (Discretionary Requirement).
The number of small entities affected by Regulatory Cost 1 of the rule and the respective impact on their annual revenue was determined in the IRFA and is summarized in Table 4 below.
The number of small entities affected by Regulatory Cost 2 of the rule and the respective impact on their annual revenue was determined in the IRFA and is summarized in Table 5 below.
Therefore, 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.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, we offer to assist small entities in understanding this rule so that they can better evaluate its effects on them and participate in the rulemaking. 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.
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 rule revises a previously approved collection of information (OMB Control Number 1625-0046) under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520. As defined in 5 CFR 1320.3(c), “collection of information” comprises reporting, recordkeeping, monitoring, posting, labeling, and other similar actions. The title and description of the information collections, a description of those who must collect the information, and an estimate of the total annual burden follow. The estimate covers the time for reviewing instructions, searching existing sources of data, gathering and maintaining the data needed, and completing and reviewing the collection.
Providing tonnage measurement systems used and submitting the tonnage certifying document, upon request, in the rule, with respect to gross tonnage allows the Coast Guard to determine more effectively the limit of liability and applicable amounts of financial responsibility for the incident. In some cases, the vessel may be assigned tonnage under more than one measurement system depending on a variety of factors including the vessel's flag, length, voyage type, keel laid, or substantial alteration date, and whether it is a self-propelled vessel. This has caused confusion with respect to which method to use to determine limit of liability and amount of financial responsibility.
Regardless of the tonnage reported on the Application, the tonnage certifying document governs the required evidence of financial responsibility and the limit of liability at the time of the incident (except when the responsible parties or guarantors knew or should have known that the tonnage certifying document or certificate of registry was incorrect). Using the tonnage certifying document provides the following benefits: It ensures that the Coast Guard has the most accurate tonnage measurements; it provides the method used to determine tonnage, as well as the tonnage amount; it provides information for foreign flagged vessels that is oftentimes difficult to obtain; and without the applicable tonnage certifying document, if an incident occurred, a re-measurement of tonnage could alter the already determined financial responsibility and limit of liability.
The rule requires that the guarantor include the reason for termination, if known, with the notification for termination of the guaranty. This information provides the Coast Guard with information about the COFR Operator that otherwise is not known in the event there is an incident.
The additional collection of information in the rule ensures the information the Coast Guard relies on when initially issuing a COFR is up to date and remains current—especially concerning vessels that, over time, become derelict while in U.S. navigable waters or U.S. EEZ. The revisions also improve the Coast Guard's ability to establish compliance with COFR regulations by more effectively ensuring that the responsible party is able to pay its liability and mitigate risks to the OSLTF. For example, if a vessel is sold while using a place subject to U.S. jurisdiction, the new responsible parties become immediately subject to the COFR program. These changes ensure that, while the Coast Guard still has regulatory authority over a responsible party and the financial assurances of the guarantor, the Coast Guard receives information material to continued compliance before problems arise. Enforcing compliance with the COFR program's requirements, however, depends on the Coast Guard knowing about the vessel transfer. The regulatory revisions seek to ensure that the Coast Guard receives this information and to mitigate the risk of uninsured responsible parties and derelict vessels.
The Coast Guard uses the additional collection of information in the rule to ensure that the gross tonnage of a vessel involved in an incident is accurate to determine its limit of liability and applicable amount of financial responsibility.
The Coast Guard uses the additional collection of information in the rule to learn more about a vessel and its COFR Operators in the event of an incident. This new requirement to provide the reason for guaranty termination will reduce the possibility that a guarantor will cancel the guaranty to simply shield themselves from potential liability in the event of an incident.
The Coast Guard uses the additional collection of information in the rule to identify a responsible party in the event there is an incident.
All COFR Operators, including those for the tank vessels greater than 100 gross tons but less than or equal to 300 gross tons in this rule, must report the gross tonnage measurement systems used when applying for a COFR. The Coast Guard's COFR database indicates that there are 26,163 currently COFRed vessels. Adding the 465 COFRed tank vessels greater than 100 gross tons but less than or equal to 300 gross tons in Regulation Cost 1, and assuming the number of COFRed vessels remains constant during the analysis period the total number of COFRed vessels equals 26,628.
Master Certificate and Fleet Certificate holders will also be required to provide the gross tonnage measurement systems used for the largest vessel covered by the Application.
The Coast Guard estimated that COFR Operators will provide information on
26,628 COFRed vessels ÷ 3 = 8,876 COFRed vessels per year that will require the submission of the gross tonnage measurement systems used.
8 Master Certificates ÷ 3 = 3 Master Certificates per year that will require the submission of the gross tonnage measurement systems used for the largest vessel covered by the Application.
12 Fleet Certificates ÷ 3 = 4 Fleet Certificates per year that will require the submission of the gross tonnage measurement systems used for the largest vessel covered by the Application.
COFR Operators will also provide a copy of the tonnage certifying document, upon request. We assume that the Coast Guard will request a copy of the tonnage certifying document when there is an incident. According to incident data from the Coast Guard's CIMS database, there are an average of 12 incidents per year involving vessels with COFRs and vessels that will be required to have COFRs under this rule over the five year period 2016-2020. We assume that for the analysis period, the number of incidents will remain constant with this average.
Based on NPFC Vessel Certification Program data on the historical number of annual notices of guaranty termination by guarantors, the Coast Guard estimates that there will be 4,000 vessels per year for the 10-year analysis period.
Based on NPFC Vessel Certification Program historical data, the Coast Guard estimates that there will be 1,000 submissions on vessel name changes and change in location when there is a change in ownership per year.
Reporting the gross tonnage measurement systems used with the application and/or requests for COFR renewal will result in a negligible burden (less than one minute of time) to the COFR Operator and will be completed with the Application for or request for renewal of the COFR.
Based on estimates received from COFR insurance guarantors who will submit, upon request, a copy of the tonnage certifying document on behalf of the COFR Operator, COFR Operators will require 15 minutes (0.25 hours) per submission.
The Coast Guard estimated that it will take 5 minutes (0.08 hours) for the guarantor to add the reason why the guaranty was terminated to the information they provide to the Coast Guard already when he or she terminates a guaranty.
The Coast Guard estimated that it will take an additional 5 minutes (0.08 hours) per submission to provide additional information that is not already required under the current rule.
As stated above in the cost benefit analysis section of the preamble, we do not quantify the cost impact of reporting the gross tonnage measurement systems used because it is negligible and is provided as part of the Application and/or request for COFR renewal.
The cost burden associated with COFR Operators providing, upon request, their tonnage certifying document is calculated as follows:
Table 6 shows the incremental collection burden of the proposed rule and the total proposed collection of information burden for OMB Control Number 1625-0046.
As required by 44 U.S.C. 3507(d), we will submit a copy of this rule to OMB for its review of the collection of information.
You are not required to respond to a collection of information unless it displays a currently valid OMB control number. OMB has not yet completed its review of this collection. Before the Coast Guard could enforce the collection of information requirements in this rule, OMB would need to approve the Coast Guard's request associated with this rule to collect this information. After OMB completes action on our information collection request, we will publish a
A rule has implications for federalism under Executive Order 13132 (Federalism) if it has a substantial direct effect on 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 Executive Order 13132 and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132. Our analysis follows.
It is well settled that States may not regulate in categories reserved for regulation by the Coast Guard. It is also well settled that the categories covered in 46 U.S.C. 3306, 3703, 7101, and 8101 (design, construction, alteration, repair, maintenance, operation, equipping, personnel qualification, and manning of vessels), as well as the reporting of casualties and any other category in which Congress intended the Coast Guard to be the sole source of a vessel's obligations, are within the field foreclosed from regulation by the States.
This rulemaking is based on provisions in OPA 90 and CERCLA; 33 U.S.C. 2716 and 42 U.S.C. 9608, respectively. This rule amends Coast Guard regulations on vessel evidence of financial responsibility and removes certain unnecessary pollution fund regulations. The OPA 90 contains a savings clause that saves to the States the ability to regulate activities contained in Title I of OPA 90, including vessel evidence of financial responsibility requirements.
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. Although this rule will not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This rule will 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 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 rule under Executive Order 13045 (Protection of Children from Environmental Health Risks and Safety Risks). This rule is not an economically significant rule and will not create an environmental risk to health or risk to safety that might disproportionately affect children.
This rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments), because it will 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
We have analyzed this 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 will be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (
This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this rule under Department of Homeland Security Management Directive 023-01, Rev. 1, associated implementing instructions, 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 made a 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 Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the
Administrative practice and procedure, Continental shelf, Insurance, Oil pollution, Reporting and recordkeeping requirements.
Hazardous materials transportation, Insurance, Oil pollution, Reporting and recordkeeping requirements, Vessels, Water pollution control.
Hazardous substances, Oil pollution, Reporting and recordkeeping requirements, Water pollution control.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR chapter 1 as follows:
6 U.S.C. 552(d); 33 U.S.C. 2704, 2716, 2716a; 42 U.S.C. 9608, 9609; E.O. 12580, Sec. 7(b), 3 CFR, 1987 Comp., p. 193; E.O. 12777, Secs. 4 and 5, 3 CFR, 1991 Comp., p. 351, as amended by E.O. 13286, Sec. 89, 3 CFR, 2004 Comp., p. 166, and by E.O. 13638, Sec. 1, 3 CFR, 2014 Comp., p.227; Department of Homeland Security Delegation Nos. 00170.1, Revision 01.2 and 5110, Revision 01. Section 138.40 also issued under the authority of 46 U.S.C. 2103 and 14302.
(a)
(1) The requirements and procedures each COFR Operator (as defined in § 138.30(b)) must use to establish and maintain the evidence of financial responsibility required by the OPA 90 and CERCLA (both defined in § 138.30), and to obtain Certificates of Financial Responsibility (COFR);
(2) The standards and procedures the Coast Guard uses to determine the acceptability of guarantors;
(3) The procedures guarantors must use to submit evidence of financial responsibility on behalf of the responsible parties for vessels to which this subpart applies;
(4) The requirements for designating and maintaining U.S. agents for service of process;
(5) The requirements for reporting changes affecting compliance with this subpart; and
(6) The enforcement actions that may result from non-compliance with this subpart or OPA 90, CERCLA, or both, referenced in paragraph (a)(1) of this section.
(b)
(1) Under OPA 90 in the event of a discharge, or substantial threat of a discharge, of oil; and
(2) In the case of vessels greater than 300 gross tons, under CERCLA in the event of a release, or threatened release, of a hazardous substance.
(a)
(1) To the COFR Operator of—
(i) Any vessel over 300 gross tons (except a vessel listed in paragraph (d)(1) or (2) of this section) using the navigable waters of the United States, or any port or other place subject to the
(ii) Any vessel of any size (except a vessel listed in paragraph (d)(1) or (3) of this section) using the waters of the Exclusive Economic Zone to transship or lighter oil (whether delivering or receiving) destined for a place subject to the jurisdiction of the United States; and
(iii) Any tank vessel over 100 gross tons (except a vessel listed in paragraph (d)(1) or (3) of this section) using the navigable waters of the United States, or any port or other place subject to the jurisdiction of the United States, including any such tank vessel using a deepwater port or other offshore facility subject to the jurisdiction of the United States;
(2) To a guarantor providing evidence of financial responsibility under this subpart on behalf of one or more of a vessel's responsible parties;
(3) To responsible parties other than the COFR Operator designated to represent the responsible parties for purposes of this subpart; and
(4) To any person serving as a U.S. agent for service of process under this subpart.
(b)
(1) A tank vessel when it is being used as an offshore facility; and
(2) A vessel other than a tank vessel when it is not being used as an offshore facility.
(c)
(d)
(2) Paragraph (a)(1)(i) of this section does not apply to any non-self-propelled barge that does not carry oil as cargo or fuel and does not carry hazardous substances as cargo.
(3) Paragraphs (a)(1)(ii) and (iii) of this section do not apply to: any offshore supply vessel; any fishing vessel or fish tender vessel of 750 gross tons or less that transfers fuel without charge to a fishing vessel owned by the same person; any towing or pushing vessel (tug) simply because it has in its custody a tank barge; or any tank vessel that only carries, or is adapted to carry, non-liquid hazardous material in bulk as cargo or cargo residue.
(a) As used in this subpart, the following terms have the meanings set forth in—
(1) OPA 90 (specifically in 33 U.S.C. 2701):
(2) CERCLA (42 U.S.C. 9601):
(3) 46 CFR 69.9:
(b) As used in this subpart—
(i) If a vessel has one owner and is operated by that owner, or the owner controls and is responsible for the vessel's operation, the owner is the COFR Operator. In all other cases the person who operates, or controls and is principally responsible for the operation of, the vessel (for example, the demise charterer) is the COFR Operator.
(ii) A person who is responsible, or who agrees by contract to become responsible, for a vessel in the capacity of a builder, repairer, or scrapper, or for the purpose of holding the vessel out for sale or lease, is the COFR Operator. A person who takes possession of, or responsibility for, a newly built, modified, or repaired vessel from a builder or repairer, or who purchases and operates or becomes a demise charterer of a vessel held out for sale or lease, is the COFR Operator.
(iii) A time or voyage charterer who does not assume responsibility for the operation of a vessel is not a COFR Operator for purposes of this subpart.
(iv) The designation of an operator to act as the COFR Operator on behalf of a vessel's responsible parties for purposes of this subpart does not limit who may be determined to be an operator under OPA 90, CERCLA, or both, in the event of an incident or a release.
(a)
(1) Established as of the date they become a responsible party; and
(2) Continuously maintained for so long as they remain a responsible party.
(b)
(a)
(1) Determine whether a vessel exceeds the 100 or 300 gross ton threshold under § 138.20 and OPA 90, CERCLA, or both;
(2) Calculate the OPA 90 and CERCLA applicable amounts of financial responsibility required, as provided in § 138.100; and
(3) Determine the OPA 90 limit of liability under subpart B of this part in the event of an oil pollution incident, and the CERCLA limit of liability under 42 U.S.C. 9607 in the event of a hazardous substance release.
(b)
(c)
(d)
(e)
(f)
(g)
(a)
(b)
(c)
(i) Electronically, using the eCOFR process (located at
(ii) By email, sent to such email address as the Director may specify, attaching legible electronic images scanned in a format acceptable to the Director;
(iii) By fax, sent to 202-795-6123 with a cover sheet specifying the total number of pages, the sender's telephone number, and referencing NPFC telephone number 202-795-6130; or
(iv) By mail, addressed to—
Director, National Pollution Funds Center, ATTN: VESSEL CERTIFICATION, U.S. Coast Guard Stop 7605, 2703 Martin Luther King Jr. Ave. SE, Washington, DC 20593-7605.
(2) Submissions may not be hand delivered to the NPFC.
(3) Do not present submissions by more than one method.
(d)
(1) Set forth, in full, the correct legal name of the COFR Operator to whom the COFR is to be, or has been, issued;
(2) Be in English, and
(3) Express all monetary terms in United States dollars.
(e)
(2) Ensuring the timeliness of the submissions is the sole responsibility of the person making the submission.
(3) The Director may, in the Director's sole discretion, grant an exception to a deadline specified in this subpart for good cause shown.
(f)
(a)
(b)
(c)
(d)
(e)
(1) The name of the COFR Operator;
(2) The date of COFR expiration;
(3) The COFR number;
(4) For an Individual Certificate, the name of the covered vessel, and the
(5) For a Fleet Certificate, the gross tons of the largest unmanned, non-self-propelled, non-tank barge within the fleet, including the measurement systems(s) used; and
(6) For a Master Certificate, the gross tons of the largest tank vessel and largest vessel other than a tank vessel eligible for coverage by the Master Certificate, including the measurement systems(s) used.
(a)
(1) Submit, or cause to be submitted, to the Director, by one of the submission methods provided in § 138.60(c):
(i) An Application;
(A) For an Individual Certificate, list the name of the covered vessel, and the vessel's gross tonnage information, including the measurement system(s) used on the application;
(B) For a Fleet Certificate, instead of listing each individual barge, mark the box with the following statement: “This is an Application for a Fleet Certificate. The largest unmanned, non-self-propelled, non-tank barge to be covered by this Application is [INSERT APPLICABLE GROSS TONS] GT ITC and [INSERT GROSS TONNAGE] GRT”; and
(C) For a Master Certificate, instead of listing each individual vessel, mark the box with the following statement: “This is an Application for a Master Certificate. The largest tank vessel to be covered by this Application is [INSERT APPLICABLE GROSS TONS] GT ITC and [INSERT APPLICABLE GROSS TONS] GRT, as applicable. The largest vessel other than a tank vessel to be covered by this Application is [INSERT APPLICABLE GROSS TONS] GT ITC and [INSERT APPLICABLE GROSS TONS] GRT, as applicable.”
(ii) The evidence of financial responsibility using one of the guaranty methods provided in § 138.110;
(A) For a Fleet Certificate, the evidence of financial responsibility must be in the total applicable amount, determined as provided in § 138.100, for the largest unmanned, non-self-propelled, non-tank barge to be covered.
(B) For a Master Certificate, the evidence of financial responsibility must be in the total applicable amount determined as provided in § 138.100 for the largest tank vessel and largest non-tank vessel to be covered by the Master Certificate.
(iii) The agent for service of process designations required by § 138.130; and
(iv) All other supporting documentation required by this subpart.
(A) At the time of Application for a Master Certificate, the COFR Operator must submit a report to the Director, indicating: the name; previous name, if applicable; type; gross tonnage and measurement system(s) used, for each vessel covered by the Master Certificate, indicating which vessels, if any, are tank vessels. If a vessel has both a GT ITC and GRT tonnage, specify both gross tonnages.
(B) Six months after receiving a Master Certificate, and every 6 months thereafter, each COFR Operator must submit to the Director, an updated report, separately listing the vessels no longer covered by that Master Certificate. If a vessel has both a GT ITC and GRT, both gross tonnages must be specified. If a vessel has been transferred to another responsible party and the COFR Operator to whom the Master Certificate was issued ceases to be the vessel's operator, the COFR Operator must report the date and place of the transfer, and the name and contact information of the responsible party to whom the vessel was transferred. If the vessels covered by the Master Certificate have not changed from the previous report, the COFR Operator may submit an updated report that indicates no change from previous report.
(2) Pay, or cause to be paid, all fees required by § 138.120.
(b)
(c)
(d)
(2) The Application must include the title of the person signing it.
(3) If the person signing the Application is acting under a Power of Attorney, they must include a copy of the Power of Attorney with the Application.
(e)
(f)
(1) Submit a new or amended Application, or a written request to supplement the Application, to reflect the new maximum gross tonnages on the COFR;
(2) Unless the COFR Operator qualifies as a self-insurer at the higher total applicable amount, submit, or cause to be submitted, evidence of financial responsibility using one of the guaranty methods provided in § 138.110 to the Director, demonstrating increased coverage based on the new maximum gross tonnage; and
(3) Pay a new certification fee, as required by § 138.120.
(a) The COFR Operator must submit a request for COFR renewal to the NPFC at least 21 days, but no earlier than 90 days, before the expiration date of the current COFR.
(b) The COFR Operator may seek an exception to the 21-day request for COFR renewal submission deadline in paragraph (a) of this section only as provided in § 138.60(e)(3).
(c) The COFR Operator must identify in the request for COFR renewal all changes to the information contained in the initial Application, including the gross ton measurement system(s) used (if not previously provided), the evidence of financial responsibility, and all other supporting documentation previously submitted to the Director, as provided in § 138.150.
The total applicable amount is the sum of the OPA 90 applicable amount determined under paragraph (a) of this section plus the CERCLA applicable amount determined under paragraph (b) of this section.
(a)
(b)
(1) For a vessel over 300 gross tons carrying a hazardous substance as cargo, and for any vessel covered under § 138.110(c)(3) or (d)(2)(ii) (calculation of CERCLA applicable amounts for financial guarantors and self-insurers), the greater of $5,000,000 or $300 per gross ton.
(2) For any other vessel over 300 gross tons, the greater of $500,000 or $300 per gross ton.
(c)
(d)
(1) OPA 90 is required to be made available by a guarantor for the costs and damages related to an incident where there is not also a release; and
(2) CERCLA is required to be made available by a guarantor for the costs and damages related to a release where there is not also an incident. A guarantor (or a self-insurer for whom the exceptions to a limitations of liability are not applicable), therefore, is not required to apply the entire amount of financial responsibility to an incident involving oil alone or a release involving a hazardous substance alone.
(a)
(1) If submitted on behalf of the COFR Operator, the guarantor must provide evidence of financial responsibility to the Director.
(2) The effective and termination dates are as follows:
(3) Termination provisions:
(i) The guarantor must specify the reason for terminating the guaranty in the notice required by this paragraph, if known.
(ii) Termination of the guaranty as to any covered vessel will not affect the liability of the guarantor in connection with an incident or release commencing or occurring prior to the effective date of the guaranty termination.
(4) If, at any time, the information contained in the evidence of financial responsibility submitted under this section changes, or there is a material change in a guarantor or self-insurer's financial position, the guarantor or COFR Operator or self-insurer (as applicable), must report the change to the Director, as provided in § 138.150.
(b)
(1) Each form must be executed by no more than four COFR insurance guarantors accepted by the Director. A lead underwriter is considered one of the COFR insurance guarantors.
(2) The process for establishing and maintaining the acceptability of a COFR insurance guarantor is as follows:
(i) The COFR insurance guarantor must request an initial determination by the Director of the COFR insurance guarantor's acceptability to serve as a COFR insurance guarantor under this subpart, at least 90 days before the date a COFR is required, by submitting information describing the COFR insurance guarantor's structure, business practices, history, and financial strength, and such other information as may be requested by the Director.
(ii) The Director reviews the continued acceptability of COFR insurance guarantors annually. Each COFR insurance guarantor must submit updates to the initial request submitted under paragraph (b)(2)(i) of this section, annually, within 90 days after the close of the COFR insurance guarantor's fiscal year, describing any material changes to the COFR insurance guarantor's legal status, structure, business practices, history, and financial strength, since the previous year's submission, and providing such other information as may be requested by the Director.
(c)
(1) Each form must be executed by no more than four financial guarantors accepted by the Director, at least one of which must be a parent or affiliate of the COFR Operator. (
(2) The process for establishing and maintaining the acceptability of a financial guarantor is as follows:
(i) The financial guarantor must comply with the self-insurance provisions in paragraph (d) of this section, and the periodic reporting requirements in paragraphs (e)(1) through (4) of this section.
(ii) The financial guarantor must also demonstrate that it maintains net worth and working capital, each in amounts equal to or greater than—
(A) The aggregate total applicable amounts, calculated for each COFR Operator vessel for which the financial guaranty is being provided, based on
(B) The total applicable amount required to be demonstrated by a self-insurer under this subpart if the financial guarantor is also acting as a self-insurer.
(3) In the case of a vessel greater than 300 gross tons, calculate the CERCLA applicable amount under § 138.100(b)(1) based on a vessel carrying hazardous substances as cargo.
(d)
(1) Submit to the Director the financial statements specified in paragraphs (e)(1) through (4) of this section for the fiscal year preceding the date the COFR Operator signs the Application or request for COFR renewal.
(2) Demonstrate that the COFR Operator maintains, in the United States, working capital and net worth, each in amounts equal to or greater than the total applicable amount, calculated as follows:
(i) If the self-insurer has multiple vessels, calculate the total applicable amount based on the vessel with the greatest total applicable amount.
(ii) In the case of a vessel greater than 300 gross tons, calculate the CERCLA applicable amount under § 138.100(b)(1) based on a vessel carrying hazardous substances as cargo.
(e)
(i) Submit the self-insurer or financial guarantor's annual, current, and audited non-consolidated financial statements prepared in accordance with Generally Accepted Accounting Principles, and audited by an independent Certified Public Accountant in accordance with Generally Accepted Auditing Standards.
(ii) Accompany the financial statements with a declaration from the self-insurer or financial guarantor's chief financial officer, treasurer, or equivalent official, certifying the amount of the self-insurer or financial guarantor's current assets, and the amount of the self-insurer or financial guarantor's total assets included in the accompanying balance sheet, which are located in the United States.
(iii) If the financial statements cannot be submitted in non-consolidated form, submit a consolidated statement accompanied by an additional declaration prepared by the same Certified Public Accountant—
(A) Verifying the amount by which the total assets located in the United States exceed the self-insurer or financial guarantor's total (worldwide) liabilities, and the self-insurer or financial guarantor's current assets located in the United States exceed the self-insurer or financial guarantor's total (worldwide) current liabilities;
(B) Specifically naming the self-insurer or financial guarantor;
(C) Confirming that the amounts so verified relate only to the self-insurer or financial guarantor, apart from any parent or other affiliated entity; and
(D) Identifying the consolidated financial statement to which it applies.
(2) When the self-insurer or financial guarantor's demonstrated net worth is not at least ten times the cumulative total applicable amounts, their chief financial officer, treasurer, or equivalent official must submit to the Director with the Application and semi-annually thereafter, within the deadline specified in paragraph (e)(4) of this section, an affidavit stating that neither their working capital nor net worth fell during the first 6 months of the self-insurer or financial guarantor's current fiscal year, below the cumulative total applicable amounts.
(3) All self-insurers and financial guarantors must—
(i) Submit, upon the Director's request, additional financial information within the time specified; and
(ii) Notify the Director in writing within 5 days following the date the self-insurer or financial guarantor knows, or has reason to know, that its working capital or net worth has fallen below the total applicable amounts.
(4) All required annual financial statements and declarations must be submitted to the Director within 90 days after the close of the self-insurer or financial guarantor's fiscal year. All required semi-annual financial statements and declarations must be submitted to the Director within 30 days after the close of the applicable 6-month period. The Director will grant an extension of the time limits for submissions under this paragraph only as provided in § 138.60(e).
(5) A failure by a self-insurer or financial guarantor to timely submit to the Director any statement, data, notification, or other submission required may result in the Director denying or revoking the COFR, and may prompt enforcement action as provided under § 138.170.
(6) The Director may waive the working capital requirement for any self-insurer or financial guarantor that—
(i) Is a regulated public utility, a municipal or higher-level governmental entity, or an entity operating solely as a charitable, non-profit organization qualifying under the Internal Revenue Code (26 U.S.C. 501(c)), provided that the self-insurer or financial guarantor demonstrates in writing that the waiver would benefit a local public interest; or
(ii) Demonstrates in writing that working capital is not a significant factor in the self-insurer or financial guarantor's financial condition, in which case the self-insurer or financial guarantor's net worth in relation to the required cumulative total applicable amounts, and a history of stable operations, are the major elements considered by the Director.
(f)
(i) The COFR Operator must submit the request to the Director in writing, at least 90 days prior to the date the COFR is required.
(ii) The request must describe in detail: The method proposed; the reasons why the COFR Operator does not wish to (or is unable to) use one of the methods described in paragraphs (b) through (e) of this section; and how the proposed guaranty method assures that the vessel's responsible parties have the financial ability to meet their potential liabilities under OPA 90 and CERCLA in the event of an incident or a release.
(iii) Each COFR Operator making a request under this paragraph must provide the Director a proposed guaranty form that includes all the elements described in paragraphs (g) and (h) of this section.
(2) The Director will not accept a self-insurance method other than the one described in paragraph (d) of this section. The Director also will not accept a guaranty method under this paragraph that merely deletes or alters a requirement or provision of one of the guaranty methods described in paragraphs (b) through (e) of this section (for example, one that alters the termination clause of the Insurance Guaranty).
(3) A Director's decision to accept an alternative guaranty method of establishing evidence of financial responsibility under this paragraph is final agency action.
(g)
(1) If a guarantor's percentage of vertical participation is specified on the relevant guaranty form, the guarantor is subject to direct action and is liable for the payment of costs and damages under OPA 90 or CERCLA, as applicable, only in accordance with the percentage of vertical participation so specified for that guarantor.
(2) Participation in the form of layering (tiers, one in excess of another) is not permitted. Only vertical participation on a percentage basis and participation with no specified percentage allocation is acceptable.
(3) If no percentage of vertical participation is specified for a guarantor on the relevant guaranty form, the guarantor's liability is joint and several for the total of the unspecified portion.
(4) The participating guarantors must designate a lead guarantor having authority to bind all of the participating guarantors for actions required of guarantors under OPA 90 or CERCLA and this subpart, including but not limited to reporting changes in the evidence of financial responsibility as provided in § 138.150(d), receipt of source designations, advertisement of source designations and the responsible party's claims procedures, and receipt and settlement of claims.
(h)
(i) The incident, release, or both, were caused by the willful misconduct of a responsible party for whom the guaranty was provided;
(ii) All rights and defenses, which would be available to the responsible party under OPA 90, CERCLA, or both, as applicable;
(iii) A defense that the amount of the claim, or all claims asserted with respect to the same incident or release, whether asserted in court or in any other proceeding, exceeds the amount of the guaranty, except when the guaranty is based on the gross tonnage of the vessel (instead of the statutory minimums) and the guarantor knew or should have known that the applicable tonnage certificate was incorrect (see § 138.50(f)); and
(iv) The claim is not one made under OPA 90, CERCLA, or both.
(2) Except when the guaranty is based on the gross tonnage of the vessel (instead of the statutory minimums) and the guarantor knew or should have known that the evidence of financial responsibility or applicable tonnage certificate is incorrect (see § 138.50(f)), a guarantor who provides evidence of financial responsibility under this subpart will be liable, with respect to any one incident or release, or both, as applicable, only for the amount of costs and damages specified in the evidence of financial responsibility.
(3) A guarantor will not be considered to have consented to direct action under any law other than OPA 90 or CERCLA, or to unlimited liability under any law or in any venue, solely because the guarantor has provided evidence of financial responsibility under this subpart.
(4) In the event of any finding that the liability of a guarantor under OPA 90 or CERCLA exceeds the amount of the guaranty provided under this subpart, that guaranty is considered null and void with respect to that excess.
(i)
(1) If the COFR Operator establishes, or causes to be established, new acceptable evidence of financial responsibility within the period specified by the Director in the notice, the Application if otherwise complete will be approved or the COFR will remain in effect, and the COFR Operator will not have to pay a new Application fee or certification fee.
(2) If the COFR Operator fails to establish, or cause to be established, new acceptable evidence of financial responsibility within the period specified by the Director in the notice, the Director may deny or revoke the COFR and, if revoked, the COFR Operator will have to apply for a new COFR and pay a new certification fee. The COFR Operator's failure to establish, or cause to be established, new acceptable evidence of financial responsibility within the period specified by the Director may also result in enforcement as provided under § 138.170.
(a)
(1) All fees required by this section must be paid in United States dollars.
(2) For COFR Operators using eCOFR as provided under § 138.60(c)(1)(i), credit card payment is required.
(3) For COFR Operators submitting Applications and requests for COFR renewal under § 138.60(c)(1)(ii) through (iv) (email, fax, and mail submissions), the fees must be paid by a check, cashier's check, draft, or postal money order, made payable to the “U.S. Coast Guard”. Cash payments will not be accepted.
(i) For Applications and requests for COFR renewal submitted under § 138.60(c)(1)(ii) and (iii) (email and fax submissions, respectively), all fee payments must be received by the Director no later than 21 days following submission of the Application or request for COFR renewal.
(ii) For Applications and requests for COFR renewal submitted under § 138.60(c)(1)(iv) (mail submissions), all fee payments must be enclosed with the Application or request for COFR renewal.
(4) Any failure to timely pay the fees required by this section may result in COFR denial or revocation, debt collection (see 6 CFR part 11, 44 CFR part 11, and 31 CFR parts 285, and 900 through 904), and such other enforcement under § 138.170 as may be appropriate.
(b)
(2) An Application fee is not required when the COFR Operator submits—
(i) A request for an additional Individual Certificate under an existing Application;
(ii) A request to amend an Application;
(iii) A request for Certificate renewal; or
(iv) A request to reinstate a Certificate, if submitted within 90 days following the Certificate's revocation.
(c)
(1) $100 for each vessel listed in, or added to, an Application for one or more Individual Certificates;
(2) $100 for each Application for a Fleet Certificate or Master Certificate; and
(3) $100 for each request for renewal of an Individual Certificate, a Fleet Certificate or a Master Certificate.
(d)
(2) Overpayments of Application and certification fees will be refunded to the COFR Operator.
(a)
(b)
(c)
(d)
(e)
(1) Has sent a copy of each document served on the Director to the COFR Operator or guarantor, as applicable, by registered mail, at the COFR Operator or guarantor's last known address on file with the Director;
(2) Indicates, at the time process is served upon the Director, that the purpose of the mailing is to effect service of process on the COFR Operator or guarantor; and
(3) Provides evidence acceptable to the Director at the time process is served upon the Director, that service was attempted on the designated U.S. agent for service of process but failed, stating the reasons why service on the U.S. agent for service of process was not possible, and that the document was sent to the COFR Operator or guarantor, as required by paragraph (e)(1) of this section.
(a)
(b)
(1) If the COFR Operator, or other person acting on the COFR Operator's behalf, makes a false statement in, or in connection with, any submission required by this subpart;
(2) If the COFR Operator, or other person acting on the COFR Operator's behalf, fails to establish or maintain acceptable evidence of financial responsibility, as required by this subpart;
(3) If the COFR Operator fails to pay the Application and certification fees required by § 138.120;
(4) If the COFR Operator or guarantor fails to designate and maintain a U.S. agent for service of process as required by § 138.130;
(5) If the COFR Operator, or other person acting on the COFR Operator's behalf, fails to comply with, or respond to, lawful inquiries, regulations, or orders of the U.S. Coast Guard pertaining to the activities subject to this subpart;
(6) If the COFR Operator, or other person acting on the COFR Operator's behalf, fails to timely report information required to be reported to the Director under this subpart, including failing to timely submit to the Director statements, data, financial information, notifications, affidavits, or other submissions required by this subpart; or
(7) If the Director obtains information indicating that the Application should be denied or that a new COFR is required (for example, a permanent vessel transfer, new COFR Operator, vessel renaming, guaranty termination, disapproval of a guarantor).
(c)
(d)
(1) A notice from the Director that an Application is incomplete will be considered a denial unless the Application is completed by the COFR Operator within the period specified in the notice. A COFR subject to revocation remains valid until the COFR is revoked as provided in § 138.140(d)(2) and (3).
(2) If the Director issues a notice of intent to deny an Application or revoke a COFR due to a violation under paragraph (b) of this section, the COFR Operator may demonstrate compliance to the Director in writing by no later than the date specified by the Director in the notice. If the COFR Operator demonstrates compliance by that date, the Application will remain under consideration, and any current COFR will remain in effect, unless and until
(3) The denial of an Application or revocation of a COFR does not terminate the guaranty.
(e)
(i) The COFR Operator must submit the request for reconsideration, in writing, to the Director no later than 21 days after the date of the denial or revocation.
(ii) The submission must state the COFR Operator's reasons for requesting reconsideration and include all supporting documentation.
(2) A decision by the Director on reconsideration of an Application denial or a COFR revocation is final agency action. If the Director does not issue a written decision on the request for reconsideration within 30 days after its submission, the request for reconsideration will be deemed to have been denied, and the Application denial or COFR revocation will be deemed to have been affirmed as a matter of final agency action. Unless the Director issues a decision reversing the revocation, the COFR revocation remains in effect.
(f)
(a)
(b)
(1) The number of the current COFR;
(2) The name of the covered vessel;
(3) The type of change planned;
(4) The date the change will take place;
(5) The reason for the change;
(6) For a vessel that will be located in U.S. navigable waters or U.S. Exclusive Economic Zone on the date the change is scheduled to take place, where the vessel will be located on that date (for example, name and location of port);
(7) For a vessel name change, the vessel's new legal name;
(8) For the planned transfer of a vessel to a new responsible party, and even if the transferee's intent is to scrap or otherwise dispose of the vessel, the name and contact information of the responsible party to whom the vessel is being transferred;
(9) For a change of COFR Operator, the name and contact information of the person who will replace the COFR Operator; and
(10) Any other changes in the information previously submitted to ensure the information on record at the NPFC is current.
(c)
(d)
(e)
(a) Each COFR Operator of a vessel with a COFR, other than an unmanned, non-self-propelled barge, who is not also an owner of the vessel must ensure that the original or a legible copy of the vessel's demise charter-party (or other written document on the owner's letterhead, signed by the vessel owner, which specifically identifies the COFR Operator named on the COFR) is maintained on board the vessel.
(b) The demise charter-party or other document required by paragraph (a) of this section must be presented, upon request, for examination and copying, to the Director or other United States Government official.
(a)
(1) The COFR Operator fails to maintain acceptable evidence of financial responsibility as required;
(2) The name of a covered vessel is changed without reporting the change to the Director as required in § 138.150;
(3) The COFR Operator ceases, for any reason, to be an operator of a covered vessel, including when a vessel is scrapped or transferred to a new owner or operator, and a new Application and report have not been submitted to the Director as required by §§ 138.80 and 138.150; or
(4) The COFR Operator fails to maintain a U.S. agent for service of process.
(b)
(c)
(d)
(e)
(f)
(2) Under 18 U.S.C. 1001, any person making a false statement in, or in connection with, a submission under OPA 90 or CERCLA or this subpart is subject to prosecution.
(3) Any person who fails to timely pay the fees required by § 138.120 or any other amounts due under OPA 90 or CERCLA or this subpart may also be subject to Federal debt collection under 6 CFR part 11, 44 CFR part 11 and 31 CFR parts 285, and 900 through 904.
14 U.S.C. 503; 33 U.S.C. 1321, 1903, 1908; 42 U.S.C. 9615; 46 U.S.C. 6101; E.O. 12580, 3 CFR, 1987 Comp., p. 193; E.O. 12777, 3 CFR, 1991 Comp., p. 351; Department of Homeland Security Delegation No. 0170.1.
Forest Service, Agriculture (USDA).
Technical correction.
This document makes technical corrections to Forest Service regulations regarding National Forest System land management planning. The correction reinstates paragraphs that were inadvertently removed from a final rule published on December 15, 2016.
This correction is effective December 1, 2021.
Written inquiries about this correction may be sent to the Director, Ecosystem Management Coordination Staff, USDA Forest Service, 1400 Independence Ave. SW, Mailstop Code 1104, Washington, DC 20250-1104.
Ecosystem Management Coordination Staff's Planning Specialist Nick DiProfio at (202) 253-0640 or by email at
On December 15, 2016 (81 FR 90723), the United States Department of Agriculture (Department) published a final rule to amend 36 CFR part 219 (the planning rule) clarifying the direction for plan amendments, and to correct § 219.11(d)(4). The intent of the final rule was to reinstate paragraph (d)(4) in its entirety. The paragraph establishes maximum size openings for even aged harvests which the National Forest Management Act requires (16 U.S.C. 1604 (g)(3)(F)(iv)). Reinstatement of the paragraph was necessary because a sentence that had been included in the paragraph when the rule was issued on April 9, 2012, was inadvertently removed when correcting amendments were made in July 2012 (compare the rule text as set out on April 9, 2012, and July 27, 2012: 77 FR 21260, 21266 and 77 FR 44144, 44145).
However, the December 15, 2016, rule to reinstate the entire paragraph failed to maintain paragraphs (d)(4)(i), (ii), and (iii) as part of § 219.11(d)(4).
To ensure that § 219.11 is complete, as it was set out when the planning rule was issued in 2012, the Department is issuing a technical correction to § 219.11(d)(4)(i) through (iii) of the planning rule.
Administrative practice and procedure, Environmental impact statements, Indians, Intergovernmental relations, National forests, Reporting and recordkeeping requirements, Science and technology.
Accordingly, 36 CFR part 219 is corrected by making the following correcting amendment:
5 U.S.C. 301; 16 U.S.C. 1604, 1613.
(d) * * *
(4) Where plan components will allow clearcutting, seed tree cutting, shelterwood cutting, or other cuts designed to regenerate an even-aged stand of timber, the plan must include standards limiting the maximum size for openings that may be cut in one harvest operation, according to geographic areas, forest types, or other suitable classifications. Except as provided in paragraphs (d)(4)(i) through (iii) of this section, this limit may not exceed 60 acres for the Douglas-fir forest type of California, Oregon, and Washington; 80 acres for the southern yellow pine types of Alabama, Arkansas, Georgia, Florida, Louisiana, Mississippi, North Carolina, South Carolina, Oklahoma, and Texas; 100 acres for the hemlock-Sitka spruce forest type of coastal Alaska; and 40 acres for all other forest types.
(i) Plan standards may allow for openings larger than those specified in
(ii) Plan components may allow for size limits exceeding those established in paragraphs (d)(4) introductory text and (d)(4)(i) of this section on an individual timber sale basis after 60 days public notice and review by the regional forester.
(iii) The plan maximum size for openings to be cut in one harvest operation shall not apply to the size of openings harvested as a result of natural catastrophic conditions such as fire, insect and disease attack, or windstorm (16 U.S.C. 1604(g)(3)(F)(iv)).
Copyright Royalty Board (CRB), Library of Congress.
Final rule; cost of living adjustment.
The Copyright Royalty Judges announce a cost of living adjustment (COLA) in the royalty rates that commercial and noncommercial noninteractive webcasters pay for eligible transmissions pursuant to the statutory licenses for the public performance of and for the making of ephemeral reproductions of sound recordings.
Anita Blaine, (202) 707-7658,
Sections 112(e) and 114(f) of the Copyright Act, title 17 of the United States Code, create statutory licenses for certain digital performances of sound recordings and the making of ephemeral reproductions to facilitate transmission of those sound recordings. On October 27, 2021, the Copyright Royalty Judges (Judges) adopted final regulations governing the rates and terms of copyright royalty payments under those licenses for the license period 2021-2025 for performances of sound recordings via eligible transmissions by commercial and noncommercial noninteractive webcasters. See 86 FR 59452.
Pursuant to those regulations, at least 25 days before January 1 of each year from 2022 to 2025, the Judges shall publish in the
The adjustment in the royalty fee shall be based on a calculation of the percentage increase in the CPIU from the CPIU published in November 2020 (260.229), according to the formula: For subscription performances, (1 + (Cy−260.229)/260.229) × $0.0026; for nonsubscription performances, (1 + (Cy−260.229)/260.229) $0.0021; for performances by a noncommercial webcaster in excess of 159,140 ATH per month, (1 + (Cy−260.229)/260.229) × $0.0021; where Cy is the CPI-U published by the Secretary of Labor before December 1 of the preceding year. The adjusted rate shall be rounded to the nearest fourth decimal place. 37 CFR 380.10(c). The CPIU published by the Secretary of Labor from the most recent index published before December 1, 2021, is 276.589.
The 2022 rate for eligible transmissions of sound recordings by commercial webcasters is $0.0028 per subscription performance and $0.0022 per nonsubscription performance.
Application of the increase to rates for noncommercial webcasters results in a 2022 rate of $0.0022 per performance for all digital audio transmissions in excess of 159,140 ATH in a month on a channel or station.
As provided in 37 CFR 380.10(d), the royalty fee for making ephemeral recordings under section 112 of the Copyright Act to facilitate digital transmission of sound recordings under section 114 of the Copyright Act is included in the section 114 royalty fee and comprises 5% of the total fee.
Copyright; Sound recordings.
In consideration of the foregoing, the Judges amend part 380 of title 37 of the Code of Federal Regulations as follows:
17 U.S.C. 112(e), 114(f), 804(b)(3).
(a)
(1)
(2)
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes tolerances for residues of bifenthrin in or on multiple commodities which are identified and discussed later in this document. The Interregional Project Number 4 (IR-4) and FMC Corporation requested these tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA).
This regulation is effective December 1, 2021. Objections and requests for hearings must be received on or before January 31, 2022 and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The dockets for this action, identified by docket identification (ID) number EPA-HQ-OPP-2016-0352 and EPA-HQ-OPP-2019-0560, are available at
Due to the public health concerns related to COVID-19, the EPA Docket Center (EPA/DC) and Reading Room is closed to visitors with limited exceptions. The staff continues to provide remote customer service via email, phone, and webform. For the latest status information on EPA/DC services and docket access, visit
Marietta Echeverria, Acting Director, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Publishing Office's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID numbers EPA-HQ-OPP-2016-0352 and EPA-HQ-OPP-2019-0560 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing and must be received by the Hearing Clerk on or before January 31, 2022. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).
In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID numbers EPA-HQ-OPP-2016-0352 and EPA-HQ-OPP-2019-0560, by one of the following methods:
•
•
•
In the
Additionally, the petition requested, upon approval of the above tolerances, to remove the existing tolerances in 40 CFR 180.442(a) in or on
In the
Based upon review of the data supporting the petitions, EPA is establishing some tolerances that vary from what was requested. The reasons for these changes are explained in Unit IV.C.
Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”
Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for bifenthrin including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with bifenthrin follows.
EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.
The predominant effects seen in most of the bifenthrin experimental toxicology studies were behavioral changes characteristic of Type I pyrethroids, such as muscle tremors, which are consistent with its mode-of-action (MOA) to activate sodium channels. Additional effects seen in one or more studies included: muscle twitching, decreased grip strength, altered landing foot splay, depressed respiration, increased grooming counts, loss of muscle coordination, staggered gait, exaggerated hind limb flexion, and convulsions at high doses. Decreased body weight and food consumption were also noted in repeat-dosing dietary studies.
In developmental toxicity studies involving rats and rabbits, maternal toxicity was observed (neurological effects) while no developmental effects of biological significance were observed. In the 2-generation reproduction dietary study in the rat, tremors were noted only in females of both generations, with one parental generation rat observed to have clonic convulsions, and no observed effects in the offspring. A developmental neurotoxicity study was also conducted. Clinical signs of neurotoxicity were observed in both the adults and offspring at the same dose levels; therefore, there is no indication of increased qualitative or quantitative susceptibility in the young.
Bifenthrin is classified as a Group C—“possible human carcinogen,” based on an increased incidence of urinary bladder tumors in mice. However, EPA has determined that quantification of risk using a non-linear approach (
A complete discussion of the toxicological profile for bifenthrin and the Agency's cancer conclusion as well as specific information on the studies received and the nature of the adverse effects caused by bifenthrin as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found in the documents titled “Bifenthrin: Revised Human Health Risk Assessment for the Requested Section 3 Registration of Bifenthrin on Pome Fruit Group 11-10 (except Mayhaw), Peach Subgroup 12-12B, Avocado, Pomegranate,
Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/
A summary of the toxicological endpoints for bifenthrin used for human risk assessment can be found in the Bifenthrin Multiple Crop Human Health Risk Assessment.
1.
i.
Such effects were identified for bifenthrin. In estimating acute dietary exposure, EPA used 2003-2008 food consumption data from the United States Department of Agriculture's (USDA's) National Health and Nutrition Examination Survey, What We Eat in America (NHANES/WWEIA). As to residue levels in food, the acute assessment was refined using distributions and point estimates derived from pesticide data program (PDP) monitoring data, field trial data, percent crop treated (PCT) data, and empirical processing factors.
ii.
iii.
iv.
Section 408(b)(2)(F) of FFDCA states that the Agency may use data on the actual percent of food treated for assessing chronic dietary risk only if:
• Condition a: The data used are reliable and provide a valid basis to show what percentage of the food derived from such crop is likely to contain the pesticide residue.
• Condition b: The exposure estimate does not underestimate exposure for any significant subpopulation group.
• Condition c: Data are available on pesticide use and food consumption in a particular area, and the exposure estimate does not understate exposure for the population in such area.
In addition, the Agency must provide for periodic evaluation of any estimates used. To provide for the periodic evaluation of the estimate of PCT as required by FFDCA section 408(b)(2)(F), EPA may require registrants to submit data on PCT.
The acute dietary assessment used the following maximum PCT estimates: Almonds: 40%, artichoke: 65%, green beans (fresh & succulent): 60%, blueberries (all bushberries): 35%, broccoli: 25%, Brussel sprouts: 5%, cabbage: 50%, caneberries: 55%, canola: 25%, cantaloupes: 55%, carrots: 5%, cauliflower: 2.5%, celery: 45%, citrus (all others): 2.5%, corn: 10%, cotton: 20%, cucumbers: 35%, dry beans/peas: 5%, eggplant: 45%, grapefruit: 2.5%, grapes, juice: 10%, grapes, table: 2.5%, grapes, wine: 5%, hazelnuts: 5%, honeydews: 90%, kumquat: 2.5%, lemons: 2.5%, lettuce; 15%, lima beans: 40%, lime: 2.5%, okra: 45%, onions: 5%, oranges, 10%, peanuts: 20%, pears: 2.5%, green peas (fresh & succulent): 50%, pecans: 20%, peppers (all); 30%, pistachios: 55%, potatoes: 15%, pummelo: 2.5%, pumpkins: 25%, soybeans: 10%, spinach: 15%, squash: 25%, strawberries: 70%, sweet corn: 50%, tangerines: 2.5%, tomatoes: 45%, walnuts: 25%, and watermelons: 20%. The acute dietary assessment also used the following maximum PCT estimates for some of the new uses: apples: 55%, avocados: 50%, nectarines: 65%, peaches: 35%, and pomegranates: 60%.
The following average PCT estimates for bifenthrin were used to refine the chronic dietary risk assessment for the following crops: Almonds: 25%, artichoke: 30%, green beans (fresh & succulent): 55%, blueberries (all bushberries): 10%, broccoli: 15%, Brussel sprouts: 1%, cabbage: 30%, caneberries: 45%, canola: 10%, cantaloupes: 50%, carrots: 2.5%, cauliflower: 1%, celery: 10%, citrus (all others): 1%, corn: 5%, cotton: 15%, cucumbers: 20%, dry beans/peas: 2.5%, eggplant: 25%, grapefruit: 1%, grapes, juice: 2.5%, grapes, table: 1%, grapes, wine: 2.5%, hazelnuts: 1%, honeydews: 25%, kumquat: 1%, lemons: 1%, lettuce; 10%, lima beans: 20%, lime: 1%, okra: 25%, onions: 2.5%, oranges, 1%, peanuts: 10%, pears: 1%, green peas (fresh & succulent): 30%, pecans: 10%, peppers (all); 20%, pistachios: 35%, potatoes: 10%, pummelo: 1%, pumpkins: 15%, soybeans: 5%, spinach: 2.5%, squash: 20%, strawberries: 55%, sweet corn: 40%, tangerines: 1%, tomatoes: 25%, walnuts: 15%, and watermelons: 15%. The chronic dietary assessment also used the following maximum PCT estimates for some of the new uses: apples: 50%, avocados: 50%, nectarines: 65%, peaches: 35%, and pomegranates: 60%.
A default of 100% CT was used for all livestock and game commodities, freshwater finfish, and all other registered uses where no maximum/average PCT estimates were available. All other commodities included for depicting food handling establishment (FHE) uses were refined with the upper bound estimate of 4.65% for non-fumigant treatments made in FHEs.
In most cases, EPA uses available data from United States Department of Agriculture/National Agricultural Statistics Service (USDA/NASS),
The Agency believes that the three conditions discussed in Unit III.C.1.iv. have been met. With respect to Condition a, PCT estimates are derived from Federal and private market survey data, which are reliable and have a valid basis. The Agency is reasonably certain that the percentage of the food treated is not likely to be an underestimation. As to Conditions b and c, regional consumption information and consumption information for significant subpopulations are taken into account through EPA's computer-based model for evaluating the exposure of significant subpopulations including several regional groups. Use of consumption information in EPA's risk assessment process ensures that EPA's exposure estimate does not understate exposure for any significant subpopulation group and allows the Agency to be reasonably certain that no regional population is exposed to residue levels higher than those estimated by the Agency. Other than the data available through national food consumption surveys, EPA does not have available reliable information on the regional consumption of food to which bifenthrin may be applied in a particular area.
2.
EPA used the limit of solubility as the drinking water input,
3.
EPA assessed residential exposure using the following assumptions. There is the potential for residential handler and post-application exposures from the use of bifenthrin. These exposures were assessed using the 2012 Residential SOPs and submitted chemical-specific residue data [bifenthrin-specific turf transferable residue (TTR; liquid and granular) and dislodgeable foliar residue (DFR; liquid) data are available]. EPA did not quantitatively assess the outdoor residential handler uses in/around home foundations, outdoor impervious surfaces, wood piles/structures and fence posts. Residential handler exposure assessments were performed for adult homeowners applying bifenthrin ready-to-use products (aerosol, hose-end sprayers and dog shampoos); mixing/loading/applying liquid concentrates; loading/applying granular formulations and applying dust formulations. The application rates for these uses that were quantitatively assessed are equal to or higher than those outdoor uses and thus are protective of the outdoor uses. Dermal and inhalation risk estimates were combined in this assessment because the toxicological effects for these exposure routes were the same. A total aggregate risk index (ARI) was used because the levels of concern (LOCs) for dermal exposure (100) and inhalation exposure (30) are different. ARIs of less than 1 are risk estimates of concern. The ARIs were calculated as follows.
Post-application exposure was assessed for broadcast applications to turf, gardens/trees, indoor environments (carpets and hard floor) and treated pets. Residential post-application exposures are expected to be short-, intermediate- or long-term in duration. Because the single dose and repeat dosing bifenthrin studies show that repeat exposures do not result in lower points of departure, the residential assessments are conducted as a series of acute exposures and the same endpoint is used regardless of duration. Therefore, the acute/single day residential post-application assessments are protective of expected longer-term exposures. Dermal and incidental oral risk estimates were combined because the toxicological effects for these exposure routes were similar [combined Margin of Exposure (MOE) approach used since LOCs are the same].
There were some residential post-application risk estimates of concern identified previously in Registration Review. Specifically, dermal post-application risks were identified for a liquid formulation product with a maximum application rate of 2.3 lb ai/A, and risks were identified for episodic ingestion of granules at application rates greater than 0.34 lb ai/A. As a result, during Registration Review, some bifenthrin labels were amended or canceled to address these risk concerns. The product label for the liquid formulation with the high application rate of 2.3 lb ai/A, which was canceled as of July 2021 (EPA Reg. #279-3152), was never commercialized. Because that product was never sold or distributed, there are no exposures from that product for consideration in the aggregate risk assessment. In addition, 25 granular products were either canceled or amended to require watering in of the product after application when application rates were greater than 0.34 lb ai/A. Although these label changes reduce the risks from ingestion of granules, that use is not included in the aggregate assessment because it is considered an episodic event and not a routine behavior.
The following residential exposure scenarios were selected for aggregation and represent the worst-case risk estimates: Adults contacting treated gardens (dermal exposure); children 1 to
Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at
4.
The Agency has determined that the pyrethroids and pyrethrins share a common mechanism of toxicity (
Since the 2011 CRA, for each new pyrethroid and pyrethrin use, the Agency has conducted a screen to evaluate any potential impacts on the CRA prior to registration of that use. A new turf use for the pyrethroid, tau-fluvalinate, was assessed after completion of the cumulative, which did impact the worst-case non-dietary risk estimates identified in the 2011 CRA for the turf scenario (Memo, DeLeon, H., D450820, 12/16/2019). However, the overall finding (
To account for the additional uses requiring tolerances in this rule, the Agency has conducted an additional screen, taking into account all previously approved uses and these proposed new uses. The additional uses will not significantly impact the cumulative assessment because dietary exposures make a minor contribution to total pyrethroid exposure relative to residential exposures in the 2011 cumulative risk assessment. Therefore, the results of the 2011 CRA are still valid and there are no cumulative risks of concern for the pyrethroids/pyrethrins.
1.
2.
3.
i. The toxicity database for bifenthrin is complete.
ii. Like other pyrethroids, bifenthrin causes clinical signs of neurotoxicity from interaction with sodium channels. These effects are adequately assessed by the available guideline and non-guideline studies. Bifenthrin is a Type I pyrethroid, and neurotoxic effects characteristic of Type I pyrethroids were observed in adults in most of the bifenthrin toxicity database. Specifically, muscle tremors and decreased motor activity were observed in adults in guideline studies throughout the bifenthrin toxicology database, and hind-limb flexion was observed in adults the dermal study. For these reasons, the tremors seen in juveniles in the 2-generation reproduction study are not considered age-dependent effects.
iii. There was no evidence that bifenthrin resulted in increased susceptibility in
iv. There are no residual uncertainties identified in the exposure databases.
EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.
1.
2.
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Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in an aggregate MOE of 520 for adults (treated gardens). The short-term aggregate assessment for children 1 to less than 2 years old resulted in an MOE of 170 (treated turf at 0.23 lb ai/A). The short-term aggregate assessment for children 6 to less than 11 years old and children 11 to 16 years old resulted in MOEs of 1,600 (treated gardens) and 7,600 (golfing), respectively. Because EPA's level of concern for bifenthrin is an MOE of 100 or lower, these MOEs are not of concern.
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Adequate enforcement methodology (gas chromatography with an electron capture detector (GC/ECD) analyses for determining bifenthrin residues in both plant and livestock commodities) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address:
In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.
The Codex has not established any MRLs for bifenthrin in or on apple, wet pomace; avocado; fruit, pome, group 11-10; peach, or pomegranate. The following U.S. tolerances being established are harmonized with the Codex MRLs, which are identified in parentheses: Caneberry subgroup 13-07A at 1 ppm (blackberry, dewberries and raspberries); fruit, citrus, group 10-10 at 0.05 ppm (citrus fruit); and nut, tree, group 14-12 at 0.05 ppm (tree nuts). The U.S. tolerance for pepper/eggplant subgroup 8-10B at 0.5 ppm is harmonized with the Codex MRL on pepper. It is not possible to harmonize with the Codex MRLs of all commodities in the subgroup, including eggplant at 0.3 ppm and dried chili peppers at 5 ppm.
The Codex has established an MRL for bifenthrin in or on grape at 0.3 ppm. The Agency is establishing the tolerance in or on fruit, small, vine climbing, except fuzzy kiwifruit, subgroup 13-07F at 0.3 ppm (rather than at 0.2 ppm, the existing U.S. tolerance on grape) to harmonize with the Codex MRL on grape.
The Canadian MRL for bifenthrin in or on pear is 0.9 ppm and there are no Codex MRLs for the commodities in the pome fruit crop group. EPA is establishing the U.S. tolerance for fruit, pome, group 11-10, except mayhaw at 0.9 ppm (rather than at the request level of 0.70 ppm based on submitted residue data and the existing U.S. tolerance for
EPA is establishing the tolerance for tomato subgroup 8-10A at 0.3 ppm (rather than at 0.15 ppm, the existing U.S. tolerance on tomato) to harmonize with the Codex MRL of 0.3 ppm in/on tomato. Additionally, EPA is establishing the tolerance for
It is not possible to harmonize the U.S. tolerance for Berry, low growing, subgroup 13-07G at 3 ppm with the Codex MRL for strawberry at 1 ppm. Reducing the U.S. tolerance would put U.S. growers at risk of having violative residues despite legal use of the pesticide according to the label.
EPA is establishing the tolerance at different levels than requested for: Apple, wet pomace; avocado; berry, low growing, subgroup 13-07G;
All trailing zeroes have been removed from the proposed tolerances to be consistent with Organization for Economic Cooperation and Development (OECD) Rounding Class Practice. In addition, the proposed apple, wet pomace tolerance of 1.3 ppm has been established at 1.5 ppm because the value determined is rounded following the OECD rounding class practice.
To harmonize with the applicable international MRLs, the tolerances for fruit, pome, group 11-10, except mayhaw; fruit, small, vine climbing, except fuzzy kiwifruit, subgroup 13-07F; and tomato subgroup 8-10A were established at higher limits than what was proposed.
The petitioner withdrew the change to the use pattern that would have necessitated the change to the tolerance for
The commodity definition for sunflower (crop subgroup 20B) has been revised to sunflower subgroup 20B and the proposed tolerance at 0.01 has been established at 0.05 based on the current enforcement method limit of quantitation (LOQ).
In this rule, EPA is establishing a lower tolerance for bifenthrin residues in or on groundcherry than the current tolerance. The current tolerance for groundcherry is 0.5 ppm, but groundcherry is a commodity in the proposed crop group expansion from tomato to tomato subgroup 8-10A, for which EPA is establishing a new tolerance in this rulemaking at 0.3 ppm. As a result, EPA intends for the allowable residues on groundcherry to be reduced. As discussed in EPA's crop grouping rulemaking, EPA has determined that groundcherry is similar to tomatoes and appropriately categorized in subgroup 8-10A.
In accordance with the World Trade Organization's (WTO) Sanitary and Phytosanitary Measures (SPS) Agreement, EPA intends to notify the WTO of the changes to these tolerances in order to satisfy its obligations under the Agreement. In addition, the SPS Agreement requires that Members provide a “reasonable interval” between the publication of a regulation subject to the Agreement and its entry into force to allow time for producers in exporting Member countries to adapt to the new requirement. Accordingly, EPA is establishing an expiration date for the existing tolerance to allow this tolerance to remain in effect for a period of six months after the effective date of this final rule. After the six-month period expires, this tolerance will be reduced or revoked, as indicated in the regulatory text, and allowable residues on groundcherry must conform to the tolerance for subgroup 8-10A.
This reduction in tolerance level is not discriminatory; the same food safety standard contained in the FFDCA applies equally to domestically produced and imported foods. The new tolerance level is supported by available residue data.
Tolerances are established for residues of bifenthrin, (2-methyl [1,1′-biphenyl]-3-yl) methyl-3-(2-chloro-3,3,3,-trifluoro-1-propenyl)-2,2-dimethylcyclopropanecarboxylate, in or on apple, wet pomace at 1.5 ppm; avocado at 0.5 ppm; berry, low growing, subgroup 13-07G at 3 ppm;
The following tolerances are removed as unnecessary due to the establishment of the above tolerances:
Additionally, the following Section 18 time-limited tolerances are removed as unnecessary due to the establishment of the above permanent tolerances: Apple at 0.5 ppm; avocado at 0.50 ppm; nectarine at 0.5 ppm; peach at 0.5 ppm; and pomegranate at 0.50 ppm.
Finally, EPA is setting a six-month expiration date for the current groundcherry tolerance at 0.5 ppm.
This action establishes tolerances under FFDCA section 408(d) in response to petitions submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), nor is it considered a regulatory action under Executive Order 13771, entitled “Reducing Regulations and Controlling Regulatory Costs” (82 FR 9339, February 3, 2017). This action
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerances in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This action directly regulates growers, food processors, food handlers, and food retailers, not States or Tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or Tribal Governments, on the relationship between the National Government and the States or Tribal Governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian Tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, for the reasons stated in the preamble, EPA is amending 40 CFR chapter I as follows:
21 U.S.C. 321(q), 346a and 371.
The additions and revisions read as follows.
(a)(1) * * *
Environmental Protection Agency (EPA).
Final rule.
This rule codifies in the regulations the prior approval of Louisiana's hazardous waste management program and incorporates by reference authorized provisions of the State's statutes and regulations. The Environmental Protection Agency (EPA) uses the regulations entitled “Approved State Hazardous Waste Management Programs” to provide notice of the authorization status of State programs and to incorporate by reference those provisions of the State statutes and regulations that are authorized and that EPA will enforce under the Solid Waste Disposal Act, commonly referred to as the Resource Conservation and Recovery Act (RCRA). The EPA previously provided notices and opportunity for comments on the Agency's decisions to authorize the State of Louisiana program and the EPA is not now reopening the decisions, nor requesting comments, on the Louisiana authorizations as previously published in the
This regulation is effective January 3, 2022. The Director of the Federal Register approves this incorporation by reference as of January 3, 2022, in accordance with 5 U.S.C. 552(a) and 1 CFR part 51.
The EPA has established a docket for this action under Docket ID No. EPA-R06-RCRA-2020-0261. All documents in the docket are listed in the
Alima Patterson, EPA Region 6 Regional Authorization/Codification Coordinator, RCRA Permit Section (LCR-RP), Land, Chemicals and Redevelopment Division, EPA Region 6, 1201 Elm Street, Suite 500, Dallas, Texas 75270, phone number: (214) 665-8533, email address:
Codification is the process of placing a State's statutes and regulations that comprise the State's authorized hazardous waste management program into the Code of Federal Regulations (CFR). Section 3006(b) of RCRA, as amended, allows the EPA to authorize State hazardous waste management programs to operate in lieu of the Federal hazardous waste management regulatory program. The EPA codifies its authorization of State programs in 40 CFR part 272 and incorporates by reference State statutes and regulations that the EPA will enforce under sections 3007 and 3008 of RCRA and any other applicable statutory provisions.
The incorporation by reference of State authorized programs in the CFR should substantially enhance the public's ability to discern the current status of the authorized State program and State requirements that can be
The EPA is publishing this rule to codify Louisiana's authorized hazardous waste management program without a prior proposal because we believe this action is not controversial. The reason being that, in accordance with section 3006(b) of RCRA, EPA has already evaluated the State's regulatory and statutory requirements and has determined that the State's program meets the statutory and regulatory requirements established by RCRA. The EPA previously provided notices and opportunity for comments on the Agency's decisions to authorize the Louisiana program. The EPA is not now reopening the decisions, nor requesting new comments, on the Louisiana authorizations as previously published in the
The State of Louisiana initially received final authorization on January 24, 1985, effective February 7, 1985 (50 FR 3348), to implement its base Hazardous Waste Management Program. We granted authorization for changes to their program on November 28, 1989 (54 FR 48889) effective January 29, 1990; August 26, 1991 (56 FR 41958), as corrected October 15, 1991 (56 FR 51762) effective October 25, 1991; November 7, 1994 (59 FR 55368) effective January 23, 1995 (Note: On January 23, 1995 (60 FR 4380), the EPA responded to adverse public comments and affirmed the effective date for the November 7, 1994 final rule. Then on April 11, 1995 (60 FR 18360); the EPA also made administrative corrections for the January 23, 1995
The EPA incorporated by reference Louisiana's then authorized hazardous waste management program effective March 16, 1998 (62 FR 67578), October 4, 2010 (75 FR 47223), September 11, 2012 (77 FR 41292), November 25, 2013 (78 FR 58890), and December 20, 2016 (81 FR 72730).
In this document, the EPA is revising Subpart T of 40 CFR part 272 to include the authorization revision actions effective September 11, 2017 (82 FR 32253) and December 26, 2018 (83 FR 66143).
In this rule, the EPA is finalizing regulatory text that includes incorporation by reference of the authorized hazardous waste management program of the State of Louisiana. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the Louisiana rules described in the amendments to 40 CFR part 272 set forth in section 272.951. The EPA has made, and will continue to make, these documents available electronically through
The purpose of this
The EPA is incorporating by reference the Louisiana authorized hazardous waste program in Subpart T of 40 CFR part 272. Section 272.951(c)(1) incorporates by reference Louisiana's authorized hazardous waste statutes and regulations. Section 272.951 also references material which is not being incorporated by reference, but which the EPA considered in determining the adequacy of Louisiana's program. Section 272.951(c)(2) references sections of the Louisiana statutes which provide the legal basis for the State's implementation of the hazardous waste management program. In addition, §§ 272.951(c)(5), (6), and (7) reference the Memorandum of Agreement, the Attorney General's Statements, and the Program Description, respectively. These documents are evaluated as part of the approval process of the hazardous waste management program in accordance with subtitle C of RCRA but are not part of the material to be incorporated by reference.
State provisions that are “broader in scope” than the Federal program are not incorporated by reference in 40 CFR part 272. For reference and clarity, the EPA lists in 40 CFR 272.951(c)(3) the Louisiana statutory and regulatory provisions that are “broader in scope” than the Federal program, and which are not part of the authorized program being incorporated by reference. While “broader in scope” provisions are not part of the authorized program and cannot be enforced by the EPA, the State may enforce such provisions under State law. At 40 CFR 272.951(c)(4), EPA lists amendments to Louisiana regulations and Federal rules which are not part of the Louisiana authorized program.
The EPA retains its authority under statutory provisions, including but not limited to, RCRA sections 3007, 3008, 3013, and 7003, and other applicable statutory and regulatory provisions to undertake inspections and enforcement actions and to issue orders in authorized States. With respect to these actions, the EPA will rely on Federal sanctions, Federal inspection authorities, and Federal procedures rather than any authorized State analogs to these provisions. Therefore, the EPA is not incorporating by reference such particular, approved Louisiana procedural and enforcement authorities. Section 272.951(c)(2) of 40 CFR lists the
The public needs to be aware that some provisions of Louisiana's hazardous waste management program are not part of the Federally authorized State program. These non-authorized provisions include:
(1) Provisions that are not part of the RCRA subtitle C program because they are “broader in scope” than RCRA subtitle C (see 40 CFR 271.1(i));
(2) Federal rules adopted by Louisiana but for which the State is not authorized; and
(3) Unauthorized amendments to authorized State provisions.
State provisions that are “broader in scope” than the Federal program are not part of the RCRA authorized program and the EPA will not enforce them. Therefore, they are not incorporated by reference in 40 CFR part 272. For reference and clarity, 40 CFR 272.951(c)(3) lists the Louisiana regulatory provisions which are “broader in scope” than the Federal program and which are not part of the authorized program being incorporated by reference. “Broader in scope” provisions cannot be enforced by the EPA; the State, however, may enforce such provisions under State law.
Additionally, Louisiana's hazardous waste regulations include amendments which have not been authorized by the EPA. Since the EPA cannot enforce a State's requirements which have not been reviewed and authorized in accordance with RCRA section 3006 and 40 CFR part 271, it is important to be precise in delineating the scope of a State's authorized hazardous waste program. Regulatory provisions that have not been authorized by the EPA include amendments to previously authorized State regulations as well as certain Federal rules.
Louisiana has adopted but is not authorized for Federal rules published in the
State regulations that are not incorporated by reference in this rule at 40 CFR 272.951(c)(1), or that are not listed in 40 CFR 272.951(c)(2) (“legal basis for the State's implementation of the hazardous waste management program”), 40 CFR 272.951(c)(3) (“broader in scope”), or 40 CFR 272.951(c)(4) (“unauthorized state amendments”), are considered new unauthorized State requirements. These requirements are not Federally enforceable. After review and analysis of the State's regulations, the EPA has notified the State to seek authorization for the unauthorized rules that the State has adopted and are documented in this
With respect to any requirement pursuant to the Hazardous and Solid Waste Amendments of 1984 (HSWA) for which the State has not yet been authorized, the EPA will continue to enforce the Federal HSWA standards until the State is authorized for these provisions.
The EPA is not amending 40 CFR part 272 to include HSWA requirements and prohibitions that are implemented by the EPA. Section 3006(g) of RCRA provides that any HSWA requirement or prohibition (including implementing regulations) takes effect in authorized and not authorized States at the same time. A HSWA requirement or prohibition supersedes any less stringent or inconsistent State provision which may have been previously authorized by the EPA (50 FR 28702, July 15, 1985). The EPA has the authority to implement HSWA requirements in all States, including authorized States, until the States become authorized for such requirement or prohibition. Authorized States are required to revise their programs to adopt the HSWA requirements and prohibitions, and then to seek authorization for those revisions pursuant to 40 CFR part 271.
Instead of amending the 40 CFR part 272 every time a new HSWA provision takes effect under the authority of RCRA section 3006(g), the EPA will wait until the State receives authorization for its analog to the new HSWA provision before amending the State's 40 CFR part 272 incorporation by reference. Until then, persons wanting to know whether a HSWA requirement or prohibition is in effect should refer to 40 CFR 271.1(j), as amended, which lists each such provision.
Some existing State requirements may be similar to the HSWA requirement implemented by the EPA. However, until the EPA authorizes those State requirements, the EPA can only enforce the HSWA requirements and not the State analogs. The EPA will not codify those State requirements until the State receives authorization for those requirements.
The Office of Management and Budget (OMB) has exempted this action from the requirements of Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011). This action incorporates by reference Louisiana's authorized hazardous waste management regulations, and imposes no additional requirements beyond those imposed by State law. Therefore, this action is not subject to review by OMB. This action is not an Executive Order 13771 (82FR 9339, February 3, 2017) regulatory action because actions such as this codification of Louisiana's revised hazardous waste program under RCRA are exempted under Executive Order 12866. Accordingly, I certify that this action 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 action also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant and it does not make decisions based on environmental health or safety risks. This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) because it is not a significant regulatory action under Executive Order 12866.
Under RCRA section 3006(b), EPA grants a State's application for authorization as long as the State meets the criteria required by RCRA. It would thus be inconsistent with applicable law for EPA, when it reviews a State authorization application, to require the use of any particular voluntary consensus standard in place of another standard that otherwise satisfies the requirements of RCRA. The requirements being codified are the result of Louisiana's voluntary participation in the EPA's State program authorization process under RCRA Subtitle C. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this rule, the EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct. The EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the executive order. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Executive Order 12898 (59 FR 7629, February 16, 1994) establishes Federal executive policy on environmental justice. Because this rule codifies pre-existing State rules which are at least equivalent to, and no less stringent than existing Federal requirements, and imposes no additional requirements beyond those imposed by State law, and there are no anticipated significant adverse human health or environmental effects, the rule is not subject to Executive Order 12898.
The Congressional Review Act, 5 U.S.C. 801-808, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. The EPA will submit a report containing this document and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication in the
Environmental protection, Hazardous waste, Hazardous materials transportation, Incorporation by reference, Intergovernmental relations, Water pollution control, Water supply.
This action is issued under the authority of Sections 2002(a), 3006, and 7004(b) of the Solid Waste Disposal Act as amended, 42 U.S.C. 6912(a), 6926 and 6974(b).
For the reasons set forth in the preamble, under the authority at 42 U.S.C. 6912(a), 6926, and 6974(b), the EPA is amending 40 CFR part 272 as follows.
Sections 2002(a), 3006, and 7004(b) of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. 6912(a), 6926, and 6974(b).
(a)
(b)
(c)
(i) The compilation entitled “EPA-Approved Louisiana Statutory and Regulatory Requirements Applicable to the Hazardous Waste Management Program”, dated December 2018. Only those provisions that have been authorized by EPA are incorporated by reference. Those provisions are listed in appendix A to this part.
(ii) [Reserved]
(2)
(i) Louisiana Statutes Annotated, Revised Statutes, 2017 Main Volume (effective April 23, 2017), Volume 17B, Subtitle II of Title 30, Louisiana Environmental Quality Act: Chapter 1, Section 2002; Chapter 2, Sections 2011.A(1), 2011.B and C, 2011.D (except 2011.D(4), (10)-(12), (16), (19), (20), (23) and (25)), 2011.E-G, 2012, 2013, 2014.A (except 2014.A.3), 2014.2, 2017, 2019.A-C, 2020, 2021, 2022.A (except the first sentence of 2022.A(1)); 2022.B and C; 2022.1(B), 2023 (except phrase “Except as otherwise provided in this Subsection,” in 2023.A(1) and 2023.A(2)); 2024, 2025 (except 2025.D, .F(3), .H, and .K), 2026 through 2029, 2033.A-D; Chapter 2-A, Section 2050.8; Chapter 3, Sections 2054.B(1), 2054.B(2)(a); Chapter 9, Sections 2172, 2174, 2175, 2180.A-C, 2181, 2183.C, and .F-.H, 2183.1.B, 2183.2, 2184.B, 2186, 2187, 2188.A and C, 2189.A and B, 2190.A-D, 2191.A-C, 2192, 2193, 2196, 2199, 2200, 2203.B and C, 2204.A(2), A(3) and B; Chapter 13, Sections 2294(6), 2295.C; Chapter 16, Section 2369; Chapter 18, Section 2417.A.
(ii) Louisiana Administrative Code, Title 33, Part I, Office of The Secretary Part I, Subpart 1: Departmental Administrative Procedures: Chapter 5, Sections 501.A, effective October 20, 2007, 501.B, effective October 20, 2005, 502, effective September 20, 2008, and 503 through 511, effective October 20, 2005; Chapter 7, Section 705, effective October 20, 2006; Chapter 19, Sections 1901 through 1909, effective November 20, 2010; Chapter 23, Sections 2303 through 2309, effective October 20, 2009.
(iii) Louisiana Administrative Code, Title 33, Part V, Hazardous Waste and Hazardous Materials, Louisiana Hazardous Waste Regulations, dated January 2018, unless otherwise specified: Chapter 1, Sections 101, 107.A.-.C; Chapter 3, Sections 301, 311.A, 311.C, 315 introductory paragraph, 323.B.3, 323.B.4.d and e; Chapter 5, Section, 503; Chapter 7, Sections 703, 705, 707, 709 through 721; and Chapter 22, Sections 2201.A, 2201.E, 2201.F.
(3)
(i) Louisiana Statutes Annotated, Revised Statutes, 2017 Main Volume (effective April 23, 2017), Volume 17B, Subtitle II of Title 30, Louisiana Environmental Quality Act: Chapter 2, Sections 2014.B and D; Chapter 9, Sections 2178 and 2197.
(ii) Louisiana Administrative Code, Title 33, Part I, Office of The Secretary Part I, Subpart 1: Departmental Administrative Procedures: Chapter 19, Section 1911, effective November 20, 2010.
(iii) Louisiana Administrative Code, Title 33, Part V, Hazardous Waste And Hazardous Materials, Louisiana Hazardous Waste Regulations, dated January 2018, unless otherwise specified: Chapter 1, Sections, 105.D.1.y, 105.O.1.f, 105.O.2.d, 105.R.5, 108.F.5, 108.G.5 and 109 Analogous Product; 109 Analogous Raw Material; 109 Intermediate; Chapter 3, Section 327; Chapter 4, Sections 401 through 409; Chapter 11, Sections 1101.G and 1109.E.7.f; Chapter 13, Section 1313; Chapter 51.
(4)
(ii) The Federal rules listed in the table below are not delegable to States. Louisiana has adopted these provisions and left the authority to the EPA for implementation and enforcement.
(iii) (A) The following authorized provisions of the Louisiana regulations include amendments published in the Louisiana Register that are not approved by EPA. Such unauthorized amendments are not part of the State's authorized program and are, therefore, not Federally enforceable. Thus, notwithstanding the language in the Louisiana hazardous waste regulations incorporated by reference at paragraph (c)(1)(i) of this section, EPA will enforce the State provisions that are actually authorized by EPA. The effective dates of the State's authorized provisions are listed as follows.
(B) The actual State regulatory text authorized by EPA (
(5)
(6)
(7)
The statutory provisions include:
Louisiana Statutes Annotated, Revised Statutes, 2017 Main Volume (effective April 23, 2017), Volume 17B, Subtitle II of Title 30, Louisiana Environmental Quality Act: Chapter 1, Sections 2003, 2004 introductory paragraph, (2)-(4), (7)-(10), (13), (14) (except (14)(b)-(d)), (15), and (18); Chapter 2, Section 2022.A(1), first sentence, 2022.1(A); Chapter 8, Section 2153(1); Chapter 9, Sections 2173 (except 2173(9)), 2183.A, B, D, E, and I, 2183.1.A, 2184.A, 2188.B, 2189.C, 2202, 2203.A, 2204.A(1) and C; Chapter 13, Sections 2295.A and B; Chapter 18, Section 2417.E(5).
Copies of the Louisiana statutes that are incorporated by reference are available from Thomson Reuters, 610 Opperman Drive, Eagan, Minnesota 55123; Phone: 1-888-728-7677; website:
The regulatory provisions include:
Louisiana Administrative Code, Title 33, Part V, Hazardous Waste and Hazardous Materials, Louisiana Hazardous Waste Regulations, Part V, Subpart 1: Department of Environmental Quality—Hazardous Waste, dated January 2018.
Chapter 1—General Provisions and Definitions, Sections 103; 105 (except 105.D.1.y, 105.O.1.f, 105.O.2.d, 105.P, and 105.R.5); 108 (except 108.F.5 and 108.G.5); 109 (except “Analogous Product”, “Analogous Raw Material”, “Batch Tank”, “Competent Authorities”, “Concerned Countries”, “Consignee”, “Continuous-Flow Tank”, “Country of Export”, “Country of Import”, “Country of Transit”, “EPA Acknowledgement of Consent”, “Exporter”, “Exporting Country”, “Importer”, “Importing Country”, “Intermediate”, “OECD”, “Organization for Economic Cooperation and Development (OECD) Area”, “Primary Exporter”, “Receiving Country”, “Recognized Trader”, “Recovery Facility”, “Recovery Operations”, “Transboundary Movement”, and “Transit Country”); 110 (except 110.G.1 and reserved provisions); 111;
Chapter 3—General Conditions for Treatment, Storage, and Disposal Facility Permits, Sections 303; 305 (except 305.F and .G); 307; 309; 311 (except 311.A and .C); 313; 315.A-.D; 317; 319; 321; 322 (except 322.D.1.g); 323 (except 323.B.3, .B.4.d and .e); 325; 329;
Chapter 5—Permit Application Contents, Sections 501; 505 through 516; 517 (except the following phrases in 517.V: “or 2271, or a determination made under LAC 33:V.2273,” and, “or a determination”); 519 through 528; 529 (except 529.E introductory paragraph through .E.3); 530 through 536; 537 (except reserved provision); 540 through 699;
Chapter 7—Administrative Procedures for Treatment, Storage, and Disposal Facility Permits, Sections 701; 706; 708;
Chapter 11—Generators, Sections 1101 (except 1101.B and .G); 1103; 1105; 1107 (except reserved provision); 1109 (except E.7.f and reserved provision); 1111.A, 1111.B.1 introductory paragraph (except the phrase “to a treatment, storage, or disposal facility within the United States”), 1111.B.1.a.-.c, 1111.B.1.d (except the phrase “within the United States”), 1111.B.1.e
Chapter 13—Transporters, Sections 1301 (except 1301.F); 1303; 1305; 1307.A introductory paragraph (except the third sentence), 1307.B, 1307.C (except the last sentence), 1307.D, 1307.E (except the phrase “and, for exports, an EPA Acknowledgment of Consent” at 1307.E.2), 1307.F (except the phrase “and, for exports, an EPA Acknowledgment of Consent” at 1307.F.2), 1307.G (except 1307.G.4), 1307.H-.N; 1309, 1311, 1315 through 1323;
Chapter 15—Treatment, Storage, and Disposal Facilities, Sections 1501 (except reserved provision); 1503 through 1515; 1516 (except 1516.B.4); 1517 through 1529; 1531 (except 1531.B); 1533; 1535;
Chapter 17—Air Emission Standards, Sections 1701 through 1767; 1799, Appendix Table 1;
Chapter 18—Containment Buildings, Sections 1801; 1802; 1803 (except 1803.B.2);
Chapter 19—Tanks, Sections 1901 through 1907 (except 1907.E.1.e & .f, .E.2.d, .J, and .K), 1909.A-C, 1911 through 1921;
Chapter 20—Integration with Maximum Achievable Control Technology (MACT), Section 2001;
Chapter 21—Containers, Sections 2101 through 2119;
Chapter 22—Prohibitions on Land Disposal, Sections 2201.B-.D, 2201.G (except reserved provision), 2201.H, 2201.I; 2203.A (except “Cone of Influence”, “Confining Zone”, “Formation”, “Injection Interval”, “Injection Zone”, “Mechanical Integrity”, “Transmissive Fault or Fracture”, “Treatment”, and “Underground Source of Drinking Water”), 2203.B; 2205 (except the phrase “or a determination made under LAC 33:V.2273,” in 2205.D); 2207; 2208; 2209 (except the phrase “or a determination made under LAC 33:V.2273,” in 2209.D.1); 2211; 2213; 2215; 2216 (except the phrase “or 2271” in 2216.E.2); 2218 (except the phrase “or 2271” in 2218.B.2); 2219; 2221.D-.F; 2223; 2227 (except reserved provision); 2230; 2231.G-.M; 2233; 2236; 2237; 2245 (except 2245.J and .K); 2246; 2247 (except 2247.G and .H); 2299 Appendix (except Tables 4 (Reserved) and 12 (Repealed));
Chapter 23—Waste Piles, Sections 2301 through 2313; 2315 (except the word “either” at the end of 2315.B introductory paragraph; the word “or” at the end of 2315.B.1; and 2315.B.2); 2317;
Chapter 24—Hazardous Waste Munitions and Explosives Storage, Sections 2401 through 2405;
Chapter 25—Landfills, Sections 2501 through 2523;
Chapter 26—Corrective Action Management Units and Temporary Units, Sections 2601 through 2607;
Chapter 27—Land Treatment, Sections 2701 through 2723;
Chapter 28—Drip Pads, Sections 2801 through 2807; 2809 (except the word “either” at the end of 2809.B introductory paragraph; the word “or” at the end of 2809.B.1; and 2809.B.2);
Chapter 29—Surface Impoundments, Sections 2901 through 2909; 2911 (except the word “either” at end of 2911.B introductory paragraph; and 2911.B.1); 2913 through 2919;
Chapter 30—Hazardous Waste Burned in Boilers and Industrial Furnaces, Sections 3001 through 3007; 3009 (except reserved provision); 3011 through 3025; 3099 Appendices A through L;
Chapter 31—Incinerators, Sections 3101 through 3121;
Chapter 32—Miscellaneous Units, Sections 3201; 3203; 3205; 3207 (except 3207.C.2);
Chapter 33—Groundwater Protection, Sections 3301 through 3321; 3322 (except 3322.D); 3323; 3325 and Table 4;
Chapter 35—Closure and Post-Closure, Sections 3501 through 3505; 3507 (except 3507.B); 3509 through 3519; 3521 (except 3521.A.3); 3523 through 3527;
Chapter 37—Financial Requirements, Sections 3701 through 3719;
Chapter 38—Universal Wastes, Sections 3801 through 3811; 3813 (except “Mercury-containing lamp”); 3815 through 3833; 3835 (except the phrase “, other than to those OECD countries . . . requirements of LAC 33:V.Chapter 11.Subchapter B),” at 3835.A introductory paragraph); 3837 through 3855; 3857 (except the phrase “, other than to those OECD countries . . . requirements of LAC 33:V.Chapter 11.Subchapter B),” at 3857.A introductory paragraph); 3859 through 3869; 3871 (except the phrase “other than to those OECD countries . . . requirements of LAC 33:V.Chapter 11.Subchapter B)” at 3871.A introductory paragraph); 3873 through 3877; 3879 (except 3879.B); 3881; 3883;
Chapter 40—Used Oil, Sections 4001 through 4093;
Chapter 41—Recyclable Materials, Sections 4101; 4105 (except 4105.A.1.a.i and ii; and 4105.A.4); 4139; 4141; 4143 (except the word “and” at the end of 4143.B.4; and 4143.B.5); 4145;
Chapter 42—Conditional Exemption for Low-Level Mixed Waste Storage and Disposal, Sections 4201 through 4243;
Chapter 43—Interim Status, Sections 4301 through 4371; 4373 (except the last two sentences “The administrative authority . . . as demonstrated in accordance with LAC 33:I.Chapter 13.” in 4373.K.1); 4375; 4377; 4379 (except 4379.B); 4381 through 4387; 4389 (except 4389.C); 4391 through 4397; 4399; 4401 through 4413; 4417 through 4456, 4457.A (except 4457.A.2), 4457.B (except the phrase: “If the owner or operator . . . he must” in the introductory paragraph), 4457.C; 4459 through 4474; 4475 (except the word “either” at the end of 4475.B introductory paragraph; the word “or” at the end of 4475.B.1; and 4475.B.2); 4476 through 4499; 4501 through 4703; 4705 (except the word “either” at the end of 4705.B introductory paragraph; the word “or” at the end of 4705.B.1; and 4705.B.2); 4707 through 4739;
Chapter 49—Lists of Hazardous Wastes, Sections 4901; 4903; 4907; 4911 through 4915; 4999, Appendices C through E;
Chapter 53—Military Munitions, Sections 5301 through 5311; Louisiana Administrative Code, Title 33, Part VII, Solid Waste, as amended through June 2011; Sections 301.A.2.a; and 315.J.
Copies of the Louisiana Administrative Code as published by the Office of the State Register, P.O. Box 94095, Baton Rouge, LA 70804-9095; Phone: (225) 342-5015; website:
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for all Airbus Helicopters Model AS332L2 and EC225LP helicopters. This proposed AD was prompted by a report of loss of tightening torque on the nut that attaches the tail gear box (TGB) bevel wheel. This proposed AD would require repetitive inspections (measurements) of the angular clearances of the TGB, and, depending on the findings, replacement of the TGB with a serviceable TGB, as specified in a European Union Aviation Safety Agency (EASA) AD, which is proposed for incorporation by reference (IBR). This proposed AD would also provide terminating action for certain 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 January 18, 2022.
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 EASA material that is proposed for IBR in this AD, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
You may examine the AD docket at
Andrea Jimenez, Aerospace Engineer, COS Program Management Section, Operational Safety Branch, Compliance & Airworthiness Division, FAA, 1600 Stewart Ave., Suite 410, Westbury, NY 11590; telephone (516) 228-7330; 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
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Andrea Jimenez, Aerospace Engineer, COS Program Management Section, Operational Safety Branch, Compliance & Airworthiness Division, FAA, 1600 Stewart Ave., Suite 410, Westbury, NY 11590; telephone (516) 228-7330; email
The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2021-0184R1, dated October 8, 2021 (EASA AD 2021-0184R1), to correct an unsafe condition for Airbus Helicopters, formerly Eurocopter, Eurocopter France, Aerospatiale, Model AS 332 L2 and EC 225 LP helicopters, all serial numbers.
This proposed AD was prompted by a report of loss of tightening torque on the nut that attaches the TGB bevel wheel. Additionally, the subsequent investigation highlighted that loss of the tightening torque might lead to degradation of the splines between the
EASA AD 2021-0184R1 requires repetitive inspections (measurements) of the angular clearances of the TGB, and, depending on the findings, additional repetitive inspections (measurements) of the angular clearances of the TGB at a reduced interval and replacement of the TGB with a serviceable TGB. EASA AD 2021-0184R1 provides terminating action for the repetitive inspections at the reduced interval for a helicopter if, during two consecutive inspections, the value of the measured angular clearance remains unchanged for that helicopter.
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
These helicopters have been approved by EASA and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the European Union, EASA has notified the FAA about the unsafe condition described in its AD. The FAA is proposing this AD after evaluating all known relevant information and determining that the unsafe condition described previously is likely to exist or develop on other helicopters of the same type design.
This proposed AD would require accomplishing the actions specified in EASA AD 2021-0184R1, described previously, as incorporated by reference, except for any differences identified as exceptions in the regulatory text of this proposed AD.
In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to incorporate EASA AD 2021-0184R1 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2021-0184R1 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 EASA AD 2021-0184R1 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 EASA AD 2021-0184R1. Service information referenced in EASA AD 2021-0184R1 for compliance will be available at
The FAA considers this proposed AD would be an interim action. If final action is later identified, the FAA might consider further rulemaking then.
The FAA estimates that this AD, if adopted as proposed, would affect 38 helicopters of U.S. Registry. The FAA estimates the following costs to comply with this proposed AD:
The FAA estimates the following costs to do any necessary on-condition action that would be required based on the results of any required actions. The FAA has no way of determining the number of helicopters that might need this on-condition 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.
The FAA determined that this proposed AD would not have federalism
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Would not affect intrastate aviation in Alaska, and
(3) Would 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 on this airworthiness directive (AD) by January 18, 2022.
None.
This AD applies to all Airbus Helicopters Model AS332L2 and EC225LP helicopters, certificated in any category.
Joint Aircraft Service Component (JASC) Code: 6400, Tail Rotor System.
This AD was prompted by a report of loss of tightening torque on the nut that attaches the tail gear box (TGB) bevel wheel. The FAA is issuing this AD to address loss of tightening torque on the nut that attaches the TGB bevel wheel, which, if not corrected, could lead to structural failure of the TGB drive, resulting in reduced, or loss of, control of the helicopter.
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, European Union Aviation Safety Agency (EASA) AD 2021-0184R1, dated October 8, 2021 (EASA AD 2021-0184R1).
(1) Where EASA AD 2021-0184R1 requires compliance in terms of flight hours, this AD requires using hours time-in-service.
(2) Where EASA AD 2021-0184R1 refers to August 19, 2021 (the effective date of EASA AD 2021-0184, dated August 5, 2021), this AD requires using the effective date of this AD.
(3) Where the service information referenced in EASA AD 2021-0184R1 specifies sending parts to the manufacturer or an approved repair station to be examined, this AD does not include that requirement.
(4) This AD does not mandate compliance with the “Remarks” section of EASA AD 2021-0184R1.
Although the service information referenced in EASA AD 2021-0184R1 specifies to submit certain information to the manufacturer, this AD does not include that requirement.
Special flight permits may be permitted provided that there are no passengers on board.
(1) The Manager, International Validation Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the International Validation Branch, send it to the attention of the person identified in paragraph (l)(2) of this AD. Information may be emailed to:
(2) 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.
(1) For EASA AD 2021-0184R1, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
(2) For more information about this AD, contact Andrea Jimenez, Aerospace Engineer, COS Program Management Section, Operational Safety Branch, Compliance & Airworthiness Division, FAA, 1600 Stewart Ave., Suite 410, Westbury, NY 11590; telephone (516) 228-7330; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for DG Flugzeugbau GmbH Model DG-1000T gliders and Schempp-Hirth Flugzeugbau GmbH Model Duo Discus T gliders with a Solo Kleinmotoren GmbH Solo Model 2350C or 2350D engine installed. This proposed AD was prompted by mandatory continuing airworthiness information (MCAI) issued by the aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as failure of the bearing of the upper pulley of the belt driven reduction gear resulting in separation of the propeller from the engine. This proposed AD would require replacing a certain hex-nut and would establish a lift limit for the ball bearing assembly. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by January 18, 2022.
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 Solo Kleinmotoren GmbH, Postfach 600152, D71050 Sindelfingen, Germany; phone: +49 703 1301-0; fax: +49 703 1301-136; email:
You may examine the AD docket at
Jim Rutherford, Aviation Safety Engineer, General Aviation & Rotorcraft Section, International Validation Branch, FAA, 901 Locust, Room 301, Kansas City, MO 64106; phone: (816) 329-4165; fax: (816) 329-4090; 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
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Jim Rutherford, Aviation Safety Engineer, FAA, General Aviation & Rotorcraft Section, International Validation Branch, FAA, 901 Locust, Room 301, Kansas City, MO 64106. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2019-0029, dated February 8, 2019 (referred to after this as “the MCAI”), to address an unsafe condition on Solo Kleinmotoren GmbH Solo Model 2350B, 2350BS, 2350C, and 2350D engines. The MCAI states:
An occurrence was reported of failure of the bearing of the upper pulley of the belt driven reduction gear, resulting in separation of the propeller from the engine.
This condition, if not corrected, could lead to similar occurrences, with possible reduced control of, and damage to, the aircraft.
To address this potential unsafe condition, Solo redesigned the nut securing the pulley bearing on the axle and introduced a life time limit of 15 years for the reduction gear bearings.
For the reason stated above, this [EASA] AD requires replacement of affected parts with serviceable parts, and introduces a life limit for the affected ball bearings.
You may examine the MCAI in the AD docket at
The FAA reviewed Solo Kleinmotoren GmbH Service Bulletin 4603-18, dated January 22, 2019. The service information contains procedures for replacing the hex-nut at the excentric axle and the ball bearing assemblies at the bearing block of the reduction gear. 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
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 this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI and service information referenced above. The FAA is issuing this NPRM after determining the unsafe condition described previously is likely to exist or develop on other products of the same type design.
This proposed AD would require removing the affected hex-nut from service and replacing it with a flange-nut. This proposed AD would also establish a lift limit of 15 years for the affected ball bearing assemblies.
The MCAI applies to Solo Kleinmotoren GmbH Solo Model 2350B, 2350BS, 2350C, and 2350D engines. None of these model engines have an FAA engine type certificate. However, Model 2350C and Model 2350D engines are certificated by the FAA with the type certificate for certain gliders. This proposed AD would not apply to Solo Kleinmotoren GmbH Solo Model 2350B and 2350BS engines because they are not part of an FAA glider type design.
The MCAI requires replacing an affected ball bearing assembly before it accumulates 15 years since first installation on an engine. This proposed AD would require replacing both ball bearing assemblies simultaneously before either accumulates 15 years since first installation on an engine.
The FAA estimates that this AD, if adopted as proposed, would affect 10 gliders of U.S. registry. The FAA estimates that for gliders with an affected hex-nut, replacement would take about 0.5 work-hour and require a
In addition, the FAA estimates that for gliders with the affected ball bearing assemblies, replacement would take about 4 work-hours for both ball bearing assemblies and require ball bearing assemblies costing $118 (2 units). The average labor rate is $85 per work-hour. Based on these figures, the FAA estimates the cost of the ball bearing assembly replacement on U.S. operators to be $4,580 (assuming all 10 gliders have this configuration) or $458 per glider.
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.
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) Would not affect intrastate aviation in Alaska, and
(3) Would 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 on this airworthiness directive (AD) by January 18, 2022.
None.
This AD applies to DG Flugzeugbau GmbH Model DG-1000T gliders and Schempp-Hirth Flugzeugbau GmbH Model Duo Discus T gliders, certificated in any category, with a Solo Kleinmotoren GmbH Solo Model 2350C or 2350D engine, all serial numbers, installed.
Joint Aircraft System Component (JASC) Code 7200, Engine (Turbine/Turboprop).
This AD was prompted by mandatory continuing airworthiness information (MCAI) issued by the aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as failure of the bearing of the upper pulley of the belt driven reduction gear. The FAA is issuing this AD to prevent separation of the propeller from the engine. The unsafe condition, if not addressed, could result in loss of control of the aircraft.
Comply with this AD within the compliance times specified, unless already done.
(1) Within 12 months after the effective date of this AD, remove the nut installed at the excentric axle from service and replace it with a nut in accordance with the Condition section, paragraph a, of Solo Kleinmotoren GmbH Service Bulletin 4603-18, dated January 22, 2019.
(2) Before either ball bearing assembly at the bearing block of the reduction gear accumulates 15 years since first installation on an engine or within 12 months after the effective date of this AD, whichever occurs later, and thereafter at intervals not to exceed 15 years, remove both ball bearing assemblies from service and replace with new (zero hours time-in-service) ball bearing assemblies in accordance with the Condition section, paragraph b, of Solo Kleinmotoren GmbH Service Bulletin 4603-18, dated January 22, 2019.
(3) After replacing the ball bearing assemblies required by paragraph (g)(2) of this AD, record compliance in the aircraft log book. The entry must include: (1) Reduction gear part number (P/N) and serial number; and (2) date ball bearing assemblies were replaced.
(4) As of the effective date of this AD, do not install a hex-nut P/N 0028143 on any engine.
(5) As of the effective date of this AD, do not install ball bearing assembly P/N 0050110 on any engine unless it is new (zero hours time-in-service).
(1) The Manager, International Validation Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the certification office, send it to the attention of the person identified in paragraph (i)(1) of this AD or email:
(2) 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.
(1) For more information about this AD, contact Jim Rutherford, Aviation Safety Engineer, General Aviation & Rotorcraft Section, International Validation Branch, FAA, 901 Locust, Room 301, Kansas City, MO 64106; phone: (816) 329-4165; fax: (816) 329-4090; email:
(2) Refer to European Aviation Safety Agency (EASA) AD 2019-0029, dated February 8, 2019, for more information. You may examine the EASA AD in the AD docket at
(3) For service information identified in this AD, contact Solo Kleinmotoren GmbH, Postfach 600152, D71050 Sindelfingen, Germany; phone: +49 703 1301-0; fax: +49 703 1301-136; email:
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for all True Flight Holdings LLC Model AA-1, AA-1A, AA-1B, AA-1C, AA-5, AA-5A, and AA-5B airplanes. This proposed AD was prompted by the report of an accident of an airplane with bondline corrosion and delamination of the horizontal stabilizers. This proposed AD would require inspecting the wings, fuselage, and stabilizers for bondline separation, corrosion, and previous repair. This AD would also require repairing or replacing parts and applying corrosion inhibitor as necessary. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by January 18, 2022.
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 True Flight Holdings LLC, 2300 Madison Highway, Valdosta, GA 31601; phone: (229) 242-6337; email:
You may examine the AD docket at
Fred Caplan, Aviation Safety Engineer, Atlanta ACO Branch, FAA, 1701 Columbia Avenue, College Park, GA 30337; phone: (404) 474-5507; fax: (404) 474-5606; 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
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Fred Caplan, Aviation Safety Engineer, Atlanta ACO Branch, FAA, 1701 Columbia Avenue, College Park, GA 30337. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.
The FAA received a report of an accident involving a True Flight Holdings LLC Model AA-5 airplane that occurred on January 19, 2021. During flight, the outboard elevator attach bracket on the horizontal stabilizer detached, causing loss of elevator control, flutter, and significant damage to the airplane. An investigation identified corrosion and delamination of the airplane skin bondlines around the area of the horizontal stabilizer where the elevator attach bracket was attached, as well as on the trailing edge of the elevator trim tab. Field reports have identified additional instances of corrosion and delamination of skin bondlines around the horizontal stabilizer and other primary structures.
Model AA-1, AA-1A, AA-1B, AA-1C, AA-5, AA-5A, and AA-5B airplanes are similar in design and are constructed using a metal-to-metal bonding process. While the bond adhesive remains structurally sound throughout the aging process, factors such as corrosion and freezing moisture may compromise the structural integrity of some of the bond joints. This can lead to delamination of the skin from the primary structure.
Field reports indicate that bondline inspections are not being adequately performed during routine inspections, which emphasize a visual scanning for problem areas. However, damage can exist with no visual indications, and a mechanic might miss damage in a hidden area. The FAA has determined that a more thorough inspection procedure is necessary to reliably identify corrosion and delamination of bondlines in these critical areas.
This condition, if not addressed, could result in reduced structural integrity of the affected airplane component, with consequent loss of
The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop on other products of the same type design.
The FAA reviewed True Flight Aerospace Service Bulletin SB-195, Revision A, dated June 1, 2021 (True Flight SB-195A). This service information specifies procedures for inspecting the primary structure and flight controls for bondline separation and corrosion and repairing or replacing parts and applying corrosion inhibitor as necessary.
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 FAA also reviewed True Flight Aerospace Service Kit 125, Revision B. This service information specifies procedures for repairing bondline delamination of flight controls and structures.
This proposed AD would require accomplishing the actions specified in True Flight SB-195A as already described, except as discussed under “Differences Between the AD and the Service Information.”
This proposed AD would only require the Part A inspections, and not the Part B inspection, from True Flight SB-195A. In addition, True Flight SB-195A specifies reporting information to the manufacturer, and this proposed AD would not.
The FAA estimates that this AD, if adopted as proposed, would affect 2,466 airplanes of U.S. registry.
The FAA estimates the following costs to comply with this proposed AD:
The FAA estimates that it would take 3 work-hours at $85 per work-hour to do the proposed corrosion inhibitor treatment. Parts would cost $104 for a total proposed cost of $359 per airplane. In addition, there could be a wide range of areas that may require repair (fuselage, stabilizers, and wings) for the delaminated bondlines and/or corrosion with potential replacement of the entire component. The FAA has no way of determining the number of airplanes that might need these repairs or the exact costs for corrective actions needed as a result of the proposed inspection, as the damage may vary significantly from airplane to airplane.
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.
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) Would not affect intrastate aviation in Alaska, and
(3) Would 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 on this airworthiness directive (AD) by January 18, 2022.
None.
This AD applies to True Flight Holdings LLC Model AA-1, AA-1A, AA-1B, AA-1C, AA-5, AA-5A, and AA-5B airplanes, all serial numbers, certificated in any category.
Joint Aircraft System Component (JASC) Code: 5330, Fuselage Main, Plate/Skin; 5512, Horizontal Stabilizer, Plate/Skin; 5522, Elevator, Plates/Skin Structure; 5532, Vertical Stabilizer, Plates/Skin; 5542, Rudder, Plate/Skin; 5730, Wing, Plates/Skins.
This AD was prompted by corrosion and delamination of the horizontal stabilizer bondlines. The FAA is issuing this AD to detect and address cracks, buckles, corrosion,
Comply with this AD within the compliance times specified, unless already done.
Within 100 hours time-in-service after the effective date of this AD or within 12 months after the effective date of this AD, whichever occurs first, and thereafter at intervals not to exceed 12 months, inspect the wings, stabilizers, and aft fuselage for bondline separation, corrosion, and previous repair and take all necessary corrective action before further flight in accordance with paragraphs A.1. through A.7. in True Flight Aerospace Service Bulletin SB-195, Revision A, dated June 1, 2021. Pay particular attention to the areas listed in paragraphs (g)(1) through (3) of this AD.
(1) Bondlines of the horizontal stabilizer outboard rib at the elevator bearing support assembly.
(2) Bondlines of the elevator trim tab inboard rib.
(3) Bondlines and previous repairs of the trailing edges of the elevator trim tabs, elevators, rudder, ailerons, and wings.
Special flight permits are prohibited.
(1) The Manager, Atlanta ACO Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the certification office, send it to the attention of the person identified in paragraph (j)(1) of this AD.
(2) 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.
(1) For more information about this AD, contact Fred Caplan, Aviation Safety Engineer, Atlanta ACO Branch, FAA, 1701 Columbia Avenue, College Park, GA 30337; phone: (404) 474-5507; fax: (404) 474-5606; email:
(2) For service information identified in this AD, contact True Flight Holdings LLC, 2300 Madison Highway, Valdosta, GA 31601; phone: (229) 242-6337; email:
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to establish Class E surface airspace to accommodate Area Navigation (RNAV) Global Positioning System (GPS) Standard Instrument Approach Procedures (SIAPs) serving Ocean Reef Club Airport. This action also proposes to amend Class E airspace extending upward from 700 feet above the surface for Ocean Reef Club Airport by updating the geographic coordinates of the airport and correcting the descriptor by replacing AL with FL. Controlled airspace is necessary for the safety and management of instrument flight rules (IFR) operations in the area.
Comments must be received on or before January 18, 2022.
Send comments on this proposal to: The U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140, Washington, DC 20590-0001; Telephone: (800) 647-5527, or (202) 366-9826. You must identify the Docket No. FAA-2021-0985; Airspace Docket No. 21-ASO-28, at the beginning of your comments. You may also submit comments through the internet at
FAA Order JO 7400.11F Airspace Designations and Reporting Points and subsequent amendments can be viewed online at
John Fornito, Operations Support Group, Eastern Service Center, Federal Aviation Administration, 1701 Columbia Avenue, College Park, GA 30337; Telephone (404) 305-6364.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. 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. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority, as it would establish and amend Class E airspace for Ocean Reef Club Airport, Key Largo, FL to support IFR operations in the area.
Interested persons are invited to comment on this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.
Communications should identify both docket numbers (Docket No. FAA-2021-0985 and Airspace Docket No. 21-ASO-28) and be submitted in triplicate to DOT Docket Operations (see
Persons wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2021-0985 Docket No. 21-ASO-28.” The postcard will be date/
All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this document may be changed in light of the comments received. All comments submitted will be available for examination in the public docket both before and after the comment closing date. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the
This document proposes to amend FAA Order JO 7400.11F, Airspace Designations and Reporting Points, dated August 10, 2021, and effective September 15, 2021. FAA Order JO 7400.11F is publicly available as listed in the
The FAA proposes an amendment to 14 CFR part 71 to establish Class E surface airspace within a 4.0-mile radius of Ocean Reef Club Airport to accommodate RNAV SIAPs serving the airport.
This action would also amend Class E airspace extending upward from 700 feet above the surface by updating the airport's geographic coordinates to coincide with the FAA's database, and correcting the airspace descriptor by replacing AL with FL.
Class E airspace designations are published in Paragraphs 6002 and 6005, respectively, of FAA Order JO 7400.11F, dated August 10, 2021, and effective September 15, 2021, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in FAA Order JO 7400.11.
FAA Order JO 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures”, prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from the surface within a 4-mile radius of. Ocean Reef Club Airport. This Class E airspace is effective during the specific dates and times established in advance by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.
That airspace extending upward from 700 feet above the surface within a 7-mile radius of Ocean Reef Club Airport.
Employment and Training Administration, Department of Labor.
Notice of proposed rulemaking.
The Department of Labor (Department or DOL) is proposing to amend its regulations governing the certification of agricultural labor or services to be performed by temporary foreign workers in H-2A nonimmigrant status (H-2A workers). Specifically, the Department proposes to revise the methodology by which it determines the hourly Adverse Effect Wage Rates
Interested persons are invited to submit written comments on the proposed rule on or before January 31, 2022.
You may submit comments electronically by the following method:
Brian Pasternak, Administrator, Office of Foreign Labor Certification, Employment and Training Administration, U.S. Department of Labor, 200 Constitution Avenue NW, Room N-5311, Washington, DC 20210, telephone: (202) 693-8200 (this is not a toll-free number). Individuals with hearing or speech impairments may access the telephone numbers above via TTY/TDD by calling the toll-free Federal Information Relay Service at 1 (877) 889-5627.
The Immigration and Nationality Act (INA), as amended by the Immigration Reform and Control Act of 1986 (IRCA), establishes an “H-2A” nonimmigrant visa classification for a worker “having a residence in a foreign country which he has no intention of abandoning who is coming temporarily to the United States to perform agricultural labor or services . . . of temporary or a seasonal nature.” 8 U.S.C. 1101(a)(15)(H)(ii)(a); see also 8 U.S.C. 1184(c)(1), 1188.
The Secretary has delegated the authority to issue temporary agricultural labor certifications to the Assistant Secretary, Employment and Training Administration (ETA), who in turn has delegated that authority to ETA's Office of Foreign Labor Certification (OFLC).
Since 1987, the Department has operated the H-2A temporary labor certification program under regulations promulgated pursuant to the INA. The standards and procedures applicable to the certification and employment of workers under the H-2A program are found in 20 CFR part 655, subpart B, and 29 CFR part 501.
An employer seeking H-2A workers generally initiates the temporary labor certification process by filing an H-2A Agricultural Clearance Order, Form ETA-790/790A (job order), with the State Workforce Agency (SWA) in the area where it seeks to employ H-2A workers.
With the exception of brief periods under the 2008 Final Rule
As explained in prior rulemakings, requiring employers to pay the AEWR when it is the highest applicable wage is the primary way the Department meets its statutory obligation to certify no adverse effect on workers in the United States similarly employed. The AEWR is the rate that the Department has determined is necessary to ensure the employment of H-2A foreign workers will not have an adverse effect on the wages of agricultural workers in the United States similarly employed. Specifically, the AEWR is intended to guard against the potential for the entry of H-2A foreign workers to adversely affect the wages and working conditions of agricultural workers in the United States similarly employed. As the Department noted shortly after the creation of the modern H-2A program, a “basic Congressional premise for temporary foreign worker programs . . . is that the unregulated use of [nonimmigrant foreign workers] in agriculture would have an adverse impact on the wages of U.S. workers, absent protection.”
Addressing the potential adverse effect that the employment of temporary foreign workers may have on the wages of agricultural workers in the United States similarly employed is particularly important because U.S. agricultural workers are, in many cases, especially susceptible to adverse effects caused by the employment of temporary foreign workers. As discussed in prior rulemakings, the Department continues to hold the view that “U.S. agricultural workers need protection from potential adverse effects of the use of foreign temporary workers, because they generally comprise an especially vulnerable population . . . with few alternatives in the non-farm labor market.”
The use of an AEWR, separate from a prevailing wage for a particular crop or agricultural activity, “is most relevant in cases in which the local prevailing wage is lower than the wage considered over a larger geographic area (within which the movement of domestic labor is feasible) or over a broader occupation/crop/activity definition (within which reasonably ready transfer of skills is feasible).”
Congress, however, did not “define adverse effect and left it in the Department's discretion how to ensure that the [employment] of farmworkers met the statutory requirements.”
As part of a comprehensive H-2A program notice of proposed rulemaking (2019 NPRM) published on July 26, 2019, the Department proposed to adjust the methodology used to establish the AEWRs in the H-2A program. That approach would have provided occupation-specific hourly AEWRs for non-range occupations
The Department received thousands of comments on the proposed changes to the methodology for setting the AEWRs in the 2019 NPRM. The commenters represented a wide range of stakeholders interested in the H-2A program, and the Department received comments both in support of and in opposition to the proposed changes to establish occupation-specific hourly AEWRs for non-range occupations. A detailed discussion of the public comments as well as further background on the 2019 NPRM, specifically related to the hourly AEWR determinations, is available in the Department's 2020 AEWR Final Rule and will not be restated here.
On September 30, 2020, USDA publicly announced its intent to cancel the planned October data collection and November publication of the Agricultural Labor Survey (ALS) and Farm Labor reports (better known as the FLS).
The 2020 AEWR Final Rule set the 2021 AEWR for field and livestock worker occupations at the 2020 AEWR rates, which were based on results from the FLS wage survey published in November 2019, and provided for those AEWRs to adjust annually, starting at the beginning of calendar year 2023, using the BLS Economic Cost Index (ECI), Wages and Salaries. For all other occupations, and for geographic areas not included in the FLS, the 2020 AEWR Final Rule set the 2021 AEWR at the statewide annual average hourly gross wage for the occupation reported by the OEWS survey or, where a statewide average hourly gross wage is not reported, the national average hourly gross wage for the occupation reported by the OEWS survey, to be adjusted annually based on the OEWS survey.
On October 28, 2020, the U.S. District Court for the Eastern District of California in
In the litigation challenging the Department's 2020 AEWR Final Rule, the court recognized that the Department has broad discretion in determining the methodology for setting the AEWR so long as the Department's approach is sufficiently explained.
As the court noted, the Department has previously stated that the FLS “is the only annually available data source that actually uses information sourced directly from [farm employers],” and its “broader geographic scope makes the FLS more consistent with both the nature of agricultural employment and the statutory intent of the H-2A program.”
Additionally, while the 2020 AEWR Final Rule would have led to higher wages for certain higher skilled workers, the rule also acknowledged that the revised methodology “may result in the AEWRs for field workers and livestock workers being set at slightly lower levels in future years than would be the case under the [2010 Rule's] methodology.”
The Department has also reviewed the policy underlying the 2020 AEWR Final Rule in light of its statutory mandate, and has determined that two major aspects of the 2020 AEWR Final Rule do not adequately protect against adverse impact: (1) The imposition of a 2-year wage freeze for field and livestock workers at a wage level based on the FLS survey published in November 2019, and (2) the use of the BLS ECI, Wages and Salaries, to annually adjust AEWRs for field and livestock workers annually thereafter. These policy decisions represent a significant departure from how minimum or prevailing wage determinations are issued to employers in other employment-based visa programs administered by the Department, and from how the Department has established the AEWR in the H-2A program for more than 30 years. The Department considers actual, current wage data to be the best source of information for determining prevailing wages, when an appropriate data source is available, and has consistently relied upon such information in determining minimum or prevailing wages in the other employment-based visa programs it administers. Using a methodology other than actual, current wage data increases the likelihood of permitting employers to pay wages that are not reflective of market wages, which undermines the Department's mandate to prevent an adverse effect on the wages of workers in the United States similarly employed.
However, as discussed above, the Department remains concerned that the use of a single AEWR for all workers in the H-2A program may adversely affect wages in certain occupations. Therefore, the Department proposes utilizing the bifurcated approach set forth in the 2020 rule that set a single AEWR based on the FLS for the vast majority of job opportunities used by employers in the H-2A program—occupational classifications for field workers and livestock workers—while shifting AEWR determinations to the OEWS survey for all other occupations for which the FLS does not adequately collect or consistently report wage data at a State or regional level (
Accordingly, the Department has determined these policies must be reconsidered and proposes revisions in this notice of proposed rulemaking (NPRM). The Department has determined that the proposals outlined below reflect an approach that allows the Department to meet its statutory mandate to ensure that workers in the United States are provided an adequate level of wage protection in their employment. The Department took into account the regulations promulgated in 2010, as well as the significant revision of the AEWR provisions in the 2020 AEWR Final Rule, in order to arrive at the approach described below. The Department believes the methodology described below is reasonable and strikes an appropriate balance under the INA.
The Department proposes to use the definition of AEWR found in the 2020 AEWR Final Rule. Because that rule has been preliminarily enjoined, and there is uncertainty as to whether that rule will be vacated prior to the issuance of a final rule, the Department seeks comment on the proposal to define the
The 2010 Final Rule defined the AEWR as “[t]he annual weighted average hourly wage for field and livestock workers (combined) in the States or regions as published annually by the U.S. Department of Agriculture (USDA) based on its quarterly wage survey.” In the 2019 NPRM, to be consistent with the Department's proposal to adjust the AEWR methodology for non-range occupations, the Department proposed to revise the definition of AEWR to include both the FLS and OEWS survey as sources for determining the AEWR and to reference the new AEWR methodology provision at § 655.120(b). The revised definition in the 2020 AEWR Final Rule clarified that the term AEWR applies to both the hourly rate for non-range occupations, as set forth in § 655.120(b), and to the monthly rate for range occupations, as set forth in § 655.211(c). Second, rather than identifying particular data sources, the revised definition stated that the AEWR is the rate that the OFLC Administrator publishes in the
In § 655.120(b), for the vast majority of H-2A job opportunities represented by six occupations comprising the field and livestock worker (combined) category within the FLS, the Department proposes to utilize the AEWR methodology set forth in the 2010 Final Rule, which set a single AEWR using the annual average gross hourly wage for field and livestock workers (combined) for the State or region, as determined by the USDA's NASS FLS report, whenever such data is available. For this occupational grouping, the Department proposes to use OEWS wage data in limited circumstances. Specifically, the AEWR would be set using OEWS wage data in circumstances where FLS wage data is unavailable or insufficient to generate a State or regional wage finding. For example, in Alaska and Puerto Rico, where the FLS is not currently conducted and, accordingly, NASS does not report wage data for field and livestock workers (combined), the Department proposes using OEWS wage data to determine the statewide (or statewide equivalent for the District of Columbia and U.S. territories)
For all other occupations, the Department proposes to use the methodology previously set forth in the 2020 AEWR Final Rule, under which the AEWR will be the statewide annual average gross hourly wage for the occupational classification, as reported by the OEWS survey, or the national annual average hourly wage for the occupational classification reported by the OEWS survey, if the OEWS survey does not report a statewide annual average gross hourly wage for the occupation.
As with the 2020 AEWR Final Rule, the Department proposes to require that if the job duties on the H-2A application (including the job order) do not fall within a single occupational classification, and the occupations involved are subject to different AEWRs, the Department will determine the applicable AEWR at the highest AEWR for the applicable occupational classifications.
Also as with the 2020 AEWR Final Rule, the Department proposes to require that the OFLC Administrator publish, at least once in each calendar year, on a date to be determined by the OFLC Administrator, an update to each AEWR via a notice in the
The Department proposes to use the average gross hourly wage rate for the field and livestock workers (combined) category from the FLS for the State or region to determine the AEWR for field and livestock worker job opportunities, when that data is available.
The FLS field and livestock workers (combined) category encompasses the vast majority of temporary agricultural job opportunities offered in the H-2A program. According to NASS, wage data reported for this category includes workers who “plant, tend, pack, and harvest field crops, fruits, vegetables, nursery and greenhouse crops, or other crops” or “tend livestock, milk cows, or care for poultry,” including those who “operate farm machinery while engaged in these activities.”
Determining AEWRs using a single gross hourly wage for this group of occupations, rather than occupation-specific AEWRs for each occupation encompassed in the field and livestock worker (combined) category, is consistent with the Department's conclusion in the 2010 Final Rule that
The Department proposes to continue using a single gross hourly AEWR applicable to all H-2A job opportunities covered by the occupations in the field and livestock category (combined) in each State, because this approach strikes a reasonable balance between the interests of employers and workers and ensures employment of foreign workers in the vast majority of H-2A job opportunities will not adversely affect agricultural workers in the United States similarly employed. Continuing to use this approach will provide continuity and a reasonable level of predictability and flexibility for employers using the H-2A program while reducing the complexities and business impacts associated with greater occupation-specific determinations, including combination of occupation determinations, on the AEWR applicable to an employer's job opportunity in the vast majority of cases. This approach also provides continuity and a reasonable level of predictability and protection to workers who may move between the occupations in the field and livestock category (combined). In addition, as each of the field and livestock occupations encompass a broad variety of duties, resulting in areas of overlap between the occupations, a worker's duties within a single workday may fall under multiple field and livestock occupations. The proposed approach helps both employers and workers by simplifying the process each uses to ensure that work is correctly compensated. Use of a single AEWR in each State applicable to this occupational grouping will minimize recordkeeping burdens, especially in cases where workers are needed to perform a variety of field and livestock duties, as employers will be required to pay such workers the same wage rate for all of those duties.
The Department proposes to use the FLS field and livestock worker (combined) wage data as the primary source for determining the AEWRs for this grouping of six occupations for several reasons. As noted in prior rulemaking, the FLS is the best available information for determining the AEWRs because it is the only wage survey that collects data from farm and ranch employers.
In addition, the Department considers the broad geographic scope of the survey an advantage of the FLS. The FLS consistently collects sufficient data to generate a wage finding for field and livestock workers (combined) in each State or region surveyed, making it a reliable source of wage data year to year. As explained in the 2019 NPRM, the geographic scope of the FLS, covering California, Florida, and Hawaii, and 15 multistate groupings for other States, and the statewide and regional wages issued “provide[s] protection against wage depression that is most likely to occur in particular local areas where there is a significant influx of foreign workers.”
The Department proposes using the OEWS wage data to determine a statewide AEWR for field and livestock workers in the event the FLS cannot report wages to establish a statewide AEWR for the field and livestock workers (combined) category. By using the FLS report as the sole source for establishing AEWRs under the 2010 final rule's methodology, the Department cannot establish an AEWR in all geographic locations where employers may seek to employ H-2A workers (
Although the Department generally prefers to establish AEWRs based on the FLS for this group of occupations for the reasons discussed above, the OEWS survey would become the best available source of wage data to establish AEWRs for field and livestock workers (combined) if the FLS is not available. OEWS survey data is the only other comprehensive and statistically valid set of wage data collected from employers engaged in agricultural activities, tailored to geographic areas and occupations common in the H-2A program, and is most consistent with the occupation-based wage collection of the FLS. Within the agricultural sector of the U.S. economy, the OEWS survey collects employment and gross hourly wage data from employer establishments that support farm production activities. Although they do not represent fixed-site farms and ranches, these establishments employ workers engaged in similar agricultural labor or services as those workers who are directly employed by farms and ranches. In addition, these types of employer establishments (
Finally, to further address potential data gaps, the Department proposes that in the event neither the FLS nor the OEWS survey report a statewide annual average hourly gross wage for field and livestock workers (combined) in a particular State, the District of Columbia, or U.S. Territory, the AEWR will be the national annual average hourly gross wage for field and livestock workers (combined) in that State (or equivalent district/territory), as reported by the OEWS survey. Given the anticipated scenarios in which such a data gap may occur, the Department does not propose to use the FLS's national data to establish the AEWR for field and livestock workers (combined) in the event a statewide annual average hourly gross wage for those workers in a particular State is unavailable. Whenever the FLS has published, it consistently reports annual average hourly gross wage findings for field and livestock workers (combined) in 15 multistate and three single-State regions, covering 49 States. The Department anticipates that a national rate would be needed for field and livestock workers (combined) in these 49 States only in the unexpected event the FLS is broadly not available (
For job opportunities that do not fall within the FLS field and livestock workers (combined) category, the Department proposes adopting the OEWS-based, occupation-specific AEWR methodology explained in the 2020 AEWR Final Rule. Under this methodology, the AEWR for all occupations other than field and livestock workers will be the statewide annual average hourly wage for the occupational classification, as reported by the OEWS survey. If the OEWS survey does not report a statewide annual average hourly wage for the SOC, the AEWR for that State will be the national annual average hourly wage for the SOC, as reported by the OEWS survey.
The Department is proposing to utilize the OEWS-based methodology for these occupations for the reasons explained below and in the 2020 AEWR Final Rule.
Since 2014, the FLS has collected data by SOC—the same taxonomy that is
The OEWS survey is a reliable and comprehensive wage survey that consistently produces annual average wages for nearly all SOC outside of the field and livestock workers occupational category. The OEWS survey is among the largest ongoing statistical survey programs of the Federal Government, producing wage estimates for over 800 occupations, and it is used as the primary wage source for prevailing wage determinations in the H-2B temporary non-agricultural labor certification program, as well as other nonimmigrant and immigrant programs. The OEWS program surveys approximately 200,000 establishments every 6 months and over a 3-year period collects the full sample of 1.2 million establishments, accounting for approximately 57 percent of employment in the United States.
Similarly to state or regional FLS-based AEWRs for field and livestock workers, the use of an OEWS-based statewide AEWR addresses the Department's concern that the potential for localized wage depression is more pronounced in the H-2A program than in the H-2B program due to both the economic position of agricultural workers and the fact that the H-2A program is not subject to a statutory cap, which allows an unlimited number of nonimmigrant workers to enter a given local area.
Shifting AEWR determinations to the OEWS survey for those occupations for which the FLS does not report statistically reliable wage data at a State or regional level also addresses the Department's concern that use of the combined field and livestock worker FLS data to determine the AEWR for all occupations may have an adverse effect on the wages of workers in higher paid agricultural occupations, including truck drivers, farm supervisors and managers, construction workers, and many occupations primarily in contract employment, because OEWS data will provide an occupation-specific wage that does not include data for lower wage occupations and because OEWS data includes farm labor contractor wage data. For example, a worker performing construction labor on a farm under the H-2A program in Ohio must currently be paid at least the AEWR of $15.31 per hour because the worker's wage is determined based on the field and livestock workers (combined) wage, which reflects neither wages paid to agricultural workers engaged in duties typically performed by a construction worker nor wages of workers who perform contract work, which an agricultural construction laborer in the H-2A program is likely to perform. In contrast, if the same construction worker performed identical job duties at a location other than a farm and, therefore, fell under the H-2B program, the required prevailing wage rate based on OEWS data would be approximately $22.73 per hour.
The Department proposes to require that employers pay the highest applicable wage if the job opportunity can be classified within more than one occupation, when those occupations are subject to different AEWRs, as proposed in the 2019 NPRM and adopted in the 2020 AEWR Final Rule.
This requirement would address scenarios in which the combination of duties an employer requires involves different AEWRs. The Department best protects against adverse effect by setting the AEWR applicable to the job opportunity at the highest of the applicable AEWRs. Under this proposal, if the job duties on the H-2A application (including the job order) do not fall within the field and livestock worker (combined) occupational grouping, the Department will determine the applicable AEWR based on the highest AEWR for all applicable occupational classifications. In the event an employer's job opportunity requires the performance of duties encompassed by two or more distinct occupational classifications subject to different AEWRs (
The proposal, discussed above, to determine a single statewide AEWR for all job opportunities in the field and livestock workers (combined) occupational grouping will minimize use of this provision because a job opportunity involving a combination of occupations that are all encompassed within the field and livestock workers (combined) will be subject to a single AEWR, regardless of which of the particular SOCs applicable to the field and livestock workers (combined) occupational category may be involved. For example, a job opportunity involving duties properly classified under SOC 45-2091 (Agricultural Equipment Operators) and duties properly classified under SOC 45-2093 (Farmworkers, Farm, Ranch, and Aquacultural Animals) would be subject only to the field and livestock workers (combined) AEWR and the provision regarding combination of occupations with different AEWRs would not be relevant, as a single AEWR applies to the job opportunity.
Under this proposal, the SWA will continue to review job orders—and SOCs therein—in the first instance and determine the appropriate SOC code for the job opportunity when it reviews an employer's job order for compliance with 20 CFR part 653, subpart F, and 20 CFR part 655, subpart B. The SWA will enter the SOC code assigned to the employer's job opportunity in Section I, Items 4 and 5, of the Form ETA-790,
Generally, a job opportunity corresponds with a single SOC code if all of the duties fall within a single occupation and the qualifications, requirements, and other factors are consistent with that occupation. For example, a job opportunity for workers to solely perform hand harvesting activities would match with a single occupation, SOC code 45-2092 (Farmworkers and Laborers, Crop, Nursery, and Greenhouse), absent factors indicating other SOCs (
As explained in the 2020 AEWR Final Rule, a job opportunity involving driving duties may be properly classified under SOC 45-2091 (Agricultural Equipment Operators), SOC 53-3032 (Heavy and Tractor-Trailer Truck Drivers), or a combination of the two, depending on the duties described in the employer's job order. A job opportunity for workers to drive tractors and other mechanized, electrically powered or motor-driven equipment on farms to plant, cultivate, and harvest a crop (including driving tractors in and out of fields carrying bins and driving forklifts to transfer and stack bins of full product onto trailers), which requires 12 months of experience operating such equipment, would be properly classified under SOC 45-2091 and subject to the field and livestock worker (combined) FLS-based AEWR. In contrast, a job opportunity for workers to drive semi tractor-trailer trucks to and from specified destinations within an area of intended employment (including maneuvering trucks into and out of loading and unloading positions as well as driving in both on-road (paved) and off-road conditions), which requires 12 months of experience operating such equipment and a valid Class A CDL or equivalent, would be properly classified under SOC 53-3032 and subject to the OEWS-based, occupation-specific AEWR. In the event an employer seeks
As noted in the 2019 NPRM and 2020 AEWR Final Rule, determining the appropriate occupational classification is an important component of the Department's decision to move to occupation-specific wages for job opportunities not classifiable within the field and livestock (combined) occupational grouping. Use of the highest applicable wage in these cases reduces the potential for employers to misclassify workers than if the Department permitted employers to pay different AEWRs for job duties falling within different occupational classifications on a single
As with the 2020 AEWR Rule, the Department proposes to require that the OFLC Administrator publish, at least once in each calendar year, on a date to be determined by the OFLC Administrator, an update to each AEWR as a notice in the
The Department anticipates that only one of the two AEWR adjustment notifications may impact an employer's wage obligations during the work contract period. Given the Department's proposal to determine the AEWR for the majority of H-2A job opportunities using the field and livestock worker (combined) wage reported by FLS, most H-2A certifications would be subject only to the FLS-based AEWR adjustment in January. Further, due to the seasonal nature of temporary agricultural labor or services, many H-2A employment periods begin and end between FLS-based AEWR adjustments. Only in the circumstance in which a job opportunity constitutes a combination of occupations that involves both an FLS-based AEWR and an OEWS-based AEWR would two AEWR adjustment notices potentially impact an employer's wage obligations.
In proposing to annually adjust the AEWRs based on the annual publication of new FLS and OEWS data, the Department is proposing not to use the ECI to adjust AEWRs as the 2020 AEWR Final Rule had done, and is not contemplating use of a similar index for several reasons. First, the FLS—the Department's preferred wage source for establishing the AEWR for field and livestock workers—is again available, eliminating the Department's primary impetus for electing to use the ECI to adjust AEWRs in future years under the 2020 AEWR Final Rule. Second, the Department proposes to leverage OEWS survey data for this group of occupations instead of using of the ECI, as OEWS data is more consistent with the FLS data category used to set the AEWRs. As noted above, BLS now will provide the Department wage data for field and livestock workers (combined), based on the OEWS survey, to determine the AEWR for these occupations in each State or region where the FLS is not available or does not report wage data for workers in a particular geographic area. In those cases where the FLS is not available, the Department believes that using the OEWS survey rather than the ECI best allows the Department to prevent adverse effect as required under the INA because the OEWS survey provides data more specifically tailored to geographic areas and occupations common in the H-2A program and is more consistent with the FLS. In particular, though the ECI provides a stable measure of annual increases in the wages of private sector workers generally, the ECI does not report the annual change in wages of field and livestock workers specifically, and does not provide wage data for agricultural workers in particular geographic areas. Both the FLS and OEWS survey provide data more specifically tailored to U.S. agricultural workers and the States and regions where these workers are employed, making these sources more effective in ensuring that the temporary employment of foreign workers in field and livestock job opportunities will not adversely affect the wages of workers in the United States similarly employed. In addition, OEWS data includes wage data from farm labor contractors, who increasingly provide labor or services to growers both in the predominant field and livestock workers (combined) occupational group and in occupations that are less common in the H-2A program.
While the Department remains sensitive to concerns of employers regarding increases in the FLS-based AEWRs, the Department believes, for the reasons discussed above, that the approach proposed in this rulemaking best allows the Department to fulfill its statutory mandate. The concerns about AEWR increases also appear overstated when considering long-term historical trends in agricultural worker wages and the agricultural labor market. Long-term data on growth in the AEWRs shows that with the exception of the AEWRs for Hawaii, Oregon, and Washington, growth in the AEWRs from 2010 through 2019 was lower than growth from 2000 to 2010 and substantially lower in many States. Considering top user States as examples, the total AEWR increase from 2010 through 2019 compared to 2000 through 2010 was lower in four of the five top States.
Moreover, despite higher-than-average wage increases in some recent years, farmworkers remain among the lowest paid workers in the United States. The USDA Economic Research Service (ERS) recently reported that the gap between farmworker and non-farmworker wages
AEWR increases above historical averages in recent years also are consistent with a growing agricultural labor shortage that is evidenced by an exponential increase in use of the H-2A program since 2015, USDA data, and recurrent statements by employers and associations that it is increasingly difficult to find U.S. workers for their job opportunities.
The Department invites comments on all aspects of the proposed AEWR methodology. Because the 2020 AEWR Final Rule has been preliminarily enjoined, and there is uncertainty as to whether that rule will be vacated prior to the issuance of a final rule, the Department seeks comment on all proposals to mirror provisions found in the 2020 rule. In addition, the Department is interested in comments on the use of the FLS and OEWS survey and the conditions under which each survey should be used to establish the AEWR. For example, the Department is interested in comments on the continued use of a single statewide hourly AEWR for field and livestock worker occupations (combined), rather than occupation-specific statewide AEWRs for each occupation comprising the field and livestock workers (combined) category covered by the FLS. In addition, the Department is interested in comments on use of the OEWS survey to establish the AEWR for field and livestock worker occupations (combined) in the absence of the FLS or where the FLS does not report a wage finding for these occupations in a particular geographic area, as well as the use of the OEWS to establish AEWRs for all job opportunities that do not fall within the FLS field and livestock workers (combined) category. Commenters may address the existence or role of the AEWR, but the Department encourages commenters to focus on the methodology used to determine the AEWR. The Department is not considering eliminating the AEWR or changing the AEWR's role in determinations of an employer's required minimum wage rate in the H-2A program, for reasons explained at length in prior rulemakings, including in the 2020 AEWR Final Rule and 2010 Final Rule.
Under E.O. 12866, the OMB's Office of Information and Regulatory Affairs (OIRA) determines whether a regulatory action is significant and, therefore, subject to the requirements of the E.O. and review by OMB. 58 FR 51735. Section 3(f) of E.O. 12866 defines a “significant regulatory action” as an action that is likely to result in a rule that: (1) Has an annual effect on the economy of $100 million or more, or adversely affects in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities (also referred to as economically significant); (2) creates serious inconsistency or otherwise interferes with an action taken or planned by another agency; (3) materially alters the budgetary impacts of entitlement grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the E.O.
E.O. 13563 directs agencies to propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; the regulation is tailored to impose the least burden on society, consistent with achieving the regulatory objectives; and in choosing among alternative regulatory approaches, the agency has selected those approaches that maximize net benefits. E.O. 13563 recognizes that some benefits are difficult to quantify and provides that, where appropriate and permitted by law, agencies may consider and discuss qualitative values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts.
Section VI.A.1 describes the need for the proposed rule, and section VI.A.2 describes the process used to estimate the costs of the rule and the general inputs used, such as wages and number of affected entities. Section VI.A.3 explains how the provisions of the proposed rule will result in quantifiable costs and transfers and presents the calculations the Department used to estimate them. In addition, section
The Department estimates that the proposed rule will result in costs and transfers. As shown in Exhibit 1, the proposed rule is expected to have an annualized cost of $0.064 million and a total 10-year quantifiable cost of $0.45 million at a discount rate of 7 percent.
The total cost of the proposed rule is associated with rule familiarization. Transfers are the results of changes to the AEWR methodology and, more specifically, in H-2A job opportunities where the FLS does not adequately collect or consistently report wage data at a State or regional level. See the costs and transfers subsections of section VI.A.3 (Subject-by-Subject Analysis) below for a detailed explanation.
The Department was unable to quantify some costs and benefits of the proposed rule. The Department describes them qualitatively in section VI.A.3 (Subject-by-Subject Analysis) and seek input from the public to help us to reasonably quantify them in the final rule.
As discussed above, court-issued injunctions prevented USDA from suspending FLS data collection for calendar year 2020 and prevented the Department from further implementing the 2020 AEWR Final Rule on December 23, 2020, resulting in a return to the 2010 Final Rule AEWR methodology. Under the 2010 Final Rule, the FLS wage data is used to determine the AEWRs for all H-2A job opportunities. However, the Department remains concerned that the use of a single AEWR for all job opportunities in the H-2A program may adversely affect the wages of workers in the United States similarly employed in certain occupations where the FLS does not adequately collect or consistently report wage data at a State or regional level. Therefore, the Department proposes using the bifurcated approach set forth in the 2020 AEWR Final Rule that set a single AEWR based on the FLS for the vast majority of job opportunities used by employers in the H-2A program—six occupational classifications covering field workers and livestock workers—while shifting AEWR determinations to the OEWS survey for all other occupations for which the FLS does not adequately collect or consistently report wage data at a State or regional level (
The Department has also determined that two major aspects of the 2020 AEWR Final Rule are inconsistent with the Department's statutory mandate to protect the wages of workers in the United States similarly employed against adverse effect: (1) The imposition of a 2-year wage freeze for field and livestock workers at a wage level based on the FLS published in November 2019, and (2) using the BLS ECI solely to adjust AEWRs annually thereafter. Accordingly, the Department has determined these policies must be reconsidered and proposes revisions in this NPRM that better meet the statute's twin goals to ensure that employers can access legal agricultural labor while maintaining an adequate level of wage protection for workers in the United States similarly employed.
The Department estimated the costs and transfers of the proposed rule relative to the existing baseline (
In accordance with the regulatory analysis guidance articulated in OMB's Circular A-4 and consistent with the Department's practices in previous rulemakings, this regulatory analysis focuses on the likely consequences of the proposed rule (
Exhibit 2 presents the number of affected entities that are expected to be impacted by the proposed rule. The average number of affected entities is calculated using OFLC H-2A labor certification data from 2016 through 2020. The Department provides this estimate and uses it to estimate the costs of the proposed rule.
The Department estimated growth rates for applications processed and certified H-2A workers based on fiscal year (FY) 2012-2020 H-2A program data, presented in Exhibit 3.
The geometric growth rate for certified H-2A workers using the program data in Exhibit 3 is calculated as 15.8 percent. This growth rate, applied to the analysis timeframe of 2022 to 2031, would result in more H-2A certified workers than projected employment of workers in the relevant H-2A SOC codes by BLS.
The Department presents the estimated average number of applicants and the change in burden hours required for rule familiarization in section VI.A.3 (Subject-by-Subject Analysis).
In section VI.A.3 (Subject-by-Subject Analysis), the Department presents the costs, including labor, associated with the implementation of the provisions of the proposed rule. Exhibit 4 presents the hourly compensation rates for the occupational categories expected to experience a change in the number of hours necessary to comply with the proposed rule. The Department used the mean hourly wage rate for private sector Human Resources Specialists (SOC code 13-1071).
The Department's analysis below covers the rule familiarization costs, unquantifiable costs, transfers, and qualitative benefits of the proposed rule. In accordance with Circular A-4, the Department considers transfers as payments from one group to another that do not affect total resources available to society. This proposed rule includes the cost of rule familiarization and transfers associated with the AEWR wage structure from the proposed rule. The Department also described efficiency impacts, payroll and other transition costs, and the distributional impacts that could result from the proposed rule.
The following section describes the costs of the proposed rule.
When the proposed rule takes effect, H-2A employers will need to familiarize themselves with the new regulations. Consequently, this will impose a one-time cost in the first year. To estimate the first-year cost of rule familiarization, the Department applied the growth rate of H-2A applications (3.1 percent) to the average number of annual unique H-2A applicants from FY2016 to FY2020 (8,204) to determine the number of unique recurring H-2A applicants impacted in the first year the rule is in effect. The number of unique H-2A applicants (8,459) was multiplied by the estimated amount of time required to review the rule (1 hour).
The proposed wage methodology is designed to achieve the statute's twin goals of providing employers with an adequate legal supply of agricultural labor and protecting the wages and working conditions of workers in the United States similarly employed. The AEWR provides a floor below which wages cannot be negotiated, thereby strengthening the ability of this particularly vulnerable labor force to negotiate over wages with growers who are in a stronger economic and financial position in contractual negotiations for employment. In the case of perfect competition, if the proposed rule results in a wage floor above competitive market wages, it will produce some deadweight loss (DWL). In the case of market power, if the proposed rule reduces a wage floor below competitive market wages, it may produce some DWL if employers exercise market power, but otherwise will not. Setting minimum wage rates has implications on economic efficiency that are complicated and difficult to assess because, in certain combinations of SOC codes and geographies, the gross average hourly wage rates used to determine the AEWRs annually for each State under this proposed rule may act as a wage floor that is above competitive market equilibrium wages for certain job opportunities whereas in others imperfect competition may suppress domestic labor markets at quantities below the competitive market equilibrium.
These two impacts are dependent on local labor market conditions, the nature of the agricultural work to be performed and wage payment structure (
The Department is unable to quantify these efficiency impacts because it does not have data on all local labor market conditions for all occupations, data on foreign labor supply curves, and how these interact with employer demand. The Department seeks public comment on the DWL or other labor market inefficiencies resulting from the proposed rule. The efficiency impact of the proposed rule is limited only to the 2 percent of H-2A workers whose wages the proposed rule will affect, while there would be no change to the DWL for the other 98 percent of H-2A workers.
The Department is unable to quantify the DWL without data on the equilibrium wage arising from each locality and occupational code's labor demand and combined immigrant foreign worker and domestic U.S. worker labor supply curves. The below paragraphs qualitatively discuss changes in the AEWR wages that may result in some DWL. In the analysis of wage transfers, only 2 percent of workers would be employed in H-2A job opportunities where the AEWR will change under the proposed rule from the current baseline. For the 98 percent of workers employed in H-2A job opportunities under the six occupational classifications covering field workers and livestock workers reported by the FLS with no change to wages, the proposed rule does not change the DWL and existing labor market efficiencies or inefficiencies from the current baseline.
In some cases the baseline AEWR creates a DWL by setting a minimum wage above the market equilibrium, because the hourly wage represents an annual weighted average across six occupational classifications covering a State or multistate region. Under the proposed rule when the AEWR is annually adjusted, the DWL may increase when the AEWR covering the State or multistate region also increases and remains above market equilibrium. Under the proposed rule this may occur for some, but not all, occupations covering field and livestock workers where the AEWR is determined using the annual weighted statewide gross hourly wage based on the OEWS survey. The OEWS survey does not collect wages for fixed-site farms and ranches but does include data for establishments that support farm production activities (
When employers have market power in the labor market and the AEWR is set below the domestic competitive market equilibrium wage, then there may be a DWL in the associated U.S. labor market. In the H-2A program there are
When labor markets are competitive, an AEWR set below the U.S.-only labor market equilibrium wage rate in absence of foreign labor, but above the market equilibrium, with both domestic and foreign labor, results in DWL for the United States because it reduces domestic employer surplus more than it increases domestic worker surplus. In a competitive labor market with no AEWR, there will be no DWL. Figure 3 illustrates this in a simplified case where domestic and foreign agricultural workers are perfect substitutes, and an infinite supply of foreign agricultural workers are willing to work at wage rate W
Setting an AEWR above the competitive labor market equilibrium wage creates a DWL. Working from the same assumptions as Figure 3, Figure 4 illustrates that setting AEWR
The proposed rule will result in new AEWR wage rates for some SOC code and geographic area combinations compared to the baseline. Companies employing H-2A workers will need to update payrolls to account for the new AEWR wage rates. The Department does not quantify this cost and expects it to be
The proposed rule may also result in other transition costs to some employers for recruitment and training if they hire U.S. workers for the jobs that are performed by H-2A workers. The Department is not able to quantify the transition costs and seeks public input on the potential transition expenses such as recruitment and training.
The following section describes the transfers of the proposed rule related to the revisions to the wage structure. The Department considers transfers as payments from one group to another that do not affect total resources available to society. The transfers measured in this analysis are wage transfers from U.S. employers to H-2A workers. H-2A workers are migrant workers who will spend some of their earnings on consumption goods in the U.S. economy but likely send a large fraction of their earnings to their home countries.
Section 218(a)(1) of the INA, 8 U.S.C. 1188(a)(1), provides that an H-2A worker is admissible only if the Secretary of Labor determines that “there are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services involved in the petition, and the employment of the alien in such labor or services will not adversely affect the wages and working conditions of workers in the United States similarly employed.” In 20 CFR 655.120(a), the Department currently meets this statutory requirement, in part, by requiring the employer to offer, advertise in its recruitment, and pay a wage that is the highest of the AEWR, the prevailing wage, the agreed-upon collective bargaining wage, the Federal minimum wage, or the State minimum wage. As discussed below, the Department's proposed rule maintains this general wage-setting structure but proposes to modify the methodology by which it establishes the AEWRs.
Currently, pursuant to the 2010 Final Rule, the AEWR for each State or region is published annually as a single average hourly gross wage that is set using the field and livestock workers (combined) data from the FLS, which is conducted by the USDA's NASS. This methodology produces a single AEWR for all agricultural workers in a State or region, without regard to occupational classification, and no AEWR in geographic areas not surveyed by NASS (
Under this proposed rule the Department would modify the AEWR methodology so that it is based on data more specific to the agricultural occupation of workers in the United States similarly employed. Both the FLS and OEWS survey provide data tailored to U.S. agricultural workers and the States and regions where these workers are employed, making these sources effective in ensuring that the temporary employment of foreign workers in field and livestock job opportunities will not adversely affect the wages of workers in the United States similarly employed. In addition, OEWS data includes employment and gross hourly wage data from employer establishments that support farm production activities. Although they do not represent fixed-site farms and ranches, these establishments employ workers engaged in similar agricultural labor or services as those workers who are directly employed by farms and ranches.
As explained above, these types of employer establishments (
Under this proposed rule the Department would use the AEWR methodology set forth in the 2010 Final Rule,
If the annual gross average hourly wage in the State or region is not reported by the FLS, the Department proposes to set the annual AEWR for these occupations (45-2041, 45-2091, 45-2092, 45-2093, 53-7064, 45-2099) using the statewide gross average hourly wage rate reported by the OEWS survey. If the annual statewide gross average hourly wage is not reported by the OEWS survey, the Department proposes to set the AEWR for these occupations by using the annual national gross average hourly wage as reported by the OEWS survey. To produce an equivalent AEWR for field and livestock worker job opportunities using the OEWS survey under the proposed rule, BLS will compute an annual weighted average hourly wage using the establishment data reported for these occupations at the State and national level.
For all other SOC codes the Department proposes to annually set the AEWR for agricultural services or labor based on the statewide annual average hourly wage reported by the OEWS survey. If the OEWS survey does not report a statewide annual average hourly wage for the SOC code, the Department proposes to set the AEWR based on the national/annual average hourly wage reported by the OEWS survey.
To estimate wage impacts the Department uses FY 2020 through FY 2021 OFLC certification data. To include the most recent H-2A certification data (
To produce a combined field and livestock AEWR using the OEWS, BLS provided the Department with the weighted average hourly wage for 45-2041, 45-2091, 45-2092, 45-2093, 53-7064, 45-2099 occupations at the State and national level using the OEWS May 2020 survey. The OEWS May 2020
The Department calculated the impact on wages that would occur from the implementation of the revised AEWR methodology. For each H-2A certification in FY 2020 through FY 2021, the Department calculated total wages under the current AEWR baseline,
The Department provides two examples illustrating the above wage calculation methodology for H-2A certifications. Exhibits 5 and 6 illustrate how total wages are calculated for the proposed rule and baseline. The Department multiplied the number of certified workers by the number of hours worked each day, the number of days in a year that the employees worked, and the annual average hourly gross State AEWR wage for SOC codes set by the AEWR. In the example provided in Exhibit 5, for agricultural equipment operators (SOC 45-2092, Farmworkers and Laborers, Crop, Nursery, and Greenhouse) the FLS AEWR wage is not available in Alaska and Puerto Rico, so the AEWR is set by the weighted average OEWS wage. For SOC codes set by the OEWS survey, the annual average hourly gross wage from the state-level OEWS-based wage for the appropriate SOC code and worksite state is used, or the national OEWS-based wage is used if the State-level wage is not available.
After the total wages for the proposed rule were determined, the wage calculation under the baseline AEWR was calculated. The number of workers certified is multiplied by the number of hours worked each day, the number of days in a year that the employees worked, and the AEWR baseline for the year(s) in which the work occurred (Exhibit 6 provides an example of the calculation of the AEWR baseline for the same case as in Exhibit 5). In the example provided in Exhibit 6 for SOC code 45-2092, the AEWR baseline wage is not available, so the baseline wage is set by the public OEWS State wage.
The changes in wages constitute a transfer from H-2A employers to H-2A employees for SOC codes set by the OEWS survey. For SOC codes set by the FLS AEWR there is no wage impact, unless the worksite location is in Alaska or Puerto Rico where no AEWR currently exists because the FLS does not collect wage data covering these geographic areas.
The estimated transfers are likely on the high end of potential transfers. The Department does not make any adjustment to account for H-2A certifications that are made but do not end up in jobs with realized wages. In FY 2020, according to State Department data, there were 213,394 H-2A visas issued.
The increase (or decrease) in the wage rates for H-2A workers also represents a wage transfer from employers to corresponding workers performing similar work for the employer, not just the H-2A workers employed under the work contract. The higher (or lower) wages paid to H-2A workers associated with the proposed rule's methodology for determining the AEWRs will also result in wage changes to corresponding workers. However, the Department does not collect or possess sufficient information about the number of corresponding workers affected and their wage payment structures to reasonably measure the transfers to corresponding workers. Employers are not required to provide the Department, on any application or report, the estimated or actual total number of workers in corresponding employment. Although each employer, as a condition of being granted a temporary labor certification, must provide the Department with a report of its initial recruitment efforts for U.S. workers, including the name and contact information of each U.S. worker who applied or was referred to the job, such information typically reflects only a very small portion of the total recruitment period, which runs through 50 percent of the certified work contract period, and does not account for any other workers who may be considered in corresponding employment and already working for the employer. And finally, the Department is also not able to estimate how much of the wage transfer stays in the U.S. economy. It is likely that a substantial portion of the wage transfer is from U.S. employers to the home economy of H-2A workers. Nonimmigrant foreign H-2A workers may spend wages earned in the U.S., spend the money outside of the U.S., send the money outside of the U.S., or some combination. The Department invites comments regarding how these wage transfer impacts can be calculated.
The proposed rule makes an important update to the AEWR to ensure that it protects U.S. workers in occupations where the existing wage methodology may adversely affect wages in certain occupations where the FLS does not adequately collect or consistently report wage data at a State or regional level (
The AEWR is the rate that the Department has determined is necessary to ensure the employment of H-2A foreign workers will not have an adverse effect on the wages of agricultural workers in the United States similarly employed. A more accurate AEWR for workers in occupations where the FLS is inadequate will guard against the potential for the entry of H-2A foreign workers to adversely affect the wages and working conditions of workers in the United States similarly employed in these occupations. The potential for the employment of foreign workers to adversely affect the wages of U.S. workers is heightened in the H-2A program because the H-2A program is not subject to a statutory cap on the number of foreign workers who may be admitted to work in agricultural jobs. Consequently, concerns about wage depression from the employment of foreign workers are particularly acute because access to an unlimited number of foreign workers in a particular labor market and occupation could cause the prevailing wage of workers in the United States similarly employed to stagnate or decrease.
Addressing the potential adverse effect that the employment of temporary foreign workers may have on the wages of agricultural workers in the United States similarly employed is particularly important because U.S. agricultural workers are, in many cases, especially susceptible to adverse effects caused by the employment of temporary foreign workers. As discussed in prior rulemakings, the Department continues to hold the view that “U.S. agricultural workers need protection from potential adverse effects of the use of foreign temporary workers, because they generally comprise an especially vulnerable population whose low educational attainment, low skills, low rates of unionization and high rates of unemployment leave them with few alternatives in the non-farm labor market.”
To assess the impact of the proposed rule on equity the Department used Current Population Survey (CPS) data from BLS
Exhibit 8 summarizes the estimated total costs and transfers of the proposed rule over the 10-year analysis period. The Department estimates the annualized costs of the proposed rule at $0.19 million and the annualized transfers (from H-2A employers to employees) at $30.17 million, at a discount rate of 7-percent.
The Department considered two alternatives to the proposal of using the FLS-based field and livestock worker (combined) average gross hourly wage, where USDA reports such as wage, as the sole source for establishing the AEWR in job opportunities classified under one of the following SOCs:
For each alternative, job opportunities classified under any other SOC will have the AEWR set using the same methodology in the proposed rule: The AEWR for each occupation would be the statewide annual average hourly gross wage for that occupation as reported by the OEWS survey. If the statewide wage is not available, the AEWR would be set by the national annual average hourly wage for that occupation as reported by the OEWS survey.
Under the first regulatory alternative, the Department considered setting the AEWR for job opportunities classified under SOCs 45-2041, 45-2091, 45-2092, 45-2093, 53-7064, and 45-2099, using the
The total impact of the first regulatory alternative was calculated using the methodology described to calculate proposed wage impacts using FY 2020 to FY 2021 certification data. The Department estimated average annual undiscounted transfers of $103.30 million. The total transfer over the 10-year period was estimated at $1.03 billion undiscounted, or $890.12 million and $741.88 million at discount rates of 3 and 7 percent, respectively. The annualized transfer over the 10-year period was $104.35 million and $105.63 million at discount rates of 3 and 7 percent, respectively.
Under the second regulatory alternative, the Department would set the AEWR using
Exhibit 9 summarizes the estimated transfers associated with the three considered revised wage structures over the 10-year analysis period. Transfers under the proposal and the first regulatory alternative are transfers from H-2A employers to H-2A employees and transfers under the second alternative are transfers from H-2A employees to H-2A employers.
The Department prefers the chosen approach of the proposed rule because it allows specific OEWS wages for workers in higher paid agricultural occupations, such as supervisors of farmworkers and construction laborers on farms while maintaining the use of FLS data for occupations with the majority of H-2A workers. As the Department has stated previously, the FLS, which surveys directly hired agricultural workers, is the best source of wage data to set AEWRs for the vast majority of H-2A occupations. This is in part because the FLS is a more comprehensive source of farmworker wage date than the OEWS survey. The chosen approach also minimizes transfers compared to the two alternatives, and ensures greater stability in the wage obligations of employers by determining AEWRs, including annual adjustments, using the data source that best reflects the wages of workers in the United States similarly employed.
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601
The RFA defines a “small entity” as a (1) small not-for-profit organization, (2) small governmental jurisdiction, or (3) small business. The Department used the entity size standards defined by the Small Business Administration (SBA), in effect as of August 19, 2019, to classify entities as small.
The Department collected employment and annual revenue data from the business information provider Data Axle and merged those data into the H-2A disclosure data for FY 2020 and FY 2021. This process allowed the Department to identify the number and type of small entities in the H-2A disclosure data as well as their annual revenues. The Department determined the number of unique employers in the FY 2020 and FY 2021 certification data based on the employer name and city. The Department identified 9,927 unique employers (excluding labor contractors). Of those 9,927 employers, the Department was able to obtain data matches of revenue and employees for 2,615 H-2A employers in the FY 2020 and FY 2021 certification data. Of those 2,615 employers, the Department determined that 2,105 were small (80.5 percent).
To provide clarity on the agricultural industries impacted by this regulation, Exhibit 10 shows the number of unique H-2A small entities employers with certifications in the FY 2020 and FY 2021 certification data within each NAICS code at the 6-digit level.
The Department has estimated the incremental costs for small entities from the baseline (
The Department estimates that small entities not classified as H-2ALCs, 1,946 unique small entities,
In addition to the cost of rule familiarization above, each small entity will have an increase in the wage costs due to the revisions to the wage structure. To estimate the wage impact for each small entity we followed the methodology presented in the E.O. 12866 section. For each certification of a small entity the Department calculated total wage impacts of the proposed rule in CY 2020 and CY 2021. The Department estimates the total annualized cost at a discount rate of 7 percent is $4,347 on average.
The Department determined the proportion of each small entity's total revenue that would be impacted by the costs of the proposed rule to determine if the proposed rule would have a significant and substantial impact on small entities. The cost impacts included estimated first year costs and the wage impact introduced by the proposed rule. The Department used a total cost estimate of 3 percent of revenue as the threshold for a significant individual impact and set a total of 15 percent of small entities incurring a significant impact as the threshold for a substantial impact on small entities.
A threshold of 3 percent of revenues has been used in prior rulemakings for the definition of significant economic impact.
Exhibit 11 provides a breakdown of small entities by the proportion of revenue affected by the costs of the proposed rule. Of the 2,085 unique small entities with revenue data in the FY 2020 and FY 2021 certification data, 1.3 percent of employers had more than 3 percent of their total revenue impacted in the first year. Based on the findings presented in Exhibit 11, the proposed rule does not have a significant economic impact on a substantial number of small H-2A employers.
The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501,
The Unfunded Mandates Reform Act of 1995 (UMRA) is intended, among other things, to curb the practice of imposing unfunded Federal mandates on State, local, and tribal governments. Title II of UMRA requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in a $100 million or more expenditure (adjusted annually for inflation) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector. The inflation-adjusted value equivalent of $100 million in 1995 adjusted for inflation to 2019 levels by the Consumer Price Index for All Urban Consumers (CPI-U) is approximately $168 million based on the Consumer Price Index for All Urban Consumers.
This proposed rule does not result in unfunded mandates for the public or private sector because private employers” participation in the program is voluntary, and State governments are reimbursed for performing activities required under the program. The requirements of Title II of the UMRA, therefore, do not apply, and the Department has not prepared a statement under the UMRA.
This proposed rule would 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 section 6 of E.O. 13132, it is determined that this proposed rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.
This proposed rule meets the applicable standards set forth in sections 3(a) and 3(b)(2) of E.O. 12988.
This proposed rule does not have “tribal implications” because 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. Accordingly, E.O. 13175, Consultation and Coordination with Indian Tribal Governments, requires no further agency action or analysis.
Administrative practice and procedure, Employment, Employment and training, Enforcement, Foreign workers, Forest and forest products, Fraud, Health professions, Immigration, Labor, Passports and visas, Penalties, Reporting and recordkeeping requirements, Unemployment, Wages, Working conditions.
For the reasons stated in the preamble, the Department of Labor proposes to amend 20 CFR part 655 as follows:
Section 655.0 issued under 8 U.S.C. 1101(a)(15)(E)(iii), 1101(a)(15)(H)(i) and (ii), 8 U.S.C. 1103(a)(6), 1182(m), (n), (p), and (t), 1184(c), (g), and (j), 1188, and 1288(c) and (d); sec. 3(c)(1), Pub. L. 101-238, 103 Stat. 2099, 2102 (8 U.S.C. 1182 note); sec. 221(a), Pub. L. 101-649, 104 Stat. 4978, 5027 (8 U.S.C. 1184 note); sec. 303(a)(8), Pub. L. 102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1101 note); sec. 323(c), Pub. L. 103-206, 107 Stat. 2428; sec. 412(e), Pub. L. 105-277, 112 Stat. 2681 (8 U.S.C. 1182 note); sec. 2(d), Pub. L. 106-95, 113 Stat. 1312, 1316 (8 U.S.C. 1182 note); 29 U.S.C. 49k; Pub. L. 107-296, 116 Stat. 2135, as amended; Pub. L. 109-423, 120 Stat. 2900; 8 CFR 214.2(h)(4)(i); and 8 CFR 214.2(h)(6)(iii); and sec. 6, Pub. L. 115-218, 132 Stat. 1547 (48 U.S.C. 1806).
Subpart A issued under 8 CFR 214.2(h).
Subpart B issued under 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184(c), and 1188; and 8 CFR 214.2(h).
Subpart E issued under 48 U.S.C. 1806.
Subparts F and G issued under 8 U.S.C. 1288(c) and (d); sec. 323(c), Pub. L. 103-206, 107 Stat. 2428; and 28 U.S.C. 2461 note, Pub. L. 114-74 at section 701.
Subparts H and I issued under 8 U.S.C. 1101(a)(15)(H)(i)(b) and (b)(1), 1182(n), (p), and (t), and 1184(g) and (j); sec. 303(a)(8), Pub. L. 102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1101 note); sec. 412(e), Pub. L. 105-277, 112 Stat. 2681; 8 CFR 214.2(h); and 28 U.S.C. 2461 note, Pub. L. 114-74 at section 701.
Subparts L and M issued under 8 U.S.C. 1101(a)(15)(H)(i)(c) and 1182(m); sec. 2(d), Pub. L. 106-95, 113 Stat. 1312, 1316 (8 U.S.C. 1182 note); Pub. L. 109-423, 120 Stat. 2900; and 8 CFR 214.2(h).
(b) * * *
(b)(1) * * *
(i) For occupations included in the Department of Agriculture's (USDA) Farm Labor Survey (FLS) field and livestock workers (combined) category:
(A) If an annual average hourly gross wage in the State or region is reported by the FLS, that wage shall be the AEWR for the State; or
(B) If an annual average hourly gross wage in the State or region is not reported by the FLS, the AEWR for the occupations shall be the statewide annual average hourly gross wage in the State as reported by the Occupational Employment and Wage Statistics (OEWS) survey; or
(C) If a statewide annual average hourly gross wage in the State is not reported by the OEWS survey, the AEWR for the occupations shall be the national annual average hourly gross wage as reported by the OEWS survey.
(ii) For all other occupations:
(A) The AEWR for each occupation shall be the statewide annual average hourly gross wage for that occupation in the State as reported by the OEWS survey; or
(B) If a statewide annual average hourly gross wage in the State is not reported by the OEWS survey, the AEWR for each occupation shall be the national annual average hourly gross wage for that occupation as reported by the OEWS survey.
(iii) The AEWR methodologies described in paragraphs (b)(1)(i) and (ii) of this section shall apply to all job orders submitted, as set forth in § 655.121, on or after January 31, 2022, including job orders filed concurrently with an
(5) If the job duties on the
National Indian Gaming Commission.
Proposed rule.
The National Indian Gaming Commission proposes to amend our facility license notifications. The proposed rule would modify the requirement that facility license notice submissions include a name and address of the proposed gaming facility. Specifically, the National Indian Gaming Commission would require the submission of the name and address of the property only if known when the facility license notification is submitted to the NIGC Chair. The Commission proposes this action to assist tribal governments, and tribal gaming regulatory authorities that face challenges in meeting the regulatory requirement in instances where a facility has not been issued a name or address.
The agency must receive comments on or before January 3, 2022.
You may send comments by any of the following methods:
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Rea Cisneros, National Indian Gaming Commission; Telephone: (202) 632-7003.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal.
The Indian Gaming Regulatory Act (IGRA or Act), Public Law 100-497, 25 U.S.C. 2701
On, June 9, 2021, the National Indian Gaming Commission sent a Notice of Consultation announcing that the Agency intended to consult on a number of topics, including proposed changes to the Facility License notifications and submission requirements. Prior to consultation, the Commission released proposed discussion drafts of the regulations for review. The proposed amendments to the regulations were intended to implement flexibilities for a tribe to submit the notification of a new facility if the facility does not have an existing physical address at the time of submission.
The Commission held two virtual consultation sessions in July 2021 to receive tribal input on the possible changes. The Commission reviewed all comments and now proposes these changes which it believes will allow Tribes greater flexibility in submitting facility license notifications and afford the Agency greater efficiency in processing the applications.
The proposed rule will not have a significant impact on a substantial number of small entities as defined under the Regulatory Flexibility Act, 5 U.S.C. 601,
The proposed rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. The rulemaking does not have an effect on the economy of $100 million or more. The rulemaking will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, local government agencies or geographic regions. Nor will the proposed rule have a significant adverse effect on competition, employment, investment, productivity, innovation, or the ability of the enterprises, to compete with foreign based enterprises.
The Commission, as an independent regulatory agency, is exempt from compliance with the Unfunded Mandates Reform Act, 2 U.S.C. 1502(1); 2 U.S.C. 658(1).
In accordance with Executive Order 12630, the Commission has determined that the proposed rule does not have significant takings implications. A takings implication assessment is not required.
In accordance with Executive Order 12988, the Commission has determined that the proposed rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Order.
The Commission has determined that the proposed rule does not constitute a major federal action significantly affecting the quality of the human environment and that no detailed statement is required pursuant to the National Environmental Policy Act of 1969, 42 U.S.C. 4321,
The information collection requirements contained in this proposed rule were previously approved by the Office of Management and Budget as required by 44 U.S.C. 3501,
The National Indian Gaming Commission is committed to fulfilling its tribal consultation obligations—whether directed by statute or administrative action such as Executive Order (E.O.) 13175 (Consultation and Coordination with Indian Tribal Governments)—by adhering to the consultation framework described in its Consultation Policy published July 15, 2013. The NIGC's consultation policy specifies that it will consult with tribes on Commission Action with Tribal Implications, which is defined as: Any Commission regulation, rulemaking, policy, guidance, legislative proposal, or operational activity that may have a substantial direct effect on an Indian tribe on matters including, but not limited to the ability of an Indian tribe to regulate its Indian gaming; an Indian tribe's formal relationship with the Commission; or the consideration of the Commission's trust responsibilities to Indian tribes.
Pursuant to this policy, on June 9, 2021, the National Indian Gaming Commission sent a Notice of Consultation announcing that the Agency intended to consult on a number of topics, including proposed changes to the management contract process.
Gambling, Indian—lands, Indian—tribal government, Reporting and recordkeeping requirements.
Therefore, for reasons stated in the preamble, 25 CFR part 559 is amended as follows:
25 U.S.C. 2701, 2702(3), 2703(4), 2705, 2706(b)(10), 2710, 2719.
(b) The notice shall contain the following:
(1) A legal description of the property;
(2) The tract number for the property as assigned by the Bureau of Indian Affairs, Land Title and Records Offices, if any;
(3) If not maintained by the Bureau of Indian Affairs, Department of the Interior, a copy of the trust or other deed(s) to the property or an explanation as to why such documentation does not exist; and
(4) If not maintained by the Bureau of Indian Affairs, Department of the Interior, documentation of property ownership.
Postal Regulatory Commission.
Proposed rulemaking.
The Commission is proposing to add rules which describe instances when letters may be carried out of the mail, or when the letter monopoly does not apply to a mailpiece. The Commission invites public comment on the proposed rule.
For additional information, Order No. 6047 can be accessed electronically through the Commission's website at
David A. Trissell, General Counsel, at 202-789-6820.
Section 601 of title 39 describes instances when letters may be carried out of the mail, or when the letter monopoly does not apply to a mailpiece. Section 601(a) sets forth the conditions under which a letter may be carried out of the mail, which include requiring that the letter be enclosed in an envelope, that the proper amount of postage is affixed to the envelope, and that the postage is canceled. 39 U.S.C. 601(a). Section 601(b) provides the price and weight limitations such that the letter monopoly does not apply to letters charged more than six times the current rate for the first ounce of a Single-Piece First-Class Letter or to letters weighing more than 12.5 ounces. 39 U.S.C. 601(b)(1) and (2). Section 601(b)(3) references exceptions from the Postal Service regulations that purported to permit private carriage as in effect on July 1, 2005. 39 U.S.C. 601(b)(3);
The Postal Service has exclusive rights in the carriage and delivery of letters under certain circumstances.
Under the Postal Accountability and Enhancement Act (PAEA) of 2006,
On February 7, 2020, the Commission issued Order No. 5422, seeking input from the public about what regulations promulgated by the Commission may be necessary to carry out the requirements of 39 U.S.C. 601. In particular, the Commission sought comments on 14 issues, such as whether the statutory requirements of Section 601 are clear and concise, whether any terms in the statute required further definition, and whether consumers and competitors can easily determine when a mailpiece is subject to monopoly protections. Order No. 5422 at 7-8.
The Commission received a wide range of comments in response to Order No. 5422, but found it necessary to gather more information before promulgating regulations under Section 601. Thus, the Commission held this docket in abeyance and initiated a public inquiry seeking further input from the public.
Having received adequate input from the public in order to propose regulations in this docket, the Commission issued an order, filed concurrently with this order, closing the public inquiry docket.
The Commission finds it necessary to provide some clarity on the statute, and its relationship with the Postal Service's regulations. The Commission also finds it necessary to provide the public a process to seek clarification of the statute or the letter monopoly should the need arise in the future. Thus, the Commission proposes the following rules.
First, the Commission proposes a provision stating that certain Postal Service regulations in parts 310 and 320 of this title are within the scope of these new rules and subject to Commission interpretation. The Postal Service asserts that only certain provisions in parts 310 and 320 of this title are subject to Commission authority, namely § 310.1(a)(7) of this title, § 310.2(b)(1) and (2) of this title, and §§ 320.2 through 320.8 of this title. However, the Commission notes that Section 601(b)(3) specifically references § 310.1 of this title in its entirety and thus, the entirety of that provision is under Commission authority. Additionally, the definitions referenced in § 310.1 of this title are referenced in § 320.1 of this title and therefore, the Commission also includes § 320.1 of this title. The Commission also proposes a provision that if there is a conflict between the Postal Service regulations and Section 601, Section 601 takes precedence.
Next, the Commission proposes a provision explicitly stating that the Postal Service no longer has authority to issue regulations interpreting, suspending or otherwise defining the scope of the letter monopoly. These provisions also include a prohibition on issuing guidance or entering into agreements purporting to do the same. The Commission also proposes a provision stating that it has the sole authority to promulgate regulations necessary to carry out Section 601.
Finally, the Commission proposes a provision allowing interested parties to seek interpretation of Postal Service regulations or statutory language by filing a rulemaking petition with the Commission, or requesting an advisory opinion from the Commission's General Counsel. The Commission may also initiate its own proceeding. These procedures allow for interpretation of statutory and regulatory requirements that is accessible and transparent to the public.
The Commission proposes to place the new regulations clarifying Section 601 in new 39 CFR part 3065.
Proposed § 3050.1 states that the rules in this part implement 39 U.S.C. 601. It lists the Postal Service regulations that are subject to the proposed rules and clarifies that the Commission has authority to interpret them. It also provides that in the event of a conflict between Section 601 and the Postal Service regulations, Section 601 would supersede any applicable requirements.
Proposed § 3065.2 provides that the Commission has the sole authority to promulgate new regulations necessary to carry out Section 601. It also prohibits the Postal Service from promulgating any new regulations, issuing any guidance, or entering into agreements purporting to suspend or otherwise define the letter monopoly. It further states that the Postal Service may not promulgate new regulations or issue any guidance purporting to interpret Section 601.
Proposed § 3065.3 provides two procedures for parties seeking clarification or interpretation of the statute or regulations concerning Section 601. It also states that the Commission may initiate its own proceeding for clarification or interpretation.
Administrative practice and procedure, Postal Service.
For the reasons stated in the preamble, the Commission proposes to amend chapter III of title 39 of the Code of Federal Regulations as follows:
39 U.S.C. 503, 601.
(a) The rules in this part implement 39 U.S.C. 601, which generally describes when letters may be carried out of the mail.
(b) Notwithstanding placement in Postal Service chapter I of this title, the following provisions in parts 310 and 320 of this title are within the scope of this part and the Commission has the authority to interpret them:
(1) § 310.1 of this title;
(2) § 310.2(b)(1) and (2) of this title; and
(3) §§ 320.1 through 320.8 of this title.
(c) In the event of a conflict between 39 U.S.C. 601 and applicable regulations under parts 310 and 320 of this title, 39 U.S.C. 601 shall supersede any other generally applicable requirements.
(a) The Postal Service may not promulgate any new regulations, issue guidance, or enter into agreements purporting to suspend or otherwise define the scope of the letter monopoly.
(b) The Postal Service may not promulgate any new regulations or issue guidance purporting to interpret 39 U.S.C. 601.
(c) The Commission has the sole authority to promulgate new regulations necessary to carry out 39 U.S.C. 601.
(a) The Commission may, on its own motion, initiate a proceeding under this subpart pursuant to § 3010.201(a) of this chapter.
(b) The Commission may provide interpretation of these regulations or 39 U.S.C. 601 upon:
(1) A party's request to initiate a rulemaking proceeding with the Commission pursuant to the requirements of § 3010.201(b) of this chapter; or
(2) a party's request for an advisory opinion from the General Counsel.
Federal Communications Commission.
Proposed rule; proposed auction procedures.
The Office of Economics and Analytics and the Media Bureau seek
Comments are due on or before December 13, 2021, and reply comments are due on or before December 23, 2021. Bidding in this auction is expected to commence in June 2022.
Interested parties may file comments or reply comments in AU Docket No. 21-449. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS) All filings in response to the Public Notice must refer to AU Docket No. 21-449.
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• Filings in response to the Public Notice can be sent by commercial courier or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.
• Commercial deliveries (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Dr., Annapolis Junction, MD 20701.
• U.S. Postal Service first-class, Express, or Priority mail must be addressed to 45 L Street NE, Washington, DC 20554.
• Until further notice, the Commission no longer accepts any hand or messenger delivered filings. This is a temporary measure taken to help protect the health and safety of individuals, and to mitigate the transmission of COVID-19.
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This is a summary of the Public Notice (
1. By the
2. Auction 112 will offer 27 construction permits for FPTV stations. The permits that will be available in Auction 112 are listed in Attachment A to the
3. The permits that will be available in Auction 112 are for channel allotments contained in the Table of Television Allotments (TV Table) and assigned at the indicated communities for which there currently is not a licensee. Each permit awarded will be for one of the allotted-but-unlicensed channels currently contained in the TV Table.
4. Consistent with the provisions of section 309(j)(3)(E)(i) of the Communications Act of 1934 (the Act), and to ensure that potential bidders have adequate time to familiarize themselves with the specific rules that will govern the day-to-day conduct of an auction, OEA and MB seek comment on a variety of auction-specific procedures relating to the conduct of Auction 112.
5. The Commission's part 1 and part 73 competitive bidding rules require each applicant seeking to bid to acquire a construction permit in a broadcast auction to provide certain information in a short-form application (FCC Form 175), including ownership details and numerous certifications. The competitive bidding rules in part 1, subpart Q, and part 73 also contain a framework for the implementation of a competitive bidding design, application and certification procedures, reporting requirements, and the prohibition of certain communications.
6. OEA and MB propose to require any party seeking to participate in Auction 112 to certify in its short-form application, under penalty of perjury, that it has read the public notice adopting procedures for the auction and that it has familiarized itself both with the auction procedures and with the requirements for obtaining a construction permit for an FPTV station. OEA and MB believe that this requirement, which was also recently implemented in Auction 110, would help ensure that the applicant has reviewed the procedures for participation in the auction process and has investigated and evaluated those technical and marketplace factors that may have a bearing on its potential use of any permits won at auction. Consequently, OEA and MB believe this requirement would promote an applicant's successful participation and minimize its risk of defaulting on its auction obligations. As with other certifications required under 47 CFR 1.2105, an auction applicant's failure to make the required certification in its short-form application by the applicable filing deadline would render its application unacceptable for filing, and its application would be dismissed with prejudice. OEA and MB seek comment on this proposal. Are there alternative procedures that could be implemented that would better ensure that an applicant has thoroughly reviewed the auction's procedures and considered all relevant factors that may affect its participation in the auction and use of any permits for which it is the winning bidder?
7. OEA and MB propose to limit information available in Auction 112 to
8. Under this proposal, OEA and MB would not make public any real-time information on bidding activity until the close of the auction. However, bidders would have access to additional information related to their own bidding and bid eligibility before and during the auction via the FCC auction bidding system.
9. Under this proposal, after the close of bidding, bidders' permit selections, upfront payment amounts, bidding eligibility, bids, and other bidding-related information would be made publicly available.
10. OEA and MB seek comment on the above details of the proposal for implementing limited information procedures, or anonymous bidding, in Auction 112. Commenters opposing the use of limited information procedures in Auction 112 should explain their reasoning and propose alternative information rules.
11. In keeping with the usual practice in spectrum auctions, OEA and MB propose that applicants be required to submit upfront payments as a prerequisite to becoming qualified to bid. An upfront payment is a refundable deposit made by an applicant to establish its eligibility to bid on construction permits. Upfront payments that are related to the specific construction permits being auctioned protect against frivolous or insincere bidding and provide the Commission with a source of funds from which to collect payments owed at the close of bidding.
12. OEA and MB seek comment on an appropriate upfront payment for each construction permit being auctioned, taking into account such factors as the efficiency of the auction process and the potential value of similar construction permits. With these considerations in mind, OEA and MB propose the upfront payments set forth in Attachment A to the
13. OEA and MB further propose that the amount of the upfront payment submitted by an applicant will determine its initial bidding eligibility in bidding units, which are a measure of bidder eligibility and bidding activity. OEA and MB propose to assign each construction permit a specific number of bidding units, equal to one bidding unit per one thousand dollars of the upfront payment listed in Attachment A to the
14. As part of the pre-bidding process for each auction, OEA and MB seek comment on the use of a minimum opening bid amount and/or reserve price, as mandated by section 309(j) of the Act. OEA and MB propose to establish minimum opening bid amounts for Auction 112. Based on their experience in past broadcast auctions, OEA and MB have found that setting a minimum opening bid amount judiciously is an effective bidding tool for accelerating the competitive bidding process. In the most recent television broadcast auctions—for low power television (LPTV) construction permits (Auctions 104 and 111)—OEA and MB have similarly proposed establishing minimum opening bids but not reserve prices; in those auctions, no comments opposed the proposal, and OEA and MB adopted it both times. Based on these facts, OEA and MB propose establishing minimum opening bids for Auction 112. OEA and MB do not propose to establish separate reserve prices for any of the construction permits to be offered in Auction 112, nor do OEA and MB see any reason to propose an aggregate reserve price for this auction.
15. For auctions of broadcast permits, OEA and MB generally propose minimum opening bid amounts that have been determined by taking into account the type of service and class of facility offered, market size, population covered by the proposed broadcast facility, and recent broadcast transaction data, to the extent such information is available. OEA and MB seek comment on the proposed minimum opening bid amounts for Auction 112, which are specified in Attachment A to this
16. If commenters believe that these minimum opening bid amounts will result in unsold construction permits or are not reasonable amounts at which to start bidding, they should explain why this is so and comment on the desirability of an alternative approach. Commenters should support their claims with valuation analyses and suggested amounts or formulas. In establishing the minimum opening bid amounts, OEA and MB particularly seek comment on factors that could reasonably have an impact on bidders' valuation of the broadcast spectrum, including the type of service and class
17. For Auction 112, OEA and MB propose that at any time before or during the bidding process OEA, in conjunction with MB, may delay, suspend, or cancel bidding in the auction in the event of a natural disaster, technical obstacle, network interruption, administrative or weather necessity, evidence of an auction security breach or unlawful bidding activity, or for any other reason that affects the fair and efficient conduct of competitive bidding. In such a case, OEA would notify participants of any such delay, suspension, or cancellation by public notice or through the FCC auction bidding system's messages function. OEA and MB propose that, if bidding is delayed or suspended, OEA may, in its sole discretion, elect to resume the auction starting from the beginning of the current round or from some previous round, or cancel the auction in its entirety. OEA and MB propose to exercise this authority solely at their discretion, and not as a substitute for situations in which bidders may wish to apply activity rule waivers. OEA and MB seek comment on these proposals.
18. As discussed below, OEA and MB propose not to allow bid withdrawals in Auction 112. In the event bid withdrawals are permitted in Auction 112, however, OEA and MB propose the interim bid withdrawal payment be 20% of the withdrawn bid. A bidder that withdraws a provisionally winning bid during an auction is subject to a withdrawal payment equal to the difference between the amount of the withdrawn bid and the amount of the winning bid in the same or a subsequent auction. However, if a construction permit for which a bid has been withdrawn does not receive a subsequent higher bid or winning bid in the same auction, the Commission cannot calculate the final withdrawal payment until that construction permit receives a higher bid or winning bid in a subsequent auction. In such cases, when that final withdrawal payment cannot yet be calculated, the Commission imposes on the bidder responsible for the withdrawn bid an interim bid withdrawal payment, which will be applied toward any final bid withdrawal payment that is ultimately assessed.
19. The percentage amount of the interim bid withdrawal payment is established in advance of bidding in each auction and may range from 3% to 20% of the withdrawn bid amount. The Commission has determined that the level of interim withdrawal payment in a particular auction will be based on the nature of the service and the inventory of the licenses being offered. The Commission noted specifically that a higher interim withdrawal payment percentage is warranted to deter the anti-competitive use of withdrawals when, for example, bidders will not need to aggregate the licenses being offered in the auction or when there are few synergies to be captured by combining licenses. In light of these considerations with respect to the construction permits being offered in this auction, OEA and MB propose to use the maximum interim bid withdrawal payment percentage permitted by 47 CFR 1.2104(g)(1) in the event bid withdrawals are allowed in this auction. OEA and MB request comment on using 20% for calculating an interim bid withdrawal payment amount in Auction 112 in the event that bidders would be permitted to withdraw bids. Commenters advocating the use of bid withdrawals should also address the percentage of the interim bid withdrawal payment.
20. Any winning bidder that defaults or is disqualified after the close of an auction (
21. The Commission's rules provide that, in advance of each auction, it will establish a percentage between 3% and 20% of the applicable winning bid to be assessed as an additional default payment. As the Commission has indicated, the level of this additional payment in each auction will be based on the nature of the service and the construction permits being offered.
22. For Auction 112, OEA and MB propose to establish an additional default payment of 20%, which is consistent with the percentage in prior auctions of broadcast construction permits. As the Commission has noted, defaults weaken the integrity of the auction process and may impede the deployment of service to the public, and an additional 20% default payment will be more effective in deterring defaults than the 3% used in some earlier auctions. In light of these considerations, OEA and MB propose for Auction 112 an additional default payment of 20% of the relevant bid. OEA and MB seek comment on this proposal.
23. OEA and MB propose to use the Commission's simultaneous multiple-round auction format for Auction 112. As described further below, this type of auction offers every construction permit for bid at the same time and consists of successive bidding rounds in which qualified bidders may place bids on individual construction permits. Typically, bidding remains open on all construction permits until bidding stops on every construction permit. OEA and MB seek comment on this proposal.
24. The Commission will conduct Auction 112 over the internet using the FCC auction bidding system. A bidder will also have the option of placing bids by telephone through a dedicated auction bidder line.
25. Under this proposal, Auction 112 would consist of sequential bidding rounds, each followed by the release of round results. The initial bidding schedule will be announced in a public notice to be released at least one week before the start of bidding. Details on viewing round results, including the location and format of downloadable round results files, will be included in the same public notice.
26. OEA and MB propose that the initial bidding schedule may be
27. OEA and MB have discretion to establish stopping rules before or during multiple-round auctions in order to complete the auction within a reasonable time. For Auction 112, OEA and MB propose to employ a simultaneous stopping rule approach, which means all construction permits remain available for bidding until bidding stops on every construction permit. Specifically, bidding will close on all construction permits after the first round in which no bidder submits any new bid, applies a proactive activity rule waiver, or withdraws any provisionally winning bid (if bid withdrawals are permitted in this auction). Thus, under the proposed simultaneous stopping rule, bidding would remain open on all construction permits until bidding stops on every construction permit. Consequently, under this approach, it is not possible to determine in advance how long the bidding in this auction will last.
28. Further, OEA and MB propose to retain the discretion to exercise any of the following stopping options during Auction 112:
29. OEA and MB propose to exercise these options only in certain circumstances, for example, where the auction is proceeding unusually slowly or quickly, there is minimal overall bidding activity, or it appears likely that the auction will not close within a reasonable period or will close prematurely. Before exercising these options, OEA and MB are likely to attempt to change the pace of the auction. For example, OEA and MB may adjust the pace of bidding by changing the number of bidding rounds per day or the minimum acceptable bids. Under the proposal, OEA would retain the discretion to exercise any of these options with or without prior announcement during the auction. OEA and MB seek comment on these proposals. Commenters should provide specific reasons for supporting or objecting to these proposals.
30. OEA and MB propose to make available, after each round closes, for each permit its current provisionally winning bid amount, the minimum acceptable bid amount for the following round, and the amounts of all bids placed on the permit during the round. These reports would be publicly accessible. Moreover, after the auction closes, OEA and MB propose to make available complete reports of all bids placed during each round of the auction, including bidder identities.
31. OEA and MB also propose to provide bidders with secure access to certain non-public bidding information while bidding is ongoing. Specifically, after each round ends, and before the next round begins, OEA and MB propose to make the following information available to individual bidders:
• The bidder's activity, based on all bids in the previous round; and
• Summary statistics of the bidder's bidding and other bidding-related actions in each round, including the permits on which it bid and the price it bid for each of those permits, the result of each of its bids, whether it has any provisionally winning bids, and remaining activity rule waivers.
32. OEA and MB believe that limiting the availability of bidding information during the auction balances the Commission's interest in providing bidders with sufficient information about the status of their own bids and the general level of bidding on all permits to allow them to bid confidently and effectively, while restricting the availability of information that may facilitate identification of bidders placing particular bids, which could potentially lead to undesirable strategic bidding. OEA and MB seek comment on this view.
33. To ensure that the auction closes within a reasonable period, an activity rule requires bidders to bid actively throughout the auction, rather than wait until late in the auction before participating. For purposes of the activity rule, the FCC auction bidding system calculates a bidder's activity in a round as the sum of the bidding units associated with any construction permits upon which it places bids during the current round and the bidding units associated with any construction permits for which it holds provisionally winning bids. Bidders are required to be active on a specific percentage of their current bidding eligibility during each round of the auction. OEA and MB propose a single-stage auction with a 100% activity requirement. That is, in each bidding round, a bidder desiring to maintain its current bidding eligibility will be required to be active on 100% of its bidding eligibility. Under this proposal, the activity requirement would be satisfied when a bidder has bidding activity on construction permits with bidding units that total 100% of its current eligibility in the round. If the activity rule is met, then the bidder's eligibility does not change in the next round. Failure to maintain the requisite activity level will result in the use of an activity rule waiver, if any remain, or a reduction in the bidder's eligibility for the next round of bidding, possibly curtailing or eliminating the bidder's
34. For the proposed simultaneous multiple-round auction format, OEA and MB propose that when a bidder's activity in the current round is below the required minimum level, it may preserve its current level of eligibility through an activity rule waiver, if the bidder has any available. Consistent with prior Commission auctions of broadcast construction permits, OEA and MB propose that each bidder in Auction 112 be provided with three activity rule waivers that may be used as set forth below at the bidder's discretion during the course of the auction.
35. An activity rule waiver applies to an entire round of bidding, not to a particular construction permit. Activity rule waivers can be either proactive or automatic. Activity rule waivers are primarily a mechanism for a bidder to avoid the loss of bidding eligibility in case exigent circumstances prevent it from bidding in a particular round.
36. The FCC auction bidding system will assume that a bidder that does not meet the activity requirement would prefer to use an activity rule waiver (if available) rather than lose bidding eligibility. Therefore, the system will automatically apply a waiver at the end of any bidding round in which a bidder's activity level is below the minimum required unless: (1) The bidder has no activity rule waiver remaining; or (2) the bidder overrides the automatic application of a waiver by reducing eligibility, thereby meeting the activity requirement. If a bidder has no waivers remaining and does not satisfy the required activity level, the bidder's current eligibility will be permanently reduced, possibly curtailing or eliminating the ability to place additional bids in the auction.
37. A bidder with insufficient activity may wish to reduce its bidding eligibility rather than use an activity rule waiver. If so, the bidder must affirmatively override the automatic waiver mechanism during the bidding round by using the reduce eligibility function in the FCC auction bidding system. In this case, the bidder's eligibility would be permanently reduced to bring it into compliance with the activity rule described above. Reducing eligibility is an irreversible action; once eligibility has been reduced, a bidder cannot regain its lost bidding eligibility.
38. Under the proposed simultaneous stopping rule, a bidder would be permitted to apply an activity rule waiver proactively as a means to keep the auction open without placing a bid. If a bidder proactively applies an activity rule waiver (using the proactive waiver function in the FCC auction bidding system) during a bidding round in which no bid is placed or withdrawn (if bid withdrawals are permitted in this auction), the auction will remain open and the bidder's eligibility will be preserved. An automatic waiver applied by the FCC auction bidding system in a round in which there is no new bid, no bid withdrawal (if bid withdrawals are permitted in this auction), or no proactive waiver would not keep the auction open. OEA and MB seek comment on these proposals.
39. OEA and MB propose that, in each round, a qualified bidder will be able to place a bid on a given construction permit in any of up to nine different amounts: The minimum acceptable bid amount or one of eight additional bid amounts. Bidders must have sufficient eligibility to place a bid on the particular construction permit.
40.
41.
42. For Auction 112, OEA and MB propose to use a minimum acceptable bid increment percentage of 10%. This means that the minimum acceptable bid amount for a construction permit will be approximately 10% greater than the provisionally winning bid amount for the construction permit. To calculate the additional acceptable bid amounts, OEA and MB propose to use a bid increment percentage of 5%. OEA and MB seek comment on these proposals.
43.
44. OEA and MB seek comment on these proposals. If commenters disagree with the proposal to begin the auction with nine acceptable bid amounts per construction permit, they should suggest an alternative number of acceptable bid amounts to use. Commenters may wish to address the role of the minimum acceptable bids and the number of acceptable bid amounts in managing the pace of the auction and the tradeoffs in managing auction pace by changing the bidding schedule, activity requirement, bid amounts, or by using other means.
45. Under the proposed simultaneous multiple-round auction format, the FCC auction bidding system would determine provisionally winning bids consistent with practice in past auctions. At the end of a bidding round, the bidding system would determine a provisionally winning bid for each construction permit based on the highest bid amount received for that permit. The FCC auction bidding system would advise bidders of the status of their bids when round results are released. A provisionally winning bid would remain the provisionally winning bid until there is a higher bid on the same construction permit at the close of a subsequent round, unless the provisionally winning bid is withdrawn (if bid withdrawals are permitted in this auction). Provisionally winning bids at the end of the auction would become the winning bids. As a reminder, provisionally winning bids count toward activity for purposes of the activity rule.
46. The FCC auction bidding system assigns a pseudo-random number generated by an algorithm to each bid when the bid is entered. If identical high bid amounts are submitted on a construction permit in any given round (
47.
48.
49. The Commission has recognized that bid withdrawals may be a helpful tool in certain circumstances for bidders seeking to efficiently aggregate products or implement backup strategies. The Commission has also acknowledged that allowing bid withdrawals may encourage insincere bidding or increased opportunities for undesirable strategic bidding in certain circumstances. The Commission stated that this discretion should be exercised assertively, consider limiting the number of rounds in which bidders may withdraw bids, and prevent bidders from bidding on a particular market if they find a bidder is abusing the Commission's bid withdrawal procedures. In managing the auction, therefore, OEA and MB have discretion to limit the number of withdrawals to prevent bidding abuses.
50. Based on this guidance and on experience with past auctions of broadcast construction permits, OEA and MB propose to prohibit bidders from withdrawing any bid after the close of the round in which that bid was placed. OEA and MB make this proposal in light of the site-specific nature and wide geographic dispersion of the permits available in this auction, which suggest that potential applicants for this auction may have fewer incentives to aggregate permits through the auction process (as compared with bidders in many auctions of wireless licenses). Thus, OEA and MB believe that it is unlikely that bidders will have a need to withdraw bids in this auction. Further, OEA and MB are mindful that bid withdrawals, particularly if they were made late in this auction, could result in delays in licensing new broadcast stations and attendant delays in the offering of new broadcast service to the public. OEA and MB seek comment on the proposal to prohibit bid withdrawals in Auction 112. Commenters advocating alternative approaches should support their arguments by taking into account the construction permits offered, the impact of auction dynamics and the pricing mechanism, and the effects on the bidding strategies of other bidders.
51. The Commission intends to provide additional information on the bidding system and to offer demonstrations and other educational opportunities for applicants in Auction 112 to familiarize themselves with the FCC auction application system and the auction bidding system. For example, OEA and MB intend to release an online tutorial that will help applicants understand the procedures to be followed in the filing of their auction short-form applications (FCC Form 175) and on the bidding procedures for Auction 112.
52. The
53. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), 5 U.S.C. 603, the Commission prepared Initial Regulatory Flexibility Analyses (IRFAs) in connection with the
54. The proposed procedures for the conduct of Auction 112, as described in the
55. The
• A requirement that any applicant seeking to participate in Auction 112 certify in its short-form application, under penalty of perjury, that it has read the public notice adopting procedures for Auction 112 that will be released in advance of the short-form deadline, and that it has familiarized itself with those procedures and the requirements for obtaining a construction permit for an FPTV station;
• establishment of an interim bid withdrawal percentage of 20% of the withdrawn bid in the event that OEA and MB allow bid withdrawals in Auction 112;
• establishment of an additional default payment of 20% under 47 CFR 1.2104(g)(2) in the event that a winning bidder defaults or is disqualified after the auction;
• use of a simultaneous multiple-round auction format, consisting of sequential bidding rounds with a simultaneous stopping rule (with discretion to exercise alternative stopping rules under certain circumstances);
• retention by OEA, in conjunction with MB, of its discretion to delay, suspend, or cancel bidding in Auction 112 for any reason that affects the fair and efficient conduct of the competitive bidding process;
• retention by OEA of its discretion to adjust the bidding schedule in order to manage the pace of Auction 112;
• a specific minimum opening bid amount for each construction permit available in Auction 112;
• a specific number of bidding units for each construction permit;
• a specific upfront payment amount for each construction permit;
• establishment of a bidder's initial bidding eligibility in bidding units based on that bidder's upfront payment through assignment of a specific number of bidding units for each construction permit;
• use of an activity requirement so that bidders must bid actively during the auction rather than waiting until late in the auction before participating;
• a single stage auction in which a bidder is required to be active on 100% of its bidding eligibility in each round of the auction;
• provision of three activity waivers for each qualified bidder to allow it to preserve eligibility during the course of the auction;
• use of minimum acceptable bid amounts and additional bid increments, along with a proposed methodology for calculating such amounts, while retaining discretion to change their methodology if circumstances dictate;
• bid removal procedures; and
• proposal to allow for bid removals (before the close of a bidding round) but not allow bid withdrawals (after the close of a bidding round).
56. The Commission's statutory obligations to small businesses participating in a spectrum auction
57. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed procedures, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small government jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) Is independently owned and operated, (2) is not dominant in its field of operation, and (3) satisfies any additional criteria established by the SBA.
58. The specific procedures and minimum opening bid amounts on which comment is sought in the
59.
60. Additionally, the Commission has estimated the number of licensed commercial television stations to be 1,374. Of this total, 1,269 stations (or about 92.5%) had revenues of $41.5 million or less, according to Commission staff review of the BIA Kelsey Inc. Media Access Pro Television Database (BIA) in April 20, 2021, and therefore these stations qualify as small entities under the SBA definition.
61. In addition, the Commission has estimated the number of licensed noncommercial educational (NCE) television stations to be 384. These stations are non-profit, and therefore considered to be small entities.
62. There are also 2,371 low power television stations, including Class A stations, and 3,306 TV translators. Given the nature of these services, OEA and MB presume that all of these entities qualify as small entities under the SBA small business size standard.
63. OEA and MB note, however, that the SBA size standard data do not allow for a meaningful estimate of the number of small entities that may participate in Auction 112.
64. In assessing whether a business entity qualifies as small under the SBA definition, business control affiliations must be included. The estimates above therefore likely overstate the number of small entities that might be affected by this auction because the revenue figures on which this estimate is based does not include or aggregate revenues from affiliated companies. Moreover, the definition of small business also requires that an entity not be dominant in its field of operation and that the entity be independently owned and operated. The estimate of small businesses to which Auction 112 competitive bidding rules may apply does not exclude any television station from the definition of a small business on these bases and is therefore over-inclusive to that extent. Furthermore, OEA and MB are unable at this time to define or quantify the criteria that would establish whether a specific television station is dominant in its field of operation.
65. OEA and MB also note that they are unable to accurately develop an estimate of how many of the potential Auction 112 applicants might prove to be small businesses based on the number of small entities that applied to participate in prior broadcast auctions because that information is not collected from applicants for broadcast auctions in which bidding credits are not based on an applicant's size (as is the case in some auctions of licenses for wireless services). OEA and MB conclude, however, that the majority of Auction 112 eligible bidders will likely meet the SBA's definition of a small business concern.
66. The Commission designed the auction application process itself to minimize reporting and compliance requirements for all applicants, including small business applicants. To participate in this auction, parties will file streamlined, short-form applications in which they certify under penalty of perjury as to their qualifications. Eligibility to participate in bidding is based on an applicant's short-form application and certifications, as well as its upfront payment. In the second phase of the process, there are additional compliance requirements for winning bidders. Thus, a small business that fails to become a winning bidder does not need to satisfy additional requirements of a winning bidder.
67. OEA and MB do not expect the processes and procedures proposed in the
68. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.
69. OEA and MB have taken steps to minimize any economic impact of the auction procedures on small businesses through, among other things, the many resources provided to potential auction participants. Small entities and other auction participants may seek clarification of or guidance on complying with competitive bidding rules and procedures, reporting requirements, and the FCC's auction bidding system. An FCC Auctions Hotline provides access to Commission staff for information about the auction process and procedures. The FCC Auctions Technical Support Hotline is another resource which provides technical assistance to applicants, including small entities, on issues such as access to or navigation within the electronic FCC Form 175 and use of the FCC's auction bidding system. Small entities may also use the web-based, interactive online tutorial produced by Commission staff to familiarize themselves with auction procedures, filing requirements, bidding procedures, and other matters related to an auction.
70. The Commission also makes various databases and other sources of information, including the Auctions program websites and copies of Commission decisions, available to the public without charge, providing a low-cost mechanism for small entities to conduct research prior to and throughout the auction. Prior to and at the close of Auction 112, OEA and MB will post public notices on the Auctions website, which articulate the procedures and deadlines for the auction. OEA and MB make this information easily accessible and without charge to benefit all Auction 112 applicants, including small entities, thereby lowering their administrative costs to comply with the Commission's competitive bidding rules.
71. Prior to the start of bidding, eligible bidders will be given an opportunity to become familiar with auction procedures and the bidding system by participating in a mock auction. Further, OEA and MB intend to conduct Auction 112 electronically over the internet using a web-based auction system that eliminates the need for bidders to be physically present in a specific location. Qualified bidders also have the option to place bids by telephone. These mechanisms are made available to facilitate participation in Auction 112 by all eligible bidders and may result in significant cost savings for small business entities that use these alternatives. Moreover, the adoption of bidding procedures in advance of the auction, consistent with statutory directive, is designed to ensure that the auction will be administered predictably and fairly for all participants, including small entities.
72. None.
73. Interested parties may file comments or reply comments on or before the dates indicated on the first page of this document in AU Docket No. 21-449. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS).
74.
Forest Service, Agriculture (USDA).
Notice of meeting.
The Sanders Resource Advisory Committee (RAC) will hold a virtual meeting by phone and/or video conference. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with Title II of the Act, as well as to make recommendations on recreation fee proposals for sites on Lolo and Kootenai National Forests within Sanders County, consistent with the Federal Lands Recreation Enhancement Act. RAC information can be found at the following website:
The meeting will be held on December 14, 2021, 5:00 p.m.-7:00 p.m. Mountain Standard Time.
All RAC meetings are subject to cancellation. For status of the meeting prior to attendance, please contact the person listed under
The meeting will be held virtually via telephone and/or video conference.
Members of the public may participate in the meeting by using the following Microsoft Teams meeting link:
Written comments may be submitted as described under
David Wrobleski, Designated Federal Official and Plains/Thompson Falls District Ranger, by phone at 406-203-8947 or email at
Individuals who use telecommunication devices for the deaf/hard-of-hearing (TDD) may call the Federal Relay Service (FRS) at 1-800-877-8339 24 hours a day, every day of the year, including holidays.
The purpose of the meeting is to:
1. Approve minutes from previous meeting;
2. Review, rank and recommend proposals for Title II funding; and
3. Open forum for public discussion.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by November 29, 2021, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time for oral comments must be sent to Robin Jermyn, RAC Coordinator, P.O. Box 429, Plains, Montana 59859, by email to
Equal opportunity practices, in line with USDA policies, will be followed in all membership appointments to the RAC. To help ensure that recommendations of the RAC have taken into account the needs of the diverse groups served by the Department, membership shall include, to the extent practicable, individuals with demonstrated ability to represent minorities, women, and persons with disabilities.
The USDA prohibits discrimination in all of its programs and activities on the basis of race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, political beliefs, income derived from a public assistance program, or reprisal or retaliation for prior civil rights activity in any program or activity conducted or funded by USDA (not all bases apply to all programs).
Bureau of Industry and Security, Commerce.
Notice of inquiry.
The Bureau of Industry and Security is seeking public comments on the impact that implementation of the Chemical Weapons Convention, through the Chemical Weapons Convention Implementation Act of 1998 and the Chemical Weapons Convention Regulations, has had on commercial activities involving “Schedule 1” chemicals during calendar year 2021. The purpose of this notice of inquiry is to collect information to assist BIS in its preparation of the annual certification to the Congress on whether the legitimate
Comments must be received by January 3, 2022.
You may submit comments, identified by
•
•
All filers using the portal or email should use the name of the person or entity submitting the comments as the name of their files, in accordance with the instructions below. Parties submitting business confidential information should clearly identify the business confidential portion at the time of submission, file a statement justifying nondisclosure and referring to the specific legal authority claimed, and also provide a non-confidential version of the submission.
For comments (including rebuttal comments) submitted electronically containing business confidential information, the file name of the business confidential version should begin with the characters “BC.” Any page containing business confidential information must be clearly marked “BUSINESS CONFIDENTIAL” on the top of that page. The corresponding non-confidential version of those comments must be clearly marked “PUBLIC.” The file name of the non-confidential version should begin with the character “P.” The “BC” or “P” (as appropriate) in the file name should be followed by the name of the person or entity submitting the comments. Any submissions with file names that do not begin with a “P” or “BC” will be assumed to be public and will be made publicly available through
For questions on the Chemical Weapons Convention requirements for “Schedule 1” chemicals, contact Douglas Brown, Treaty Compliance Division, Office of Nonproliferation and Treaty Compliance, Bureau of Industry and Security, U.S. Department of Commerce, (202) 482-5808, Email:
In providing its advice and consent to the ratification of the Convention on the Prohibition of the Development, Production, Stockpiling, and Use of Chemical Weapons and Their Destruction, commonly called the Chemical Weapons Convention (CWC or “the Convention”), the Senate included, in Senate Resolution 75 (S. Res. 75, April 24, 1997), several conditions to its ratification. Condition 9, titled “Protection of Advanced Biotechnology,” calls for the President to certify to Congress on an annual basis that “the legitimate commercial activities and interests of chemical, biotechnology, and pharmaceutical firms in the United States are not being significantly harmed by the limitations of the Convention on access to, and production of, those chemicals and toxins listed in Schedule 1.” On July 8, 2004, President George W. Bush, by Executive Order 13346, delegated his authority to make the annual certification to the Secretary of Commerce.
The CWC is an international arms control treaty that contains certain verification provisions. In order to implement these verification provisions, the CWC established the Organization for the Prohibition of Chemical Weapons (OPCW). In order to achieve the object and purpose of the Convention and the implementation of its provisions, the CWC imposes certain obligations on countries that have ratified the Convention (
“Schedule 1” chemicals consist of those toxic chemicals and precursors set forth in the CWC “Annex on Chemicals” and in “Supplement No. 1 to part 712—SCHEDULE 1 CHEMICALS” of the Chemical Weapons Convention Regulations (CWCR) (15 CFR parts 710-722). The CWC identified these toxic chemicals and precursors as posing a high risk to the object and purpose of the Convention.
The CWC (Part VI of the “Verification Annex”) restricts the production of “Schedule 1” chemicals for protective purposes to two facilities per State Party: A single small-scale facility and a facility for production in quantities not exceeding 10 kg per year. The CWC Article-by-Article Analysis submitted to the Senate in Treaty Doc. 103-21 defined the term “protective purposes” to mean “used for determining the adequacy of defense equipment and measures.” Consistent with this definition and as authorized by Presidential Decision Directive (PDD) 70 (December 17, 1999), which specifies agency and departmental responsibilities as part of the U.S. implementation of the CWC, the Department of Defense (DOD) was assigned the responsibility to operate these two facilities. DOD maintains strict controls on “Schedule 1” chemicals produced at its facilities in order to ensure accountability for such chemicals, as well as their proper use, consistent with the object and purpose of the Convention. Although this assignment of responsibility to DOD under PDD-70 effectively precluded commercial production of “Schedule 1” chemicals for “protective purposes” in the United States, it did not establish any limitations on “Schedule 1” chemical activities that are not prohibited by the CWC.
The provisions of the CWC that affect commercial activities involving “Schedule 1” chemicals are implemented in the CWCR (
The CWCR also contain other requirements and prohibitions that apply to “Schedule 1” chemicals and/or
(1) Prohibit the import of “Schedule 1” chemicals from States not Party to the Convention (15 CFR 712.2(b));
(2) Require annual declarations by certain facilities engaged in the production of “Schedule 1” chemicals in excess of 100 grams aggregate per calendar year (
(3) Provide for government approval of “declared Schedule 1” facilities (15 CFR 712.5(f));
(4) Require 200 days advance notification of the establishment of new “Schedule 1” production facilities producing greater than 100 grams aggregate of “Schedule 1” chemicals per calendar year (15 CFR 712.4);
(5) Provide that “declared Schedule 1” facilities are subject to initial and routine inspection by the OPCW (15 CFR 712.5(e) and 716.1(b)(1));
(6) Require advance notification and annual reporting of all imports and exports of “Schedule 1” chemicals to, or from, other States Parties to the Convention (15 CFR 712.6, 742.18(a)(1) and 745.1); and
(7) Prohibit the export of “Schedule 1” chemicals to States not Party to the Convention (15 CFR 742.18(a)(1) and (b)(1)(ii)).
For purposes of the CWCR (
In order to assist in determining whether the legitimate commercial activities and interests of chemical, biotechnology, and pharmaceutical firms in the United States are significantly harmed by the limitations of the Convention on access to, and production of, “Schedule 1” chemicals as described in this notice, BIS is seeking public comments on any effects that implementation of the CWC, through the Chemical Weapons Convention Implementation Act of 1998 and the CWCR, has had on commercial activities involving “Schedule 1” chemicals during calendar year 2021. To allow BIS to properly evaluate the significance of any harm to commercial activities involving “Schedule 1” chemicals, public comments submitted in response to this notice of inquiry should include both a quantitative and qualitative assessment of the impact of the CWC on such activities.
All comments must be submitted to one of the addresses indicated in this notice and in accordance with the instructions provided herein. BIS will consider all comments received on or before January 3, 2022.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Brenda E. Brown, Office of AD/CVD Operations, Customs Liaison Unit, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230, telephone: (202) 482-4735.
Each year during the anniversary month of the publication of an antidumping or countervailing duty order, finding, or suspended investigation, an interested party, as defined in section 771(9) of the Tariff Act of 1930, as amended (the Act), may request, in accordance with 19 CFR 351.213, that the Department of Commerce (Commerce) conduct an administrative review of that antidumping or countervailing duty order, finding, or suspended investigation.
All deadlines for the submission of comments or actions by Commerce discussed below refer to the number of calendar days from the applicable starting date.
In the event Commerce limits the number of respondents for individual examination for administrative reviews initiated pursuant to requests made for the orders identified below, Commerce intends to select respondents based on U.S. Customs and Border Protection (CBP) data for U.S. imports during the period of review. We intend to release the CBP data under Administrative Protective Order (APO) to all parties having an APO within five days of publication of the initiation notice and to make our decision regarding respondent selection within 35 days of publication of the initiation
In the event Commerce decides it is necessary to limit individual examination of respondents and conduct respondent selection under section 777A(c)(2) of the Act:
In general, Commerce finds that determinations concerning whether particular companies should be “collapsed” (
Pursuant to 19 CFR 351.213(d)(1), a party that requests a review may withdraw that request within 90 days of the date of publication of the notice of initiation of the requested review. The regulation provides that Commerce may extend this time if it is reasonable to do so. Determinations by Commerce to extend the 90-day deadline will be made on a case-by-case basis.
Section 504 of the Trade Preferences Extension Act of 2015 amended the Act by adding the concept of particular market situation (PMS) for purposes of constructed value under section 773(e) of the Act.
Neither section 773(e) of the Act nor 19 CFR 351.301(c)(2)(v) set a deadline for the submission of PMS allegations and supporting factual information. However, in order to administer section 773(e) of the Act, Commerce must receive PMS allegations and supporting factual information with enough time to consider the submission. Thus, should an interested party wish to submit a PMS allegation and supporting new factual information pursuant to section 773(e) of the Act, it must do so no later than 20 days after submission of initial Section D responses.
In accordance
Note that, for any party Commerce was unable to locate in prior segments, Commerce will not accept a request for an administrative review of that party absent new information as to the party's location. Moreover, if the interested party who files a request for review is unable to locate the producer or exporter for which it requested the review, the interested party must provide an explanation of the attempts it made to locate the producer or exporter at the same time it files its request for review, in order for the Secretary to determine if the interested party's attempts were reasonable, pursuant to 19 CFR 351.303(f)(3)(ii).
Commerce no longer considers the non-market economy (NME) entity as an exporter conditionally subject to an antidumping duty administrative reviews.
All requests must be filed electronically in Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS) on Enforcement and Compliance's ACCESS website at
Commerce will publish in the
For the first administrative review of any order, there will be no assessment of antidumping or countervailing duties on entries of subject merchandise entered, or withdrawn from warehouse, for consumption during the relevant provisional measures “gap” period of the order, if such a gap period is applicable to the period of review.
This notice is not required by statute but is published as a service to the international trading community.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Every five years, pursuant to the Tariff Act of 1930, as amended (the Act), the Department of Commerce (Commerce) and the International Trade Commission automatically initiate and conduct reviews to determine whether revocation of a countervailing or antidumping duty order or termination of an investigation suspended under section 704 or 734 of the Act would be likely to lead to continuation or recurrence of dumping or a countervailable subsidy (as the case may be) and of material injury.
Pursuant to section 751(c) of the Act, the following Sunset Reviews are scheduled for initiation in January 2022 and will appear in that month's
No Sunset Review of countervailing duty orders is scheduled for initiation in January 2022.
No Sunset Review of suspended investigations is scheduled for initiation in January 2022.
Commerce's procedures for the conduct of Sunset Review are set forth in 19 CFR 351.218. The
Pursuant to 19 CFR 351.103(c), Commerce will maintain and make available a service list for these proceedings. To facilitate the timely preparation of the service list(s), it is requested that those seeking recognition as interested parties to a proceeding contact Commerce in writing within 10 days of the publication of the Notice of Initiation.
Please note that if Commerce receives a Notice of Intent to Participate from a member of the domestic industry within 15 days of the date of initiation, the review will continue.
Thereafter, any interested party wishing to participate in the Sunset Review must provide substantive comments in response to the notice of initiation no later than 30 days after the date of initiation. Note that Commerce has modified certain of its requirements for serving documents containing business proprietary information, until further notice.
This notice is not required by statute but is published as a service to the international trading community.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) is amending its notice of final results of the 2018 administrative review of the countervailing duty (CVD) order on multilayered wood flooring (wood flooring) from the People's Republic of China (China).
Applicable December 1, 2021.
Dennis McClure, AD/CVD Operations, Office VIII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-5973.
On October 20, 2021, Commerce issued the final results of the 2018 administrative review of the CVD order on wood flooring from China, which was subsequently published in the
The product covered by the
Section 351.224(e) of Commerce's regulations provides that Commerce will analyze any comments received and, if appropriate, correct any ministerial error by amending the final results of the review. Section 751(h) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.224(f) define a “ministerial error” as an error “in addition, subtraction, or other arithmetic function, clerical error resulting from inaccurate copying, duplication, or the like, and any other similar type of unintentional error which the Secretary considers ministerial.”
In light of the ministerial error comments, we reviewed the relevant record information and determined, in accordance with section 751(h) of the Act and 19 CFR 351.224(e) and (f), that we made the following ministerial errors in the
(1) We incorrectly removed the EU market price for pine plywood from the plywood benchmark price calculation used in Jiangsu Senmao's benefit calculation for the plywood for less than adequate remuneration (LTAR) program. Therefore, we have corrected Jiangsu Senmao's plywood benefit calculation in these amended final results, and we will incorporate the Jiangsu Senmao's corrected total subsidy rate in the amended cash deposit instructions and liquidation instructions.
(2) We incorrectly calculated the total fiberboard benchmark price (inclusive of freight) used in Jiangsu Senmao's benefit calculation for fiberboard for LTAR program by adding benchmark prices denominated in Chinese renminbi and freight costs denominated in U.S. dollars without making the necessary currency conversions. Therefore, we have corrected Jiangsu Senmao's fiberboard benefit calculation in these amended final results, and we will incorporate Jiangsu Senmao's corrected total subsidy rate in the amended cash deposit instructions and liquidation instructions.
(3) Finally, we inadvertently misspelled Dalian Shengyu's name in the
With regard to the petitioner's allegation that we erred in including domestic prices in the plywood benchmark price, we find no ministerial error because we made a methodological decision to include such prices in the plywood benchmark calculation.
As a result of correcting the alleged ministerial errors noted above, we determine that the following countervailable subsidy rates exist for the POR.
Pursuant to 19 CFR 351.212(b)(2), Commerce
In accordance with section 751(a)(2)(C) of the Act, Commerce also intends to instruct CBP to collect cash deposits of estimated countervailing duties in the amounts shown for each of the respective companies listed above on shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this administrative review. These cash deposit requirements, effective upon publication of these amended final results, shall remain in effect until further notice.
This notice also serves as a reminder to parties subject to administrative protective order (APO) of their responsibility concerning the destruction 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 terms of an APO is a sanctionable violation.
We are issuing and publishing these amended final results in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
In accordance with the Tariff Act of 1930, as amended (the Act), the Department of Commerce (Commerce) is automatically initiating the five-year reviews (Sunset Reviews) of the antidumping and countervailing duty (AD/CVD) order(s) and suspended investigation(s) listed below. The International Trade Commission (the ITC) is publishing concurrently with this notice its notice of
Applicable December 1, 2021.
Commerce official identified in the
Commerce's procedures for the conduct of Sunset Reviews are set forth in its
In accordance with section 751(c) of the Act and 19 CFR 351.218(c), we are initiating the Sunset Reviews of the following antidumping and countervailing duty order(s) and suspended investigation(s):
As a courtesy, we are making information related to sunset proceedings, including copies of the pertinent statute and Commerce's regulations, Commerce's schedule for Sunset Reviews, a listing of past revocations and continuations, and current service lists, available to the public on Commerce's website at the following address:
In accordance with section 782(b) of the Act, any party submitting factual information in an AD/CVD proceeding must certify to the accuracy and completeness of that information. Parties must use the certification formats provided in 19 CFR 351.303(g). Commerce intends to reject factual submissions if the submitting party does not comply with applicable revised certification requirements.
Pursuant to 19 CFR 351.103(d), Commerce will maintain and make available a public service list for these proceedings. Parties wishing to participate in any of these five-year reviews must file letters of appearance as discussed at 19 CFR 351.103(d). To facilitate the timely preparation of the public service list, it is requested that those seeking recognition as interested parties to a proceeding submit an entry of appearance within 10 days of the publication of the Notice of Initiation. Because deadlines in Sunset Reviews can be very short, we urge interested
Domestic interested parties, as defined in section 771(9)(C), (D), (E), (F), and (G) of the Act and 19 CFR 351.102(b), wishing to participate in a Sunset Review must respond not later than 15 days after the date of publication in the
If we receive an order-specific notice of intent to participate from a domestic interested party, Commerce's regulations provide that
This notice of initiation is being published in accordance with section 751(c) of the Act and 19 CFR 351.218(c).
National Oceanic and Atmospheric Administration (NOAA), Department of Commerce (DOC).
Notice; closure of administrative appeal decision record.
This announcement provides notice that the decision record has closed for an administrative appeal filed by Norwalk Cove Marina, Inc. (Appellant) under the Coastal Zone Management Act of 1972 (CZMA). Appellant has requested that the National Oceanic and Atmospheric Administration (NOAA) Administrator, pursuant to authority delegated by the Secretary of Commerce to decide CZMA federal consistency appeals, override an objection by the New York State Department of State to a consistency certification for a proposed project to dispose of dredged material at the Central Long Island Sound Disposal Site.
The decision record for Appellant's federal consistency appeal of the New York State Department of State's objection closed on December 1, 2021.
NOAA has provided access to publicly available materials and related documents comprising the appeal record on the following website:
For questions about this notice, contact Bethany Henneman, NOAA Office of the General Counsel, Oceans and Coasts Section, 1305 East-West Highway, Room 6111, Silver Spring, MD 20910, (301) 300-0027,
On May 19, 2021, the NOAA Administrator, pursuant to authority delegated by the Secretary of Commerce to decide Coastal Zone Management Act (CZMA) federal consistency appeals, received a “Notice of Appeal” filed by Norwalk Cove Marina, Inc., pursuant to the CZMA, 16 U.S.C. 1451 et seq, and implementing regulations found at 15 CFR part 930, subpart H. The “Notice of Appeal” is taken from an objection by the New York State Department of State to a consistency certification for a pending permit application to the U.S. Army Corps of Engineers to dispose of approximately 24,500 cubic yards of dredged material in the Central Long Island Sound Disposal Site. Under the CZMA, the NOAA Administrator may override the New York State Department of State's objection on grounds that the project is consistent with the objectives or purposes of the CZMA, or otherwise necessary in the interest of national security. To make the determination that the proposed activity is “consistent with the objectives or purposes of the CZMA,” the NOAA Administrator must find that: (1) The proposed activity furthers the national interest as articulated in sections 302 or 303 of the CZMA, in a significant or substantial manner; (2) the national interest furthered by the proposed activity outweighs the activity's adverse coastal effects, when those effects are considered separately or cumulatively; and (3) no reasonable alternative is available that would permit the proposed activity to be conducted in a manner consistent with the enforceable policies of the applicable coastal management program. 15 CFR 930.121. To make the determination that the proposed activity is “necessary in the interest of national security,” the NOAA Administrator must find that a national defense or other national security interest would be significantly impaired if the proposed activity is not permitted to go forward as proposed. 15 CFR 930.122.
The NOAA Administrator must close the decision record in a federal consistency appeal 160 days after the Notice of Appeal is published in the
After reviewing the decision record developed to date, the NOAA Administrator has determined that it is not necessary to stay the closure of the decision record in this appeal. Consistent with the schedule contained in the CZMA and its implementing regulations, the decision record for Appellant's federal consistency appeal of the New York Department of State's objection closed on December 1, 2021. No further information or briefs will be considered in deciding this appeal.
NOAA has provided access to publicly available materials and related documents comprising the appeal record on the following website:
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; proposed incidental harassment authorization; request for comments on proposed authorization and possible renewal.
NMFS has received a request from the National Oceanic and Atmospheric Administration (NOAA) for authorization to take marine mammals incidental to the NOAA Port Facility Project in Ketchikan, Alaska. Pursuant to the Marine Mammal Protection Act (MMPA), NMFS is requesting comments on its proposal to issue an incidental harassment authorization (IHA) to incidentally take marine mammals during the specified activities. NMFS is also requesting comments on a possible one-year renewal that could be issued under certain circumstances and if all requirements are met, as described in Request for Public Comments at the end of this document. NMFS will consider public comments prior to making any final decision on the issuance of the requested MMPA authorizations and agency responses will be summarized in the final notification of our decision.
Comments and information must be received no later than January 3, 2022.
Comments should be addressed to Jolie Harrison, Chief, Permits and Conservation Division, Office of Protected Resources, National Marine Fisheries Service and should be sent to
Dwayne Meadows, Ph.D., Office of Protected Resources, NMFS, (301) 427-8401. Electronic copies of the application and supporting documents, as well as a list of the references cited in this document, may be obtained online at:
The MMPA prohibits the “take” of marine mammals, with certain exceptions. Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
Authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s) and will not have an unmitigable adverse impact on the availability of the species or stock(s) for taking for subsistence uses (where relevant). Further, NMFS must prescribe the permissible methods of taking and other “means of effecting the least practicable adverse impact” on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stocks for taking for certain subsistence uses (referred to in shorthand as “mitigation”); and requirements pertaining to the mitigation, monitoring and reporting of the takings are set forth.
The definitions of all applicable MMPA statutory terms cited above are included in the relevant sections below.
To comply with the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321
This action is consistent with categories of activities identified in Categorical Exclusion B4 (IHAs with no anticipated serious injury or mortality) of the Companion Manual for NOAA Administrative Order 216-6A, which do not individually or cumulatively have the potential for significant impacts on the quality of the human environment and for which we have not identified any extraordinary circumstances that would preclude this categorical exclusion. Accordingly, NMFS has preliminarily determined that the issuance of the proposed IHA qualifies to be categorically excluded from further NEPA review.
We will review all comments submitted in response to this notification prior to concluding our NEPA process or making a final decision on the IHA request.
On October 26, 2021, NMFS received an application from NOAA's Office of Marine and Aviation Operations requesting an IHA to take small numbers of 9 species (Dall's porpoise (
The purpose of the project is to remove an obsolete dock facility and construct a new facility including a 240 feet (ft) x 50 ft floating pier connected to land by a transfer bridge. A small boat dock would be connected to the large ship pier and a small boat launch ramp will be constructed adjacent to the other structures.
The pile driving/removal and DTH can result in take of marine mammals from sound in the water which results in behavioral harassment or auditory injury.
This construction work will occur from 1 February 2022 through 31 January 2023 and will take no more than 47 days of in-water pile and DTH work.
The project is located in the city of Ketchikan on Revillagigedo Island and the east shore of the Tongass Narrows waterway (Figure 1). The natural topography of the local area largely consists of moderately steep slopes trending toward the Tongass Narrows waterway. In this region, the Tongass Narrows is part of Southeast Alaska's Inside Passage where it splits into two channels by Pennock Island. The project area is in an industrial waterfront. The shoreline and underwater portions of the area are highly modified by existing dock structures and past dredging. Offshore marine sediments are reported to be minimal, with sediment cover depths progressively increasing away from the shoreline. Marine sediment depths overlying bedrock reportedly range from four to five feet and consist of coarse sand, rock fragments, and shells. Ongoing vessel activities throughout Tongass Narrows waterway, land-based industrial and commercial activities, and regular aircraft operations result in elevated in-air and underwater sound conditions in the area. Sound levels likely vary seasonally, with elevated levels during summer when the tourism and fishing industries are at their peaks. The shoreline and underwater portions of the area are highly modified by existing dock structures and past dredging.
The project consists of an almost complete recapitalization of the existing facility. This includes the removal and appropriate disposal of unused or obsolete structures and infrastructure, in both a 77,000-square-feet (ft
All existing in-water structures, including pier, access trestle, and mooring dolphins present above and below the water surface, are inadequate and would be removed except for a concrete/steel mooring platform and breasting dolphin with fender. The in-water structures would be replaced by adequately sized and structurally sound elements necessary for berthing, preparing, and maintaining vessel operations.
An estimated 134 remnant timber piles would be removed by direct pull or by vibratory methods. If piles incur breakage or splintering during the removal process, the pile would be cut at or about 2 feet (0.67 meters (m)) from the bottom. In addition, 66 remnant steel piles must be removed. This will occur by use of a pile clipper or hydraulic saw.
An approximately 240-ft long and 50-ft wide (73 by 15 m) floating pier would replace the existing pier and its supporting piles. The floating pier would be secured and stabilized by 10 24-inch diameter steel pipe piles, and accessed via a single, 144-ft long and 17-ft wide (44 by 5 m) steel, truss-framed transfer bridge. The transfer bridge would be supported by a bridge support float adjacent to the pier and hinged to the shoreline cast in place concrete abutment. The 24-ft by 22-ft (7.3 by 6.7 m) bridge support float would be secured by four additional 24-inch diameter steel piles. A small boat dock, approximately 90 ft long by 14 ft wide (27 by 4 m), would be installed and connected to the floating pier by an aluminum gangway and would require an additional four 24-inch steel piles. Thus the new structures would require a total of 18 24-inch steel piles. Installation of the new steel piles is anticipated to be undertaken using a barge mounted DTH system to create holes in the rock (sockets) in which the piles would be placed. Piles would be embedded into socket holes created by the DTH in bedrock to a minimum depth of 20 ft. The last foot of each pile would be “proofed” using an impact pile driver that is anticipated will require approximately 5 to 10 blows per pile.
Replacement mooring dolphins and fenders for mooring would be installed. Ship utilities would be extended dockside attached to the transfer bridge. A small boat launch ramp would be built on the northern portion of the site and would be supported on a raised, rip-rap protected mound with a footprint of approximately 200 ft by 70 ft wide (61 by 21 m).
Table 1 provides a summary of the pile driving activities. Because the steel piles being removed could be removed using either a pile clipper or hydraulic saw, we use the loudest, most precautionary source level for those piles which are pile clippers. In-water work would be performed using equipment based on a floating barge or from the shore, as needed. Pile work would normally only occur during civil daylight hours unless work needs to continue on a pile until it is safe to leave overnight. In summary, the project period includes 47 days of pile or DTH activities for which this IHA is requested.
Proposed mitigation, monitoring, and reporting measures are described in detail later in this document (please see Proposed Mitigation and Proposed Monitoring and Reporting).
Sections 3 and 4 of the application summarize available information regarding status and trends, distribution and habitat preferences, and behavior and life history, of the potentially affected species. Additional information regarding population trends and threats may be found in NMFS's Stock Assessment Reports (SARs;
Table 2 lists all species with expected potential for occurrence in the project area and summarizes information related to the population or stock, including regulatory status under the MMPA and Endangered Species Act (ESA) and potential biological removal (PBR), where known. For taxonomy, we follow Committee on Taxonomy (2021). PBR is defined by the MMPA as the maximum number of animals, not including natural mortalities, that may be removed from a marine mammal stock while allowing that stock to reach or maintain its optimum sustainable population (as described in NMFS's SARs). While no mortality is anticipated or authorized here, PBR and annual serious injury and mortality from anthropogenic sources are included here as gross indicators of the status of the species and other threats.
Marine mammal abundance estimates presented in this document represent the total number of individuals that make up a given stock or the total number estimated within a particular study or survey area. NMFS's stock abundance estimates for most species represent the total estimate of individuals within the geographic area, if known, that comprises that stock. For some species, this geographic area may extend beyond U.S. waters. All managed stocks in this region are assessed in NMFS's U.S. Alaska or Pacific SARs including the 2021 draft SARs.
Humpback whales, minke whales, gray whales, Pacific white-sided dolphin, killer whale, harbor porpoise, Dall's porpoise, harbor seal, and Steller sea lions spatially co-occur with the activity to the degree that take is reasonably likely to occur, and we have proposed authorizing take of these species. Fin whale could potentially occur in the area, however there are no known sightings nearby so the species is very rare, is readily observed, and the applicant would shut down pile driving if they enter the project area. Thus take is not expected to occur, and they are not discussed further.
The humpback whale is found worldwide in all oceans. Prior to 2016, humpback whales were listed under the ESA as an endangered species worldwide. Following a 2015 global status review (Bettridge
The DPSs of humpback whales that were identified through the ESA listing process do not equate to the existing MMPA stocks. The stock delineations of humpback whales under the MMPA are currently under review. Until this review is complete, NMFS considers humpback whales in Southeast Alaska to be part of the Central North Pacific stock, with a status of endangered under the ESA and designations of strategic and depleted under the MMPA (Muto
Humpback whales experienced large population declines due to commercial whaling operations in the early 20th century. Barlow (2003) estimated the population of humpback whales at approximately 1,200 animals in 1966. The population in the North Pacific grew to between 6,000 and 8,000 by the mid-1990s. Current threats to humpback whales include vessel strikes, spills, climate change, and commercial fishing operations (Muto
Humpback whales are found throughout Southeast Alaska in a variety of marine environments, including open-ocean, near-shore waters, and areas with strong tidal currents (Dahlheim
No systematic studies have documented humpback whale abundance near Ketchikan. Anecdotal information suggests that this species is present in low numbers year-round in Tongass Narrows, with the highest abundance during summer and fall. Anecdotal reports suggest that humpback whales are seen only once or twice per month, while more recently it has been suggested that the occurrence is more regular, such as once per week on average, and more seasonal. Humpbacks observed in Tongass Narrows are generally alone or in groups of one to three individuals. In August 2017, a group of 6 individuals was observed passing through Tongass Narrows several times per day, for several days in a row.
The City of Ketchikan (COK) Rock Pinnacle project, which was located approximately 4 kilometers (km) southeast of the proposed project site, reported one humpback whale sighting of one individual during the project (December 2019 through January 2020). During the Ward Cove Cruise Ship Dock Construction, located approximately 5 km northwest of the proposed project site, 28 sightings of humpbacks were made on eighteen days of in water work that occurred between February and September 2020, with at least one humpback being recorded every month. A total of 42 individuals were recorded and group sizes ranged from 1 to 6 (Power Systems & Supplies of Alaska, 2020). Humpback whales were sighted on 17 days out of 88 days of monitoring in Tongass Narrows in 2020 and 2021 (DOT&PF 2020, 2021a, 2021b, 2021c, 2021d). There were no sightings in January or February, but humpback whales were observed each month from October to December 2020 and May to June 2021. During November 2020, a single known individual (by fluke pattern) was observed repeatedly, accounting for 14 of the 26 sighting events that month (DOT&PF, 2020). During monitoring, humpback whales were observed on average once a week.
Southeast Alaska is considered an important area for feeding humpback whales between March and May (Ellison
Minke whales are found throughout the northern hemisphere in polar, temperate, and tropical waters. The population status of minke whales is considered stable throughout most of their range. Historically, commercial whaling reduced the population size of this species, but given their small size, they were never a primary target of whaling and did not experience the severe population declines as did larger cetaceans.
Minke whales are found in all Alaska waters. Minke whales in Southeast Alaska are part of the Alaska stock (Muto
There are no known occurrences of minke whales within the project area. Since their ranges extend into the project area and they have been observed in southeast Alaska, including in Clarence Strait (Dahlheim
In Alaska, the minke whale diet consists primarily of euphausiids and walleye pollock. Minke whales are generally found in shallow, coastal waters within 200 m of shore (Zerbini
Gray whales are distributed throughout the North Pacific Ocean and are found primarily in shallow coastal waters (Muto
Gray whales are rare in the action area and unlikely to occur in Tongass Narrows. They were not observed during the Dahlheim
There is an ongoing Unusual Mortality Event (UME) involving gray whales on the Pacific Coast (
Killer whales have been observed in all the world's oceans, but the highest densities occur in colder and more productive waters found at high latitudes (NMFS, 2016b). Killer whales occur along the entire Alaska coast, in British Columbia and Washington inland waterways, and along the outer coasts of Washington, Oregon, and California (NMFS, 2016b).
Based on data regarding association patterns, acoustics, movements, and genetic differences, eight killer whale stocks are now recognized within the Pacific U.S. Exclusive Economic Zone. This proposed IHA considers only the Eastern North Pacific Alaska Resident stock (Alaska Resident stock), Eastern North Pacific Northern Resident stock (Northern Resident stock), and West Coast Transient stock, because all other stocks occur outside the geographic area under consideration (Muto
There are three distinct ecotypes, or forms, of killer whales recognized: Resident, Transient, and Offshore. The three ecotypes differ morphologically, ecologically, behaviorally, and genetically. Surveys between 1991 and 2007 encountered resident killer whales during all seasons throughout Southeast Alaska. Both residents and transients were common in a variety of habitats and all major waterways, including protected bays and inlets. There does not appear to be strong seasonal variation in abundance or distribution of killer whales, but there was substantial variability between years (Dahlheim
No systematic studies of killer whales have been conducted in or around Tongass Narrows. Killer whales have been observed in Tongass Narrows year-round and are most common during the summer Chinook salmon run (May-July). During the Chinook salmon run, Ketchikan residents have reported pods of up to 20-30 whales (84 FR 36891; July 30, 2019). Typical pod sizes observed within the project vicinity range from 1 to 10 animals and the frequency of killer whales passing through the action area is estimated to be once per month (Frietag, 2017). Anecdotal reports suggest that large pods of killer whales (as many as 80 individuals, but generally between 25 and 40 individuals) are not uncommon in May, June, and July when the king salmon are running. During the rest of the year, killer whales occur irregularly in pods of 6 to 12 or more individuals.
Transient killer whales are often found in long-term stable social units (pods) of 1 to 16 whales. Average pod sizes in Southeast Alaska were 6.0 in spring, 5.0 in summer, and 3.9 in fall. Pod sizes of transient whales are generally smaller than those of resident social groups. Resident killer whales occur in larger pods, ranging from 7 to 70 whales that are seen in association with one another more than 50 percent of the time (Dahlheim
Although killer whales may occur in large numbers, they generally form large pods and would incur fewer work stoppages than their numbers suggest since stoppages would correlate more with the number of pods than the number of individuals. Killer whales tend to transit through Tongass Narrows, and do not linger in the project area.
Marine mammal observations in Tongass Narrows during 2020 and 2021 support an estimate of approximately one group of killer whales a month in the Project area. During 7 months of monitoring (October 2020 February 2021; May June 2021), there were five
Pacific white-sided dolphins are a pelagic species inhabiting temperate waters of the North Pacific Ocean and along the coasts of California, Oregon, Washington, and Alaska (Muto
Pacific white-sided dolphins prey on squid and small schooling fish such as capelin, sardines, and herring (Morton, 2006). They are known to work in groups to herd schools of fish and can dive underwater for up to 6 minutes to feed (Morton, 2006). Group sizes have been reported to range from 40 to over 1,000 animals, but groups of between 10 and 100 individuals (Stacey and Baird, 1991; NMFS no date) occur most commonly. Seasonal movements of Pacific white-sided dolphins are not well understood, but there is evidence of both north-south seasonal movement (Leatherwood
Scientific studies and data are lacking relative to the presence or abundance of Pacific white-sided dolphins in or near Tongass Narrows. Although they generally prefer deeper and more-offshore waters, anecdotal reports suggest that Pacific white-sided dolphins have previously been observed in Tongass Narrows, although they have not been observed entering Tongass Narrows or nearby inter-island waterways in 15-20 years.
Pacific white-sided dolphins are rare in the inside passageways of Southeast Alaska. Most observations occur off the outer coast or in inland waterways near entrances to the open ocean. According to Muto
During marine mammal monitoring of Tongass Narrows in 2020 and 2021, no Pacific white-sided dolphins were observed on 88 days of observations across 7 months (October 2020-February 2021; May-June 2021), which supports the anecdotal evidence that sightings of this species are rare (DOT&PF, 2020, 2021a, 2021b, 2021c, 2021d). There were also no sightings of Pacific white-sided dolphins during the COK Rock Pinnacle Blasting Project during monitoring surveys conducted in December 2019 and January 2020 (Sitkiewicz, 2020) or during monitoring surveys conducted between February and September 2020 as part of the Ward Cove Cruise Ship Dock (Power Systems and Supplies of Alaska, 2020).
In the eastern North Pacific Ocean, the harbor porpoise ranges from Point Barrow, along the Alaska coast, and down the west coast of North America to Point Conception, California. The Southeast Alaska stock ranges from Cape Suckling to the Canadian border (Muto
Studies of harbor porpoises reported no evidence of seasonal changes in distribution for the inland waters of Southeast Alaska (Dahlheim
Dall's porpoises are found throughout the North Pacific, from southern Japan to southern California north to the Bering Sea. All Dall's porpoises in Alaska are members of the Alaska stock. This species can be found in offshore, inshore, and nearshore habitat.
Jefferson
Harbor seals inhabit coastal and estuarine waters off Alaska. They haul out on rocks, reefs, beaches, and drifting glacial ice. They are opportunistic feeders and often adjust their distribution to take advantage of locally and seasonally abundant prey (Womble
Harbor seals occurring in the project area belong to the Clarence Strait stock. Distribution of the Clarence Strait stock ranges from the east coast of Prince of Wales Island from Cape Chacon north through Clarence Strait to Point Baker and along the east coast of Mitkof and Kupreanof Islands north to Bay Point, including Ernest Sound, Behm Canal, and Pearse Canal (Muto
Steller sea lions were listed as threatened range-wide under the ESA on November 26, 1990 (55 FR 49204). Steller sea lions were subsequently partitioned into the western and eastern Distinct Population Segments (DPSs; western and eastern stocks) in 1997 (62 FR 24345; May 5, 1997). The eastern DPS remained classified as threatened until it was delisted in November 2013. The current minimum abundance estimate for the eastern DPS of Steller sea lions is 43,201 individuals (Muto
There are several mapped and regularly monitored long-term Steller sea lion haulouts surrounding Ketchikan, such as West Rocks (36 mi/58 km) or Nose Point (37 mi/60 km), but none are known to occur within Tongass Narrows (Fritz
No systematic studies of sea lion abundance or distribution have occurred in Tongass Narrows. Anecdotal reports suggest that Steller sea lions may be found in Tongass Narrows year-round, with an increase in abundance from March to early May during the herring spawning season, and another increase in late summer associated with salmon runs. Overall sea lion presence in Tongass Narrows tends to be lower in summer than in winter (FHWA, 2017). During summer, Steller sea lions may aggregate outside the project area, at rookery and haulout sites. Monitoring during construction of the Ketchikan Ferry Terminal in summer (July 16 through August 17, 2016) did not record any Steller sea lions (ADOT&PF 2015); however, monitoring during construction of the Ward Cove Dock, located approximately 6 km northwest of the Project site, recorded 181 individual sea lions between February and September 2020 (Power Systems & Supplies of Alaska, 2020). Most sightings occurred in February (45 sightings of 88 sea lions) and March (34 sightings of 45 sea lions); the fewest number of sightings were observed in May (1 sighting of 1 sea lion) (Power Systems & Supplies of Alaska, 2020).
Sea lions are known to transit through Tongass Narrows while pursuing prey. Steller sea lions are known to follow fishing vessels, and may congregate in small numbers at seafood processing facilities and hatcheries or at the mouths of rivers and creeks containing hatcheries, where large numbers of salmon congregate in late summer. Three seafood processing facilities are located east of the proposed berth location on Revillagigedo Island, and two salmon hatcheries operated by the Alaska Department of Fish & Game (ADF&G) are located east of the project area. Steller sea lions may aggregate near the mouth of Ketchikan Creek, where a hatchery upstream supports a summer salmon run. The Creek mouth is more than 4 km (2.5 mi) from both ferry berth sites, and is positioned behind the cruise ship terminal and within the small boat harbor. In addition to these locations, anecdotal information from a local kayaking company suggests that there are Steller sea lions present at Gravina Point, near the southwest entrance to Tongass Narrows.
A total of 181 Steller sea lions were sighted on forty-four separate days during all months of Ward Cove Cruise Ship Dock construction (February through September, 2020) (Power Systems and Supplies of Alaska, 2020). Most sightings occurred in February and March and the fewest sightings were in May. Sightings were of single individuals, pairs, and herds of up to 10 individuals. They were identified as travelling, foraging, swimming, chuffing, milling, looking, sinking, spyhopping, and playing.
Marine mammal monitoring occurred near the proposed project site during 2020 and 2021 for previous construction components of the Tongass Narrows Project. Monitoring occurred from October 2020 to February 2021 and resumed in May 2021, and is still underway. Steller sea lions were observed in the Tongass Narrows Project area on 49 of 88 days between October 2020 and June 2021 (DOT&PF, 2020, 2021a, 2021b, 2021c, 2021d). They were observed in every month that observations took place (DOT&PF, 2020, 2021a, 2021b, 2021c, 2021d). Sightings of Steller sea lions were most frequent in January and February and least common in May and June (DOT&PF 2020, 2021a, 2021b, 2021c, 2021d). Sightings were primarily of single animals, but animals were also present in pairs and groups up to five sea lions (DOT&PF, 2020, 2021a, 2021b, 2021c, 2021d). This is consistent with Freitag (2017 as cited in 83 FR 22009), though groups of up to 80 individuals have been observed (HDR, Inc., 2003). On average over the course of a year, Steller sea lions occur in Tongass Narrows approximately three or four times per week (DOT&PF, 2020, 2021a, 2021b, 2021c, 2021d).
Hearing is the most important sensory modality for marine mammals underwater, and exposure to anthropogenic sound can have deleterious effects. To appropriately assess the potential effects of exposure to sound, it is necessary to understand the frequency ranges marine mammals are able to hear. Current data indicate that not all marine mammal species have equal hearing capabilities (
The pinniped functional hearing group was modified from Southall
For more detail concerning these groups and associated frequency ranges, please see NMFS (2018) for a review of available information. Humpback, minke and gray whales are in the low-frequency hearing group, killer whales and Pacific white-sided dolphins are in the mid-frequency hearing group, harbor and Dall's porpoises are in the high frequency hearing group, harbor seals are in the phocid group and Steller sea lions are otariids.
This section includes a summary and discussion of the ways that components of the specified activity may impact marine mammals and their habitat. The Estimated Take section later in this document includes a quantitative analysis of the number of individuals that are expected to be taken by this activity. The Negligible Impact Analysis and Determination section considers the content of this section, the Estimated Take section, and the Proposed Mitigation section, to draw conclusions regarding the likely impacts of these activities on the reproductive success or survivorship of individuals and how those impacts on individuals are likely to impact marine mammal species or stocks.
Acoustic effects on marine mammals during the specified activity can occur from impact pile driving and vibratory driving and removal and DTH. The effects of underwater noise from NOAA's proposed activities have the potential to result in Level A or Level B harassment of marine mammals in the action area.
The marine soundscape is comprised of both ambient and anthropogenic sounds. Ambient sound is defined as the all-encompassing sound in a given place and is usually a composite of sound from many sources both near and far (ANSI 1995). The sound level of an area is defined by the total acoustical energy being generated by known and unknown sources. These sources may include physical (
The sum of the various natural and anthropogenic sound sources at any given location and time—which comprise “ambient” or “background” sound—depends not only on the source levels (as determined by current weather conditions and levels of biological and shipping activity) but also on the ability of sound to propagate through the environment. In turn, sound propagation is dependent on the spatially and temporally varying properties of the water column and sea floor, and is frequency-dependent. As a result of the dependence on a large number of varying factors, ambient sound levels can be expected to vary widely over both coarse and fine spatial and temporal scales. Sound levels at a given frequency and location can vary by 10-20 dB from day to day (Richardson
In-water construction activities associated with the project would include impact and vibratory pile driving and removal and DTH. The sounds produced by these activities fall into one of two general sound types: Impulsive and non-impulsive. Impulsive sounds (
A DTH hammer is essentially a drill bit that drills through the bedrock using a rotating function like a normal drill, in concert with a hammering mechanism operated by a pneumatic (or sometimes hydraulic) component integrated into to the DTH hammer to increase speed of progress through the substrate (
The likely or possible impacts of NOAA's proposed activity on marine mammals could involve both non-acoustic and acoustic stressors. Potential non-acoustic stressors could result from the physical presence of the equipment, vessels, and personnel; however, any impacts to marine mammals are expected to primarily be acoustic in nature. Acoustic stressors include effects of heavy equipment operation during pile installation and removal.
The introduction of anthropogenic noise into the aquatic environment from pile driving equipment is the primary means by which marine mammals may be harassed from the NOAA's specified activity. In general, animals exposed to natural or anthropogenic sound may experience physical and psychological effects, ranging in magnitude from none to severe (Southall
NMFS defines a noise-induced threshold shift (TS) as a change, usually an increase, in the threshold of audibility at a specified frequency or portion of an individual's hearing range above a previously established reference level (NMFS, 2018). The amount of threshold shift is customarily expressed in dB. A TS can be permanent or temporary. As described in NMFS (2018), there are numerous factors to consider when examining the consequence of TS, including, but not limited to, the signal temporal pattern (
Depending on the degree (elevation of threshold in dB), duration (
Currently, TTS data only exist for four species of cetaceans (bottlenose dolphin, beluga whale (
Installing piles for this project requires impact pile driving and DTH. There would likely be pauses in activities producing the sound during each day. Given these pauses and that many marine mammals are likely moving through the action area and not remaining for extended periods of time, the potential for TS declines.
Disturbance may result in changing durations of surfacing and dives, number of blows per surfacing, or moving direction and/or speed; reduced/increased vocal activities; changing/cessation of certain behavioral activities (such as socializing or feeding); visible startle response or aggressive behavior (such as tail/fluke slapping or jaw clapping); avoidance of areas where sound sources are located. Pinnipeds may increase their haul-out time, possibly to avoid in-water disturbance (Thorson and Reyff, 2006). Behavioral responses to sound are highly variable and context-specific and any reactions depend on numerous intrinsic and extrinsic factors (
Disruption of feeding behavior can be difficult to correlate with anthropogenic sound exposure, so it is usually inferred by observed displacement from known foraging areas, the appearance of secondary indicators (
In 2016, the Alaska Department of Transportation and Public Facilities (ADOT&PF) documented observations of marine mammals during construction activities (
Neuroendocrine stress responses often involve the hypothalamus-pituitary-adrenal system. Virtually all neuroendocrine functions that are affected by stress—including immune competence, reproduction, metabolism, and behavior—are regulated by pituitary hormones. Stress-induced changes in the secretion of pituitary hormones have been implicated in failed reproduction, altered metabolism, reduced immune competence, and behavioral disturbance (
The primary distinction between stress (which is adaptive and does not normally place an animal at risk) and “distress” is the cost of the response. During a stress response, an animal uses glycogen stores that can be quickly replenished once the stress is alleviated. In such circumstances, the cost of the stress response would not pose serious fitness consequences. However, when an animal does not have sufficient energy reserves to satisfy the energetic costs of a stress response, energy resources must be diverted from other functions. This state of distress will last until the animal replenishes its energetic reserves sufficient to restore normal function.
Relationships between these physiological mechanisms, animal behavior, and the costs of stress responses are well-studied through controlled experiments and for both laboratory and free-ranging animals (
Airborne noise would primarily be an issue for pinnipeds that are swimming or hauled out near the project site within the range of noise levels elevated above the acoustic criteria. We recognize that pinnipeds in the water could be exposed to airborne sound that may result in behavioral harassment when looking with their heads above water. Most likely, airborne sound would cause behavioral responses similar to those discussed above in relation to underwater sound. For instance, anthropogenic sound could cause hauled-out pinnipeds to exhibit changes in their normal behavior, such as reduction in vocalizations, or cause them to temporarily abandon the area and move further from the source. However, these animals would likely previously have been “taken” because of exposure to underwater sound above the behavioral harassment thresholds, which are generally larger than those associated with airborne sound. There are no haulouts near the project site. Thus, the behavioral harassment of these animals is already accounted for in these estimates of potential take. Therefore, we do not believe that authorization of incidental take resulting from airborne sound for pinnipeds is warranted, and airborne sound is not discussed further here.
NOAA's construction activities could have localized, temporary impacts on marine mammal habitat and their prey by increasing in-water sound pressure levels and slightly decreasing water quality. Increased noise levels may affect acoustic habitat (see masking discussion above) and adversely affect marine mammal prey in the vicinity of the project area (see discussion below). During DTH, impact and vibratory pile driving or removal, elevated levels of underwater noise would ensonify the project area where both fishes and mammals occur and could affect foraging success. Additionally, marine mammals may avoid the area during construction, however, displacement due to noise is expected to be temporary and is not expected to result in long-term effects to the individuals or populations. Construction activities are of short duration and would likely have temporary impacts on marine mammal habitat through increases in underwater and airborne sound.
A temporary and localized increase in turbidity near the seafloor would occur in the immediate area surrounding the area where piles are installed or removed. In general, turbidity associated with pile installation is localized to about a 25-ft (7.6-m) radius around the pile (Everitt
The area likely impacted by the project is relatively small compared to the available habitat in Southeast Alaska and does not include any Biologically Important Areas or other habitat of known importance. The area is highly influenced by anthropogenic activities. The total seafloor area affected by pile installation and removal is a small area compared to the vast foraging area
Avoidance by potential prey (
Fish utilize the soundscape and components of sound in their environment to perform important functions such as foraging, predator avoidance, mating, and spawning (
Fish react to sounds which are especially strong and/or intermittent low-frequency sounds, and behavioral responses such as flight or avoidance are the most likely effects. Short duration, sharp sounds can cause overt or subtle changes in fish behavior and local distribution. The reaction of fish to noise depends on the physiological state of the fish, past exposures, motivation (
SPLs of sufficient strength have been known to cause injury to fish and fish mortality. However, in most fish species, hair cells in the ear continuously regenerate and loss of auditory function likely is restored when damaged cells are replaced with new cells. Halvorsen
The most likely impact to fishes from DTH and pile driving and removal and construction activities at the project area would be temporary behavioral avoidance of the area. The duration of fish avoidance of this area after pile driving stops is unknown, but a rapid return to normal recruitment, distribution and behavior is anticipated.
Construction activities, in the form of increased turbidity, have the potential to adversely affect forage fish in the project area. Forage fish form a significant prey base for many marine mammal species that occur in the project area. Increased turbidity is expected to occur in the immediate vicinity (on the order of 10 ft (3 m) or less) of construction activities. However, suspended sediments and particulates are expected to dissipate quickly within a single tidal cycle. Given the limited area affected and high tidal dilution rates any effects on forage fish are expected to be minor or negligible. Finally, exposure to turbid waters from construction activities is not expected to be different from the current exposure; fish and marine mammals in Tongass Narrows are routinely exposed to substantial levels of suspended sediment from natural and anthropogenic sources.
In summary, given the short daily duration of sound associated with individual pile driving events and the relatively small areas being affected, pile driving activities associated with the proposed action are not likely to have a permanent, adverse effect on any fish habitat, or populations of fish species. Any behavioral avoidance by fish of the disturbed area would still leave significantly large areas of fish and marine mammal foraging habitat in the nearby vicinity. Thus, we conclude that impacts of the specified activity are not likely to have more than short-term adverse effects on any prey habitat or populations of prey species. Further, any impacts to marine mammal habitat are not expected to result in significant or long-term consequences for individual marine mammals, or to contribute to adverse impacts on their populations.
This section provides an estimate of the number of incidental takes proposed for authorization through this IHA, which will inform both NMFS' consideration of “small numbers” and the negligible impact determination.
Harassment is the only type of take expected to result from these activities. Except with respect to certain activities not pertinent here, section 3(18) of the MMPA defines “harassment” as any act of pursuit, torment, or annoyance, which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
Authorized takes would primarily be by Level B harassment, as use of the acoustic sources (
As described previously, no mortality is anticipated or proposed to be authorized for this activity. Below we describe how the take is estimated.
Generally speaking, we estimate take by considering: (1) Acoustic thresholds
NMFS recommends the use of acoustic thresholds that identify the received level of underwater sound above which exposed marine mammals would be reasonably expected to be behaviorally harassed (equated to Level B harassment) or to incur PTS of some degree (equated to Level A harassment).
NOAA's proposed activity includes the use of continuous (vibratory hammer and DTH) and impulsive (DTH and impact pile-driving) sources, and therefore the 120 and 160 dB re 1 μPa (rms) thresholds are applicable.
These thresholds are provided in Table 4. The references, analysis, and methodology used in the development of the thresholds are described in NMFS 2018 Technical Guidance, which may be accessed at
Here, we describe operational and environmental parameters of the activity that will feed into identifying the area ensonified above the acoustic thresholds, which include source levels and transmission loss coefficient.
The sound field in the project area is the existing background noise plus additional construction noise from the proposed project. Marine mammals are expected to be affected via sound generated by the primary components of the project (
In order to calculate distances to the Level A harassment and Level B harassment sound thresholds for the methods and piles being used in this project, NMFS used acoustic monitoring data from other locations to develop source levels for the various pile types, sizes and methods (Table 5). Because the steel piles being removed could be removed using either a pile clipper or hydraulic saw, we use the loudest, most precautionary source level for those piles.
Transmission loss (TL) is the decrease in acoustic intensity as an acoustic pressure wave propagates out from a source. TL parameters vary with frequency, temperature, sea conditions, current, source and receiver depth, water depth, water chemistry, and bottom composition and topography. The general formula for underwater TL is:
The recommended TL coefficient for most nearshore environments is the practical spreading value of 15. This value results in an expected propagation environment that would lie between spherical and cylindrical spreading loss conditions, which is the most appropriate assumption for NOAA's proposed activity in the absence of specific modelling.
NOAA determined underwater noise would fall below the behavioral effects threshold of 160 dB RMS for impact driving at 2,530 m and the 120 dB rms threshold for the other methods at between 1,848 and 11,659 m (Table 6). It should be noted that based on the bathymetry and geography of the project area, sound will not reach the full distance of the harassment isopleths in all directions.
When the NMFS Technical Guidance (2016) was published, in recognition of the fact that ensonified area/volume could be more technically challenging to predict because of the duration component in the new thresholds, we developed a User Spreadsheet that includes tools to help predict a simple isopleth that can be used in conjunction with marine mammal density or occurrence to help predict takes. We note that because of some of the assumptions included in the methods used for these tools, we anticipate that isopleths produced are typically going to be overestimates of some degree, which may result in some degree of overestimate of take by Level A harassment. However, these tools offer the best way to predict appropriate isopleths when more sophisticated 3D modeling methods are not available, and NMFS continues to develop ways to quantitatively refine these tools, and will qualitatively address the output where appropriate. For stationary sources such as pile driving or removal and DTH using any of the methods discussed above, NMFS User Spreadsheet predicts the closest distance at which, if a marine mammal remained at that distance the whole duration of the activity, it would not incur PTS. We used the User Spreadsheet to determine the Level A harassment isopleths. Inputs used in the User Spreadsheet or models are reported in Table 1 and the resulting isopleths are reported in Table 6 for each of the construction methods and scenarios.
In this section we provide the information about the presence or group dynamics of marine mammals that will inform the take calculations. No density data are available for species in the project area. Here we describe how the information provided above is brought together to produce a quantitative take estimate. The estimates below are similar to and informed by prior projects in the Ketchikan area as discussed above. A summary of proposed take is in Table 9.
Humpback whales are expected to occur in the project area no more than twice per five-day work week. Typical group size for humpback whales in the project area is two animals. The project involves 47 days (10 work weeks) of in-water work where take could occur. Therefore, we estimate total take at 2 whales × 2/week × 10 weeks = 40 takes. All of these takes are expected to be Level B harassment takes as we believe the Level A shutdown zones can be fully implemented by Protected Species Observers (PSO) because of the large size, short dive duration, and obvious behaviors of humpback whales.
Given the data in Wade
As discussed above minke whales have not been seen in the project area but could occur there. They are often solitary. Therefore we conservatively propose to authorize a single take of minke whales. This one estimated take is expected to be by Level B harassment as we believe the Level A shutdown zones can be fully implemented by PSOs because of the large size, short dive duration, and obvious behaviors of minke whales.
Gray whales are expected to occur in the project area no more than once per month. Typical group size for gray whales in the project area is two animals. The project involves 47 days of in-water work where take could occur. Therefore, we estimate total take at two whales × two full months = four takes. All of these takes are expected to be Level B harassment takes as we believe the Level A shutdown zones can be fully implemented by PSOs because of the large size, short dive duration, and obvious behaviors of gray whales.
Killer whales are expected to occur in the project area no more than once per month. Typical group size for killer whales in the project area is conservatively estimated at 10 animals. The project involves 47 days of in-water work where take could occur. Therefore, we estimate total take at 10 whales × 2 full months = 20 takes. All of these takes are expected to be Level B harassment takes as we believe the Level A shutdown zones can be fully implemented by PSOs because of the large size, short dive duration, and obvious behaviors of killer whales and the smaller size of the shutdown zones.
Pacific white-sided dolphins are expected to occur in the project area no more than once per week. Typical group size for Pacific white-sided dolphins in the project area is 20 animals. The project involves 10 work weeks of in-water work where take could occur. Therefore, we estimate total take at 20 dolphins × 10 weeks = 200 takes. All of these takes are expected to be Level B harassment takes as we believe the Level A shutdown zones can be fully implemented by PSOs because of the large group size, short dive duration, and obvious behaviors of Pacific white-sided dolphins and the smaller size of the shutdown zones.
Harbor porpoises are expected to occur in the project area no more than three times per month. Typical group size for harbor porpoises in the project area is 5 animals. The project involves 47 days (2 months) of in-water work where take could occur. Therefore, we estimate total take at 5 porpoises × 6/month = 30 takes. Twenty of these takes are expected to be Level B harassment takes. Because the shutdown zone is not the full size of the large Level A harassment zone, and because harbor porpoises are small and cryptic and could sometimes remain undetected within the estimated harassment zones for a duration sufficient to experience PTS, we propose to authorize 10 takes by Level A harassment.
Dall's porpoises are expected to occur in the project area no more than three times. Typical group size for Dall's porpoises in the project area is 20 animals. The project involves two months of in-water work where take could occur. Therefore, we estimate total take at 20 porpoises × 3 = 60 takes. Forty of these takes are expected to be Level B harassment takes. Because the shutdown zone is not the full size of the large Level A harassment zone, and because Dall's porpoises are small and cryptic and could sometimes remain undetected within the estimated harassment zones for a duration sufficient to experience PTS, we propose to authorize 20 takes by Level A harassment.
Harbor seals are expected to occur in the project area once per day. The typical number of harbor seals per day in the project area is up to 12 animals. The project involves 47 days of in-water work where take could occur. Therefore, we estimate total take at 12 seals × 47 days = 564 takes. Seventy-five percent or 423 of these takes are expected to be Level B harassment takes. Because the shutdown zone is not the full size of the large Level A harassment zone, and because harbor seals are small and cryptic and could sometimes remain undetected within the estimated harassment zones for a duration sufficient to experience PTS, we propose to authorize 141 takes by Level A harassment.
Steller sea lions are expected to occur in the project area once per day. The typical number of Steller sea lions per day in the project area is up to 10 animals. The project involves 47 days of in-water work where take could occur. Therefore, we estimate total take at 10 sea lions × 47 days = 470 takes. Because the shutdown zone is small and Steller sea lions are not cryptic we believe the Level A shutdown zones can be fully implemented by PSOs and no Level A harassment take is proposed.
In order to issue an IHA under section 101(a)(5)(D) of the MMPA, NMFS must set forth the permissible methods of taking pursuant to the activity, and other means of effecting the least practicable impact on the species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stock for taking for certain subsistence uses (latter not applicable for this action). NMFS regulations require applicants for IHAs to include information about the availability and feasibility (economic and technological) of equipment, methods, and manner of conducting the activity or other means of effecting the least practicable adverse impact upon the affected species or stocks and their habitat (50 CFR 216.104(a)(11)).
In evaluating how mitigation may or may not be appropriate to ensure the least practicable adverse impact on species or stocks and their habitat, as well as subsistence uses where applicable, we carefully consider two primary factors:
(1) The manner in which, and the degree to which, the successful implementation of the measure(s) is expected to reduce impacts to marine mammals, marine mammal species or stocks, and their habitat. This considers the nature of the potential adverse impact being mitigated (likelihood, scope, range). It further considers the likelihood that the measure will be effective if implemented (probability of accomplishing the mitigating result if implemented as planned), the likelihood of effective implementation (probability implemented as planned); and
(2) The practicability of the measures for applicant implementation, which may consider such things as cost, impact on operations, and, in the case of a military readiness activity, personnel safety, practicality of implementation, and impact on the effectiveness of the military readiness activity.
Because of the need for an ESA Section 7 consultation for effects of the project on ESA listed humpback whales, there are a number of mitigation measures that go beyond, or are in addition to, typical mitigation measures we would otherwise require for this sort of project. The proposed measures are however typical for actions in the Ketchikan area. Additional or revised measures may be required once the consultation is finalized. The following mitigation measures are proposed in the IHA:
• Avoid direct physical interaction with marine mammals during construction activity. If a marine mammal comes within 10 m of such activity, operations must cease and vessels must reduce speed to the minimum level required to maintain steerage and safe working conditions;
• Conduct training between construction supervisors and crews and the marine mammal monitoring team and relevant NOAA staff prior to the start of all pile driving and DTH activity and when new personnel join the work, so that responsibilities, communication procedures, monitoring protocols, and operational procedures are clearly understood;
• Pile driving activity must be halted upon observation of either a species for which incidental take is not authorized or a species for which incidental take has been authorized but the authorized number of takes has been met, entering or within the harassment zone. If an ESA listed marine mammal is determined by the PSO to have been disturbed, harassed, harmed, injured, or killed (
• NOAA will establish and implement the shutdown zones indicated in Table 8. The purpose of a shutdown zone is generally to define an area within which shutdown of the activity would occur upon sighting of a marine mammal (or in anticipation of an animal entering the defined area). Shutdown zones typically vary based on the activity type and marine mammal hearing group. To simplify implementation of shutdown zones NOAA has proposed to implement a single shutdown zone size for impact pile driving and DTH activities, with the shutdown zone being the largest of the Level A harassment isopleths for any of the hearing groups for those activities (180 m). For comparison purposes, Table 8 shows both the minimum shutdown zones we would normally require and the shutdown zones NOAA proposes to implement. NMFS proposes to include the latter in the requested IHA;
• Employ PSOs and establish monitoring locations as described in the Marine Mammal Monitoring Plan and Section 5 of the IHA. The Holder must monitor the project area to the maximum extent possible based on the required number of PSOs, required monitoring locations, and environmental conditions. For all pile driving and removal at least three PSOs must be used;
• The placement of the PSOs during all pile driving and removal and DTH activities will ensure that the entire shutdown zone is visible during pile installation. Should environmental conditions deteriorate such that marine mammals within the entire shutdown zone will not be visible (
• Monitoring must take place from 30 minutes prior to initiation of pile driving activity through 30 minutes post-completion of pile driving activity. Pre-start clearance monitoring must be conducted during periods of visibility sufficient for the lead PSO to determine the shutdown zones clear of marine mammals. Pile driving may commence following 30 minutes of observation when the determination is made;
• If pile driving is delayed or halted due to the presence of a marine mammal, the activity may not commence or resume until either the animal has voluntarily exited and been visually confirmed beyond the shutdown zone or 15 minutes have passed without re-detection of the animal (30 minutes for humpback whales);
• For humpback whales, if the boundaries of the harassment zone have not been monitored continuously during a work stoppage, the entire harassment zone will be surveyed again to ensure that no humpback whales have entered the harassment zone that were not previously accounted for;
• In-water activities will take place only: Between civil dawn and civil dusk when PSOs can effectively monitor for the presence of marine mammals; during conditions with a Beaufort Sea State of 4 or less; when the entire shutdown zone and adjacent waters are visible (
• Vessel operators will maintain a watch for marine mammals at all times while underway; stay at least 91 m (100 yards (yd)) away from listed marine mammals, except they will remain at least 460 m (500 yd) from endangered
• NOAA must use soft start techniques when impact pile driving. Soft start requires contractors to provide an initial set of three strikes at reduced energy, followed by a 30-second waiting period, then two subsequent reduced-energy strike sets. A soft start must be implemented at the start of each day's impact pile driving and at any time following cessation of impact pile driving for a period of 30 minutes or longer.
Based on our evaluation of the applicant's proposed measures, as well as other measures considered by NMFS, NMFS has preliminarily determined that the proposed mitigation measures provide the means effecting the least practicable impact on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.
In order to issue an IHA for an activity, section 101(a)(5)(D) of the MMPA states that NMFS must set forth requirements pertaining to the monitoring and reporting of such taking. The MMPA implementing regulations at 50 CFR 216.104 (a)(13) indicate that requests for authorizations must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and of the level of taking or impacts on populations of marine mammals that are expected to be present in the proposed action area. Effective reporting is critical both to compliance as well as ensuring that the most value is obtained from the required monitoring.
Monitoring and reporting requirements prescribed by NMFS should contribute to improved understanding of one or more of the following:
• Occurrence of marine mammal species or stocks in the area in which take is anticipated (
• Nature, scope, or context of likely marine mammal exposure to potential stressors/impacts (individual or cumulative, acute or chronic), through better understanding of: (1) Action or environment (
• Individual marine mammal responses (behavioral or physiological) to acoustic stressors (acute, chronic, or cumulative), other stressors, or cumulative impacts from multiple stressors;
• How anticipated responses to stressors impact either: (1) Long-term fitness and survival of individual marine mammals; or (2) populations, species, or stocks;
• Effects on marine mammal habitat (
• Mitigation and monitoring effectiveness.
Monitoring must be conducted by qualified, NMFS-approved PSOs, in accordance with the following:
• PSOs must be independent (
• PSOs must record all observations of marine mammals as described in the Section 5 of the IHA and the Marine Mammal Monitoring Plan, regardless of distance from the pile being driven. PSOs shall document any behavioral reactions in concert with distance from piles being driven or removed;
PSOs must have the following additional qualifications:
• Ability to conduct field observations and collect data according to assigned protocols;
• Experience or training in the field identification of marine mammals, including the identification of behaviors;
• Sufficient training, orientation, or experience with the construction operation to provide for personal safety during observations;
• Writing skills sufficient to prepare a report of observations including but not limited to the number and species of marine mammals observed; dates and times when in-water construction activities were conducted; dates, times, and reason for implementation of mitigation (or why mitigation was not implemented when required); and marine mammal behavior; and
• Ability to communicate orally, by radio or in person, with project personnel to provide real-time information on marine mammals observed in the area as necessary;
NOAA must establish the following monitoring locations. For all pile driving and DTH activities, a minimum of one PSO must be assigned to the active pile driving or DTH location to monitor the shutdown zones and as much of the Level B harassment zones as possible. For all pile driving and DTH activities, two additional PSOs are required. The additional PSOs will start at the project site and travel along Tongass Narrows, counting all humpback whales present, until they have reached the edge of the respective harassment zone. At this point, the PSOs will identify suitable observation points from which to observe the width of Tongass Narrows for the duration of pile driving activities. For the largest DTH zones these are expected to be on South Tongass Highway near Mountain Point and North Tongass Highway just northwest of the intersection with Carlanna Creek. See application Figure 11-1 for map of PSO locations. If visibility deteriorates so that the entire width of Tongass Narrows at the harassment zone boundary is not visible, additional PSOs may be positioned so that the entire width is visible, or work will be halted until the entire width is visible to ensure that any humpback whales entering or within the harassment zone are detected by PSOs.
A draft marine mammal monitoring report will be submitted to NMFS within 90 days after the completion of pile driving and removal activities, or 60 days prior to a requested date of issuance of any future IHAs for projects at the same location, whichever comes first. The report will include an overall description of work completed, a narrative regarding marine mammal sightings, and associated PSO data sheets. Specifically, the report must include:
• Dates and times (begin and end) of all marine mammal monitoring;
• Construction activities occurring during each daily observation period, including the number and type of piles driven or removed and by what method (
• PSO locations during marine mammal monitoring;
• Environmental conditions during monitoring periods (at beginning and end of PSO shift and whenever conditions change significantly), including Beaufort sea state and any other relevant weather conditions including cloud cover, fog, sun glare, and overall visibility to the horizon, and estimated observable distance;
• Upon observation of a marine mammal, the following information: Name of PSO who sighted the animal(s) and PSO location and activity at time of sighting; Time of sighting; Identification of the animal(s) (
• Number of marine mammals detected within the harassment zones, by species;
• Detailed information about any implementation of any mitigation triggered (
• If visibility degrades to where the PSO(s) cannot view the entire impact or vibratory harassment zones, take of humpback whales will be extrapolated based on the estimated percentage of the monitoring zone that remains visible and the number of marine mammals observed.
If no comments are received from NMFS within 30 days, the draft final report will constitute the final report. If comments are received, a final report addressing NMFS comments must be submitted within 30 days after receipt of comments.
In the event that personnel involved in the construction activities discover an injured or dead marine mammal, the IHA-holder must immediately cease the specified activities and report the incident to the Office of Protected Resources (OPR) (
• Time, date, and location (latitude/longitude) of the first discovery (and updated location information if known and applicable);
• Species identification (if known) or description of the animal(s) involved;
• Condition of the animal(s) (including carcass condition if the animal is dead);
• Observed behaviors of the animal(s), if alive;
• If available, photographs or video footage of the animal(s); and
• General circumstances under which the animal was discovered.
NMFS has defined negligible impact as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival (50 CFR 216.103). A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (
Pile driving and removal and DTH activities have the potential to disturb or displace marine mammals. Specifically, the project activities may result in take, in the form of Level A and Level B harassment from underwater sounds generated from pile driving and removal and DTH. Potential takes could occur if individuals are present in the ensonified zone when these activities are underway.
The takes from Level A and Level B harassment would be due to potential behavioral disturbance, TTS, and PTS. No serious injury or mortality is anticipated given the nature of the activity and measures designed to minimize the possibility of injury to marine mammals. The potential for harassment is minimized through the construction method and the implementation of the planned mitigation measures (see Proposed Mitigation section).
The Level A harassment zones identified in Table 6 are based upon an animal exposed to impact pile driving multiple piles per day. Considering the short duration to impact drive or vibe each pile and breaks between pile installations (to reset equipment and move pile into place), this means an animal would have to remain within the area estimated to be ensonified above the Level A harassment threshold for multiple hours. This is highly unlikely given marine mammal movement throughout the area. If an animal was exposed to accumulated sound energy, the resulting PTS would likely be small (
The nature of the pile driving project precludes the likelihood of serious injury or mortality. For all species and stocks, take would occur within a limited, confined area (adjacent to the project site) of the stock's range. Level A and Level B harassment will be reduced to the level of least practicable adverse impact through use of mitigation measures described herein. Further the amount of take proposed to be authorized is extremely small when compared to stock abundance.
Behavioral responses of marine mammals to pile driving at the project site, if any, are expected to be mild and temporary. Marine mammals within the Level B harassment zone may not show any visual cues they are disturbed by activities (as noted during modification to the Kodiak Ferry Dock) or could become alert, avoid the area, leave the area, or display other mild responses that are not observable such as changes in vocalization patterns. Given the short duration of noise-generating activities per day, any harassment would be temporary. There are no other areas or times of known biological importance for any of the affected species.
In addition, it is unlikely that minor noise effects in a small, localized area of habitat would have any effect on the stocks” ability to recover. In combination, we believe that these factors, as well as the available body of evidence from other similar activities, demonstrate that the potential effects of the specified activities will have only minor, short-term effects on individuals. The specified activities are not expected to impact rates of recruitment or survival and will therefore not result in population-level impacts.
In summary and as described above, the following factors primarily support our preliminary determination that the impacts resulting from this activity are not expected to adversely affect the species or stock through effects on annual rates of recruitment or survival:
• No mortality is anticipated or authorized;
• Authorized Level A harassment would be very small amounts and of low degree;
• No important habitat areas have been identified within the project area;
• For all species, Tongass Narrows is a very small and peripheral part of their range;
• NOAA would implement mitigation measures such as soft-starts, and shut downs; and
• Monitoring reports from similar work in Tongass Narrows have documented little to no effect on individuals of the same species impacted by the specified activities.
Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the proposed monitoring and mitigation measures, NMFS preliminarily finds that the total marine mammal take from the proposed activity will have a negligible impact on all affected marine mammal species or stocks.
As noted above, only small numbers of incidental take may be authorized under section 101(a)(5)(D) of the MMPA for specified activities other than military readiness activities. The MMPA does not define small numbers and so, in practice, where estimated numbers are available, NMFS compares the number of individuals taken to the most appropriate estimation of abundance of the relevant species or stock in our determination of whether an authorization is limited to small numbers of marine mammals. When the predicted number of individuals to be taken is fewer than one third of the species or stock abundance, the take is considered to be of small numbers. Additionally, other qualitative factors may be considered in the analysis, such as the temporal or spatial scale of the activities.
The amount of take NMFS proposes to authorize is below one third of the estimated stock abundance for all species (in fact, take of individuals is less than 10 percent of the abundance of the affected stocks, see Table 7). This is likely a conservative estimate because we assume all takes are of different individual animals, which is likely not the case. Some individuals may return multiple times in a day, but PSOs would count them as separate takes if they cannot be individually identified. The Alaska stock of Dall's porpoise has no official NMFS abundance estimate for this area as the most recent estimate is greater than eight years old. Nevertheless, the most recent estimate was 83,400 animals and it is highly unlikely this number has drastically declined. Therefore, the 60 authorized takes of this stock clearly represent small numbers of this stock. Likewise, the Southeast Alaska stock of harbor porpoise has no official NMFS abundance estimate as the most recent estimate is greater than eight years old. Nevertheless, the most recent estimate was 11,146 animals (Muto
Based on the analysis contained herein of the proposed activity (including the proposed mitigation and monitoring measures) and the anticipated take of marine mammals, NMFS preliminarily finds that small numbers of marine mammals will be taken relative to the population size of the affected species or stocks.
In order to issue an IHA, NMFS must find that the specified activity will not have an “unmitigable adverse impact” on the subsistence uses of the affected marine mammal species or stocks by Alaskan Natives. NMFS has defined “unmitigable adverse impact” in 50 CFR 216.103 as an impact resulting from the specified activity: (1) That is likely to reduce the availability of the species to a level insufficient for a harvest to meet subsistence needs by: (i) Causing the marine mammals to abandon or avoid hunting areas; (ii) Directly displacing subsistence users; or (iii) Placing physical barriers between the marine mammals and the subsistence hunters; and (2) That cannot be sufficiently mitigated by other measures to increase the availability of marine mammals to allow subsistence needs to be met.
Alaska Native hunters in the Ketchikan vicinity do not traditionally harvest cetaceans (Muto
Based on the description of the specified activity, the measures described to minimize adverse effects on the availability of marine mammals for subsistence purposes, and the proposed mitigation and monitoring measures, NMFS has preliminarily determined that there will not be an unmitigable adverse impact on subsistence uses from NOAA's proposed activities.
Section 7(a)(2) of the ESA (16 U.S.C. 1531
NMFS is proposing to authorize take of Mexico DPS of humpback whales which are listed under the ESA. The NMFS Office of Protected Resources has requested initiation of Section 7 consultation with the Alaska Region for the issuance of this IHA. NMFS will conclude the ESA consultation prior to reaching a determination regarding the proposed issuance of the authorization.
As a result of these preliminary determinations, NMFS proposes to issue an IHA to the NOAA to conduct the NOAA Port Facility Project in Ketchikan, Alaska from 1 February 2022 through 31 January 2023, provided the previously mentioned mitigation, monitoring, and reporting requirements are incorporated. A draft of the proposed IHA can be found at
We request comment on our analyses, the proposed authorization, and any other aspect of this notice of proposed IHA for the proposed NOAA Ketchikan Port project. We also request at this time comment on the potential renewal of this proposed IHA as described in the paragraph below. Please include with your comments any supporting data or literature citations to help inform decisions on the request for this IHA or a subsequent Renewal IHA.
On a case-by-case basis, NMFS may issue a one-time, one-year Renewal IHA following to the public providing an additional 15 days for public comments when (1) up to another year of identical, or nearly identical, activities as described in the Description of Proposed Activity section of this notification is planned or (2) the activities as described in the Description of Proposed Activity section of this notification would not be completed by the time the IHA expires and a Renewal IHA would allow for completion of the activities beyond that described in the Dates and Duration section of this notification, provided all of the following conditions are met:
• A request for renewal is received no later than 60 days prior to the needed Renewal IHA effective date (recognizing that Renewal IHA expiration date cannot extend beyond one year from expiration of the initial IHA);
• The request for renewal must include the following:
(1) An explanation that the activities to be conducted under the requested Renewal IHA are identical to the activities analyzed under the initial IHA, are a subset of the activities, or include changes so minor (
(2) A preliminary monitoring report showing the results of the required monitoring to date and an explanation showing that the monitoring results do not indicate impacts of a scale or nature not previously analyzed or authorized; and
• Upon review of the request for Renewal, the status of the affected species or stocks, and any other pertinent information, NMFS determines that there are no more than minor changes in the activities, the mitigation and monitoring measures will remain the same and appropriate, and the findings in the initial IHA remain valid.
Consumer Product Safety Commission.
Notice of adjusted maximum civil penalty amounts.
In 1990, Congress enacted statutory amendments to adjust the maximum civil penalty amounts authorized under the Consumer Product Safety Act (CPSA), the Federal Hazardous Substances Act (FHSA), and the Flammable Fabrics Act (FFA). On August 14, 2008, the Consumer Product Safety Improvement Act of 2008 (CPSIA) increased the maximum civil penalty amounts to $100,000 for each violation and $15,000,000 for any related series of violations. The CPSIA tied the effective date of the new amounts to the earlier of the date on which final regulations are issued or 1 year after August 14, 2008. The new amounts became effective on August 14, 2009. The CPSIA also revised the starting date, from December 1, 1994 to December 1, 2011, and December 1 of each fifth calendar year, thereafter, on which the Commission must prescribe and publish in the
The new amounts will become effective after January 1, 2022.
Amy S. Colvin, Attorney, Office of the General Counsel, U.S. Consumer Product Safety Commission, 4330 East-West Highway, Bethesda, MD 20814; telephone (301) 504-7639; email
The Consumer Product Safety Improvement Act of 1990 (Improvement Act), Public Law 101-608, 104 stat. 3110 (Nov. 16, 1990), and the CPSIA, Public Law 110-314, 122 stat. 3016 (Aug. 14, 2008), amended the CPSA, FHSA, and the FFA. The Improvement Act added civil penalty authority to the FHSA and FFA, which previously contained only criminal penalties. 15 U.S.C. 1264(c) and 1194(e). The Improvement Act also increased the maximum civil penalty amounts applicable to civil penalties under the CPSA and set the same maximum amounts for the newly created FHSA and FFA civil penalties. 15 U.S.C. 2069(a)(1), 1264(c)(1) and 1194(e)(1).
The Improvement Act amended the CPSA, FHSA, and FFA to adjust the maximum civil penalty amounts periodically for inflation. 15 U.S.C. 2069(a)(3), 1264(c)(6), and 1194(e)(5). The Improvement Act required that the Commission “prescribe and publish in the
The CPSIA amended the CPSA, FHSA, and FFA to increase the maximum authorized civil penalty amounts to $100,000 for each violation, and $15,000,000 for any related series of violations. 15 U.S.C. 2069(a)(1), 1264(c)(1), and 1194(e)(1). The CPSIA amended the starting date in the CPSA from not later than December 1, 1994, and December 1 of each fifth calendar year thereafter, to not later than December 1, 2011, and December 1 of each fifth calendar year thereafter, as the date on which “the Commission shall prescribe and publish in the
The Commission's Directorate for Economics calculated the cost-of-living adjustment increases the maximum civil penalty amounts to $117,656 for each violation, and to $17,140,340 for any related series of violations. In accordance with statutory directions regarding rounding, the adjusted maximum amounts are $120,000 for each violation, and $17,150,000 for any related series of violations. These new amounts apply to violations that occur after January 1, 2022.
Office of Spent Fuel and Waste Disposition, Office of Nuclear Energy, Department of Energy.
Request for information.
The Office of Nuclear Energy (NE), U.S. Department of Energy (DOE), requests information on how to site Federal facilities for the temporary, consolidated storage of spent nuclear fuel using a consent-based approach. DOE anticipates that communities; governments at the local, State, and Tribal levels; members of the public; energy and environmental justice groups; organizations or corporations; and other stakeholders may be interested in responding to this Request for Information (RFI). We especially welcome insight from people, communities, and groups that have historically not been well-represented in these discussions. Responses to the RFI will inform development of a consent-based siting process, overall strategy for an integrated waste management system, and possibly a funding opportunity.
Responses to the RFI must be received by March 4, 2022 by 5:00 p.m. (ET).
Interested parties may submit comments electronically to
Please send any questions to
In 2015, DOE began developing a consent-based process for siting storage or disposal facilities collaboratively with members of the public, communities, stakeholders, and governments at the Tribal, State, and local levels. As part of this initiative, the Department issued an Invitation for Public Comment (
In the Consolidated Appropriations Act, 2021, Congress appropriated funds to the Department for interim storage activities. Interim storage is an important component of a waste management system and will enable near-term consolidation and temporary storage of spent nuclear fuel. This will allow for removal of spent nuclear fuel from reactor sites, provide useful research opportunities, and build trust and confidence with stakeholders and the public by demonstrating a consent-based approach to siting.
DOE anticipates that an interim storage facility would need to operate until the fuel can be moved to final disposal. The duration of the interim period depends on the completion of a series of significant steps, such as the need to identify, license, and construct a facility, plus the time needed to move the spent nuclear fuel.
Given Congressional appropriations to move forward with interim storage activities, we are seeking input on using a consent-based process to site federal interim storage facilities. We will use responses to this RFI, along with comments received in 2017 on the
Respondents to this RFI do not need to address every question, but DOE welcomes input in all of the following areas.
1. How should the Department build considerations of social equity and environmental justice into a consent-based siting process?
2. What role should Tribal, State, and local governments and officials play in determining consent for a community to host a federal interim storage facility?
3. What benefits or opportunities could encourage local, State, and Tribal governments to consider engaging with the Department as it works to identify federal interim storage sites?
4. What are barriers or impediments to successful siting of federal interim storage facilities using a consent-based process and how could they be addressed?
5. How should the Department work with local communities to establish reasonable expectations and plans concerning the duration of storage at federal interim storage facilities?
6. What organizations or communities should the Department consider partnering with to develop a consent-based approach to siting?
7. What other issues, including those raised in the
1. What barriers might prevent meaningful participation in a consent-based siting process and how could those barriers be mitigated or removed?
2. What resources might be needed to ensure potentially interested communities have adequate opportunities for information sharing, expert assistance, and meaningful participation in the consent-based siting process?
3. How could the Department maximize opportunities for mutual learning and collaboration with potentially interested communities?
4. How might the Department more effectively engage with local, State, and Tribal governments on consent-based siting of federal interim storage facilities?
5. What information do communities, governments, or other stakeholders need to engage with the Department on consent-based siting of federal interim storage facilities?
1. How can the Department ensure considerations of social equity and environmental justice are addressed in developing the nation's waste management system?
2. What are possible benefits or drawbacks to co-locating multiple facilities within the waste management system or co-locating waste management facilities with manufacturing facilities, research and development infrastructure, or clean energy technologies?
3. To what extent should development of an interim storage facility relate to progress on establishing a permanent repository?
4. What other issues should the Department consider in developing a waste management system?
Please submit responses to this RFI electronically to
Please identify your answers by responding to a specific question or topic, if applicable. Please clearly state the specific question to which you are responding. All proprietary and restricted information must be clearly marked. Respondents may answer as many or as few questions as they wish. DOE will not respond to individual submissions. A response to this RFI will not be viewed as a binding commitment to develop or pursue the project or ideas discussed.
Please provide the following information at the start of your response:
Data collected from this RFI will not be protected from the public view in any way. Individual commentors' names and addresses (including email addresses) received as part of this RFI are part of the public record. DOE plans to post all comment documents received in their entirety at following the close of the public comment period. Any person wishing to have their name, address, email address, or other identifying information withheld from the public record of comment documents must state this request prominently at the beginning of any comment document, or else no redactions will be made.
This RFI is not a Funding Opportunity Announcement (FOA), prize, or any other type of solicitation; therefore, DOE is not accepting applications at this time. DOE may issue a FOA or other solicitation in the future based on or related to the content and responses to this RFI; however, there is no guarantee that a FOA or solicitation will be issued as a result of this RFI. Responding to this RFI does not provide any advantage or disadvantage to potential applicants if DOE chooses to issue a FOA regarding the subject matter. Final details, including the anticipated award size, quantity, and timing of DOE-funded awards, will be subject to Congressional appropriations and direction.
Any information obtained as a result of this RFI is intended to be used by the Government on a non-attribution basis for planning and strategy development. This RFI does not constitute a formal solicitation for proposals or abstracts. Your response to this notice will be treated as information only. DOE will review and consider all responses in its formulation of program strategies for the identified materials of interest that are the subject of this request. DOE will not provide reimbursement for costs incurred in responding to this RFI. Respondents are advised that DOE is under no obligation to acknowledge receipt of the information received or provide feedback to respondents with respect to any information submitted under this RFI. Responses to this RFI do not bind DOE to any further actions related to this topic.
If you need assistance in a language other than English, please visit
Thank you in advance for your input, and we look forward to receiving your responses.
This document of the Department of Energy was signed on November 18, 2021, by Dr. Kathryn Huff, Principal Deputy Assistant Secretary for the Office of Nuclear Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system (
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:
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
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.
Any person desiring to protest in any the above proceedings must file in accordance with Rule 211 of the Commission's Regulations (18 CFR § 385.211) on or before 5:00 pm Eastern time on the specified comment date.
The filings are accessible in the Commission's eLibrary system (
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that on November 10, 2021, Texas Eastern Transmission, LP (Texas Eastern), P.O. Box 1396, Houston, Texas 77251, filed an application under sections 7(b) and 7(c) of the Natural Gas Act (NGA), and Part 157 of the Commission's regulations requesting that the Commission authorize its Venice Extension Project (Project) which will provide up to 1,260,000 Dth/d of firm natural gas transportation service in Louisiana.
Specifically, Texas Eastern requests authorization to: (1) Construct, install, own, operate and maintain a 3.0-mile, 36-inch-diameter pipeline segment on Texas Eastern's Line 40 located in Pointe Coupee Parish; (2) abandon-in-place a 2.2-mile, 36-inch-diameter existing pipeline segment on Line 40; (3) construct a new 31,900 horsepower (hp) compressor station and metering and regulating facilities in Pointe Coupee Parish, Louisiana; (4) abandon-in-place the existing, inactive 19,800 hp compressor unit at the compressor station located in Iberville Parish, Louisiana, and the existing, inactive 19,800 compressor unit at the compressor station in Lafourche Parish, Louisiana; (5) install one new 31,900 hp compressor unit and related appurtenances at each compressor station in Iberville Parish and Lafourche Parish; (6) upgrade a metering and regulating facility on a platform in Plaquemines Parish; and (7) establish initial incremental recourse reservation rate and usage rates for firm transportation service on the Project under Rate Schedule FT-1 and an incremental fuel retainage percentage that will apply to service provided on the Project facilities.
In addition to publishing the full text of this document in the
Any questions regarding the proposed project should be directed to Arthur Diestel, Director, Rate and Certificates, Texas Eastern Transmission, LP, P.O. Box 1642, Houston, Texas 77251-1642, by phone (713) 627-5116, or by email at
Pursuant to Section 157.9 of the Commission's Rules of Practice and Procedure,
There are two ways to become involved in the Commission's review of this project: You can file comments on the project, and you can file a motion to intervene in the proceeding. There is no fee or cost for filing comments or intervening. The deadline for filing a motion to intervene is 5:00 p.m. Eastern Time on December 16, 2021.
Any person wishing to comment on the project may do so. Comments may include statements of support or objections to the project as a whole or specific aspects of the project. The more specific your comments, the more useful they will be. To ensure that your comments are timely and properly recorded, please submit your comments on or before December 16, 2021.
There are three methods you can use to submit your comments to the Commission. In all instances, please reference the Project docket number CP22-15-000 in your submission.
(1) You may file your comments electronically by using the eComment feature, which is located on the Commission's website at
(2) You may file your comments electronically by using the eFiling feature, which is located on the Commission's website (
(3) You may file a paper copy of your comments by mailing them to the following address below.
The Commission encourages electronic filing of comments (options 1 and 2 above) and has eFiling staff available to assist you at (202) 502-8258 or
Persons who comment on the environmental review of this project will be placed on the Commission's environmental mailing list, and will receive notification when the environmental documents (EA or EIS) are issued for this project and will be notified of meetings associated with the Commission's environmental review process.
The Commission considers all comments received about the project in determining the appropriate action to be taken. However, the filing of a comment alone will not serve to make the filer a party to the proceeding. To become a party, you must intervene in the proceeding. For instructions on how to intervene, see below.
Any person, which includes individuals, organizations, businesses, municipalities, and other entities,
To intervene, you must submit a motion to intervene to the Commission in accordance with Rule 214 of the Commission's Rules of Practice and Procedure
There are two ways to submit your motion to intervene. In both instances, please reference the Project docket number CP22-15-000 in your submission.
(1) You may file your motion to intervene by using the Commission's eFiling feature, which is located on the Commission's website (
(2) You can file a paper copy of your motion to intervene, along with three copies, by mailing the documents to the address below.
The Commission encourages electronic filing of motions to intervene (option 1 above) and has eFiling staff available to assist you at (202) 502-8258 or
Motions to intervene must be served on the applicant either by mail or email at: P.O. Box 1642, Houston, Texas 77251-1642 or at
All timely, unopposed
Throughout the proceeding, additional information about the project will be available from the Commission's Office of External Affairs, at (866) 208-FERC, or on the FERC website at
In addition, the Commission offers a free service called eSubscription which allows you to keep track of all formal issuances and submittals in specific dockets. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. For more information and to register, go to
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:
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The Commission strongly encourages electronic filing. Please file comments, motions to intervene, and protests using the Commission's eFiling system at
The Commission's Rules of Practice and Procedure require all intervenors filing documents with the Commission to serve a copy of that document on each person whose name appears on the official service list for the project. Further, if an intervenor files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency.
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m. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.
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This constitutes notice, in accordance with 18 CFR 385.2201(b), of the receipt of prohibited and exempt off-the-record communications.
Order No. 607 (64 FR 51222, September 22, 1999) requires Commission decisional employees, who make or receive a prohibited or exempt off-the-record communication relevant to the merits of a contested proceeding, to deliver to the Secretary of the Commission, a copy of the communication, if written, or a summary of the substance of any oral communication.
Prohibited communications are included in a public, non-decisional file associated with, but not a part of, the decisional record of the proceeding. Unless the Commission determines that the prohibited communication and any responses thereto should become a part of the decisional record, the prohibited off-the-record communication will not be considered by the Commission in reaching its decision. Parties to a proceeding may seek the opportunity to respond to any facts or contentions made in a prohibited off-the-record communication and may request that the Commission place the prohibited communication and responses thereto in the decisional record. The Commission will grant such a request only when it determines that fairness so requires. Any person identified below as having made a prohibited off-the-record communication shall serve the document on all parties listed on the official service list for the applicable proceeding in accordance with Rule 2010, 18 CFR 385.2010.
Exempt off-the-record communications are included in the decisional record of the proceeding, unless the communication was with a cooperating agency as described by 40 CFR 1501.6, made under 18 CFR 385.2201(e)(1)(v).
The following is a list of off-the-record communications recently received by the Secretary of the Commission. The communications listed are grouped by docket numbers in ascending order. These filings are available for electronic review at the Commission in the Public Reference Room or may be viewed on the Commission's website at
Environmental Protection Agency (EPA).
Notification for a public meeting.
Pursuant to the Federal Advisory Committee Act (FACA), the U.S. Environmental Protection Agency (EPA) hereby provides notice that the National Environmental Justice Advisory Council (NEJAC) will meet on the date and time described below. The meeting is open to the public. Members of the public are encouraged to provide comments relevant to the specific issues being considered by the NEJAC. For additional information about registering to attend the meeting or to provide public comment, please see “REGISTRATION” under
The NEJAC will hold a virtual public meeting on Wednesday, January 5, 2022, from approximately 1:00 p.m. to 4:00 p.m., Eastern Time. A public comment period relevant to the specific issues will be considered by the NEJAC during the meeting (see
Fred Jenkins, NEJAC Designated Federal Officer, U.S. EPA; please send via email to
The meeting discussion will focus on the environmental justice and civil rights compliance elements in the EPA's next multiyear strategic plan draft and the future implementation of those elements, as well as other aligned efforts and plans of the agency. The Charter of the NEJAC states that its purpose is to provide independent advice and recommendations to the EPA Administrator about broad, crosscutting issues related to environmental justice. The NEJAC's efforts will include evaluation of a broad range of strategic, scientific, technological, regulatory, community engagement and economic issues related to environmental justice.
Every effort will be made to hear from as many registered public commenters during the time specified on the agenda. Individuals or groups making remarks during the oral public comment period will be limited to three (3) minutes. Submitting written comments for the record are strongly encouraged. You can submit your written comments in three different ways, (1.) by creating comments in the Docket ID No. EPA-HQ-OA-2021-0848 at
For information about access or services for individuals requiring assistance, please contact Fred Jenkins, via email at:
Environmental Protection Agency (EPA).
Notice of public meeting for Great Lakes Advisory Board.
Pursuant to the Federal Advisory Committee Act (FACA), the Environmental Protection Agency (EPA) provides notice of a public meeting for the Great Lakes Advisory Board. Pre-registration is required.
This virtual public meeting will be held on December 15th, 2021 from 12:30 p.m. to 4:30 p.m. Central Standard Time. Members of the public seeking to view the meeting must register by 3:00 p.m. Central Standard Time on December 8th, 2021. Members of the public seeking to make comments relevant to issues discussed at the virtual meeting must register and indicate a request to make oral and/or written public comments in advance of the meeting. For information on how to register, please see [How do I participate in the meeting] below.
Edlynzia Barnes, Designated Federal Officer (DFO), at
The GLAB is chartered in accordance with the Federal Advisory Committee Act (FACA) of 1972 (5 U.S.C., Appendix 2, as amended) and 41 CFR 102-3.50(d). The Advisory Board provides advice and recommendations on matters related to the Great Lakes Restoration Initiative. The Advisory Board also advises on domestic matters related to implementation of the Great Lakes Water Quality Agreement between the U.S. and Canada. The major objectives are to provide advice and recommendations on: Great Lakes protection and restoration activities; long-term goals, objectives, and priorities for Great Lakes protection and restoration; and other issues identified by the Great Lakes Interagency Task Force/Regional Working Group.
This meeting will be conducted as a virtual meeting on December 15th, 2021 from 12:30 p.m. to 4:30 p.m. Central Standard Time. You must register by 3:00 p.m. Central Standard Time on December 8th, 2021 to receive information on how to participate. You may also submit written or oral comments for the committee by following the processes outlined below.
Individual registration is required for participation in this meeting. Information on registration for this meeting can be found at
The meeting agenda and other materials for the virtual conference will be posted on the GLAB website at
Persons with disabilities who wish to request reasonable accommodations to participate in this event may contact the DFO at
Environmental Protection Agency (EPA).
Notice; request for public comment.
In accordance with the Environmental Protection Agency (EPA) Administrator's October 16, 2017, Directive Promoting Transparency and Public Participation in Consent Decrees and Settlement Agreements, notice is hereby given of a proposed consent decree to address several claims in a lawsuit filed by Sierra Club, Center for Environmental Law and Policy, and plaintiff-intervenor, the Spokane Tribe of Indians (“Plaintiffs”) in the U.S. District Court for the Western District of Washington. On October 21, 2011, the Plaintiffs Sierra Club and Center for Environmental Law and Policy filed a complaint alleging, among other things, that EPA failed to perform duties mandated by the Clean Water Act (“CWA”) with respect to Total Maximum Daily Loads (“TMDLs”) for segments of the Spokane River and adjacent water bodies that were listed as impaired due to polychlorinated biphenyls (“PCBs”). EPA seeks public input on the proposed consent decree prior to its final decision-making to settle the litigation.
Written comments on the proposed consent decree must be received by January 3, 2022.
Submit your comments, identified by Docket ID number EPA-HQ-OGC-2021-0828, online at
Stephen Sweeney, Water Law Office (2355A), Office of General Counsel, U.S.
On October 11, 2011, Plaintiffs Sierra Club and Center for Environmental Law and Policy filed suit in the federal district court for the Western District of Washington. Plaintiff's original Complaint alleged a failure by EPA to perform nondiscretionary duties under CWA section 303(d)(2), 33 U.S.C. 1313(d)(2), to approve or disapprove TMDLs for PCBs that Plaintiffs asserted the Washington Department of Ecology had constructively submitted for various segments of the Spokane River, and, upon disapproval, to promulgate such TMDLs. Subsequently, the Spokane Tribe of Indians intervened as plaintiffs and Plaintiffs amended their complaints to file additional claims. The proposed consent decree would resolve all claims brought by Plaintiffs.
Under the proposed consent decree, EPA's obligations would be to issue the TMDLs for PCBs by a deadline of September 30, 2024, for the following PCB-impaired water segments Assessment Units in the Spokane River, the Little Spokane River, and or Lake Spokane (Long Lake) located in Washington State (or as these same PCB-impaired Assessment Units have been or may be subsequently renumbered by the Washington State Department of Ecology): 17010305000009; 17010305000010; 17010305000011; 17010305000012; 17010307000010; 17010307000774; 17010307009102; 17010307009615; 17010308000018; 47117H513; 47117I6C1; 47117I7d4; 47117I8C2; 47117I5A4; 47117H5J8; 47117I7E2; 47117I7D3; 47117I7B9 and 47117I5A5. EPA also would file status reports with the court every 180 days to apprise the parties to the litigation and the court of EPA's progress satisfying the requirement to issue the TMDLs and of the work EPA intended to undertake during the next 180 day period. The proposed consent decree would not resolve Plaintiffs' claims for attorney's fees, which Plaintiffs would need to file within 165 days of entry of the consent decree.
For a period of thirty (30) days following the date of publication of this notice, the Agency will accept written comments relating to the obligations of EPA for resolution of the claims contained in the proposed consent decree from persons who are not named as original parties or intervenors to the litigation in question. EPA or the Department of Justice may withdraw or withhold consent to the proposed consent decree if the comments disclose facts or considerations that indicate that such consent is inappropriate, improper, inadequate, or inconsistent with the requirements of the CWA or any other provision of law. Unless EPA or the Department of Justice determine that they should not consent to this proposed consent decree, the terms of the proposed consent decree will be affirmed and filed for entry by the Court.
The official public docket for this action (identified by EPA-HQ-OGC-2021-0828) contains a copy of the proposed settlement agreement. The official public docket is located at the Office of Environmental Information (OEI) Docket in the EPA Docket Center, EPA West, Room 3334, 1301 Constitution Ave. NW, Washington, DC. The regular hours of the EPA Docket Center Public Reading Room are from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays; however, due to the COVID-19 pandemic, there may be limited or no opportunity to enter the docket center. At the time of this printing, the docket center is closed to public visitors out of an abundance of caution for members of the public and EPA staff to reduce the risk of transmitting COVID-19. During the closure, Docket Center staff will continue to provide remote customer service via email, phone, and webform. For further information on EPA Docket Center services, see
An electronic version of the public docket is available on EPA's website at
EPA's policy is that copyrighted material, including copyrighted material contained in a public comment, will not be placed in EPA's electronic public docket but will be available only in printed, paper form in the official public docket. EPA has not included any copyrighted material in the docket for this proposed settlement. If commenters submit copyrighted material in a public comment, it will be placed in the official public docket and made available for public viewing when the EPA Docket Center is open.
You may submit comments as provided in the
EPA recommends that you include your name, mailing address, and an email address or other contact information in the body of your comment. This ensures that you can be identified as the submitter of the comment and allows EPA to contact you in case EPA cannot read your comment due to technical difficulties or needs further information on the substance of your comment. Any identifying or contact information provided in the body of a comment will be included as part of the comment that is placed in the official public docket and made available in EPA's electronic public docket. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment.
Use of the
Board of Governors of the Federal Reserve System.
The Board of Governors of the Federal Reserve System (Board) is adopting a proposal to extend for three years, with revision, the Complex Institution Liquidity Monitoring Report (FR 2052a; OMB No. 7100-0361).
The revisions will be effective May 1, 2022, for banking organizations subject to Category I standards and October 1, 2022, for banking organizations subject to Category II-IV standards.
Federal Reserve Board Clearance Officer—Nuha Elmaghrabi—Office of the Chief Data Officer, Board of Governors of the Federal Reserve System, Washington, DC 20551, (202) 452-3829.
Office of Management and Budget (OMB) Desk Officer for the Federal Reserve Board, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, 725 17th Street NW, Washington, DC 20503, or by fax to (202) 395-6974.
On June 15, 1984, OMB delegated to the Board authority under the Paperwork Reduction Act (PRA) to approve and assign OMB control numbers to collections of information conducted or sponsored by the Board. Board-approved collections of information are incorporated into the official OMB inventory of currently approved collections of information. The OMB inventory, as well as copies of the PRA Submission, supporting statements, and approved collection of information instrument(s) are available at
The FR 2052a is mandatory. The information collected on the FR 2052a is collected as part of the Board's supervisory process. Therefore, such information is entitled to confidential treatment under exemption 8 of the Freedom of Information Act (FOIA).
Several commenters requested an extension of the proposed effective date of July 1, 2021. Some of these commenters suggested a phased-in approach that would require the reporting of FR 2052a data elements related to the NSFR rule earlier than FR 2052a data elements not related to the NSFR rule.
Commenters raised concerns that the different submission cycles for various proposed FR 2052a data elements would increase burden and cause confusion, as banking organizations would be required to submit different FR 2052a data elements either daily, monthly, or quarterly and with different time lags (for example, T+2 business days, T+10 calendar days, or T+15 calendar days) based on criteria specified in the FR 2052a. One commenter also argued that the FR 2052a data elements required to be submitted on a monthly and quarterly submission cycle should be reported based on business days rather than calendar days.
The Board is finalizing the submission timing for the FR 2052a data elements as proposed. The timeliness of data is critical to effective liquidity monitoring and basing the submission of monthly and quarterly FR 2052a data elements on a business day cadence would impede the Board's ability to effectively monitor the liquidity risks of banking organizations. Moreover, the approach the Board is taking is consistent with the current requirement for monthly filers of the FR 2052a to report data on a calendar day cadence. In addition, the Board has the authority to require banking organizations to report FR 2052a data elements more frequently or with less delay when necessary (for example, during periods of market stress). Banking organizations that build reporting processes based on a rigid and lengthy data production cycle may struggle to provide data more frequently or with less delay in these scenarios. Thus, to mitigate burden, the final FR 2052a instructions clarify that data elements that are reported based on calendar days are due on the next good business day if the calendar day submission deadline falls on a weekend or holiday.
Additionally, commenters requested clarification regarding (i) how the Board plans to use the FR 2052a to monitor NSFR rule compliance, (ii) which FR 2052a data elements should be used to fulfill NSFR rule public disclosure requirements, and (iii) the reporting approach for FR 2052a data elements on a monthly or quarterly submission cycle. Specifically, commenters asked whether banking organizations that submit FR 2052a data elements daily would need to submit static monthly FR 2052a data elements each business day using data from the previous month end, prior to the required monthly refresh of these data elements. Commenters also asked whether banking organizations should update previously submitted balances of daily FR 2052a data elements with the same as-of date when filing their monthly FR 2052a data elements, and whether these monthly FR 2052a data elements should be based on the final or estimated month-end balance sheet. Commenters further noted that some required FR 2052a data elements may not be available at the submission frequency required by the proposed FR 2052a. In particular, commenters observed that the risk weights that are needed for reporting certain FR 2052a data elements are generally reported on a quarterly basis for purposes of existing regulatory reports.
The Board will use the FR 2052a to calculate a banking organization's NSFR in accordance with Appendix VIII
Further, the NSFR rule public disclosure requirements, which are based on daily averages, are independent of and not modified by the FR 2052a. The Board is allowing banking organizations to report certain FR 2052a data elements less frequently than daily, as banking organizations have less time to compile, validate, and submit these data elements compared to the NSFR rule public disclosures, which are reported publicly on a semi-annual basis and disclosed with a longer delay. Nonetheless, banking organizations can choose to align the submission cycles of FR 2052a data elements by submitting the T+10 or T+15 FR 2052a data elements prior to their submission deadlines, provided that they have the capability to accurately produce the data.
With respect to the FR 2052a data elements that are submitted less frequently (that is, monthly for daily filers or quarterly for certain monthly filers) and with a T+15 time lag, the Board is requiring banking organizations to report the information as of the end of the submission cycle, and not for each business day. The Board is not requiring banking organizations to re-submit FR 2052a data elements that must be submitted daily or with less delay in tandem with FR 2052a data elements that are submitted less frequently and with longer delay. However, the Board is requiring banking organizations to re-submit previously submitted FR 2052a data elements that contain material errors. In addition, the Board is requiring banking organizations to report FR 2052a data elements in accordance with the submission cycles required by the FR 2052a and NSFR rule public disclosure requirements, even if related data are currently reported less frequently and with less granularity on other regulatory reports (for example, the risk weights of a banking organization's exposures are reported quarterly). In the case of risk weights that are needed for daily or monthly FR 2052a data elements, the Board does not anticipate material variation on an intra-quarter basis since these are standardized parameters.
Some commenters expressed concern with the lack of alignment between the reporting of FR 2052a data elements and the balance sheet under U.S. generally accepted accounting principles (U.S. GAAP), and asserted that the proposed FR 2052a approach (that is, through FR 2052a data element field “S.B.6: Carrying Value Adjustment”) to align the two would be overly burdensome. Commenters noted that banking organizations would incur significant
Relatedly, commenters requested guidance on how banking organizations are expected to reconcile their U.S. GAAP balance sheet with the FR 2052a. These commenters requested a comprehensive list of FR 2052a data elements and how those elements map to the U.S. GAAP balance sheet. Commenters also requested clarification regarding how banking organizations should report reconciliations between settlement date positions, on which the FR 2052a is primarily based, and trade date positions, on which parts of the U.S. GAAP balance sheet are based. In addition, to assist with reconciling the FR 2052a with U.S. GAAP balance sheet reporting, commenters recommended that the Board provide a list of validation checks and checks with other regulatory reports to ensure the accuracy and reasonableness of data submissions. One commenter also requested that the Board provide a new list of edit checks.
The Board is finalizing the FR 2052a data elements designed to align the FR 2052a with a U.S. GAAP balance sheet (that is, through FR 2052a data element field “S.B.6: Carrying Value Adjustment”) as proposed. The Board clarifies that the FR 2052a does not require a banking organization to report carrying value adjustments at the transaction level. Instead, these carrying value adjustments may be aggregated and reported at a level sufficient for the Board to monitor and assess the adequacy of a banking organization's asset liquidity and funding stability. Hence, banking organizations may generally apply these carrying value adjustments at the FR 2052a product
Further, the FR 2052a does not require banking organizations to wholly reconcile FR 2052a data elements to the details reported on a U.S. GAAP balance sheet. Rather, the FR 2052a requires banking organizations to report data that conceptually cover the entirety of their balance sheet exposures and certain off-balance sheet exposures in a manner sufficient to measure funding stability and asset liquidity. Banking organizations subject to the NSFR rule should refer to Appendix VIII, which reflects the level at which the Board requires the FR 2052a to align with a U.S. GAAP balance sheet and includes methods to reconcile between trade date and settlement date accounting. Board staff will coordinate with each banking organization not subject to the NSFR rule to determine the appropriate level to reconcile the FR 2052a reporting requirements with U.S. GAAP balance sheet reporting requirements, commensurate with each banking organization's size, complexity, and risk profile.
Additionally, FR 2052a validation checks have historically been implemented following the finalization of changes to the FR 2052a, as developing new validation checks benefits from interactions with banking organizations on technical issues. Moreover, the Board expects banking organizations to independently develop appropriate validation checks and controls to ensure the quality and integrity of submitted data.
One commenter argued that certain FR 2052a data fields that are unrelated to liquidity risk management should be removed, including the “global systematically important Bank (G-SIB)” field, “Fixed Income Clearing Corporation (FICC)” settlement specification, “Collateral Level” field, identification of total loss absorbing capacity (TLAC) instruments in the “Loss Absorbency” field, “Accounting Designation” field, and “Business Line” field. Similarly, commenters asserted that the Board should not adopt the proposed expansions of certain FR 2052a data fields, such as the counterparty and collateral class data fields, as these expansions are not necessary to implement the NSFR and LCR rules.
The Board is finalizing these aspects of the FR 2052a as proposed. The Board uses the FR 2052a to collect data in support of its supervisory mandates, including monitoring the microprudential and financial stability risks associated with large banking organizations' asset and liability profiles. These new FR 2052a data fields play an important role in the Board's monitoring of these risks.
For example, the “G-SIB” field, which identifies data elements where the underlying counterparty is a G-SIB, captures necessary information for monitoring potential interdependencies between G-SIBs that could be a channel for the transmission of systemic funding risks. It also provides visibility into interdependencies with non-U.S. G-SIBs, including exposures in the U.S. capital markets that are booked through non-U.S. affiliates or are otherwise less transparent to the Board. The Board notes that there is significant precedent for the collection of counterparty data in regulatory reports and through supervisory monitoring.
The “FICC” settlement specification identifies repurchase and reverse repurchase transactions (repo-style transactions) cleared and novated to the FICC. These transactions represent a material and critical segment of the repo-style transactions market, and accordingly the FICC settlement specification provides substantial insight into banking organization-specific and banking system-wide liquidity risks in this market segment. Understanding a banking organization's repo-style transactions cleared through FICC could have significant implications for the Board's supervisory assessments of the banking organization's strategies to obtain liquidity from high-quality liquid assets (HQLA) and any associated financial stability implications. In addition, an understanding of how a banking organization's repo-style transactions are settled, including through FICC, would help the Board to assess the risks of a banking organization's repo-style transactions and access to funding markets. Further, reporting a banking organization's relationship with a central counterparty such as FICC by name is less sensitive compared to reporting a banking organization's relationship with a commercial counterparty by name. Finally, introducing the FICC settlement specification addresses ambiguities in the current FR 2052a instructions regarding the classification of repo-style transactions that may be cleared and net settled with FICC, but may individually
The “Collateral Level” field is used to differentiate the derivative asset and liability values and the balances of variation margin posted and received for all derivative contracts. This field is required for banking organizations to determine the extent to which variation margin posted and received is eligible for netting under the NSFR rule. This field is referenced in Appendix VIII, which maps the FR 2052a to the applicable NSFR rule provisions.
The information collected in the “Loss Absorbency” field is required to distinguish between tier 2 capital instruments and other long-term liabilities. The TLAC indicator is a natural extension of the “Loss Absorbency” field and distinguishes TLAC instruments from other long-term liabilities. This indicator also provides insight into the composition of a banking organization's capital markets debt issuances that is critical to monitoring the execution of its funding strategy. Moreover, TLAC instruments are typically issued with early call options that are not deemed to be exercised when determining the maturity of these instruments for purposes of the LCR and NSFR rules. These call options could introduce sudden and unexpected liquidity needs during a period of stress. An indicator that clearly identifies TLAC instruments enables supervisory monitoring of risks associated with these potential liquidity needs, as the call dates of TLAC instruments are relatively standardized.
The “Accounting Designation” field differentiates a banking organization's unencumbered inventory based on its designated treatment for accounting purposes. The data collected in the “Accounting Designation” field provide information about potential constraints to a banking organization's liquidity buffer management strategies. Classification of assets as Held-to-Maturity has significant implications on a banking organization's possible channels for obtaining liquidity from those assets. This field also facilitates reconciliation to other regulatory reports.
The “Business Line” field designates the business line responsible for or associated with all applicable exposures reported on the FR 2052a. The information collected in the “Business Line” field helps the Board in conducting reviews of banking organizations' internal liquidity stress tests (ILSTs) required under the Board's Regulation YY and Regulation LL, since a key factor in a banking organization's own assessment of its liquidity risk for certain transactions can be the line of business in which these transactions are managed. Appropriately, this field only applies to the largest and most complex banking organizations, where distinguishing transactions by business lines is particularly important given the breadth and complexity of their operations. This information also enhances supervisory coordination with banking organizations, as it will provide a mechanism to align certain data collected in regulatory reports with the banking organization's ILST results and other internal management information systems. Further, the current FR 2052a instructions already capture limited business line information by requiring a banking organization to differentiate between exposures that are associated with its prime brokerage operations versus other exposures. Therefore, the “Business Line” field is an expansion of the current reporting requirement for banking organizations subject to Category I standards and not a new reporting requirement. Moreover, the Board is providing relief to banking organizations subject to Category II-IV standards by removing the reporting requirement to designate transactions associated with prime brokerage business lines. Additionally, banking organizations should not incur significant burden in implementing this field, as the “Business Line” field only requires banking organizations to designate the existing business lines in which a particular transaction is managed and does not create new regulatory categories.
The Board is adding more granular counterparty types to the counterparty class data field because the current definitions do not provide for mutually exclusive categories of financial counterparties. These changes fully align with the financial counterparty types specified in Regulation WW,
The expansion of the collateral class data field, which identifies the types of collateral for relevant FR 2052a data elements, recognizes that the liquidity characteristics of exchange traded funds (ETFs) and mutual funds can be different from the individual securities or assets that underlie the ETF or mutual fund. ETFs can also play a significant role in the funding strategies of banking organizations that engage in dealing activities, such as providing financing to and acting as an intermediary for the trading activities of their clients. Additionally, the Board is expanding the collateral class data field to include equity investments in subsidiaries because information about these equity investments is required to construct an accurate view of a banking organization's balance sheet and can be necessary to calculate the NSFR.
Several commenters argued that certain banking organizations, including FBOs, should not be required to report FR 2052a data elements that are related to the NSFR rule (NSFR-related FR 2052a data elements) for a material entity if the material entity is not subject to the NSFR rule. Some commenters argued that FBOs should not be required to report NSFR-related FR 2052a data elements for material entities that are part of its combined U.S. operations but not subject to the NSFR rule (such as a U.S. branch that is not required to be held under a FBO's U.S. intermediate holding company (IHC)). In this case, commenters argued that FBOs should report the NSFR-related FR 2052a data elements only for their IHCs. Additionally, one commenter requested the Board to differentiate between the category of standards applicable to an FBO's IHC and its combined U.S. operations under Regulation YY to avoid misinterpretation of requirements for reporting NSFR-related FR 2052a data elements and to align the FR 2052a instructions with the tailoring final rules.
The Board is clarifying that certain banking organizations, including FBOs, may provide certain NSFR-related FR 2052a data elements (for example, FR 2052a data element field “S.L.10: Net Stable Funding Ratio”) exclusively at the level of the material entity that is subject to the NSFR rule. Other NSFR-related FR 2052a data elements (for example, FR 2052a data element field “S.B.1 Regulatory Capital Element”) would be required to be reported by a banking organization for material entities not subject to the NSFR rule to assist the Board in assessing the banking organization's funding risks under a range of market conditions, as an adequate assessment requires an
One commenter recommended that the Board should leverage existing regulatory reports, when possible, to collect NSFR-related FR 2052a data elements. This commenter pointed out several comparable data elements in the FR 2052a and FR Y-9C reports as examples. The Board has leveraged existing data from other regulatory reports to the extent possible, but the data provided in other regulatory reports do not consistently align with the FR 2052a data elements and would not provide the same granularity as the NSFR-related FR 2052a data elements. Although the FR Y-9C data elements and related FR 2052a data elements cited by the commenter share some characteristics, the FR 2052a data elements have unique features and greater granularity requirements to provide the Board with the necessary insight into a banking organization's balance sheet funding risks.
Commenters also raised a number of requests for technical clarifications and recommendations pertaining to the FR 2052a instructions, as listed below.
One commenter asked whether resubmissions of a FR 2052a report that was filed prior to the effective date of the revised FR 2052a would be based on FR 2052a requirements as of the filing date, or whether such resubmissions would need to incorporate changes made in the revised FR 2052a. The Board is clarifying that resubmissions of the FR 2052a must be based on the FR 2052a requirements as of the original filing date. However, the Board will only require banking organizations to resubmit data using the FR 2052a requirements as of a filing date prior to the effective date of the revised FR 2052a for up to 180 days after this effective date.
The same commenter requested clarification regarding how banking organizations should map the proposed FR 2052a maturity time buckets to the NSFR rule's standardized maturity buckets used for the application of certain NSFR parameters. The Board is amending the proposed FR 2052a maturity time buckets to match the NSFR rule's standardized maturity buckets. The commenter also asked how the proposed FR 2052a effective maturity buckets are to be applied to tables other than the “I.S: Inflows-Secured” table. Effective maturity buckets must be used to designate the period of encumbrance for assets that have been pledged to secure other assets. These assets include unsecured loans reported in the “I.U: Inflows-Unsecured” table or securities reported in the “I.A: Inflows-Assets” table. The commenter also asked how banking organizations should treat products that have both evergreen and extendable features (for example, a contract with an option to extend its maturity that also requires a minimum number of days' notice before the contract can mature). Banking organizations should use the “Evergreen” maturity optionality designation for products with both evergreen and extendable features. The commenter also asked for an example of an asset that would fall within the “Not Accelerated” maturity optionality designation. Examples include where a banking organization holds an option to accelerate the maturity of an asset, or where the banking organization holds an option to accelerate the maturity of a liability with an original maturity of more than one year but the option is not exercisable for the first six months.
The same commenter also asked the Board to clarify the distinction between the “IG-2-Q” collateral class, which refers to investment grade municipal obligations, and the “IG-2” collateral class, which refers to investment grade U.S. municipal general obligations. The Board is clarifying that the “IG-2” collateral class includes only general obligations and the “IG-8” collateral class includes all other municipal obligations. The “IG-2-Q” collateral class includes investment grade municipal obligations that are liquid and readily marketable and that qualify as level 2B HQLA.
One commenter asked the Board to allow banking organizations to provide general descriptions of the “Other” FR 2052a data element fields monthly as opposed to daily. After considering the commenter's request regarding the frequency of reporting general descriptions of the “Other” FR 2052a data element fields, the Board is amending the instructions to require monthly reporting of these general descriptions.
The commenter also asked for examples of assets that should be reported in the FR 2052a data element field “I.A.7: Encumbered Assets.” Examples of assets that should be reported in the FR 2052a data element field “I.A.7: Encumbered Assets” include, without limitation, securities owned by a banking organization that are pledged to a repo-style transaction, loan, or derivative transaction. The commenter further requested clarification on the types of assets in the “S.DC: Supplemental-Derivatives & Collateral” table that require the reporting of an encumbrance type. The Board is clarifying that the encumbrance type field is only required in circumstances where assets held or received by the banking organization have been encumbered to other transactions or exposures. On this basis, the FR 2052a data element fields “S.DC.1: Gross Derivative Asset Values,” “S.DC.7: Initial Margin Received,” and “S.DC.10: Variation Margin Received” can require the assignment of an encumbrance type.
The commenter asked whether the collateral class designation of “Y-4,” which refers to equity investment in affiliates, for the FR 2052a data element field “O.O.19: Interest & Dividends Payable” would apply to only inter-affiliate dividends or all dividends. The Board is clarifying that the designation applies to all dividends. A question was also asked regarding how banking organizations should report the maturity amount of a secured financing transaction where they have elected the fair value option for accounting purposes. The Board is clarifying that the maturity amount must reflect the cash settlement obligation of the secured financing transaction. Banking organizations must also use the FR 2052a data element field “S.B.6: Carrying Value Adjustment” to align the maturity amount with the balance sheet carrying value based on the fair value option election.
The commenter also asked questions related to a banking organization's capacity to engage in collateral substitution for purposes of the FR 2052a data element field “S.DC.21: Other Collateral Substitution Capacity.” The commenter asked whether banking organizations could include encumbered assets that would become unencumbered after the first good
The commenter further requested clarification on whether banking organizations could exclude from their required stable funding (RSF) amount
In addition, the commenter asked whether non-cash items should be included in the FR 2052a data element fields “S.B.2: Other Liabilities” and “S.B.4: Other Assets.” The Board is clarifying that these two FR 2052a data element fields should reflect all other assets and liabilities that are (i) not otherwise reported in other FR 2052a data elements, (ii) reportable under U.S. GAAP, and (iii) within the scope of the NSFR rule, regardless of whether these assets or liabilities are cash or non-cash items.
The commenter also requested clarification with respect to the FR 2052a data element field “S.B.5: Counterparty Netting.” Specifically, the commenter asked whether banking organizations should follow U.S. GAAP or the NSFR rule. The Board is clarifying that banking organizations are required to follow the NSFR rule. The Board believes that requiring banking organizations to follow the NSFR rule when filing the FR 2052a is appropriate, as the Board will use information collected through the FR 2052a to monitor compliance with the NSFR rule in addition to evaluating the liquidity and funding risks of banking organizations. The commenter also asked whether amounts reported under the FR 2052a data element field “S.B.5: Counterparty Netting” could be excluded from the FR 2052a data element field “S.B.6: Carrying Value Adjustment.” The Board is clarifying that the FR 2052a data element fields “S.B.5: Counterparty Netting” and “S.B.6: Carrying Value Adjustment” are mutually exclusive; therefore, amounts reported under the FR 2052a data element field “S.B.5: Counterparty Netting” must be excluded from amounts reported under FR 2052a data element field “S.B.6: Carrying Value Adjustment.”
The commenter also asked the Board to confirm that currency is not a required field in “Appendix I: FR 2052a Data Format, Tables, and Fields.” The Board is confirming that currency is a required field. The currency and converted fields are not displayed for each value field in this appendix to simplify its visual representation of the FR 2052a data structure.
The Board is also revising the FR 2052a instructions to correct typographical errors, align the FR 2052a with previously issued FAQs, or remove certain FR 2052a data elements as the Board no longer considers those items to be critical to monitoring the liquidity and funding risks of banking organizations and across the entire banking system by:
• Removing interest receivable from the products reportable in the “I.U: Inflows-Unsecured” table;
• Changing “I.O.6: Interest and Dividends Receivable” so that the counterparty to be reported is the payor of the interest;
• Changing the definition of an operational escrow account, found in “O.D.7: Operational Escrow Accounts,” to match the definition provided in Question 5 of the FR 2052a FAQ Volume 12;
• Updating the “other cash” reference in “I.A.3: Unrestricted Reserve Balances” to refer to “Currency and Coin;”
• Removing “I.U.8: Unposted Debits;” and
• Completing the instructions to “S.L.9: Additional Funding Requirement for Off-Balance Sheet Rehypothecated Assets” by adding the phrase “has been rehypothecated.”
A commenter requested clarification with respect to the reporting of certain secured financing transactions, including the process of netting in cases where the collateral value exceeds the netted on-balance sheet cash leg and the collateral potentially consists of more than one instrument. Relatedly, the commenter asked how banking organizations should allocate the RSF factors
The Board notes that the FR 2052a provides clear instructions regarding the reporting of secured financing transactions, asset exchange transactions, and the encumbrance type designation. Additionally, the information collected through the FR 2052a regarding these types of transactions and the encumbrance type designation provides the Board with important insights into banking organization-specific and banking
The Board received several comments related to the mapping appendices associated with the FR 2052a. The Board will respond to these inquiries in a different forum, as the mapping appendices do not represent FR 2052a instructions.
Centers for Medicare & Medicaid Services, HHS.
Notice of hearing: reconsideration of disapproval.
This notice announces an administrative hearing to be held on January 12, 2022, at the Department of Health and Human Services, Division of Medicaid Field Operations, South, Centers for Medicare & Medicaid Services, Division of Medicaid and Children's Health Operations, 61 Forsyth St., Suite 4T20, Atlanta, Georgia 30303-8909 to reconsider CMS' decision to disapprove South Carolina's Medicaid SPA 19-0004-A.
Benjamin R. Cohen, Presiding Officer, CMS, 7500 Security Blvd., MS B1-01-31, Baltimore MD 21244-1850,
This notice announces an administrative hearing to reconsider CMS's decision to disapprove South Carolina's Medicaid state plan amendment (SPA) 19-0004-A, which was submitted to the Centers for Medicare & Medicaid Services (CMS) on June 28, 2019 and disapproved on May 21, 2021. This SPA requested CMS approval to update annual supplemental teaching physician (STP) payment program using the Average Commercial Rate (ACR) methodology effective April 1, 2019. This SPA included Greenville Memorial Hospital, and Palmetto Health, Richland/USC.
The issues to be considered at the hearing are whether South Carolina SPA 19-0004-A is inconsistent with the requirements of:
• Section 1902(a)(2) of the Social Security Act (the Act), providing that the state plan must assure adequate funding for the non-federal share of expenditures from state or local sources, such that the lack of adequate funds from local sources will not result in lowering the amount, duration, scope, or quality of care and services available under the plan.
• Sections 1903(a) and 1905(b) of the Act, providing that states receive a statutorily determined Federal Medicaid Assistance Percentage (FMAP) for allowable state expenditures on medical assistance.
• Section 1903(w)(1)(A)(i)(I) of the Act, providing that, notwithstanding the previous provisions of section 1903, for purposes of determining the amount to be paid to a State (as defined in paragraph (7)(D)) under subsection (a)(1) for quarters in any fiscal year, the total amount expended during such fiscal year as medical assistance under the State plan (as determined without regard to section 1903(w)) shall be reduced, inter alia, by the sum of any revenues received by the State (or by a unit of local government in the State) during the fiscal year from provider-related donations other than bona fide provider-related donations, as defined in section 1903(w)(2)(B).
• Section 1903(w)(2)(A) of the Act, providing that, in section 1903(w), except as provided in section 1903(w)(6), the term “provider-related donation” means any donation or other voluntary payment (whether in cash or in kind) made (directly or indirectly) to a State or unit of local government by—(i) a health care provider (as defined in section 1903(w)(7)(B)), (ii) an entity related to a health care provider (as defined in section 1903(w)(7)(C)), or (iii) an entity providing goods or services under the State plan for which payment is made to the State under paragraph (2), (3), (4), (6), or (7) of section 1903(a).
• Section 1903(w)(2)(B) of the Act, providing that, for purposes of section 1903(w)(1)(A)(i)(I), the term “bona fide provider-related donation” means a provider-related donation that has no direct or indirect relationship (as determined by the Secretary) to payments made under title XIX to that provider, to providers furnishing the same class of items and services as that provider, or to any related entity, as established by the State to the satisfaction of the Secretary. The Secretary may by regulation specify types of provider-related donations described in the previous sentence that will be considered to be bona fide provider-related donations.
• Section 1903(w)(6)(A) of the Act, providing that, notwithstanding the provisions of section 1903(w), the Secretary may not restrict States” use of funds where such funds are derived from State or local taxes (or funds appropriated to State university teaching hospitals) transferred from or certified by units of government within a State as the non-Federal share of expenditures under title XIX, regardless of whether the unit of government is also a health care provider, except as provided in section 1902(a)(2), unless the transferred funds are derived by the unit of government from donations or taxes that would not otherwise be recognized as the non-Federal share under section 1903.
• 42 CFR 433.54(b), (c)(2), and (c)(3), providing that provider-related donations will be determined to have no direct or indirect relationship to Medicaid payments if those donations are not returned to the individual provider, the provider class, or related entity under a hold harmless provision or practice, as described in 42 CFR 433.54(c). A hold harmless practice exists if, inter alia, all or any portion of the Medicaid payment to the donor, provider class, or related entity, varies based only on the amount of the donation, including where Medicaid payment is conditional on receipt of the donation; or if the State (or other unit of government) receiving the donation provides for any direct or indirect payment, offset, or waiver such that the provision of that payment, offset, or waiver directly or indirectly guarantees to return any portion of the donation to the provider (or other parties responsible for the donation).
Section 1116 of the Act and federal regulations at 42 CFR part 430 establish Department procedures that provide an administrative hearing for reconsideration of a disapproval of a state plan or plan amendment. CMS is required to publish in the
Any individual or group that wants to participate in the hearing as a party must petition the presiding officer within 15 days after publication of this notice, in accordance with the requirements contained at 42 CFR 430.76(b)(2). Any interested person or organization that wants to participate as amicus curiae must petition the presiding officer before the hearing begins in accordance with the requirements contained at 42 CFR 430.76(c). If the hearing is later rescheduled, the presiding officer will notify all participants.
The notice to South Carolina announcing an administrative hearing to reconsider the disapproval of its SPAs reads as follows:
I am responding to the July 19, 2021 request for reconsideration of the decision to disapprove South Carolina's State Plan amendment (SPA) 19-0004-A. South Carolina SPA 19-0004-A was submitted to the Centers for Medicare & Medicaid Services (CMS) on June 28, 2019 and disapproved on May 21, 2021. I am scheduling a hearing on the request for reconsideration to be held on January 12, 2022, at the Department of Health and Human Services, Division of Medicaid Field Operations, South, Centers for Medicare & Medicaid Services, Division of Medicaid and Children's Health Operations, 61 Forsyth St., Suite 4T20, Atlanta, Georgia 30303-8909.
I am designating Mr. Benjamin R. Cohen as the presiding officer. If these arrangements present any problems, please contact Mr. Cohen at (410) 786-3169. In order to facilitate any communication that may be necessary between the parties prior to the hearing, please notify the presiding officer to indicate acceptability of the hearing date that has been scheduled and provide names of the individuals who will represent the State at the hearing. If the hearing date is not acceptable, Mr. Cohen can set another date mutually agreeable to the parties. The hearing will be governed by the procedures prescribed by federal regulations at 42 CFR part 430.
This SPA requested CMS approval to update annual supplemental teaching physician (STP) payment program using the Average Commercial Rate (ACR) methodology effective April 1, 2019. This SPA included Greenville Memorial Hospital, and Palmetto Health Richland/USC.
The issues to be considered at the hearing are whether South Carolina SPA 19-0004-A is inconsistent with the requirements of:
• Section 1902(a)(2) of the Social Security Act (the Act), providing that the state plan must assure adequate funding for the non-federal share of expenditures from state or local sources, such that the lack of adequate funds from local sources will not result in lowering the amount, duration, scope, or quality of care and services available under the plan.
• Sections 1903(a) and 1905(b) of the Act, providing that states receive a statutorily determined Federal Medicaid Assistance Percentage (FMAP) for allowable state expenditures on medical assistance.
• Section 1903(w)(1)(A)(i)(I) of the Act, providing that, notwithstanding the previous provisions of section 1903, for purposes of determining the amount to be paid to a State (as defined in paragraph (7)(D)) under subsection (a)(1) for quarters in any fiscal year, the total amount expended during such fiscal year as medical assistance under the State plan (as determined without regard to section 1903(w)) shall be reduced, inter alia, by the sum of any revenues received by the State (or by a unit of local government in the State) during the fiscal year from provider-related donations other than bona fide provider-related donations, as defined in section 1903(w)(2)(B).
• Section 1903(w)(2)(A) of the Act, providing that, in section 1903(w), except as provided in section 1903(w)(6), the term “provider-related donation” means any donation or other voluntary payment (whether in cash or in kind) made (directly or indirectly) to a State or unit of local government by—(i) a health care provider (as defined in section 1903(w)(7)(B)), (ii) an entity related to a health care provider (as defined in section 1903(w)(7)(C)), or (iii) an entity providing goods or services under the State plan for which payment is made to the State under paragraph (2), (3), (4), (6), or (7) of section 1903(a).
• Section 1903(w)(2)(B) of the Act, providing that, for purposes of section 1903(w)(1)(A)(i)(I), the term “bona fide provider-related donation” means a provider-related donation that has no direct or indirect relationship (as determined by the Secretary) to payments made under title XIX to that provider, to providers furnishing the same class of items and services as that provider, or to any related entity, as established by the State to the satisfaction of the Secretary. The Secretary may by regulation specify types of provider-related donations described in the previous sentence that will be considered to be bona fide provider-related donations.
• Section 1903(w)(6)(A) of the Act, providing that, notwithstanding the provisions of section 1903(w), the Secretary may not restrict States” use of funds where such funds are derived from State or local taxes (or funds appropriated to State university teaching hospitals) transferred from or certified by units of government within a State as the non-Federal share of expenditures under title XIX, regardless of whether the unit of government is also a health care provider, except as provided in section 1902(a)(2), unless the transferred funds are derived by the unit of government from donations or taxes that would not otherwise be recognized as the non-Federal share under section 1903.
• 42 CFR 433.54(b), (c)(2), and (c)(3), providing that provider-related donations will be determined to have no direct or indirect relationship to Medicaid payments if those donations are not returned to the individual provider, the provider class, or related entity under a hold harmless provision or practice, as described in 42 CFR 433.54(c). A hold harmless practice exists if, inter alia, all or any portion of the Medicaid payment to the donor, provider class, or related entity, varies based only on the amount of the donation, including where Medicaid payment is conditional on receipt of the donation; or if the State (or other unit of government) receiving the donation provides for any direct or indirect payment, offset, or waiver such that the provision of that payment, offset, or waiver directly or indirectly guarantees to return any portion of the donation to the provider (or other parties responsible for the donation).
In the event that CMS and the State come to agreement on resolution of the issues which formed the basis for disapproval, these SPAs may be moved to approval prior to the scheduled hearing.
The Administrator of the Centers for Medicare & Medicaid Services (CMS), Chiquita Brooks-LaSure, having reviewed and approved this document, authorizes Evell J. Barco Holland, who is the Federal Register Liaison, to electronically sign this document for purposes of publication in the
Section 1116 of the Social Security Act (42 U.S.C. section 1316; 42 CFR section 430.18) (Catalog of Federal Domestic Assistance Program No. 13.714. Medicaid Assistance Program.)
Food and Drug Administration, HHS.
Notice; renewal of Federal advisory committee.
The Food and Drug Administration (FDA) is announcing the
Authority for the Patient Engagement Advisory Committee would have expired on October 6, 2021, unless the Commissioner had formally determined that renewal is in the public interest.
Letise Williams, Office of the Center Director, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 5407, Silver Spring, MD 20993-0002, 301-796-8398,
Pursuant to 41 CFR 102-3.65 and approval by the Department of Health and Human Services and by the General Services Administration, FDA is announcing the renewal of the Patient Engagement Advisory Committee (the Committee). The Committee is a discretionary Federal advisory committee established to provide advice to the Commissioner. The Committee advises the Commissioner or designee in discharging responsibilities as they relate to helping to ensure safe and effective devices for human use and, as required, any other product for which the Food and Drug Administration has regulatory responsibility.
The Committee provides advice to the Commissioner on complex scientific issues relating to medical devices, the regulation of devices, and their use by patients. Agency guidance and policies, clinical trial or registry design, patient preference study design, benefit-risk determinations, device labeling, unmet clinical needs, available alternatives, patient reported outcomes, device-related quality of life measures, or health status issues are among the topics that may be considered by the Committee. The Committee provides relevant skills and perspectives to improve communication of benefits, risks, and clinical outcomes, and increase integration of patient perspectives into the regulatory process for medical devices. It performs its duties by identifying new approaches, promoting innovation, recognizing unforeseen risks or barriers, and identifying unintended consequences that could result from FDA policy.
Pursuant to its Charter the Committee shall consist of a core of nine voting members, including the Chair. Members and the Chair are selected by the Commissioner or designee from among authorities who are knowledgeable in areas such as clinical research, patient experience, healthcare needs of patient groups in the United States, or are experienced in the work of patient and health professional organizations, methodologies for patient-reported outcomes and eliciting patient preferences, and strategies for communicating benefits, risks and clinical outcomes to patients and research subjects, as well as other relevant areas. Members will be invited to serve for overlapping terms of up to 4 years. Non-Federal members of this committee will serve as Special Government Employees, representative or Ex-Officio members. Federal members will serve as Regular Government Employees or Ex-Officios. The core of voting members may include one technically qualified member, selected by the Commissioner or designee, who is identified with consumer interests and is recommended by either a consortium of consumer-oriented organizations or other interested persons. The Commissioner or designee shall also have the authority to select from a group of individuals nominated by industry to serve temporarily as non-voting members who are identified with industry interests. The number of temporary members selected for a particular meeting will depend on the meeting topic.
The Commissioner or designee shall also have the authority to select members of other scientific and technical FDA advisory committees (normally not to exceed 10 members) to serve temporarily as voting members and to designate consultants to serve temporarily as voting members when: (1) Expertise is required that is not available among current voting standing members of the Committee (when additional voting members are added to the Committee to provide needed expertise, a quorum will be based on the combined total of regular and added members), or (2) to comprise a quorum when, because of unforeseen circumstances, a quorum is or will be lacking. Because of the size of the Committee and the variety in the types of issues that it will consider, FDA may, in connection with a particular committee meeting, specify a quorum that is less than a majority of the current voting members. The Agency's regulations (21 CFR 14.22(d)) authorize a committee charter to specify quorum requirements.
Further information regarding the most recent charter and other information can be found at
This notice is issued under the Federal Advisory Committee Act (5 U.S.C. app.). For general information related to FDA advisory committees, please visit us at
Office of the Assistant Secretary for Administration, Department of Health and Human Services (HHS).
Notice of a new system of records.
In accordance with the requirements of the Privacy Act of 1974, as amended, the U.S. Department of Health and Human Services (HHS) is establishing a new departmentwide system of records, 09-90-2103, Accommodation Records About HHS Civilian Employees, Contractors and Visitors.
The new system of records is applicable December 1, 2021, subject to a 30-day period in which to comment on the routine uses.
The public should address written comments by email to
General questions may be submitted to Beth Kramer, HHS Privacy Act Officer,
This new system of records will cover all records used by HHS to process and determine requests for accommodation made verbally or in writing by HHS civilian employees, HHS contractors, and HHS visitors (visitors are defined in the Categories of Individuals section of the system of records notice). Accommodation records about federal civilian job applicants are covered by the government-wide system of records notice (SORN) published by the Office of Personnel Management, OPM/&GOVT-5, Recruiting, Examining, and Placement Records, and accommodation records about HHS Public Health Service Commissioned Corps officers and applicants are covered by HHS SORN 09-40-0003 Public Health Service (PHS) Commissioned Corps Board Proceedings, so are not included in this new system of records.
All types of accommodation requests made by HHS civilian employees and HHS contractors and visitors are intended to be covered, including:
• Requests for accommodations based on a medical condition under the Rehabilitation Act of 1973 (Rehab Act), the Americans with Disabilities Act of 1990 (ADA), and the American with Disabilities Act Amendments Act of 2008 (ADAA); and
• Requests for religious accommodation under the First Amendment of the Constitution of the United States of America (First Amendment), Religious Freedom Restoration Act of 1993 (RFRA), or Title VII of the Civil Rights Act of 1964 (Title VII).
The records are used by relevant HHS supervisors, reasonable accommodation coordinators, equal employment opportunity (EEO) specialists, employee relations specialists, attorneys, medical review personnel, contracting officers and their representatives, and other personnel involved in processing or adjudicating accommodation requests.
A reasonable accommodation may be requested by and granted to a qualified individual with a disability in order to allow an employee to perform the essential functions of their position or to enjoy the same benefits and privileges of employment as other similarly situated employees. A reasonable accommodation may also be requested by and granted to an individual with a disability to allow for participation in a federally funded program. A religious accommodation may be requested by and granted to an individual to resolve a conflict between a sincerely held religious belief, practice, or observance and a work requirement or requirement for participation in a federally funded program. An accommodation may include a modification or adjustment to a work requirement, the work environment, or the way things are customarily done by HHS.
HHS determines accommodation requests in accordance with applicable laws, regulations (for example, Equal Employment Opportunity Commission (EEOC) regulations), Department policies and guidance (for example, HHS' Personal Assistant Services (PAS) Accommodation guidance), and any specific guidelines of the relevant Operating Division or Staff Division (for example, the Administration for Children and Families Office of Diversity Management and EEO Reasonable Accommodation Procedures for Individuals with Disabilities (May 17, 2019)).
To control and limit access, use, and disclosure of the records appropriately, HHS may maintain disability-based accommodation records in or with other confidential medical files about the same individual, or otherwise separately from other types of records about the same individual, to the extent possible. Likewise, to the extent possible, HHS maintains religious accommodation records about an individual separately from other types of records about the individual. Disability information is subject to (for example) restrictions stated in 42 U.S.C. 12112(d)(3)(B) and 29 CFR 1630.14(d)(4)(i); and information about how an individual exercises rights guaranteed by the First Amendment (which would include information describing sincerely held religious beliefs, practices, or observances) is subject to the restriction stated in 5 U.S.C. 552a(e)(7).
Prior to the date of publication, HHS relied on an Office of Personnel Management (OPM) governmentwide system of records, OPM/GOVT-10 Employee Medical File System Records, as covering disability-based accommodation records about civilian personnel. In recently reviewing the Department's systems of records HHS determined that a new system of records is necessary and appropriate for all accommodation records (whether based on a disability or a sincerely held religious belief) about HHS civilian employees and HHS contractors and visitors. Accordingly, those accommodation records will now be covered by new system of records 09-90-2103.
HHS provided advance notice of the new system of records to the Office of Management and Budget and Congress as required by 5 U.S.C. 552a(r) and OMB Circular A-108, Federal Agency Responsibilities for Review, Reporting, and Publication under the Privacy Act, 81 FR 94424 (Dec. 23, 2016).
Accommodation Records About HHS Civilian Employees, Contractors and Visitors, 09-90-2103.
Unclassified.
Accommodation records are collected and managed at the HHS Operating Division level and by the Office of Equal Employment Opportunity, Diversity and Inclusion (EEODI) at the Departmental level. The addresses of the HHS components responsible for this system of records are as follows:
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The System Managers to whom individuals may submit Privacy Act requests regarding records about them in this system of records are as follows:
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29 U.S.C. 791 and 793(d); 42 U.S.C. 2000e-16, 12101 through 12117, and 12201 through 12213; and Executive Order (E.O.) 13164, Establishing Procedures to Facilitate the Provision of Reasonable Accommodation, 65 FR 46565 (July 26, 2000).
The purpose of this system of records is to document, track, and support the adjudication of two types of verbal and written requests for accommodation,
The records are used by relevant HHS supervisors, reasonable accommodation coordinators, equal employment opportunity (EEO) specialists, employee relations specialists, attorneys, medical review personnel, contracting officers and their representatives, and other personnel involved in processing or adjudicating accommodation requests.
The categories of individuals are HHS civilian employees and HHS contractors and visitors who make accommodation requests, verbally or in writing, to HHS.
For purposes of this system of records, visitors are individuals who seek to access an HHS facility or to participate in an HHS-sponsored federally funded meeting, event, medical trial, or other program but are neither HHS employees nor HHS contractors. Visitors may include employees and contractors of other federal agencies, guest speakers participating in an HHS-hosted meeting or training event, members of the public attending an HHS-hosted meeting, participants in medical trials, interns, detailees, student volunteers, visiting scientists, intramural research trainees, fellows, or other non-employees performing work for HHS.
The system of records includes all records that may support a determination regarding an accommodation request.
The categories of records include:
• Documentation of the original request, whether made verbally or in writing.
• Records submitted by the individual in support of a request for reasonable accommodation based on disability, such as records describing the individual's medical conditions and the accommodation requested.
• Records submitted by the individual in support of a request for religious accommodation, such as records describing the individual's religious beliefs, practices, or observances, explaining the conflict(s) experienced by the individual with a particular HHS practice, policy, custom, or environment, and describing the accommodation requested.
• Correspondence from professionals such as physicians who know the individual and provide information supporting the individual's request for the accommodation.
• Notes memorializing verbal conversations.
• Records of consultations with third parties within or outside the agency who provide technical assistance to the agency.
• Communications about the substance of the request, the processing of the request, and burdens and other issues identified.
• Records of the agency's analysis, adjudication, and determination of the request.
• Records associated with requests for reconsideration or appeal, if appropriate.
• Notices provided to the individual about the agency's determination and agency procedures for reconsideration or other appeal processes, if applicable.
• Records documenting any accommodation provided.
The records are provided by the individual making the request, by HHS personnel involved in processing or adjudicating the request (including
In addition to other disclosures authorized directly in the Privacy Act at 5 U.S.C. 552a(b)((1) and (2) and (b)(4) through (11), HHS may disclose a record about an individual from this system of records to parties outside HHS as described in the following routine uses, without the individual's prior written consent:
1. HHS may disclose records about individuals' accommodation requests to a contractor or agent engaged by HHS to assist in administering aspects of accommodation request handling, including information technology (IT) system support contractors, when it is necessary for the contractor or agent to have access to the records to provide that assistance.
2. HHS may disclose relevant information about an HHS employee's accommodation request to a labor organization recognized under E.O. 11491 Labor Management Relations in the Federal Service or 5 U.S.C. Chapter 71 upon receipt of a formal request from the labor organization and in accord with the conditions of 5 U.S.C. 7114 when a contract between the labor organization and an HHS component provides that the component will disclose personal information relevant and necessary to the labor organization's mission or duties of exclusive representation concerning personnel policies and practices and matters affecting working conditions.
3. HHS may disclose to an HHS contractor's employer the existence, status, and determination of the contractor's accommodation request, but not records that reveal whether the request is based on a medical condition or a religious conflict.
4. HHS may disclose relevant records about a federal employee's accommodation request to an authorized appeal grievance examiner, formal complaint examiner, administrative judge, equal employment opportunity investigator, arbitrator, or other authorized official engaged in investigation or settlement of a grievance, complaint, or appeal filed by an employee; however, most such disclosures will be authorized by the individual's prior, written consent.
5. HHS may disclose relevant accommodation records about a federal employee to any of the following agencies or entities when needed by the agency or entity to discharge its below-described role:
a. To the Office of Personnel Management (OPM) to evaluate the individual's application for disability retirement.
b. To the Equal Employment Opportunity Commission (EEOC) to investigate, adjudicate, and litigate the individual's complaint of employment discrimination or to ensure compliance by HHS under 29 CFR part 1630.14(b)(1)(iii)).
c. To the Merit Systems Protection Board (MSPB) to adjudicate and litigate the individual's appeal of a personnel action.
d. To the Office of Special Counsel (OSC) in order to investigate claims of prohibited personnel practices against HHS.
e. To the Federal Labor Relations Authority (FLRA) to evaluate and arbitrate a claim of unfair labor practices against HHS.
f. To the Federal Mediation and Conciliation Service (FMCS) or other alternative dispute resolution (ADR) or arbitration service to conduct a confidential mediation between HHS management and employees or between the individual and HHS.
6. A record may be disclosed to the U.S. Department of Justice (DOJ) or to a court or other adjudicative body in litigation or administrative proceedings when (1) HHS or any component thereof; or (2) any employee of HHS acting in the employee's official capacity; or (3) any employee of HHS acting in the employee's individual capacity where the DOJ or HHS has agreed to represent the employee; or (4) the United States Government, is a party to the proceedings or has an interest in the proceedings and, by careful review, HHS determines that the record is both relevant and necessary to DOJ's representation or to the proceedings.
7. Records may be disclosed to a congressional office in response to an inquiry from the congressional office made at the written request of the subject individual.
8. Records may be disclosed to representatives of the National Archives and Records Administration (NARA) in records management inspections conducted pursuant to 44 U.S.C. 2904 and 2906.
9. Records may be disclosed to appropriate agencies, entities, and persons when (1) HHS suspects or has confirmed that there has been a breach of the system of records, (2) HHS has determined that as a result of the suspected or confirmed breach there is a risk of harm to individuals, HHS (including its information systems, programs, and operations), the federal government, or national security, and (3) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with HHS' efforts to respond to the suspected or confirmed breach or to prevent, minimize, or remedy such harm.
10. Records may be disclosed to another federal agency or federal entity, when HHS determines that information from this system of records is reasonably necessary to assist the recipient agency or entity in (1) responding to a suspected or confirmed breach or (2) preventing, minimizing, or remedying the risk of harm to individuals, the recipient agency or entity (including its information systems, programs, and operations), the federal government, or national security, resulting from a suspected or confirmed breach.
Any other disclosures require the individual's prior written consent.
Note also that if an individual's accommodation records become part of a related proceeding covered by a different System of Records Notice (SORN), the records will be subject to disclosures under routine uses published in that SORN (see, for example: 09-90-0009 Discrimination Complaint Records; 09-90-0069 Unfair Labor Practice Records; EEOC/GOVT-1 Equal Employment Opportunity in the Federal Government Complaint and Appeals Records; MSPB/GOVT-1 Appeals and Case Records; and 09-90-0062 Administrative Claims).
All records (including those received in paper form) are stored in electronic media to comply with OMB Memorandum M-19-21, Transition to Electronic Records (June 28, 2019).
The records are retrieved by the subject individual's name, assigned case number (if any), or HHS identification number (if applicable).
Accommodation records about federal employees are retained and disposed of in accordance with the following disposition authorities:
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Accommodation records about federal contractors are retained and disposed of in accordance with the following disposition authority:
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Accommodation records about HHS visitors who are neither federal employees nor federal contractors are currently unscheduled and will be retained indefinitely until authorized for disposition under a schedule approved by the National Archives and Records Administration.
Safeguards conform to the HHS Information Security and Privacy Program,
Records are protected from unauthorized access through appropriate administrative, physical, and technical safeguards. These safeguards include protecting the facilities where records are received and electronically stored with security guards, identification badges, and cameras; securing any hard copies in locked file cabinets, file rooms or offices during off-duty hours; requiring contractors to maintain appropriate safeguards and to comply with the Privacy Act with respect to the records; limiting authorized users' access to electronic records based on role and either two-factor authentication or password protection; requiring passwords to be complex and to be changed frequently; using a secured operating system protected by encryption, firewalls, and intrusion detection systems; maintaining an activity log of users' access; requiring encryption for any records stored or accessed on removable media; training personnel in Privacy Act and information security requirements; and reviewing security controls on an ongoing basis.
To control and limit access, use, and disclosure of the records appropriately, HHS may maintain disability-based accommodation records in or with other confidential medical files about the same individual, or otherwise separately from other types of records about the same individual, to the extent possible. Likewise, to the extent possible, HHS maintains religious accommodation records about an individual separately from other types of records about the individual.
Individuals may request access to records about them in this system of records by submitting a written access request to the System Manager identified in the “System Manager” section of this SORN. The request must contain the requester's full name, home or work address, date of birth, signature, and assigned case identification number (if any) and must identify the employing or hiring component pertinent to the request. To verify the requester's identity, the signature must be notarized or the request must include the requester's written certification that the requester is the individual who the requester claims to be and that the requester understands that the knowing and willful request for or acquisition of a record pertaining to an individual under false pretenses is a criminal offense subject to a fine of up to $5,000. To access the records in person, the requester should make an appointment, and may be accompanied by a person of the requester's choosing if the requester provides written authorization for agency personnel to discuss the records in that person's presensce. An individual may also request an accounting of disclosures that have been made of the records, if any.
Individuals may seek to amend records about them in this system of records by submitting an amendment request to the System Manager identified in the “System Manager” section of this SORN, containing the same information required for an access request. The request must include verification of the requester's identity in the same manner required for an access request; must reasonably identify the record and specify the information contested, the corrective action sought, and the reasons for requesting the correction; and should include supporting information to show how the record is not accurate, complete, timely, or relevant.
Individuals who wish to know if this system of records contains records about them should submit a notification request to the System Manager identified in the “System Manager” section of this SORN. The request must contain the same information required for an access request and must include verification of the requester's identity in the same manner required for an access request.
None.
None.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of meetings of the National Advisory Allergy and Infectious Diseases Council.
The meeting will be open to the public. The open session will be videocast and can be accessed from the NIH Videocasting and Podcasting website (
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.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
Information is also available on the Institute's/Center's home page:
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, 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.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the Vaccine Research Center Board of Scientific Counselors, NIAID.
The meeting will be closed to the public as indicated below in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended for the review, discussion, and evaluation of individual intramural programs and projects conducted by the National Institute of Allergy And Infectious Diseases, including consideration of personnel qualifications and performance, and the competence of individual investigators, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the urgent need to meet timing limitations imposed by the intramural research review cycle.
Pursuant to section 10(a) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the AIDS Research Advisory Committee, NIAID.
The meeting will be open to the public. The open session will be videocast and can be accessed from the NIH Videocasting and Podcasting website (
Individuals who need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the National Advisory Child Health and Human Development Council.
The Open Session of the meeting will be held as a virtual meeting and is open to the public. Individuals who plan to view the virtual meeting and need special assistance or other reasonable accommodations to view the meeting, should notify the Contact Person listed below in advance of the meeting. The open session will be videocast and can be accessed from the NIH Videocasting and Podcasting website (
The Closed Session of the meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
Individuals will be able to view the meeting via NIH Videocast. Select the following link for Videocast access instructions:
Information is also available on the Institute's/Center's home page:
Bureau of Land Management, Interior.
Notice of official filing.
The plats of survey of the following described land are scheduled to be officially filed 30 days after the date of this publication in the Bureau of Land Management (BLM), Arizona State Office, Phoenix, Arizona. The surveys announced in this notice are necessary for the management of lands administered by the agency indicated.
These plats will be available for inspection in the Arizona State Office, Bureau of Land Management, One North Central Avenue, Suite 800, Phoenix, Arizona 85004-4427. Protests of any of these surveys should be sent to the Arizona State Director at the above address.
Mark Morberg, Chief Cadastral Surveyor of Arizona at (602) 417-9558 or
The plat, in two sheets, representing the dependent resurvey of a portion of the east boundary of Township 5 North, Range 10 West, Navajo Special Meridian, the survey of the south, east and north boundaries, a portion of the subdivisional lines, the subdivision of certain sections and the metes-and-bounds survey of portions of the Canyon de Chelly National Monument boundary, partially surveyed Township 31 North, Range 27 East, accepted May 27, 2021, for Group 1190, Arizona. This plat was prepared at the request of the Bureau of Indian Affairs.
The plat, in one sheet, representing the dependent resurvey of portions of the east and south boundaries, a portion of the subdivisional lines, Blue Thunder millsite and Victory No. 1 millsite, Mineral Survey No. 3022B, and the subdivision of sections 35 and 36, Township 12 North, Range 1 East, accepted September 21, 2021, for Group 1207, Arizona. This plat was prepared at the request of the United States Forest Service.
The supplemental plat, in one sheet, showing the administrative boundary of Box Canyon Recreation Area, Township 5 North, Range 2 East, accepted October 25, 2021, for Supplemental Group 9118, Arizona. This plat was prepared at the request of the Bureau of Land Management.
The supplemental plat, in one sheet, showing the administrative boundaries of Baldy Mountain Recreation Area, Church Camp Recreation Area and Saddleback Recreation Area, Township 6 North, Range 1 West, accepted October 25, 2021, for Supplemental Group 9118, Arizona. This plat was prepared at the request of the Bureau of Land Management.
The supplemental plat, in one sheet, showing the administrative boundary of Narramore Recreation Area, Township 1 South, Range 5 West, accepted October 25, 2021, for Supplemental Group 9118, Arizona. This plat was prepared at the request of the Bureau of Land Management.
A person or party who wishes to protest against any of these surveys must file a written notice of protest within 30 calendar days from the date of this publication with the Arizona State Director, Bureau of Land Management, stating that they wish to protest.
A statement of reasons for a protest may be filed with the notice of protest to the State Director, or the statement of reasons must be filed with the State Director within 30 days after the protest is filed. Before including your address, or other personal information in your protest, please be aware that your entire protest, 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.
United States International Trade Commission.
Notice.
The Commission hereby gives notice that it has instituted reviews pursuant to the Tariff Act of 1930 (“the Act”), as amended, to determine whether revocation of the countervailing duty orders on carbon and alloy steel cut-to-length plate (“CTL plate”) from China and Korea and the antidumping duty orders on CTL plate from Austria, Belgium, Brazil, China, France, Germany, Italy, Japan, Korea, South Africa, Taiwan, and Turkey would be likely to lead to continuation or recurrence of material injury. Pursuant to the Act, interested parties are requested to respond to this notice by submitting the information specified below to the Commission.
Instituted December 1, 2021. To be assured of consideration, the
Lawrence Jones (202-205-3358), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
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Former Commission employees who are seeking to appear in Commission five-year reviews are advised that they may appear in a review even if they participated personally and substantially in the corresponding underlying original investigation or an earlier review of the same underlying investigation. The Commission's designated agency ethics official has advised that a five-year review is not the same particular matter as the underlying original investigation, and a five-year review is not the same particular matter as an earlier review of the same underlying investigation for purposes of 18 U.S.C. 207, the post-employment statute for Federal employees, and Commission rule 201.15(b) (19 CFR 201.15(b)), 79 FR 3246 (Jan. 17, 2014), 73 FR 24609 (May 5, 2008). Consequently, former employees are not required to seek Commission approval to appear in a review under Commission rule 19 CFR 201.15, even if the corresponding underlying original investigation or an earlier review of the same underlying investigation was pending when they were Commission employees. For further ethics advice on this matter, contact Charles Smith, Office of the General Counsel, at 202-205-3408.
Please note the Secretary's Office will accept only electronic filings at this time. Filings must be made through the Commission's Electronic Document Information System (EDIS,
No response to this request for information is required if a currently valid Office of Management and Budget (“OMB”) number is not displayed; the OMB number is 3117 0016/USITC No. 21-5-503, expiration date June 30, 2023. Public reporting burden for the request is estimated to average 15 hours per response. Please send comments regarding the accuracy of this burden estimate to the Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.
(1) The name and address of your firm or entity (including World Wide Web address) and name, telephone number, fax number, and Email address of the certifying official.
(2) A statement indicating whether your firm/entity is an interested party under 19 U.S.C. 1677(9) and if so, how, including whether your firm/entity is a U.S. producer of the
(3) A statement indicating whether your firm/entity is willing to participate in this proceeding by providing information requested by the Commission.
(4) A statement of the likely effects of the revocation of the antidumping and countervailing duty orders on the
(5) A list of all known and currently operating U.S. producers of the
(6) A list of all known and currently operating U.S. importers of the
(7) A list of 3-5 leading purchasers in the U.S. market for the
(8) A list of known sources of information on national or regional prices for the
(9) If you are a U.S. producer of the
(a) Production (quantity) and, if known, an estimate of the percentage of total U.S. production of the
(b) Capacity (quantity) of your firm to produce the
(c) the quantity and value of U.S. commercial shipments of the
(d) the quantity and value of U.S. internal consumption/company transfers of the
(e) the value of (i) net sales, (ii) cost of goods sold (COGS), (iii) gross profit,
(10) If you are a U.S. importer or a trade/business association of U.S. importers of the
(a) The quantity and value (landed, duty-paid but not including antidumping or countervailing duties) of U.S. imports and, if known, an estimate of the percentage of total U.S. imports of
(b) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. commercial shipments of
(c) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. internal consumption/company transfers of
(11) If you are a producer, an exporter, or a trade/business association of producers or exporters of the
(a) Production (quantity) and, if known, an estimate of the percentage of total production of
(b) Capacity (quantity) of your firm(s) to produce the
(c) the quantity and value of your firm's(s') exports to the United States of
(12) Identify significant changes, if any, in the supply and demand conditions or business cycle for the
(13) (OPTIONAL) A statement of whether you agree with the above definitions of the
By order of the Commission.
United States International Trade Commission.
Notice.
The Commission hereby gives notice that it has instituted reviews pursuant to the Tariff Act of 1930 (“the Act”), as amended, to determine whether revocation of the antidumping and countervailing duty orders on certain coated paper suitable for high-quality print graphics using sheet-fed presses from China and Indonesia would be likely to lead to continuation or recurrence of material injury. Pursuant to the Act, interested parties are requested to respond to this notice by submitting the information specified below to the Commission.
Instituted December 1, 2021. To be assured of consideration, the deadline for responses is January 3, 2022. Comments on the adequacy of responses may be filed with the Commission by February 10, 2022.
Lawrence Jones (202-205-3358), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
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Former Commission employees who are seeking to appear in Commission five-year reviews are advised that they may appear in a review even if they participated personally and substantially in the corresponding underlying original investigation or an earlier review of the same underlying investigation. The Commission's designated agency ethics official has advised that a five-year review is not the same particular matter as the underlying original investigation, and a five-year review is not the same particular matter as an earlier review of the same underlying investigation for purposes of 18 U.S.C. 207, the post-employment statute for Federal employees, and Commission rule 201.15(b) (19 CFR 201.15(b)), 79 FR 3246 (Jan. 17, 2014), 73 FR 24609 (May 5, 2008). Consequently, former employees are not required to seek Commission approval to appear in a review under Commission rule 19 CFR 201.15, even if the corresponding underlying original investigation or an earlier review of the same underlying investigation was pending when they were Commission employees. For further ethics advice on this matter, contact Charles Smith, Office of the General Counsel, at 202-205-3408.
Please note the Secretary's Office will accept only electronic filings at this
No response to this request for information is required if a currently valid Office of Management and Budget (“OMB”) number is not displayed; the OMB number is 3117 0016/USITC No. 21-5-504, expiration date June 30, 2023. Public reporting burden for the request is estimated to average 15 hours per response. Please send comments regarding the accuracy of this burden estimate to the Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.
(1) The name and address of your firm or entity (including World Wide Web address) and name, telephone number, fax number, and Email address of the certifying official.
(2) A statement indicating whether your firm/entity is an interested party under 19 U.S.C. 1677(9) and if so, how, including whether your firm/entity is a U.S. producer of the
(3) A statement indicating whether your firm/entity is willing to participate in this proceeding by providing information requested by the Commission.
(4) A statement of the likely effects of the revocation of the antidumping and countervailing duty orders on the
(5) A list of all known and currently operating U.S. producers of the
(6) A list of all known and currently operating U.S. importers of the
(7) A list of 3-5 leading purchasers in the U.S. market for the
(8) A list of known sources of information on national or regional prices for the
(9) If you are a U.S. producer of the
(a) Production (quantity) and, if known, an estimate of the percentage of total U.S. production of the
(b) Capacity (quantity) of your firm to produce the
(c) the quantity and value of U.S. commercial shipments of the
(d) the quantity and value of U.S. internal consumption/company transfers of the
(e) the value of (i) net sales, (ii) cost of goods sold (COGS), (iii) gross profit, (iv) selling, general and administrative (SG&A) expenses, and (v) operating income of the
(10) If you are a U.S. importer or a trade/business association of U.S. importers of the
(a) The quantity and value (landed, duty-paid but not including antidumping or countervailing duties) of U.S. imports and, if known, an estimate of the percentage of total U.S. imports of
(b) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. commercial shipments of
(c) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. internal consumption/company transfers of
(11) If you are a producer, an exporter, or a trade/business association of producers or exporters of the
(a) Production (quantity) and, if known, an estimate of the percentage of total production of
(b) Capacity (quantity) of your firm(s) to produce the
(c) the quantity and value of your firm's(s') exports to the United States of
(12) Identify significant changes, if any, in the supply and demand conditions or business cycle for the
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By order of the Commission.
United States International Trade Commission.
Notice.
The Commission hereby gives notice that it has instituted reviews pursuant to the Tariff Act of 1930 (“the Act”), as amended, to determine whether revocation of the antidumping duty orders on heavy forged hand tools from China would be likely to lead to continuation or recurrence of material injury. Pursuant to the Act, interested parties are requested to respond to this notice by submitting the information specified below to the Commission.
Instituted December 1, 2021. To be assured of consideration, the deadline for responses is January 3, 2022. Comments on the adequacy of responses may be filed with the Commission by February 10, 2022.
Lawrence Jones (202-205-3358), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
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(2) The
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Former Commission employees who are seeking to appear in Commission five-year reviews are advised that they may appear in a review even if they participated personally and substantially in the corresponding underlying original investigation or an earlier review of the same underlying investigation. The Commission's designated agency ethics official has advised that a five-year review is not the same particular matter as the underlying original investigation, and a five-year review is not the same particular matter as an earlier review of the same underlying investigation for purposes of 18 U.S.C. 207, the post-employment statute for Federal employees, and Commission rule 201.15(b) (19 CFR 201.15(b)), 79 FR 3246 (Jan. 17, 2014), 73 FR 24609 (May 5, 2008). Consequently, former employees are not required to seek Commission approval to appear in a review under Commission rule 19 CFR 201.15, even if the corresponding underlying original investigation or an earlier review of the same underlying investigation was pending when they were Commission employees. For further ethics advice on this matter, contact Charles Smith, Office of the General Counsel, at 202-205-3408.
Please note the Secretary's Office will accept only electronic filings at this time. Filings must be made through the Commission's Electronic Document Information System (EDIS,
No response to this request for information is required if a currently valid Office of Management and Budget (“OMB”) number is not displayed; the OMB number is 3117 0016/USITC No. 21-5-505, expiration date June 30, 2023. Public reporting burden for the request is estimated to average 15 hours per response. Please send comments regarding the accuracy of this burden
(1) The name and address of your firm or entity (including World Wide Web address) and name, telephone number, fax number, and Email address of the certifying official.
(2) A statement indicating whether your firm/entity is an interested party under 19 U.S.C. 1677(9) and if so, how, including whether your firm/entity is a U.S. producer of the
(3) A statement indicating whether your firm/entity is willing to participate in this proceeding by providing information requested by the Commission.
(4) A statement of the likely effects of the revocation of the antidumping duty orders on the
(5) A list of all known and currently operating U.S. producers of the
(6) A list of all known and currently operating U.S. importers of the
(7) A list of 3-5 leading purchasers in the U.S. market for the
(8) A list of known sources of information on national or regional prices for the
(9) If you are a U.S. producer of the
(a) Production (quantity) and, if known, an estimate of the percentage of total U.S. production of the
(b) Capacity (quantity) of your firm to produce the
(c) the quantity and value of U.S. commercial shipments of the
(d) the quantity and value of U.S. internal consumption/company transfers of the
(e) the value of (i) net sales, (ii) cost of goods sold (COGS), (iii) gross profit, (iv) selling, general and administrative (SG&A) expenses, and (v) operating income of the
(10) If you are a U.S. importer or a trade/business association of U.S. importers of the
(a) The quantity and value (landed, duty-paid but not including antidumping duties) of U.S. imports and, if known, an estimate of the percentage of total U.S. imports of
(b) the quantity and value (f.o.b. U.S. port, including antidumping duties) of U.S. commercial shipments of
(c) the quantity and value (f.o.b. U.S. port, including antidumping duties) of U.S. internal consumption/company transfers of
(11) If you are a producer, an exporter, or a trade/business association of producers or exporters of the
(a) Production (quantity) and, if known, an estimate of the percentage of total production of
(b) Capacity (quantity) of your firm(s) to produce the
(c) the quantity and value of your firm's(s') exports to the United States of
(12) Identify significant changes, if any, in the supply and demand conditions or business cycle for the
(13) (
By order of the Commission.
United States International Trade Commission.
Notice.
The Commission hereby gives notice that it has instituted reviews pursuant to the Tariff Act of 1930 (“the Act”), as amended, to determine whether revocation of the countervailing duty order on stainless steel plate from South Africa and the antidumping duty orders on stainless steel plate from Belgium, South Africa, and Taiwan would be likely to lead to continuation or recurrence of material injury. Pursuant to the Act, interested parties are requested to respond to this notice by submitting the information specified below to the Commission.
Instituted December 1, 2021. To be assured of consideration, the deadline for responses is January 3, 2022. Comments on the adequacy of responses may be filed with the Commission by February 8, 2022.
Lawrence Jones (202-205-3358), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
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Former Commission employees who are seeking to appear in Commission five-year reviews are advised that they may appear in a review even if they participated personally and substantially in the corresponding underlying original investigation or an earlier review of the same underlying investigation. The Commission's designated agency ethics official has advised that a five-year review is not the same particular matter as the underlying original investigation, and a five-year review is not the same particular matter as an earlier review of the same underlying investigation for purposes of 18 U.S.C. 207, the post-employment statute for Federal employees, and Commission rule 201.15(b) (19 CFR 201.15(b)), 79 FR 3246 (Jan. 17, 2014), 73 FR 24609 (May 5, 2008). Consequently, former employees are not required to seek Commission approval to appear in a review under Commission rule 19 CFR 201.15, even if the corresponding underlying original investigation or an earlier review of the same underlying investigation was pending when they were Commission employees. For further ethics advice on this matter, contact Charles Smith, Office of the General Counsel, at 202-205-3408.
Please note the Secretary's Office will accept only electronic filings at this time. Filings must be made through the Commission's Electronic Document Information System (EDIS,
No response to this request for information is required if a currently valid Office of Management and Budget (“OMB”) number is not displayed; the OMB number is 3117 0016/USITC No. 21-5-507, expiration date June 30, 2023. Public reporting burden for the request is estimated to average 15 hours per response. Please send comments regarding the accuracy of this burden estimate to the Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.
(1) The name and address of your firm or entity (including World Wide Web address) and name, telephone number, fax number, and Email address of the certifying official.
(2) A statement indicating whether your firm/entity is an interested party under 19 U.S.C. 1677(9) and if so, how, including whether your firm/entity is a U.S. producer of the
(3) A statement indicating whether your firm/entity is willing to participate in this proceeding by providing information requested by the Commission.
(4) A statement of the likely effects of the revocation of the antidumping and countervailing duty orders on the
(5) A list of all known and currently operating U.S. producers of the
(6) A list of all known and currently operating U.S. importers of the
(7) A list of 3-5 leading purchasers in the U.S. market for the
(8) A list of known sources of information on national or regional prices for the
(9) If you are a U.S. producer of the
(a) Production (quantity) and, if known, an estimate of the percentage of total U.S. production of the
(b) Capacity (quantity) of your firm to produce the
(c) the quantity and value of U.S. commercial shipments of the
(d) the quantity and value of U.S. internal consumption/company transfers of the
(e) the value of (i) net sales, (ii) cost of goods sold (COGS), (iii) gross profit, (iv) selling, general and administrative (SG&A) expenses, and (v) operating income of the
(10) If you are a U.S. importer or a trade/business association of U.S. importers of the
(a) The quantity and value (landed, duty-paid but not including antidumping or countervailing duties) of U.S. imports and, if known, an estimate of the percentage of total U.S. imports of
(b) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. commercial shipments of
(c) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. internal consumption/company transfers of
(11) If you are a producer, an exporter, or a trade/business association of producers or exporters of the
(a) Production (quantity) and, if known, an estimate of the percentage of total production of
(b) Capacity (quantity) of your firm(s) to produce the
(c) the quantity and value of your firm's(s') exports to the United States of
(12) Identify significant changes, if any, in the supply and demand
(13) (OPTIONAL) A statement of whether you agree with the above definitions of the
By order of the Commission.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has received a complaint entitled
Lisa R. Barton, Secretary to the Commission, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone (202) 205-2000. The public version of the complaint can be accessed on the Commission's Electronic Document Information System (EDIS) at
General information concerning the Commission may also be obtained by accessing its Internet server at United States International Trade Commission (USITC) at
The Commission has received a complaint and a submission pursuant to § 210.8(b) of the Commission's Rules of Practice and Procedure filed on behalf of DivX, LLC, on November 24, 2021. The complaint alleges violations of section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain video processing devices, components thereof, and digital smart televisions containing the same. The complainant names as respondents: TCL Technology Group Corporation of China; TCL Electronics Holdings Limited of China; TTE Technology, Inc. of Corona, CA; Shenzhen TCL New Technologies Co. Ltd. of China; TCL King Electrical Appliances (Huizhou) Co. Ltd. of China; TCL MOKA International Limited of Hong Kong; and TCL Smart Device (Vietnam) Co., Ltd. of Vietnam. The complainant requests that the Commission issue a limited exclusion order and cease and desist orders and impose a bond upon respondents alleged infringing articles during the 60-day Presidential review period pursuant to 19 U.S.C. 1337(j).
Proposed respondents, other interested parties, and members of the public are invited to file comments on any public interest issues raised by the complaint or § 210.8(b) filing. Comments should address whether issuance of the relief specifically requested by the complainant in this investigation would affect the public health and welfare in the United States, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, or United States consumers.
In particular, the Commission is interested in comments that:
(i) Explain how the articles potentially subject to the requested remedial orders are used in the United States;
(ii) identify any public health, safety, or welfare concerns in the United States relating to the requested remedial orders;
(iii) identify like or directly competitive articles that complainant, its licensees, or third parties make in the United States which could replace the subject articles if they were to be excluded;
(iv) indicate whether complainant, complainant's licensees, and/or third party suppliers have the capacity to replace the volume of articles potentially subject to the requested exclusion order and/or a cease and desist order within a commercially reasonable time; and
(v) explain how the requested remedial orders would impact United States consumers.
Written submissions on the public interest must be filed no later than by close of business, eight calendar days after the date of publication of this notice in the
Persons filing written submissions must file the original document electronically on or before the deadlines stated above. Submissions should refer to the docket number (“Docket No. 3578”) in a prominent place on the cover page and/or the first page. (See Handbook for Electronic Filing Procedures, Electronic Filing Procedures
Any person desiring to submit a document to the Commission in confidence must request confidential treatment. All such requests should be directed to the Secretary to the Commission and must include a full statement of the reasons why the Commission should grant such treatment.
This action is taken under the authority of section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and of §§ 201.10 and 210.8(c) of the Commission's Rules of Practice and Procedure (19 CFR 201.10, 210.8(c)).
By order of the Commission.
Issued: November 26, 2021.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has received a complaint entitled
Lisa R. Barton, Secretary to the Commission, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone (202) 205-2000. The public version of the complaint can be accessed on the Commission's Electronic Document Information System (EDIS) at
General information concerning the Commission may also be obtained by accessing its Internet server at United States International Trade Commission (USITC) at
The Commission has received a complaint and a submission pursuant to § 210.8(b) of the Commission's Rules of Practice and Procedure filed on behalf of Graco Children's Products Inc. and Wonderland Nurserygoods Co., Ltd. on November 24, 2021. The complaint alleges violations of section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain playards and strollers. The complainant names as respondents: Baby Trend, Inc. of Fontana, CA; Dongguan Golden Prosper Baby Products Co., Ltd. of China; Sichuan Hobbies Baby Products Co., Ltd. of China; and Anhui Chile Baby Products Co., Ltd. of China. The complainant requests that the Commission issue a limited exclusion order and cease and desist orders, and impose a bond upon respondents alleged infringing articles during the 60-day Presidential review period pursuant to 19 U.S.C. 1337(j).
Proposed respondents, other interested parties, and members of the public are invited to file comments on any public interest issues raised by the complaint or § 210.8(b) filing. Comments should address whether issuance of the relief specifically requested by the complainant in this investigation would affect the public health and welfare in the United States, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, or United States consumers.
In particular, the Commission is interested in comments that:
(i) Explain how the articles potentially subject to the requested remedial orders are used in the United States;
(ii) identify any public health, safety, or welfare concerns in the United States relating to the requested remedial orders;
(iii) identify like or directly competitive articles that complainant, its licensees, or third parties make in the United States which could replace the subject articles if they were to be excluded;
(iv) indicate whether complainant, complainant's licensees, and/or third party suppliers have the capacity to replace the volume of articles potentially subject to the requested exclusion order and/or a cease and desist order within a commercially reasonable time; and
(v) explain how the requested remedial orders would impact United States consumers.
Written submissions on the public interest must be filed no later than by close of business, eight calendar days after the date of publication of this notice in the
Persons filing written submissions must file the original document electronically on or before the deadlines stated above. Submissions should refer to the docket number (“Docket No. 3577”) in a prominent place on the cover page and/or the first page. (See Handbook for Electronic Filing Procedures, Electronic Filing Procedures
Any person desiring to submit a document to the Commission in confidence must request confidential treatment. All such requests should be directed to the Secretary to the Commission and must include a full statement of the reasons why the Commission should grant such treatment. See 19 CFR 201.6. Documents for which confidential treatment by the Commission is properly sought will be treated accordingly. All information, including confidential business information and documents for which confidential treatment is properly sought, submitted to the Commission for purposes of this Investigation may be disclosed to and used: (i) By the Commission, its employees and Offices, and contract personnel (a) for developing or maintaining the records of this or a related proceeding, or (b) in internal investigations, audits, reviews, and evaluations relating to the programs, personnel, and operations of the Commission including under 5 U.S.C. Appendix 3; or (ii) by U.S. government employees and contract personnel,
This action is taken under the authority of section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and of §§ 201.10 and 210.8(c) of the Commission's Rules of Practice and Procedure (19 CFR 201.10, 210.8(c)).
By order of the Commission.
United States International Trade Commission.
Notice.
The Commission hereby gives notice that it has instituted reviews pursuant to the Tariff Act of 1930 (“the Act”), as amended, to determine whether revocation of the countervailing duty order on heavy iron construction castings from Brazil, the antidumping duty order on heavy iron construction castings from Canada, and the antidumping duty orders on iron construction castings from Brazil and China would be likely to lead to continuation or recurrence of material injury. Pursuant to the Act, interested parties are requested to respond to this notice by submitting the information specified below to the Commission.
Instituted December 1, 2021. To be assured of consideration, the deadline for responses is January 3, 2022. Comments on the adequacy of responses may be filed with the Commission by February 8, 2022.
Lawrence Jones (202-205-3358), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
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(2) The
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(5) An
Former Commission employees who are seeking to appear in Commission five-year reviews are advised that they may appear in a review even if they participated personally and substantially in the corresponding underlying original investigation or an earlier review of the same underlying investigation. The Commission's designated agency ethics official has advised that a five-year review is not the same particular matter as the underlying original investigation, and a five-year review is not the same particular matter as an earlier review of the same underlying investigation for purposes of 18 U.S.C. 207, the post-employment statute for Federal employees, and Commission rule 201.15(b) (19 CFR 201.15(b)), 79 FR 3246 (Jan. 17, 2014), 73 FR 24609 (May 5, 2008). Consequently, former employees are not required to seek Commission approval to appear in a review under Commission rule 19 CFR 201.15, even if the corresponding underlying original investigation or an earlier review of the same underlying investigation was pending when they were Commission employees. For further ethics advice on this matter, contact Charles Smith, Office of the General Counsel, at 202-205-3408.
Please note the Secretary's Office will accept only electronic filings at this time. Filings must be made through the Commission's Electronic Document Information System (EDIS,
No response to this request for information is required if a currently valid Office of Management and Budget (“OMB”) number is not displayed; the OMB number is 3117 0016/USITC No. 21-5-506, expiration date June 30, 2023. Public reporting burden for the request is estimated to average 15 hours per response. Please send comments regarding the accuracy of this burden estimate to the Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.
(1) The name and address of your firm or entity (including World Wide Web address) and name, telephone number, fax number, and Email address of the certifying official.
(2) A statement indicating whether your firm/entity is an interested party under 19 U.S.C. 1677(9) and if so, how, including whether your firm/entity is a U.S. producer of the
(3) A statement indicating whether your firm/entity is willing to participate in this proceeding by providing information requested by the Commission.
(4) A statement of the likely effects of the revocation of the antidumping and countervailing duty orders on the
(5) A list of all known and currently operating U.S. producers of the
(6) A list of all known and currently operating U.S. importers of the
(7) A list of 3-5 leading purchasers in the U.S. market for the
(8) A list of known sources of information on national or regional prices for the
(9) If you are a U.S. producer of the
(a) Production (quantity) and, if known, an estimate of the percentage of total U.S. production of the
(b) Capacity (quantity) of your firm to produce the
(c) the quantity and value of U.S. commercial shipments of the
(d) the quantity and value of U.S. internal consumption/company transfers of the
(e) the value of (i) net sales, (ii) cost of goods sold (COGS), (iii) gross profit, (iv) selling, general and administrative (SG&A) expenses, and (v) operating income of the
(10) If you are a U.S. importer or a trade/business association of U.S. importers of the
(a) The quantity and value (landed, duty-paid but not including antidumping or countervailing duties) of U.S. imports and, if known, an estimate of the percentage of total U.S. imports of
(b) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. commercial shipments of
(c) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. internal consumption/company transfers of
(11) If you are a producer, an exporter, or a trade/business association of producers or exporters of the
(a) Production (quantity) and, if known, an estimate of the percentage of total production of
(b) Capacity (quantity) of your firm(s) to produce the
(c) the quantity and value of your firm's(s') exports to the United States of
(12) Identify significant changes, if any, in the supply and demand conditions or business cycle for the
(13) (OPTIONAL) A statement of whether you agree with the above definitions of the
By order of the Commission.
Executive Office for Immigration Review, Department of Justice.
30-Day notice.
The Department of Justice (DOJ), Executive Office for Immigration Review (EOIR), will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995.
Comments are encouraged and will be accepted for 60 days until January 31, 2022.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
If you have additional comments especially on the estimated public burden or associated response time, suggestions, or need a copy of the proposed information collection instrument with instructions or additional information, please contact Lauren Alder Reid, Assistant Director, Office of Policy, Executive Office for Immigration Review, 5107 Leesburg Pike, Suite 2500, Falls Church, VA 22041, telephone: (703) 305-0289.
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points:
1.
2.
3.
4.
5.
6.
If additional information is required contact: Melody Braswell, Department Clearance Officer, United States Department of Justice, Justice Management Division, Policy and Planning Staff, Two Constitution Square, 145 N Street NE, 3E.405B, Washington, DC 20530.
Executive Office for Immigration Review, Department of Justice.
30-Day notice.
The Department of Justice (DOJ), Executive Office for Immigration Review (EOIR), will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. This proposed information collection was previously published in the
Comments are encouraged and will be accepted for an additional 30 days until January 3, 2022.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
If you need a copy of the proposed information collection or additional information, please contact Lauren Alder Reid, Assistant Director, Office of Policy, Executive Office for Immigration Review, 5107 Leesburg Pike, Suite 2500, Falls Church, VA 22041, telephone: (703) 305-0289.
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points:
1.
2.
3.
4.
5.
6.
If additional information is required contact: Melody Braswell, Department Clearance Officer, United States Department of Justice, Justice Management Division, Policy and Planning Staff, Two Constitution Square, 145 N Street NE, 3E.405B, Washington, DC 20530.
United States Digital Service (USDS), Office of Management and Budget.
Notice and request for public comment.
The United States Digital Service (USDS) within the Office of Management and Budget is announcing an opportunity for public comment on a new proposed collection of information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Consideration will be given to all comments received on or before January 31, 2022.
You may submit comments by any of the following methods:
•
•
•
Requests for additional information should be directed to Rachel Sauter, who may be reached at 202-881-7793 or
Under the PRA (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes certain agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA requires Federal agencies to provide a 60-day notice in the
The mission of USDS is to deliver better government services through technology and design. In support of that mission, USDS engages directly with program applicants and beneficiaries, and other people who use or need to use the government systems and services we are helping to improve, and incorporates their feedback into our work and recommendations. By employing human-centered design practices like user research, USDS prioritizes the user's needs and learns what works as quickly as possible, saving time and money while improving services to the public. USDS deploys small, responsive groups of designers, engineers, product managers, and other specialists to work with and empower civil servants, working with many agencies simultaneously.
Under this generic clearance, USDS would engage in a variety of formative data collections with people who use or need to use government systems and services, such as program participants, practitioners, and service providers. The data collections would occur primarily through
USDS envisions using a variety of techniques including:
Overall, this research will be designed to fulfill the following goals: (1) Discover barriers to access that create inequities for users of government systems and services; (2) inform the development of USDS and agency research, (3) discover early warnings of issues with service delivery; and (4) focus attention on areas where communication, training or changes in operations might improve delivery of products or services. These collections will allow for ongoing, collaborative and actionable communications between Federal agencies and the public. It will also allow feedback to contribute directly to the improvement of program management.
Following standard OMB requirements, USDS will submit a generic clearance information request for each individual data collection activity. Each request will include the individual instrument(s), a justification specific to the individual information collection, and any supplementary documents. OMB will attempt to review requests within 10 days of submission.
Information collected under this generic clearance will not be used to inform public policy (
The information collected in this effort may be made public through methodological appendices or footnotes, reports on instrument development, instrument user guides, descriptions of respondent behavior, and other publications or presentations describing findings of methodological interest. The results of this pre-testing research may be prepared for presentation at professional meetings or publication in professional journals. When necessary, in presenting findings, we will describe the study methods and limitations with regard to generalizability, and results will be labeled as exploratory in nature.
USDS estimates that the total burden of this information collection over a three-year period will be 20,676 hours. USDS estimates that the annual burden of this information collection is as follows, with one response per respondent:
In compliance with the requirements of Section 3506(c)(2)(A) of the PRA, USDS is soliciting public comment on the specific aspects of the information collection described above. Copies of the proposed collection of information can be obtained by writing to
USDS specifically requests comments on (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; to develop, acquire, install, and utilize technology and systems for the purpose of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; to train personnel and to be able to respond to a collection of information, to search data sources, to complete and review the collection of information; and to transmit or otherwise disclose the information. Consideration will be given to comments and suggestions submitted within 60 days of this publication.
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.
National Science Foundation.
Notice of permits issued.
The National Science Foundation (NSF) is required to publish notice of permits issued under the Antarctic Conservation Act of 1978. This is the required notice.
Polly Penhale, ACA Permit Officer, Office of Polar Programs, National Science Foundation, 2415 Eisenhower Avenue, Alexandria, VA 22314; 703-292-8030;
On October 27, 2021, the National Science Foundation published a notice in the
U.S. Nuclear Regulatory Commission.
Notice of meeting.
The U.S. Nuclear Regulatory Commission (NRC) will convene a meeting of the Advisory Committee on the Medical Uses of Isotopes (ACMUI) on December 15, 2021 to discuss the NRC staff's draft Alpha Tau Alpha Dart
The teleconference meeting will be held on Wednesday, December 15, 2021, from 2:00 p.m. to 4:00 p.m. Eastern Standard Time.
Mr. Don Lowman, email:
Darlene F. Metter, M.D. will chair the meeting. Dr. Metter will conduct the meeting in a manner that will facilitate the orderly conduct of business. The following procedures apply to public participation in the meeting:
1. Persons who wish to provide a written statement should submit an electronic copy to Mr. Lowman using the contact information listed above. All submittals must be received by the close of business on December 10, 2021, three business days before the meeting, and must pertain to the topics on the agenda for the meeting.
2. Questions and comments from members of the public will be permitted during the meeting, at the discretion of the ACMUI Chairman.
3. The draft transcript and meeting summary will be available on ACMUI's website
4. Persons who require special services, such as those for the hearing impaired, should notify Mr. Lowman of their planned participation.
This meeting will be held in accordance with the Atomic Energy Act of 1954, as amended (primarily Section 161a); the Federal Advisory Committee Act (5 U.S.C. App); and the Commission's regulations in title 10 of the
For the U.S. Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Construction permit application; acceptance for docketing.
The U.S. Nuclear Regulatory Commission (NRC) staff accepts and dockets an application for a construction permit for the Hermes test reactor to be built in Oak Ridge, Tennessee.
This action becomes effective on November 29, 2021.
Please refer to Docket No. 50-7513 or Docket ID NRC-2021-0193 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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Benjamin Beasley, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-2062; email:
On September 29, 2021, Kairos Power LLC (Kairos) filed, pursuant to Part 50 of title 10 of the
The first part of the Kairos construction permit application consisted of the following information:
• The general information required by 10 CFR 50.33.
• The Preliminary Safety Analysis Report required by 10 CFR 50.34(a).
• Exemption requests to support issuance of a construction permit.
• A request to invoice the filing fee required by 10 CFR 50.30(e) and 10 CFR 170.21.
On October 31, 2021, Kairos filed the second part of its application (ADAMS Package Accession No. ML21306A131) for a construction permit, which consisted of the Environmental Report required by 10 CFR 50.30(f). Submission of the Environmental Report completed the application for a construction permit.
The NRC staff determined that Kairos submitted a two-part application in accordance with 10 CFR 2.101(a)(5) and 10 CFR part 50, and that the application is acceptable for docketing under Docket No. 50-7513. The NRC staff provided Kairos notice of the acceptance and docketing determinations by letter dated November 29, 2021 (ADAMS Accession No. ML21319A354).
The NRC staff will perform a detailed technical review of the construction permit application and document its safety findings in a safety evaluation report. Also, in accordance with 10 CFR part 51, “Environmental Protection Regulations for Domestic Licensing and Related Regulatory Functions,” the NRC staff will prepare an environmental impact statement for the proposed action.
Docketing of the application does not preclude the NRC from requesting additional information from the applicant as the review proceeds, nor does it predict whether the Commission will grant or deny the application. The construction permit application will be referred to the Advisory Committee on Reactor Safeguards for review and report consistent with 10 CFR 50.58, “Hearings and report of the Advisory Committee on Reactor Safeguards.” If, after holding an evidentiary hearing, the Commission finds that the construction permit application meets the applicable standards of the Atomic Energy Act and the Commission's regulations, and that any required notifications to other agencies and bodies have been made, the Commission will issue a construction permit, in the form and containing conditions and limitations that the Commission finds appropriate and necessary.
The Commission will announce, in a future
For the Nuclear Regulatory Commission.
Office of Personnel Management.
Notice of a modified system of records.
In accordance with the Privacy Act of 1974, the Office of Personnel Management (“OPM”), proposes to modify an OPM government-wide system of records, OPM/GOVT-5, Recruiting, Examining, and Placement Records, primarily to make clear that records collected and generated in the process of onboarding Federal employees but prior to their entry-on-duty date are included in this system of records. In addition, OPM proposes additional administrative changes to reflect the current OPM organization.
Please submit comments on or before January 3, 2022. This modified system of records is effective upon publication.
You may submit written comments through the Federal Rulemaking Portal:
For general questions, please contact: Dianna Saxman, Associate Director, Human Resources Solutions, Office of Personnel Management at
In accordance with the Privacy Act of 1974, 5 U.S.C. 552a, the Office of Personnel Management (“OPM”), proposes to make certain modifications to the OPM/GOVT-5 Recruiting, Examining, and Placement Records system of records pending a comprehensive review and update at a later date. The records in this system of records include all records submitted by an applicant for Federal employment or generated in connection with the application and the onboarding process.
OPM proposes to modify this system of records to add an additional category of records: “m. Records collected or generated in the process of onboarding an applicant selected to fill a vacant position, to include, for example, vaccination records, proof of citizenship, and agency-specific documentation necessary for the onboarding process.” This category of records is being added to clarify that records collected or generated in the onboarding process, after applicants have been selected but before they are Federal employees, are included in this system of records. Once an individual completes the onboarding process and is a Federal employee, certain records collected and generated in the onboarding process may be included in other systems of records. For example, proof of vaccination required by Executive Order 14043, Requiring Coronavirus Disease 2019 Vaccination for Federal Employees, may later be included in the OPM/GOVT-10 Employee Medical File Systems Records system of records; and personnel forms completed in the onboarding process may later be included in the OPM/GOVT-1 General Personnel Records system of records.
In addition to modifying this system of records to add an additional category of records, OPM also proposes to modify the description of the system location and identification of the system manager. Both modifications are being made to reflect organizational changes at OPM since the last publication of the OPM/GOVT-5 system of records notice.
OPM has provided a report of this modified system of records to the Committee on Oversight and
Recruiting, Examining, and Placement Records, OPM/GOVT-5.
Unclassified.
Human Resources Solutions, Office of Personnel Management, 1900 E Street NW, Washington, DC 20415, has government-wide responsibility for the records in this system of records. Individual agencies have responsibility for the records pertaining to their applicants.
Associate Director, Human Resources Solutions, U.S. Office of Personnel Management, 1900 E Street NW, Room 6H31, Washington, DC 20415.
m. Records collected or generated in the process of onboarding an applicant selected to fill a vacant position, to include, for example, vaccination records, proof of citizenship, and agency-specific documentation necessary for the onboarding process.
61 FR 36919 (July 15, 1996); 65 FR 24731 (April 27, 2000); 71 FR 35341 (June 19, 2006); 79 FR 16834 (March 26, 2014); 80 FR 74815 (November 30, 2015).
The following is a notice of applications for deregistration under section 8(f) of the Investment Company Act of 1940 for the month of November 2021. A copy of each application may be obtained via the Commission's website by searching for the file number, or for an applicant using the Company name box, at
The Commission:
Shawn Davis, Assistant Director, at (202) 551-6413 or Chief Counsel's Office at (202) 551-6821; SEC, Division of Investment Management, Chief Counsel's Office, 100 F Street NE, Washington, DC 20549-8010.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Acting under the authority of and in accordance with section 1(a)(ii)(B) of E.O. 13224 of September 23, 2001, as amended by E.O. 13268 of July 2, 2002, E.O. 13284 of January 23, 2003, and E.O. 13886 of September 9, 2019, I hereby
Consistent with the determination in section 10 of E.O. 13224 that prior notice to persons determined to be subject to the Order who might have a constitutional presence in the United States would render ineffectual the blocking and other measures authorized in the Order because of the ability to transfer funds instantaneously, I determine that no prior notice needs to be provided to any person subject to this determination who might have a constitutional presence in the United States, because to do so would render ineffectual the measures authorized in the Order.
This notice shall be published in the
Based upon a review of the Administrative Record assembled in this matter, and in consultation with the Attorney General and the Secretary of the Treasury, I conclude that the circumstances that were the basis for the designation of the Revolutionary Armed Forces of Colombia (FARC) (and other aliases) as a Foreign Terrorist Organization have changed in such a manner as to warrant revocation of the designation.
Therefore, I hereby determine that the designation of the Revolutionary Armed Forces of Colombia (FARC) (and other aliases) as a Foreign Terrorist Organization, pursuant to section 219 of the Immigration and Nationality Act, as amended (hereinafter “INA”) (8 U.S.C. 1189), shall be revoked.
This determination shall be published in the
Acting under the authority of and in accordance with section 1(a)(ii)(A) of E.O. 13224 of September 23, 2001, as amended by E.O. 13268 of July 2, 2002, E.O. 13284 of January 23, 2003, and E.O. 13886 of September 9, 2019, I hereby determine that the person known as Revolutionary Armed Forces of Colombia—People's Army, also known as FARC—EP, also known as Fuerzas Armadas Revolucionarias de Colombia—Ejercito del Pueblo, also known as FARC dissidents FARC—EP, also known as Revolutionary Armed Forces of Colombia dissidents FARC—EP, also known as FARC—D FARC—EP, also known as Grupo Armado Organizado Residual FARC—EP, also known as GAO-R FARC—EP, also known as Residual Organized Armed Group FARC—EP, is a foreign person that has committed, attempted to commit, poses a significant risk of committing, or has participated in training to commit acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of the United States.
Acting under the authority of and in accordance with section 1(a)(ii)(B) of E.O. 13224 of September 23, 2001, as amended by E.O. 13268 of July 2, 2002, E.O. 13284 of January 23, 2003, and E.O. 13886 of September 9, 2019, I hereby determine that the persons known as Nestor Gregorio Vera Fernandez, also known as Ivan Mordisco; Miguel Santanilla Botache, also known as Gentil Duarte, also known as Miguel Botache Santillana; and Euclides Espana Caicedo, also known as Jhon Fredey Henao Munoz, also known as Jhonier, also known as Jonier, also known as Jonnier, are leaders of Revolutionary Armed Forces of Colombia—People's Army, a group whose property and interests in property are concurrently blocked pursuant to a determination by the Secretary of State pursuant to E.O. 13224.
Consistent with the determination in section 10 of E.O. 13224 that prior notice to persons determined to be subject to the Order who might have a constitutional presence in the United States would render ineffectual the blocking and other measures authorized in the Order because of the ability to transfer funds instantaneously, I determine that no prior notice needs to be provided to any person subject to this determination who might have a constitutional presence in the United States, because to do so would render ineffectual the measures authorized in the Order.
This notice shall be published in the
Based upon a review of the Administrative Record assembled in this matter, and in consultation with the Attorney General and the Secretary of the Treasury, I conclude that there is a sufficient factual basis to find that the relevant circumstances described in section 219 of the Immigration and Nationality Act, as amended (hereinafter “INA”) (8 U.S.C. 1189), exist with respect to Segunda Marquetalia, also known as New Marquetalia, also known as Second Marquetalia, also known as La Nueva Marquetalia, also known as FARC dissidents Segunda Marquetalia, also known as Revolutionary Armed Forces of Colombia Dissidents Segunda Marquetalia, also known as FARC-D Segunda Marquetalia, also known as Grupo Armado Organizado Residual Segunda Marquetalia, also known as GAO-R Segunda Marquetalia, also known as Residual Organized Armed Group Segunda Marquetalia, also known as Armed Organized Residual Group Segunda Marquetalia.
Therefore, I hereby designate the aforementioned organization and its aliases as a Foreign Terrorist Organization pursuant to section 219 of the INA.
This determination shall be published in the
Acting under the authority of and in accordance with section 1(a)(ii)(A) of E.O. 13224 of September 23, 2001, as amended by E.O. 13268 of July 2, 2002, E.O. 13284 of January 23, 2003, and E.O. 13886 of September 9, 2019, I hereby determine that the person known as Segunda Marquetalia, also known as New Marquetalia, also known as Second Marquetalia, also known as La Nueva Marquetalia, also known as FARC dissidents Segunda Marquetalia, also known as Revolutionary Armed Forces of Colombia Dissidents Segunda Marquetalia, also known as FARC-D Segunda Marquetalia, also known as Grupo Armado Organizado Residual Segunda Marquetalia, also known as GAO-R Segunda Marquetalia, also known as Residual Organized Armed Group Segunda Marquetalia, also known as Armed Organized Residual Group Segunda Marquetalia, is a foreign person that has committed, attempted to commit, poses a significant risk of committing, or has participated in training to commit acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of the United States.
Acting under the authority of and in accordance with section 1(a)(ii)(B) of E.O. 13224 of September 23, 2001, as amended by E.O. 13268 of July 2, 2002, E.O. 13284 of January 23, 2003, and E.O. 13886 of September 9, 2019, I hereby determine that the persons known as Luciano Marin Arango, also known as Ivan Marquez, also known as Ivan Marques; Hernan Dario Velasquez Saldarriaga, also known as Hernan Dario Velasquez, also known as El Paisa, also known as Oscar, also known as Carlos Alberto Garcia, also known as Paisa, also known as Hermides Buitrago, also known as Oscar Montero, also known as Antonio Rodríguez Sunce; and Henry Castellanos Garzon, also known as Romana, also known as Edison Romana, are leaders of Segunda Marquetalia, a group whose property and interests in property are concurrently blocked pursuant to a determination by the Secretary of State pursuant to E.O. 13224.
Consistent with the determination in section 10 of E.O. 13224 that prior notice to persons determined to be subject to the Order who might have a constitutional presence in the United States would render ineffectual the blocking and other measures authorized in the Order because of the ability to transfer funds instantaneously, I determine that no prior notice needs to be provided to any person subject to this determination who might have a constitutional presence in the United States, because to do so would render ineffectual the measures authorized in the Order.
This notice shall be published in the
Based upon a review of the administrative record assembled in this matter, and in consultation with the Attorney General and the Secretary of the Treasury, I have concluded that there is a sufficient factual basis to find that ISIL Khorasan, uses the additional alias The Islamic State of Iraq and ash-Sham—Khorasan Province, also known as The Islamic State of Iraq and Syria—Khorasan, Islamic State of Iraq and Levant in Khorasan Province, also known as Islamic State Khurasan, also known as ISISK, also known as ISIS-K, also known as IS-Khorasan.
Therefore, pursuant to Section 1(b) of E.O. 13224, I hereby amend the designation of ISIL Khorasan as a Specially Designated Global Terrorist to include the following new aliases: The Islamic State of Iraq and ash-Sham—Khorasan Province, The Islamic State of Iraq and Syria—Khorasan, Islamic State of Iraq and Levant in Khorasan Province, Islamic State Khurasan, ISISK, ISIS-K, and IS-Khorasan.
This notice shall be published in the
Based upon a review of the Administrative Record assembled in this matter, and in consultation with the Attorney General and the Secretary of the Treasury, I conclude that there is a sufficient factual basis to find that the relevant circumstances described in section 219 of the Immigration and Nationality Act, as amended (hereinafter “INA”) (8 U.S.C. 1189), exist with respect to Revolutionary Armed Forces of Colombia—People's Army, also known as FARC-EP, also known as Fuerzas Armadas Revolucionarias de Colombia—Ejercito del Pueblo, also known as FARC dissidents FARC-EP, also known as Revolutionary Armed Forces of Colombia dissidents FARC-EP, also known as FARC-D FARC-EP, also known as Grupo Armado Organizado Residual FARC-EP, also known as GAO-R FARC-EP, also known as Residual Organized Armed Group FARC-EP.
Therefore, I hereby designate the aforementioned organization and its aliases as a Foreign Terrorist Organization pursuant to section 219 of the INA.
This determination shall be published in the
Based upon a review of the Administrative Record assembled pursuant to Section 219(a)(4)(C) of the Immigration and Nationality Act, as amended (8 U.S.C. 1189(a)(4)(C))
Therefore, I hereby determine that the designation of the aforementioned organization as a Foreign Terrorist Organization, pursuant to Section 219 of the INA (8 U.S.C. 1189), shall be maintained. Additionally, pursuant to Section 219(b) of the INA, as amended (8 U.S.C. 1189(b)), I hereby amend the designation of the aforementioned organization (and other aliases) as a Foreign Terrorist Organization to include the following new aliases: The Islamic State of Iraq and ash-Sham—Khorasan Province, The Islamic State of Iraq and Syria—Khorasan, Islamic State of Iraq and Levant in Khorasan Province, Islamic State Khurasan, ISISK, ISIS-K, and IS-Khorasan.
This determination shall be published in the
I hereby revoke the designation of the following person as a Specially Designated Global Terrorist, pursuant to section 1(a)(ii) of E.O. 13224: Revolutionary Armed Forces of Colombia (FARC) (and other aliases).
This determination shall be published in the
By virtue of the authority vested in the Secretary of State by the laws of the United States, including 22 U.S.C. 2651a, pursuant to authority delegated by the Secretary of the Department of Homeland Security (DHS) on August 6, 2021 (DHS Delegation Number 00117), and subject to the DHS Secretary's oversight, direction, and guidance, I hereby delegate to the assistant secretary for Bureau of Population, Refugees, and Migration, to the extent authorized by law, the authority to designate Department employees as immigration officers to facilitate U.S. Citizenship and Immigration Services (USCIS) video teleconference interviews of overseas refugee applicants, pursuant to section 103(a)(6) of the Immigration and Nationality Act (8 U.S.C. 1103(a)(6)) and 8 CFR 2.1.
Nothing in this delegation shall be construed as superseding or circumventing any authorities delegated within DHS, or as superseding or circumventing the restriction in the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1998, title I, Public Law No 105-119 (8 U.S.C. 1103 note) with respect to the acceptance of fingerprints.
The authority delegated herein may be exercised by the Secretary, Deputy Secretary, Deputy Secretary for Management and Resources, and the Under Secretary for Civilian Security, Democracy, and Human Rights.
This delegation of authority shall be published in the
Based upon a review of the Administrative Records assembled pursuant to Section 219(a)(4)(C) of the Immigration and Nationality Act, as amended (8 U.S.C. 1189(a)(4)(C)) (“INA”), and in consultation with the Attorney General and the Secretary of the Treasury, I conclude that the circumstances that were the bases for the designations of the aforementioned organizations as Foreign Terrorist Organizations have not changed in such a manner as to warrant revocation of the designations and that the national security of the United States does not warrant a revocation of the designations.
Therefore, I hereby determine that the designations of the aforementioned organizations as Foreign Terrorist Organizations, pursuant to Section 219 of the INA (8 U.S.C. 1189), shall be maintained.
This determination shall be published in the
Office of the United States Trade Representative (USTR).
Notice.
On October 8, 2021, Turkey joined the United States and 134 other jurisdictions participating in the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting in reaching a political agreement on a two-pillar solution to address tax challenges arising from the digitalization of the world economy. As part of Pillar 1, all parties agreed to remove existing digital services taxes and other relevant similar measures, and to coordinate the
The additional duties on products of Turkey are terminated as of November 28, 2021.
For questions concerning this notice, please contact Benjamin Allen, Thomas Au, Patrick Childress, or Kate Hadley, Assistant General Counsels at (202) 395-9439, (202) 395-0380, (202) 395-9531, and (202) 395-3911, respectively, Robert Tanner, Director, Services and Investment at (202) 395-6125, or Michael Rogers, Director for Europe at (202) 395-2684.
For background on the proceedings in the section 301 investigation of Turkey's DST, please see prior notices including: 85 FR 34709 (June 5, 2020); 86 FR 2480 (January 12, 2021); 86 FR 16822 (March 31, 2021); and 86 FR 30353 (June 7, 2021).
On June 2, 2021, the U.S. Trade Representative determined to take action in the form of additional duties on certain products of Turkey and to immediately suspend those additional duties for up to 180 days. 86 FR 30353 (June 7, 2021).
One-hundred forty-one jurisdictions are engaged in international tax negotiations under the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting. On October 8, 2021, Turkey joined the United States and 134 other participants in reaching political agreement on a Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. OECD/G20 Base Erosion and Profit Shifting Project,
The Multilateral Convention (MLC) will require all parties to remove all Digital Services Taxes and other relevant similar measures with respect to all companies, and to commit not to introduce such measures in the future. No newly enacted Digital Services Taxes or other relevant similar measures will be imposed on any company from 8 October 2021 and until the earlier of 31 December 2023 or the coming into force of the MLC. The modality for the removal of existing Digital Services Taxes and other relevant similar measures will be appropriately coordinated.
On November 22, 2021, the United States and Turkey issued a joint statement that describes a political compromise reached on a transitional approach to existing Unilateral Measures while implementing Pillar 1.
Section 307 of the Trade Act of 1974, as amended (Trade Act) (19 U.S.C. 2417), provides that “[t]he Trade Representative may modify or terminate any action, subject to the specific direction, if any, of the President with respect to such action, that is being taken under section [301] of this title if . . . such action is being taken under section [301(b)] of this title and is no longer appropriate.” The U.S. Trade Representative has found that that the political agreement of Turkey to the OECD/G20 Two-Pillar Solution, which provides for the removal of DSTs upon entry into force of Pillar 1, and the transitional approach in the joint statement provide a satisfactory resolution of the matters covered by the section 301 investigation of Turkey's DST. Accordingly, pursuant to section 307 of the Trade Act, the U.S. Trade Representative has determined that the suspended trade action in this investigation is no longer appropriate and that the action should be terminated.
The U.S. Trade Representative's determination was made in consultation with Treasury and considers the advice of the interagency Section 301 Committee, consultations with representatives of the domestic industry concerned, and public comments and advisory committee advice received during the investigation.
In order to implement the termination of the section 301 action in the investigation of Turkey's DST, subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS) is modified by the Annex to this notice.
Section 306(a) of the Trade Act (19 U.S.C. 2416(a)) provides that “[t]he Trade Representative shall monitor the implementation of each measure undertaken, or agreement that is entered into, by a foreign country to provide a satisfactory resolution of a matter subject to investigation. . . .” Section 306(b) (19 U.S.C. 2416(b)) provides that “[i]f, on the basis of the monitoring carried out under subsection (a), the Trade Representative considers that a foreign country is not satisfactorily implementing a measure or agreement referred to in subsection (a), the Trade Representative shall determine what further action the Trade Representative shall take under section [301(a)].” Pursuant to section 306(a) of the Trade Act, the U.S. Trade Representative, in coordination with Treasury, will monitor the implementation of the
The U.S. Trade Representative has decided to terminate the additional duties under heading 9903.90.06 of the HTSUS on articles the product of Turkey, as provided for in U.S. notes 27(a) and 27(b) to subchapter III of chapter 99 of the HTSUS. The termination of these additional duties is effective on November 28, 2021.
In accordance with this determination, the U.S. Trade Representative has determined to modify the HTSUS by: (1) Deleting U.S. notes 27(a) and 27(b) to subchapter III of chapter 99 of the HTSUS; and (2) by deleting HTSUS heading 9903.90.06. The modifications of the HTSUS are effective on November 28, 2021. Any provisions of previous notices issued in this investigation that are inconsistent with this notice are superseded to the extent of such inconsistency.
Federal Highway Administration (FHWA), U.S. Department of Transportation (DOT).
Notice; request for information (RFI).
FHWA seeks public input on the implementation of the Infrastructure and Investment Jobs Act.
To ensure that you do not duplicate your docket submissions, please submit all comments by only one of the following ways:
For questions about this RFI, please contact Dan Stillson, FHWA Office of Policy, 202-366-9202, or via email at
A copy of this Notice, all comments received on this Notice, and all background material may be viewed online at
On November 15, 2021, President Joseph R. Biden, Jr. signed the Bipartisan Infrastructure Law (BIL), enacted as the Infrastructure Investment and Jobs Act, Public Law 117-58 (Nov. 15, 2021). The BIL is a once-in-a-generation investment in infrastructure, which will grow the economy, enhance U.S. competitiveness in the world, create good jobs, and make the U.S. economy more sustainable, resilient, and equitable. It includes the largest dedicated bridge investment since the construction of the Interstate System, and the largest investment in electric vehicle charging infrastructure in history. Specific to FHWA, the BIL provides more than $350 billion over 5 fiscal years (FY 22-26) for surface transportation programs. This represents, on an average annual basis, nearly 29 percent more Federal-aid funding for highway programs and activities than under prior law, and it also establishes more than a dozen new highway programs.
The BIL focuses on investing in safety, bridges, equity and reconnecting communities, addressing climate change, and promoting resilience. In addition, there are several new programs offering new opportunities for local governments and other non-traditional entities to receive highway funding. More information on the BIL can be located at
In order to make the most of the BIL's historic investment and opportunities, FHWA is seeking your input on the FHWA-related sections of the BIL. Most of those provisions are contained in Title I of Division A and in Title VIII of Division J. Through this RFI, FHWA is soliciting information and suggestions from the public and a broad array of stakeholders across public and private sectors on how best to facilitate FHWA's implementation of the BIL.
This RFI is intended to solicit information on: (i) Potential opportunities and challenges for implementing new BIL programs; (ii) potential opportunities and challenges for implementing existing programs modified by the BIL; (iii) solutions or suggestions as to how FHWA might implement the BIL; (iv) necessity for additional guidance, FAQs, or program changes; and (v) areas requiring new and continued research.
The Department will review all comments submitted to the docket associated with this Notice, FHWA-2021-0021. To maximize useful comments, FHWA encourages commenters to provide the following information:
1. Specific Reference. A specific reference to the section number of the BIL that the comment discusses (and the associated section of the U.S. Code that
2. Detailed description of the action you think FHWA should take in response to the opportunity or challenge identified.
3. Detailed information that you think FHWA should consider while implementing the provision(s).
Although FHWA is seeking comments on the new programs and other changes in the BIL, FHWA is particularly interested in any comments on how best it can implement highway formula programs continued by the BIL. For example, the BIL continues the Surface Transportation Block Program, with some additional eligibilities, under 23 U.S.C. 133. The FHWA is interested not only in comments on the new eligibilities, but also if there are additional opportunities to make improvements or changes to the existing program as FHWA implements the BIL. The same goes for other existing programs such as the National Highway Performance Program, the Highway Safety Improvement Program, the National Highway Freight Program, and the Congestion Mitigation and Air Quality Improvement Program.
Although FHWA is seeking public input on the implementation of the BIL, it will issue guidance and begin other activities related to implementation while this docket remains open.
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Securities and Exchange Commission.
Proposed rule.
The Securities and Exchange Commission (“Commission”) is proposing amendments to the electronic recordkeeping requirements for broker-dealers, security-based swap dealers (“SBSDs”), and major security-based swap participants (“MSBSPs”).
Comments should be received on or before January 3, 2022.
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 Vanessa A. Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
We or the staff may add studies, memoranda, or other substantive items 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 our website. To ensure direct electronic receipt of such notifications, sign up through the “Stay Connected” option at
Michael A. Macchiaroli, Associate Director, at (202) 551-5525; Thomas K. McGowan, Associate Director, at (202) 551-5521; Randall W. Roy, Deputy Associate Director, at (202) 551-5522; Raymond A. Lombardo, Assistant Director, at (202) 551-5755; Joseph I. Levinson, Senior Special Counsel, at (202) 551-5598; or Timothy C. Fox, Branch Chief, at (202) 551-5687, Division of Trading and Markets, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-7010.
The Commission is proposing amendments to:
Securities Exchange Act of 1934 (“Exchange Act”) Rule 17a-4 (“Rule 17a-4”)
As discussed in greater detail in the sections below, the amendments to Rule 17a-4 would provide an audit-trail alternative to the current requirement that electronic records be preserved exclusively in a non-rewriteable, non-erasable format. The audit-trail alternative would require that firms preserve electronic records in a manner that permits the recreation of an original record if it is altered, over-written, or erased. Rule 18a-6 currently does not have a requirement to preserve electronic records: (1) In a manner that permits the recreation of an original record if it is altered, over-written or erased; or (2) exclusively in a non-rewriteable, non-erasable format. The amendments to Rule 18a-6 would provide that an electronic recordkeeping system of an SBS Entity without a prudential regulator (“nonbank SBS Entity”) must meet one of these two requirements. However, this proposed amendment would apply only to newly created records, and not to those created prior to the compliance date of proposed amendments, if adopted by the Commission.
Rule 17a-4 currently requires a broker-dealer to engage a third party who has access to and the ability to download information from the broker-dealer's electronic storage media to any acceptable medium under the rule. The third party must execute undertakings that it will provide access to the broker-dealer's electronic records and provide them to the Commission and other securities regulators upon request. Rule 18a-6 currently does not have this requirement. The amendments to Rule 17a-4 would eliminate the third-party access and undertakings requirements and replace them with a requirement that a senior officer of the broker-dealer provide the access and undertakings. The amendments to Rule 18a-6 would add an analogous senior officer access and undertakings requirement.
The amendments to Rules 17a-4 and 18a-6 would require a broker-dealer or SBS Entity, respectively, to furnish a record and its audit trail (if applicable) preserved on an electronic recordkeeping system pursuant to those rules in a reasonably usable electronic format, if requested by a representative of the Commission. This means the record would need to be produced in an electronic format that is compatible with commonly used systems for accessing and reading electronic records. Electronic records produced in a proprietary electronic format that Commission staff and other securities regulators could not read using commonly available systems for accessing and reading electronic records would not be considered to be in a reasonably usable electronic format.
The amendments to Rule 17a-4 would eliminate a requirement that the broker-dealer notify its designated examining authority (“DEA”) before employing an electronic recordkeeping system. Finally, the amendments to Rules 17a-4 and 18a-6, among other things, would remove or replace text to make those rules more technology neutral and to improve readability.
Exchange Act Rule 17a-3 (“Rule 17a-3”) requires a broker-dealer to make and keep current certain books and records.
The electronic record preservation requirements are set forth in paragraph (f) of Rule 17a-4 (“Rule 17a-4(f)”). These requirements were adopted by the Commission in 1997.
In addition to the WORM requirement, Rule 17a-4(f) requires, among other things, that the broker-dealer: (1) Notify its DEA prior to employing electronic storage media and at least 90 days before employing electronic storage media other than optical disk technology; (2) use electronic storage media that (a) verifies
As to optical disks, firms can meet the WORM requirement by “burning” data onto the disk, with the result that it cannot be altered, over-written, or erased, which means that this form of storage media cannot be reused.
After the adoption of the WORM requirement, broker-dealers inquired about whether electronic storage recordkeeping systems that do not permanently “burn” records onto the storage media could meet the WORM requirement. Consequently, in 2003, the Commission issued an interpretation to clarify that the rule does not mandate the use of optical disks and, therefore, a broker-dealer can use “an electronic storage system that prevents the overwriting, erasing or otherwise altering of a record during its required retention period through the use of integrated hardware and software codes” (“Rule 17a-4(f) Interpretation”).
In the release adopting Rule 18a-6, the Commission further refined its interpretation of the WORM requirement of Rule 17a-4(f).
In 2017, a group of trade associations filed a petition for rulemaking with the Commission.
In 2019, the Commission adopted Exchange Act Rules 18a-5 (“Rule 18a-5”)
In addition to these differences from Rule 17a-4(f), Rule 18a-6(e) does not include the requirement that the firm engage a third party who has the ability to access the records and who undertakes to do so at the request of the Commission. The Commission cited comments stating that this requirement “needlessly exposes firms to data leakage and cybersecurity threats.”
In this rulemaking, the Commission is considering electronic recordkeeping systems of broker-dealers and, therefore, believes it is appropriate to also consider electronic recordkeeping systems of SBS Entities. As discussed below, the Commission is proposing amendments to Rule 18a-6(e) that largely would align with the requirements of Rule 17a-4(f), as proposed to be amended.
Paragraph (j) of Rule 17a-4 (“Rule 17a-4(j)”) requires broker-dealers to furnish promptly to the Commission legible, true, complete, and current copies of those records of the firm that are required to be preserved under Rule 17a-4 or any other record of the firm that is subject to examination under Section 17(b) of the Exchange Act.
The introductory text of Rule 17a-4(f) provides, in pertinent part, that the records required to be maintained and preserved pursuant to Rules 17a-3 and 17a-4 may be immediately produced or reproduced on “micrographic media” or by means of “electronic storage media” that meet the conditions set forth in the rule and be maintained and preserved for the required time in that form. The term “micrographic media” refers to microfilm, microfiche, or any similar medium.
The introductory text of Rule 18a-6(e) provides, in pertinent part, that the records required to be maintained and preserved pursuant to Rules 18a-5 and 18a-6 may be immediately produced or reproduced by means of an electronic storage system that meets the conditions set forth in the rule and be maintained and preserved for the required time in that form. This text diverges from Rule 17a-4(f) in two material respects. First, it does not refer to “micrographic media.” When proposing Rule 18a-6(e), the Commission expressed a preliminary belief that SBS Entities would not use micrographic media because electronic storage media is more technologically advanced and offers greater flexibility in managing records.
The second way in which the introductory text of Rule 18a-6(e) diverges from Rule 17a-4(f) in a material way is that the former refers to an electronic storage
The Commission is proposing amendments to the introductory text of Rule 17a-4(f) to make the rule more technology neutral. In particular, the phrase “electronic storage media” would be replaced with the phrase “electronic recordkeeping system” throughout the rule, including in the introductory text. The Commission is proposing a conforming amendment to Rule 18a-6(e) to replace the phrase “electronic storage system” with the phrase “electronic recordkeeping system” throughout the rule, including in the introductory text. The Commission preliminarily believes that the phrase “electronic recordkeeping system” better characterizes a system that produces and preserves records electronically. The term “electronic storage media” generally refers to the devices (hardware) used to store data (
Paragraphs (f)(1)(i) and (ii) of Rule 17a-4 currently define the terms “micrographic media” and “electronic storage media,” respectively. Paragraph (e)(1) of Rule 18a-6 defines the term “electronic storage system.” Paragraph (f)(1)(ii) of Rule 17a-4 defines the term “electronic storage media” as, in pertinent part, any digital storage medium or system that meets the requirements of the rule. Paragraph (e)(1) of Rule 18a-6 defines the term “electronic storage system” as, in pertinent part, any digital storage system that meets the requirements of the rule. As discussed above, the Commission is proposing to use the term “electronic recordkeeping system” in Rules 17a-4(f) and 18a-6(e). Consequently, the Commission is proposing to define the term “electronic recordkeeping system” in both rules as “a system that preserves records in a digital format and that requires a computer to access the records.”
Paragraph (f)(2)(i) of Rule 17a-4 requires a broker-dealer to notify its DEA prior to employing electronic storage media, including a 90-day notice if the broker-dealer intends to employ electronic storage media other than optical disk technology. Paragraph (f)(2)(i) also requires a representation from the broker-dealer or the storage medium vendor or another third party with appropriate expertise that the selected electronic storage medium meets the conditions set forth in paragraph (f)(2)(ii), which are discussed below.
The Commission is proposing to eliminate these notification and representation requirements from Rule 17a-4(f). The Commission preliminarily believes they are no longer necessary. They were adopted at a time when the use of electronic recordkeeping systems by broker-dealers to meet the record preservation requirements of Rule 17a-4 was a relatively new phenomenon.
Paragraphs (f)(2)(ii)(A) through (D) of Rule 17a-4 set forth technical requirements for electronic storage media if used by a broker-dealer to meet the record preservation requirements of Rule 17a-4. Similarly, paragraphs (e)(2)(i) through (iii) of Rule 18a-6 set forth technical requirements for an electronic storage system if used by an SBS Entity to meet the record preservation requirements of Rule 18a-6. As discussed below, the Commission is proposing amendments to these requirements.
As a preliminary matter, the requirements for electronic recordkeeping systems in Rule 17a-4(f) would apply to all broker-dealers. However, the Commission is proposing to limit the application of the requirements for electronic recordkeeping systems in paragraph (e)(2) of Rule 18a-6 to nonbank SBS Entities, that is, SBS Entities
Paragraph (f)(2)(ii)(A) of Rule 17a-4 sets forth the WORM requirement. The Commission is proposing to amend Rule 17a-4(f) to add an audit-trail alternative to the WORM requirement for broker-dealers.
Under the proposed amendments to Rule 17a-4(f), broker-dealers would have an option to employ electronic recordkeeping systems that meet the audit-trail requirement as an alternative to the existing WORM requirement (which requirement would be retained in the rule). Under the proposed amendments to Rule 18a-6(e), nonbank SBS Entities would need to employ electronic recordkeeping systems that meet either the proposed audit-trail requirement or the proposed WORM requirement. Broker-dealers and nonbank SBS Entities would have the flexibility to preserve all of their electronic records either by (1) consistently using an electronic recordkeeping system that meets
The audit-trail alternative would be designed to address concerns that the WORM requirement causes some firms to deploy an electronic recordkeeping system that serves no purpose other than to hold records in a manner that meets the Commission's regulatory requirements for electronic recordkeeping systems.
For these reasons, the Commission is proposing to amend Rule 17a-4(f) to provide an audit-trail alternative to the WORM requirement. In addition, the Commission is proposing to require nonbank SBS Entities to use electronic recordkeeping systems that meet either the audit-trail or WORM requirement. Under the audit-trail alternative, the electronic recordkeeping system would need to preserve the records for the duration of their applicable retention periods in a manner that maintains a complete time-stamped audit trail that includes: (1) All modifications to and deletions of a record or any part thereof; (2) the date and time of operator entries and actions that create, modify, or delete the record; (3) the individual(s) creating, modifying, or deleting the record; and (4) any other information needed to maintain an audit trail of each distinct record in a way that maintains security, signatures, and data to ensure the authenticity and reliability of the record and will permit re-creation of the original record and interim iterations of the record.
It is the Commission's understanding that electronic recordkeeping systems used by certain broker-dealers and nonbank SBS Entities for business purposes can be configured to meet the audit-trail requirement. Therefore, this amendment along with the others proposed in the release are designed to facilitate the use of a single electronic recordkeeping system for business and regulatory purposes.
Under the proposed amendments, broker-dealers could potentially continue to use the electronic recordkeeping systems they currently employ to meet the WORM requirement. Similarly, nonbank SBS Entities would have the option to use electronic recordkeeping systems that meet the WORM requirement (as an alternative to the audit-trail requirement).
Paragraph (f)(2)(ii)(B) of Rule 17a-4 requires electronic storage media used by a broker-dealer to verify automatically the quality and accuracy of the storage media recording process. Similarly, paragraph (e)(2)(i) of Rule 18a-6 requires an electronic storage system used by an SBS Entity to verify automatically the quality and accuracy of the electronic storage system recording process. The Commission is proposing to amend the requirements set forth in these two paragraphs. The amendments would require that the electronic recordkeeping system used by a broker-dealer or nonbank SBS Entity must verify automatically the completeness and accuracy of the processes for storing and retaining records electronically.
Paragraph (f)(2)(ii)(C) of Rule 17a-4 requires electronic storage media used by a broker-dealer to serialize the original and, if applicable, duplicate units of storage media, and time-date for the required period of retention the information placed on such electronic storage media. Paragraph (e)(2)(ii) of Rule 18a-6 requires an electronic storage system used by an SBS Entity,
Paragraph (f)(2)(ii)(D) of Rule 17a-4 requires electronic storage media used by a broker-dealer to have the capacity to readily download indexes and records preserved on the electronic storage media to any medium acceptable under Rule 17a-4 as required by the Commission or the self-regulatory organizations (“SROs”) of which the broker-dealer is a member. Paragraph (e)(2)(iii) of Rule 18a-6 requires an electronic storage system used by an SBS Entity to have the capacity to readily download into a readable format indexes and records preserved in the electronic storage system. Indexes organize records and are a means for locating specific records within a recordkeeping system. However, electronic recordkeeping systems may use other means to organize and locate records.
The Commission is proposing to amend the text of these two requirements to incorporate the information that would be stored under the proposed audit-trail requirement and to specify that the electronic recordkeeping system must have the capacity to readily download and transfer copies of a record and its audit trail (if applicable) in both a human readable format and in a reasonably usable electronic format.
Further, rather than refer to the capacity to download
Paragraph (f)(3) of Rule 17a-4 and paragraph (e)(3) of Rule 18a-6 impose obligations on broker-dealers and SBS Entities, respectively, related to their use of electronic recordkeeping systems. In general, these requirements are designed to ensure that the staffs of the Commission and other relevant securities regulators can access and examine the records. As discussed below, the Commission is proposing amendments to these requirements. Under the proposed amendments, prudentially regulated SBS Entities would no longer be subject to the requirements of paragraph (e)(2) of Rule 18a-6. Prudentially regulated SBS Entities would, however, continue to be subject to the requirements of paragraph (e)(3) of the rule. Paragraph (e)(3) of Rule 18a-6 does not impose technical requirements on the electronic recordkeeping system. Instead, it specifies the requirements for the SBS Entity in connection with its use of an electronic recordkeeping system. As noted above, these requirements generally are designed to ensure that the staffs of the Commission and other relevant regulators can access and examine the records. For these reasons, the Commission preliminarily believes they should continue to apply to bank SBS Entities.
The introductory text of paragraph (f)(3) of Rule 17a-4 provides that if the broker-dealer uses micrographic media or electronic storage media, it must comply with requirements set forth in the paragraph, which are discussed below. Similarly, the introductory text of paragraph (e)(3) of Rule 18a-6 provides that, if an SBS Entity uses an electronic storage system, it must comply with the requirements set forth in the paragraph, which are also discussed below. The Commission is
Paragraph (f)(3)(i) of Rule 17a-4 requires a broker-dealer to at all times have available, for examination by Commission or SRO staff, facilities for the immediate, easily readable projection or production of micrographic media or electronic storage media images and for the production of easily readable images. Similarly, paragraph (e)(3)(i) of Rule 18a-6 requires an SBS Entity to at all times have available for examination by Commission staff facilities for the immediate, easily readable projection or production of records or images maintained on an electronic storage system and for the production of easily readable copies of those records or images.
The Commission is proposing amendments to paragraph (f)(3)(i) of Rule 17a-4 that would delete references to micrographic media and replace terms that are tied to micrographic media.
Paragraph (f)(3)(ii) of Rule 17a-4 requires a broker-dealer to be ready at all times to provide, and immediately provide, any facsimile enlargement that the staff of the Commission, an SRO, or state securities regulator may request. Similarly, paragraph (e)(3)(ii) of Rule 18a-6 requires that an SBS Entity be ready at all times to immediately provide in a readable format any record or index stored on the electronic storage system that the staff of the Commission requests.
The Commission is proposing amendments to both of these paragraphs to require the broker-dealer and the SBS Entity to be ready at all times to provide records stored on an electronic recordkeeping system. In particular, the current text of both paragraphs would be replaced with new text requiring the broker-dealer or SBS Entity to be ready at all times to provide immediately any record or information needed to locate records stored by means of the electronic recordkeeping system that the staffs of the Commission, SROs, and state securities regulators, as applicable, may request.
Paragraph (f)(3)(iii) of Rule 17a-4 requires a broker-dealer to store separately from the original, on any medium acceptable under Rule 17a-4, a duplicate copy of a record for the requisite time period. Similarly, paragraph (e)(3)(iii) of Rule 18a-6 requires that an SBS Entity store separately from the original a duplicate copy of a record stored on the electronic storage system for the requisite time period. These current provisions require broker-dealers and SBS Entities to maintain a second copy of each record.
The Commission is proposing amendments to both of these paragraphs to require the broker-dealer and the SBS Entity to have a backup set of records when records are preserved on an electronic recordkeeping system.
Paragraph (f)(3)(iv) of Rule 17a-4 requires a broker-dealer to organize and index accurately all information maintained on both original and any duplicate storage media. Paragraph (f)(3)(iv)(A) requires a broker-dealer to have the indexes available at all times for examination by the staffs of the Commission or an SRO. Paragraph (f)(3)(iv)(B) requires that each index be duplicated and the duplicate copies be stored separately from the original copy of the index. Finally, paragraph (f)(3)(iv)(C) requires that the original and duplicate indexes be preserved for the time required for the indexed record. Similarly, paragraph (e)(3)(iv) of Rule 18a-6 requires an SBS Entity to organize and index accurately all information maintained on both original and any duplicate storage system. Paragraph (e)(3)(iv)(A) requires an SBS Entity to have the indexes available at
As discussed above, some electronic recordkeeping systems may use means other than indexes to organize and locate records stored on the systems. Further, the references to indexes in Rule 17a-4(f), in part, reflect the widespread use of optical disks to store records electronically when the rule was adopted in 1997. Consequently, the Commission is proposing to amend these paragraphs of Rules 17a-4(f) and 18a-6(e) to impose obligations on broker-dealers and SBS Entities to organize and maintain information necessary to locate records stored on their electronic recordkeeping systems without mandating the use of indexes. Under the amendments, a broker-dealer or SBS Entity using an electronic recordkeeping system would need to organize and maintain information necessary to locate records maintained by the electronic recordkeeping system.
Rule 17a-4(f)(3)(v) requires that the broker-dealer have in place an audit system providing for accountability regarding inputting of records required to be maintained and preserved pursuant to Rules 17a-3 and 17a-4 to electronic storage media and inputting of any changes made to every original and duplicate record maintained and preserved on electronic storage media. Paragraph (f)(3)(v)(A) requires a broker-dealer to have the results of the audit system available at all times for examination by the staffs of the Commission or an SRO. Finally, paragraph (f)(3)(v)(B) requires that the results of the audit be preserved for the time required for the audited records. Similarly, Rule 18a-6(e)(3)(v) requires that the SBS Entity have in place an audit system providing for accountability regarding inputting of records required to be maintained and preserved pursuant to Rules 18a-5 and 18a-6 to the electronic storage system and inputting of any changes made to every original and duplicate record maintained and preserved on the electronic storage system. Paragraph (e)(3)(v)(A) requires an SBS Entity to have the results of the audit system available at all times for examination by the staff of the Commission. Finally, Paragraph (e)(3)(v)(B) requires that the results of the audit be preserved for the time required for the audited records.
The Commission is proposing amendments to these paragraphs of Rules 17a-4 and 18a-6 that are designed to better clarify the obligations of the broker-dealer or SBS Entity. In particular, the current rules require an “audit system” that provides “accountability” regarding the inputting of records and changes to records to the electronic storage media (in the case of Rule 17a-4) or electronic storage system (in the case of Rule 18a-6).
The remaining amendments to these paragraphs would be designed to incorporate the concept of a system of controls that tracks this information. In this regard, the broker-dealer or SBS Entity would need to be able to produce a record of the results of the audit of the system of controls for examination by the staffs of the Commission, SROs, and state securities regulators, as applicable.
Paragraph (f)(3)(vi) of Rule 17a-4 requires a broker-dealer to maintain, keep current, and provide promptly upon request by the staffs of the Commission or an SRO all information necessary to access records and indexes stored on the electronic storage media; or place in escrow and keep current a copy of the physical and logical file format of the electronic storage media, the field format of all different information types written on the electronic storage media and the source code, together with the appropriate documentation and information necessary to access records and indexes. Similarly, paragraph (e)(3)(vi) of Rule 18a-6 requires an SBS Entity to maintain, keep current, and provide promptly upon request by the staff of the Commission all information necessary to access records and indexes stored in the electronic storage system; or place in escrow and keep current a copy of the physical and logical file format of the electronic storage system, the field format of all different information types written on the electronic storage system and the source code, together with the appropriate documentation and information necessary to access records and indexes.
The Commission is proposing to eliminate the escrow account option from these paragraphs for two reasons. First, this option is premised upon the use of electronic storage media such as optical disk technology. Second, it could pose cybersecurity risk to have this information held by a third party in escrow. The Commission is proposing to retain the requirement that the broker-dealer or SBS Entity maintain, keep current, and provide promptly upon request by the Commission, SROs, and state securities regulators, as applicable,
Paragraph (f)(3)(vii) of Rule 17a-4 provides that, for a broker-dealer exclusively using electronic storage media for some or all of its record preservation, at least one third party, who has access to and the ability to download information from the broker-dealer's electronic storage media to any acceptable medium under Rule 17a-4, must file with the DEA for the broker-dealer certain undertakings. The required text of the undertakings are set forth in the rule. They require the third party to undertake: (1) To furnish promptly to the Commission, the broker-dealer's SRO(s), and state securities regulators having jurisdiction over the broker-dealer (collectively, the “regulators”), upon reasonable request, such information as is deemed necessary by the regulators to download information kept on the broker-dealer's electronic storage media to any medium acceptable under Rule 17a-4; and (2) to take reasonable steps to provide access to information contained on the broker-dealer's electronic storage media, including, as appropriate, arrangements for the downloading of any record required to be maintained and preserved by the broker-dealer pursuant to Rules 17a-3 and 17a-4 in a format acceptable to the regulators. The rule further provides that these arrangements must provide specifically that in the event of a failure on the part of a broker-dealer to download the record into a readable format and after reasonable notice to the broker-dealer, upon being provided with the appropriate electronic storage medium, the third party will undertake to do so, as the regulators may request.
The Commission proposed similar requirements for Rule 18a-6(e).
The Commission preliminarily believes it is appropriate to eliminate the
For these reasons, the Commission is proposing to amend Rule 17a-4(f) to require at all times that a senior officer of the broker-dealer, who has independent access to and the ability to provide the records, execute the undertakings.
In this regard, the Commission is proposing to modify the first undertaking so that it is triggered if the broker-dealer fails to provide records and, if applicable, associated audit trails stored on the electronic recordkeeping system. As proposed, the senior officer would need to undertake to furnish promptly to the regulators, upon reasonable request, such information as is deemed necessary by the regulators, to download copies of a record and its audit trail (if applicable) kept by means of an electronic recordkeeping system by the broker-dealer into both a human readable format and a reasonably usable electronic format in the event of a failure on the part of the broker-dealer to download a requested record or its audit trail (if applicable). This modification would be intended to limit the senior officer's obligations to circumstances where employees or other officers of the broker-dealer are either unwilling or unable to access and download a requested record or its audit trail, when applicable. In the normal course, the Commission expects broker-dealers would produce the records to the regulators without the need of the senior's officer's intervention.
The proposed amendments to Rule 18a-6(e) would similarly require a senior officer of the SBS Entity, who has independent access to and the ability to provide the records, to execute undertakings consistent with the undertakings that would be required pursuant to Rule 17a-4(f), as proposed to be amended.
As discussed above, the Commission believes most broker-dealers do not use micrographic media to preserve their records. However, because some broker-dealers may use this technology, the proposed amendments to Rule 17a-4(f) would preserve this recordkeeping option for broker-dealers.
The Commission is also proposing to amend Rule 17a-4(j) to require that a broker-dealer must furnish any record and its audit trail (if applicable) preserved electronically pursuant to Rule 17a-4(f) in a reasonably usable electronic format, if requested by a representative of the Commission.
The Commission is requesting comments from all members of the public on all aspects of the proposed amendments to Rules 17a-4 and 18a-6. Commenters are requested to provide empirical data in support of any arguments or analyses. With respect to any comments, the Commission notes that they are of the greatest assistance to its rulemaking initiative if accompanied by supporting data and analysis of the issues addressed in those comments and by alternatives to the Commission's proposals where appropriate.
In addition to this general request for comment, the Commission is requesting comment on the following specific aspects of the proposals:
1. Is the proposal to replace the term “electronic storage media” in Rule 17a-4(f) and the term “electronic storage media” in Rule 18a-6(e) with the term “electronic recordkeeping system” appropriate?
2. Is the definition of “electronic recordkeeping system” in Rules 17a-4(f) and 18a-6(e), as proposed to be amended, appropriate?
3. Is there a reason to retain the notification (including the 90-day notification) and representation requirements with respect to employing an electronic recordkeeping system in
4. Is the proposal to limit the requirements for electronic recordkeeping systems (including the audit-trail and WORM requirements) in paragraph (e)(2) of Rule 18a-6 to nonbank SBS Entities appropriate?
5. Would the proposed rule text setting forth the audit-trail requirement achieve the Commission's objective of imposing an obligation that the electronic recordkeeping system be configured to permit the re-creation of an original record if it is altered, over-written, or erased?
6. Would the proposed rule text requiring that the electronic recordkeeping system verify automatically the quality and accuracy of the electronic storage system storage and retention process achieve the Commission's objective that the electronic recordkeeping system be configured to ensure that when an original record is added to the electronic recordkeeping system it is completely and accurately captured in the system?
7. Is the proposed rule text requiring that the electronic recordkeeping system serialize the original and duplicate units of the storage media, and time-date for the required period of retention the information placed on such electronic storage media, if applicable, appropriate?
8. Is the proposed rule text requiring that the electronic recordkeeping system have the capacity to readily download and transfer copies of a record and its audit trail (if applicable) in both a human readable format and a reasonably usable electronic format appropriate?
9. Is the proposed rule text requiring that the electronic recordkeeping system have the capacity to readily download and transfer the information needed to locate the electronic record sufficiently clear?
10. Is the proposed rule text requiring the broker-dealer or SBS Entity to at all times have available, for examination by the regulators, facilities for immediate production of records preserved by means of the electronic recordkeeping system and for producing copies of those records appropriate?
11. Is the proposed rule text requiring the broker-dealer or SBS Entity to be ready at all times to provide immediately any record or information needed to locate records stored by means of the electronic recordkeeping system that the regulators may request appropriate?
12. Is the proposed rule text requiring the broker-dealer or SBS Entity to maintain a backup electronic recordkeeping system appropriate and necessary?
13. Is the proposed rule text requiring the broker-dealer or SBS Entity to organize and maintain information necessary to locate records maintained by the electronic recordkeeping system appropriate?
14. Is the proposed rule text requiring a broker-dealer or SBS Entity using an electronic recordkeeping system to have in place an auditable system of controls that records, among other things: The names of persons inputting, altering, or deleting a record; and the date and time such persons input, altered, or deleted the record appropriate?
15. Is the proposal to eliminate the requirement that a broker-dealer engage a third party with access to the firm's electronic records who undertakes to provide them to the Commission and other securities regulators appropriate?
16. What type of senior officer could fulfill the proposed access and undertakings requirements? For example, which senior officers have access to electronic recordkeeping systems? Are there any circumstances in which the senior officer would not be an associated person? Should the Commission specify which officers or officers with specific responsibilities and reporting lines that would be appropriate to provide the senior officer undertakings? If so, please identify them and explain why it would be appropriate for them to provide the undertakings.
17. Is the proposal to eliminate the option to place in escrow and keep current a copy of the physical and logical file format of the electronic storage media, the field format of all different information types written on the electronic storage media, and the source code, together with the appropriate documentation and information necessary to access records and indexes, appropriate? If not, explain why. For example, do broker-dealers use this option?
18. Do broker-dealers or SBS Entities use micrographic media to store regulatory records? If not, should the Commission delete the option to use micrographic media in Rule 17a-4(f)?
19. Should the Commission adopt a sunset provision after which time broker-dealers would no longer be able to use micrographic media? If so, explain why or why not. If not, please describe broker-dealers' continued use of micrographic media to store records. Would any broker-dealers incur costs in moving from micrographic media to paper or electronic storage media? If so, identify and explain the costs. Moreover, do broker-dealers continue to preserve records using paper, rather than electronic storage methods, to fulfill the record preservation requirements of Rule 17a-4? If so, please provide data as to the frequency of such use.
20. Are the proposed amendments to paragraphs (j) and (g) of Rules 17a-4 and 18a-6, respectively, that would require firms to furnish a record and its audit trail (if applicable) preserved on an electronic recordkeeping system pursuant to paragraph (e) of this section in a reasonably usable electronic format, if requested by a representative of the Commission, appropriate?
The Commission is mindful of the economic effects, including the costs and benefits, of the proposed amendments. Section 3(f) of the Exchange Act provides that whenever the Commission is engaged in rulemaking pursuant to the Exchange Act and is required to consider or determine whether an action is necessary or appropriate in the public interest, the Commission shall also consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.
The analysis below addresses the likely economic effects of the proposed amendments, including the anticipated and estimated benefits and costs of the amendments and their likely effects on efficiency, competition, and capital formation. The Commission also discusses the potential economic effects of certain alternatives to the approaches taken in this proposal. Many of the benefits and costs discussed below are difficult to quantify. For example, the Commission cannot quantify the number of entities that may already have electronic recordkeeping systems compliant with the proposed requirements; the extent to which some broker-dealers and SBS Entities may need to upgrade existing electronic recordkeeping systems to meet the proposed audit-trail requirement and costs thereof; or the degree to which broker-dealers and SBS Entities may currently pass along recordkeeping costs to customers and counterparties. While the Commission has attempted to quantify economic effects where possible, much of the discussion of economic effects is qualitative in nature.
To assess the economic effects of the proposed amendments, the Commission is using as the baseline the broker-dealer and security-based swap markets as they exist at the time of this release, including applicable rules the Commission has already adopted, but excluding rules the Commission has proposed but not yet finalized.
With respect to broker-dealers, the regulatory baseline includes Rules 17a-4(f) and (j). In addition, as discussed above, the Commission has also issued interpretations of Rule 17a-4(f) for broker-dealers.
The following sections discuss available data about the security-based swap market, affected SBS Entities, dual registrants, other security-based swap market participants, participant domiciles, and broker dealer activity.
The market for broker-dealer services encompasses a relatively small set of large and medium sized broker-dealers and thousands of smaller broker-dealers competing for niche or regional segments of the market.
Based on an analysis of FOCUS filings as of December 2020, there were approximately 3,551 registered broker-dealers with over 186 million customer accounts.
The Commission preliminarily estimates that 45 broker-dealers may be dually registered with the CFTC as futures commission merchants as of December 31, 2020.
In addition to the above estimates of affected broker-dealers, over-the-counter (“OTC”) derivatives dealers will also be
The Commission's understanding of the market is informed, in part, by available data on security-based swap transactions, though the Commission acknowledges that limitations in the data limit the extent to which it is possible to quantitatively characterize the market.
The Commission's analysis of the current state of the security-based swap market is based on data obtained from the Depositary Trust & Clearing Corporation (“DTCC”) Derivatives Repository Limited Trade Information Warehouse (“TIW”), especially data regarding the activity of market participants in the single-name CDS market during the period from 2008 to 2021.
According to data published by the Bank for International Settlements (“BIS”), the global notional amount outstanding in single-name CDS was approximately $3.5 trillion,
Final SBS Entity registration rules have been adopted and compliance was required as of November 1, 2021.
Firms that act as dealers play a central role in the security-based swap market. Based on an analysis of 2020 single-name CDS data in TIW, accounts of dealers intermediated transactions with a gross notional amount of approximately $1.99 trillion, with approximately 55 percent of the gross notional intermediated by the top five dealer accounts.
The numerous financial markets are integrated, often attracting the same market participants that trade across corporate bond, swap, and security-based swap markets, among others. For example, persons who will register as SBS Entities are likely also to be engaged in swap activity. In part, this overlap reflects the relationship between single-name CDS contracts, which are security-based swaps, and index CDS contracts, which may be swaps or security-based swaps. A single-name CDS contract covers default events for a single reference entity or reference security. Index CDS contracts and related products make payouts that are contingent on the default of index components and allow participants in these instruments to gain exposure to the credit risk of the basket of reference entities that comprise the index, which is a function of the credit risk of the index components. A default event for a reference entity that is an index component will result in payoffs on both single-name CDS written on the reference entity and index CDS written on indices that contain the reference entity. Because of this relationship between the payoffs of single-name CDS and index CDS products, prices of these products depend upon one another,
These hedging opportunities mean that participants that are active in one market are likely to be active in the other. Commission staff analysis of approximately 4,149 TIW accounts that participated in the market for single-name CDS in 2020 revealed that approximately 3,096 of those accounts, or 75 percent, also participated in the market for index CDS. Of the accounts that participated in both markets, data regarding transactions in 2020 suggests that, conditional on an account transacting in notional volume of index CDS in the top third of accounts, the
Of the 25 SBSDs subject to Rule 18a-6(e), 24 are dually registered with the CFTC as swap dealers and are therefore subject to CFTC requirements for entities registered with the CFTC as swap.
Notwithstanding the Commission's 2003 and 2019 interpretations of the WORM requirement (
The Commission understands that third-party vendors developed software-based solutions designed to meet the WORM requirement of Rule 17a-4(f).
As discussed above, a number of affected entities are dually registered with the CFTC as swap dealers. Under the CFTC's electronic recordkeeping rule, affected entities must configure their recordkeeping systems and have policies and procedures governing those systems that are designed to prevent records from being altered or erased.
The proposed amendments are intended to modernize the SBS Entity and broker-dealer recordkeeping rules given technological changes over the last two decades. The Commission preliminarily believes that by specifying that nonbank SBS Entities
These aggregate cost savings may be reduced by three factors. First, some affected entities may have already streamlined their regulatory electronic recordkeeping systems with systems used for business records consistent with the Commission interpretations described above. Second, some affected entities may elect to upgrade existing business recordkeeping systems to accommodate the proposed audit-trail alternative. The affected entities that choose to undertake such upgrades may do so if aggregate savings from eliminating redundant electronic recordkeeping systems outweigh the costs of buildout for existing systems. The Commission expects that these costs would primarily be realized by broker-dealers. However, potential buildout costs may decrease the cost savings from the proposal. Third, because the proposal would not require broker-dealers to make changes to recordkeeping systems that are currently compliant with the WORM requirement, they may choose not to make any changes to recordkeeping systems. Such broker-dealers may, for example, choose to continue maintaining separate recordkeeping systems for business purposes and for regulatory purposes.
The proposal may also benefit customers and counterparties of broker-dealers and nonbank SBS Entities. Specifically, to the extent that broker-
The proposal may also enhance Commission oversight of nonbank SBS Entities and broker-dealers. To the degree that the proposal may lead broker-dealers and nonbank SBS Entities to move to a single recordkeeping system for both business and regulatory purposes, and if affected entities direct compliance cost savings to investments in system improvements and maintenance, the reliability and efficiency of recordkeeping systems may increase. Moreover, the Commission preliminarily believes that the proposed audit-trail and WORM alternatives will provide flexibility for broker-dealers and nonbank SBS Entities, while still maintaining the essential ability of the Commission to access the entities' records in the course of examinations or other activities.
The Commission preliminarily believes that some of the proposed amendments may provide compliance efficiencies. For example, the proposed amendments related to the verification of completeness and accuracy of the processes for retaining records electronically may introduce time efficiencies in achieving compliance when an original record is added to the electronic recordkeeping system. Similarly, proposed amendments to provide additional specificity to the obligations relating to the auditable system of controls required by paragraph (f)(3)(v) and Rule 17a-4 and Rule paragraph (e)(3)(v) of Rule 18a-6 may introduce time and compliance efficiencies by lowering burdens on compliance professionals' time. Further, the Commission preliminarily believes that the elimination of the notification and representation requirements from Rule 17a-4(f) would alleviate some burden currently imposed on broker-dealers, as discussed below.
In addition, the proposed elimination of the
Certain of the proposed amendments may also incrementally improve regulatory oversight. For example, proposed amendments related to the ability to download and transfer records in human readable and reasonably usable electronic formats may facilitate more efficient Commission oversight as they would reduce the time costs of staff review of individual records as well as searching and sorting electronic records. Further, the proposed amendments requiring that a senior officer provide required undertakings may provide the Commission with a means to obtain records if an affected entity refuses to produce them in the normal course, which may enhance the efficiency of Commission examinations and oversight.
The proposed amendments are intended to modernize the Commission's recordkeeping requirements and to reduce recordkeeping duplication by affected entities. However, as referenced above, the Commission recognizes that some broker-dealers and nonbank SBS Entities may bear costs from having to alter electronic recordkeeping systems currently used. Nonbank SBS Entities may, for example, need to alter electronic storage systems to comply with either the audit-trail or WORM requirement. In addition, broker-dealers may need to build new or alter existing electronic recordkeeping systems to the extent they would like to meet the audit-trail requirement. As noted below,
There are 802 broker-dealers with assets greater than $10 million and four SBSDs that would be subject to paragraph (e)(2) of Rule 18a-6. The Commission anticipates that eliminating the application of paragraph (e)(2) of Rule 18a-6 to the 21 SBSDs that have a prudential regulator and are subject to Rule 18a-6 would result in a decrease of 100 hours per firm on an annual basis, or 2,100 hours per year for all firms affected by the proposed amendment, for an ongoing cost savings of $663,000 per year for all affected firms.
The Commission does not believe any broker-dealers or SBSDs will elect to build a WORM-compliant electronic recordkeeping system. Moreover, the Commission estimates that most of these firms have electronic recordkeeping
The Commission estimates that the cost for the 2,749 broker-dealers with $10,000,000 or less in total assets to build and maintain an electronic recordkeeping system that meets the proposed audit-trail requirement would be significantly less than the $1,000,000 initial and $120,000 annual costs estimated for the 802 larger broker-dealers and four SBSDs that would be subject to paragraph (e)(2) of Rule 18a-6. Consequently, the Commission estimates that the initial cost to build and implement an electronic recordkeeping system that meets the audit-trail requirement for these smaller broker-dealers is $100,000, with an additional cost of $12,000 annually to maintain the system. The Commission estimates that most of the 2,749 broker-dealers with $10,000,000 or less in total assets will continue to preserve records in the manner they do today: Using a WORM-compliant system, using micrographic media, or maintaining paper records. The Commission estimates that 80 of these firms would elect to build a new electronic recordkeeping system to meet the audit-trail requirement for an initial one-time industry cost burden of $8,000,000 and an annual cost burden of $960,000.
The Commission believes that broker-dealers and SBS Entities would incur an initial burden and ongoing annual burden in establishing a backup electronic recordkeeping system. The Commission believes these burdens and costs would be substantially less than the burdens and costs of the primary electronic recordkeeping systems because of the benefit of economies of scale for the backup system whereby common technology and personnel could be used for both systems. The Commission estimates that the costs and burdens for the 802 larger broker-dealers and four SBSDs that would be subject to paragraph (e)(2) of Rule 18a-6 would be $250,000 in initial burdens and costs and $30,000 in annual burdens and costs. Further, the Commission expects that the broker-dealers and SBS Entities that have electronic recordkeeping systems that could meet the audit-trail requirement or that could be configured to meet that requirement without the need to build a new system also maintain backup recordkeeping systems for business continuity purposes. Therefore, the initial and annual costs would be incurred by the 20 firms that elect to build a new electronic recordkeeping system that meets the proposed audit-trail requirements. Consequently, the Commission estimates that the industry-wide costs and burdens for these firms would be $5,000,000 in initial costs and burdens and $600,000 in annual costs and burdens.
The Commission estimates that the costs and burdens incurred by the 80 smaller broker-dealers that would build electronic recordkeeping systems to meet the audit-trail requirement and, therefore, need to build a backup recordkeeping system, would be substantially less than the costs and burdens incurred by the larger broker-dealers. The Commission estimates that these firms would incur an initial costs and burdens of $25,000 and ongoing annual costs and burdens of $3,000. Therefore, the Commission estimates that the industry-wide costs and burdens for these firms would be $2,000,000 in initial costs and burdens and $240,000 in ongoing annual costs and burdens.
The Commission recognizes that the proposal would not harmonize with the parallel recordkeeping rule for CFTC registrants (
Certain other aspects of the proposed amendments may also impose costs on affected entities. Specifically, the proposed amendments related to human readable and reasonably usable electronic file formats may impose compliance costs related to the required updates to recordkeeping systems.
The Commission has considered a number of alternatives. For example, the Commission has considered harmonizing the recordkeeping rules for SBS Entities with the CFTC's principles-based approach applicable to Swap Entities, but retaining the proposed audit-trail requirement for broker-dealers. As another alternative, the Commission considered harmonizing recordkeeping rules for both broker-dealers and SBS Entities with the CFTC's principles-based approach. These alternatives could enhance the cost savings from the proposal as affected entities may not need to modify their business recordkeeping systems to meet the proposed electronic recordkeeping system requirements, particularly with respect to nonbank SBS Entities that would need to use electronic recordkeeping systems that meet the WORM or audit-trail requirement. In addition, these alternatives could facilitate transactions across integrated swap and security-based swap markets. The Commission believes that its proposed rule amendments establishing electronic recordkeeping requirements for SBS Entities should provide greater protection to the original records created and preserved by SBS Entities, thereby giving regulators more reliable and secure access to those records. Unlike the CFTC's 2017 amendment, the Commission's proposal retains the WORM standard as a compliance option; the standard requires electronic
As another alternative, the Commission could require prudentially regulated SBS Entities to meet the proposed electronic recordkeeping system requirements. This alternative would expand the scope of application of the requirements, magnifying its benefits for Commission oversight as well as costs of altering existing recordkeeping systems. As a baseline matter, the Commission recognizes that prudentially regulated SBS Entities are subject to a robust system of recordkeeping requirements for different types of activities, including recordkeeping requirements under the Bank Secrecy Act regarding funds transfers equal to or greater than $3,000;
As another alternative, the Commission could have proposed eliminating the WORM alternative and requiring all broker-dealers and nonbank SBS Entities to comply with an audit-trail requirement. This alternative would require all affected entities to modernize their recordkeeping systems to meet the audit-trail requirement. While this alternative could produce long-term compliance efficiencies for a greater number of affected participants, it would also require all affected entities with WORM compliant systems to upgrade their electronic recordkeeping systems. Since compliance costs may be particularly burdensome for smaller entities, the alternative could have a disproportionate effect on smaller and medium-sized broker-dealers.
Finally, the Commission could have proposed requiring that a second senior officer has independent access to and the ability to provide the records and to execute the undertakings at all times. To the degree that relying on a single senior officer may present risks that the senior officer is unable or unwilling to obtain records, this alternative could increase the probability that the Commission would be able to access records. Thus, relative to the proposal, the alternative may further enhance the efficiency of Commission examinations and oversight. However, this alternative may impose additional time demands on a second senior officer in each affected entity. To the extent that the alternative would increase the scope of duties and increase potential liability on the part of a greater number of senior officers of affected entities, more senior officers may demand higher compensation and liability insurance, which may result in a greater increase to senior officer recruitment and retention costs relative to the proposal. Requiring a second individual to have the authority to grant access to the records may potentially increase cybersecurity risks compared to the proposed approach, although it would likely still represent less risk than the baseline third-party approach.
The primary effect of the proposed amendments on efficiency would stem from increased efficiency of broker-dealer and SBS Entity recordkeeping. Permitting either the audit-trail or WORM (introduced in the optical disk era) alternative is intended to allow broker-dealers and SBS Entities to modernize the records and systems such entities maintain for regulatory purposes. The Commission anticipates that most of the affected entities would respond to such a requirement by eliminating duplicative recordkeeping for regulatory and business purposes, giving rise to cost efficiencies discussed above. The proposal would not alter the amount, type, or manner of disclosures available to investors or the Commission, nor would it change broker-dealer or SBS Entity business models or activities. Thus, the Commission does not anticipate the proposal to impact informational or allocative efficiency.
The proposed amendments are not expected to significantly impact competition between bank and nonbank SBS Entities. As described above, the proposal would impose electronic recordkeeping system requirements (including the audit-trail alternative) on nonbank SBS Entities, but not on bank SBS Entities. Transitioning regulatory recordkeeping systems from hardware solutions (such as optical disks) meeting the WORM requirement to electronic records compliant with the audit-trail requirement may require costly modifications to existing recordkeeping systems of broker-dealers and nonbank SBS Entities may need to modify existing electronic recordkeeping systems to meet either the WORM or audit-trail requirement; bank SBS Entities would not bear such costs.
To the extent that the proposal results in cost savings for broker-dealers and SBS Entities estimated above, affected entities may be able to allocate newly available capital into capital forming activities. However, it is not clear that affected entities would direct cost savings to expanding their financial intermediation business and given the magnitude of the cost savings estimated above, the capital formation effects of the proposal are likely limited. Therefore, the proposal is also not expected to have significant effects on capital formation.
The Commission requests comment on all aspects of the economic analysis of the proposed amendments. To the extent possible, the Commission requests that commenters provide supporting data and analysis with respect to the benefits, costs, and effects on competition, efficiency, and capital formation of adopting the proposed amendments or any reasonable alternatives. In particular, the Commission asks commenters to consider the following questions:
1. What additional qualitative or quantitative information should the Commission consider as part of the
2. Has the Commission accurately characterized the costs and benefits of proposed amendments? If not, why not? Should any of the costs or benefits be modified? What, if any, other costs or benefits should the Commission take into account? If possible, please offer ways of estimating these costs and benefits. What additional considerations can the Commission use to estimate the costs and benefits of the proposed amendments?
3. Has the Commission accurately characterized the effects on competition, efficiency, and capital formation arising from the proposed amendments? If not, why not?
4. Has the Commission accurately characterized the economic effects of the above alternatives? For example, has the Commission accurately characterized the economic effects of the alternative requiring prudentially regulated SBS Entities to meet the proposed electronic recordkeeping system requirements? If not, why not? Should any of the costs or benefits be modified? What, if any, other costs or benefits should the Commission take into account?
5. Are there other reasonable alternatives to the proposed amendments? What are the economic effects of any other alternatives?
6. Are there data sources or data sets that can help the Commission refine its estimates of the costs and benefits associated with the proposed amendments? If so, please identify them.
Certain provisions of the rule amendments proposed in this release would contain a new “collection of information” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
(1) Rule 17a-4—Records to be preserved by certain brokers and dealers (OMB control number 3235-0279); and
(2) Rule 18a-6—Records to be preserved by certain security-based swap dealers and major security-based swap participants (OMB control number 3235-0751).
The burden estimates contained in this section do not include any other possible costs or economic effects beyond the burdens required to be calculated for PRA purposes.
Rule 17a-4 sets forth record preservation requirements applicable to broker-dealers, including broker-dealers also registered as SBSDs or MSBSPs.
The proposed amendments to Rule 17a-4(f) would add the audit-trail alternative to the current WORM requirement.
Rule 17a-4(f) currently requires a broker-dealer to store separately from the original, on any medium acceptable under Rule 17a-4, a duplicate copy of a record for the requisite time period. Similarly, Rule 18a-6(e) currently requires that an SBS Entity store separately from the original a duplicate copy of a record stored on the electronic storage system for the requisite time period. These current provisions require broker-dealers and SBS Entities to maintain a second copy of a record. The Commission is proposing amendments to both of these paragraphs to require the broker-dealer and the SBS Entity to have a backup set of records when records are preserved on an electronic recordkeeping system.
Rule 17a-4(f) currently requires that, for every broker-dealer exclusively using electronic storage media for some or all of its record preservation, at least one third party, who has access to and the ability to download information from the broker-dealer's electronic storage media to any acceptable medium under Rule 17a-4, must file with the DEA for the broker-dealer certain undertakings that the third party will provide access to the broker-dealer's electronic records and provide them to the Commission and other securities regulators if requested. The proposed amendments to Rule 17a-4(f) would eliminate the third-party access and undertakings requirements and replace them with a requirement that a senior officer of the broker-dealer have the access and provide the necessary undertakings.
The Commission is proposing to no longer impose the requirements for electronic recordkeeping systems in paragraph (e)(2) of Rule 18a-6, as proposed to be amended, on bank SBS Entities.
The Commission is proposing to move the requirements for broker-dealers using micrographic media to new
The proposed amendments to Rule 17a-4(f) would eliminate a requirement that the broker-dealer notify its DEA before employing an electronic recordkeeping system.
Rule 17a-4(j) requires broker-dealers to furnish promptly to the Commission legible, true, complete, and current copies of those records of the firm that are required to be preserved under Rule 17a-4 or any other record of the firm that is subject to examination under Section 17(b) of the Exchange Act.
The Commission is proposing to amend the prompt production of records requirements of Rules 17a-4(j) and 18a-6(g).
The requirements of Rules 17a-4 and 18a-6, and the proposed amendments to these rules, are designed, among other things, to promote the prudent operation of broker-dealers and SBS Entities and to assist the Commission, SROs, and state securities regulators in conducting effective examinations.
As of December 31, 2020, there were 3,551 broker-dealers registered with the Commission.
The following table summarizes the estimated number of respondents that would be subject to the amendments to Rule 17a-4(f) and the number of SBSDs that would be subject to the amendments to Rule 18a-6(e) and paragraph (e)(2) of Rule 18a-6.
Based upon the recent experience of the staff, the Commission estimates that approximately 95% of the broker-dealers, including broker-dealers that will be dually registered as SBS Entities, (
Rules 17a-4(f) and 18a-6(e) currently impose collection of information requirements that result in initial and annual time burdens for broker-dealers and SBSDs. The proposed amendments to these rules would both add to and decrease the current time burden estimates as explained below.
The proposed amendments to Rule 17a-4(f) would provide an audit-trail alternative to the current WORM requirement for electronic recordkeeping systems used by broker-dealers to meet the record preservation requirements of Rule 17a-4.
The Commission believes that few, if any, broker-dealers or nonbank SBSDs that use electronic recordkeeping systems are not currently compliant with the rules, as proposed to be amended, either because they currently
A broker-dealer that does not preserve records electronically would incur initial costs to build an electronic recordkeeping system that meets either the WORM requirement or the audit-trail requirement or would have the initial burden of hiring a vendor to provide the service. A broker-dealer that preserves records electronically using a WORM-compliant electronic recordkeeping system would have an initial burden to build an electronic recordkeeping system that meets the audit-trail requirement, if it elects to use that alternative. An SBSD would have an initial burden build an electronic recordkeeping system that meets either the WORM requirement or the audit-trail requirement or would have the initial burden of hiring a vendor to provide the service. Similarly, on an ongoing basis, the broker-dealer or SBSD would be required to expend financial or human resources to maintain their recordkeeping systems to comply with the proposed audit-trail or WORM requirements.
Based upon information provided to the Commission by the securities industry, the Commission estimates that the initial cost to build and implement a WORM-compliant electronic recordkeeping system for a large broker-dealer is $10 million, with an additional cost of $1.2 million annually to maintain the system.
The Commission estimates that the cost for the 2,749 broker-dealers with $10,000,000 or less in total assets to build and maintain an electronic recordkeeping system that meets the proposed audit-trail requirement would be significantly less than the $1,000,000 initial and $120,000 annual costs estimated for the 802 larger broker-dealers and the four SBSDs that would be subject to paragraph (e)(2) of Rule 18a-6. Consequently, the Commission estimates that the initial cost to build and implement an electronic recordkeeping system that meets the audit-trail requirement for these smaller broker-dealers is $100,000, with an additional cost of $12,000 annually to maintain the system. The Commission estimates that most of the 2,749 broker-dealers with $10,000,000 or less in total assets will continue to preserve records in the manner they do today: Using a WORM-compliant system, using micrographic media, or maintaining paper records. The Commission estimates that 80 of these firms would elect to build a new electronic recordkeeping system to meet the audit-trail requirement for an initial one-time industry cost burden of $8,000,000 and an annual cost burden of $960,000.
The Commission believes that broker-dealers and SBSDs would incur an initial burden and ongoing annual burden in establishing a backup electronic recordkeeping system. The Commission believes these burdens and costs would be substantially less than the burdens and costs of the primary electronic recordkeeping systems because of the benefit of economies of scale for the backup system whereby common technology and personnel could be used for both systems. The Commission estimates that the costs and burdens for the 802 larger broker-dealers and the four SBSDs that would be subject to paragraph (e)(2) of Rule 18a-6 would be $250,000 in initial burdens and costs and $30,000 in annual burdens and costs. Further, the Commission expects that the broker-dealers and SBSDs that have electronic recordkeeping systems that could meet the audit-trail requirement or that could be configured to meet that requirement without the need to build a new system also maintain backup recordkeeping systems for business continuity purposes. Therefore, the initial and annual costs would be incurred by the 20 firms that elect to build a new electronic recordkeeping system that meets that proposed audit-trail requirement. Consequently, the Commission estimates that the industry-wide costs and burdens for these firms would be $5,000,000 in initial costs and burdens and $600,000 in annual costs and burdens.
The Commission estimates that the costs and burdens incurred by the 80 smaller broker-dealers that would build electronic recordkeeping systems to meet the audit-trail requirement and, therefore, need to build a backup recordkeeping system, would be substantially less than the costs and burdens incurred by the larger broker-dealers. The Commission estimates that these firms would incur an initial costs and burdens of $25,000 and ongoing annual costs and burdens of $3,000. Therefore, the Commission estimates that the industry-wide costs and burdens for these firms would be $2,000,000 in initial costs and burdens and $240,000 in ongoing annual costs and burdens.
The proposed amendments to Rule 17a-4(f) would eliminate the third-party access and undertakings requirements and replace them with a requirement that a senior officer of the broker-dealer have the access and provide the necessary undertakings. Based on the Commission's most recent information submitted to the OMB in connection with the renewal of Rule 17a-4, this would result in an estimated elimination of an annual cost of less than $5,000 that the broker-dealer must incur in paying a third party to agree to perform this service. Rule 18a-6(e) does not contain a third-party undertakings requirement; however, the proposed amendments to the rule would add senior officer access and undertakings requirements analogous to that of Rule 17a-4(f), as proposed to be amended.
One-time initial cost for broker-dealers: 3,373 hours × $497 per hour (at the controller hourly rate) = $1,676,381. One time initial cost for SBSDs: 25 hours × $497 per hour (at the controller hourly rate) = $12,425.
The proposed amendments would move existing requirements for broker-dealers using micrographic media from paragraph (f)(3)(i) of Rule 17a-4 to proposed new paragraph (f)(4) of Rule 17a-4, but do not change the substantive requirements. The proposed amendments do not propose a micrographic media alternative for SBS Entities for the reasons described above. The Commission does not believe the proposed amendments relating to micrographic media would have any impact on the burden experienced by broker-dealers.
The Commission anticipates that eliminating the application of paragraph (e)(2) of Rule 18a-6 to the 21 SBSDs that have a prudential regulator and are subject to Rule 18a-6 would result in a decrease of 100 hours per firm on an annual basis, or 2,100 hours per year for all firms affected by the proposed amendment, for an ongoing cost savings of $663,000 per year for all affected firms.
Finally, based upon information provided to the Commission from FINRA staff, the Commission believes that the elimination of the DEA notification requirement would decrease the industry-wide burden of compliance by one hour per broker-dealer submitting the notice to its DEA, or approximately 433 hours per year, for an ongoing cost savings of $136,828
The proposed amendments to Rules 17a-4(j) and 18a-6(g) would require a broker-dealer or SBS Entity, respectively, to furnish a record and its audit trail (if applicable) preserved on an electronic recordkeeping system pursuant to Rules 17a-4(f) and 18a-6(g), respectively, in a reasonably usable electronic format, if requested by a representative of the Commission. The Commission does not believe that these proposed amendments will change the initial or annual hourly burden for broker-dealers or SBS Entities. The Commission solicits comment on what the estimated initial and annual burden is for broker-dealers and SBS Entities to comply with current versions Rule 17a-4(j) and Rule 18a-6(g) and for those firms to comply with those rules, as proposed to be amended.
The collections of information pursuant to the proposed amendments are mandatory, as applicable, for broker-dealers and SBS Entities.
A broker-dealer or SBS Entity requested by the Commission to produce records retained electronically pursuant to the requirements of Rules 17a-4 or 18a-6 can request confidential treatment of the information.
Rule 17a-4, as proposed to be amended, specifies the required retention periods for records required to be made and preserved by a broker-dealer, whether electronically or otherwise.
Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits comment on the proposed collections of information in order to:
• 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;
• Evaluate the accuracy of the Commission's estimates of the burden of the proposed collections of information;
• Determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; and
• Evaluate whether there are ways to minimize the burden of the collection of information on those who respond, including through the use of automated collection techniques or other forms of information technology.
Persons submitting comments on the collection of information requirements 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 also send a copy of their comments to Vanessa A. Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090, with reference to File Number S7-19-21. Requests for materials submitted to OMB by the Commission with regard to this collection of information should be in writing, with reference to File Number S7-19-21 and be submitted to the Securities and Exchange Commission, Office of FOIA/PA Services, 100 F Street NE, Washington, DC 20549-2736. As OMB is required to make a decision
The proposed amendments to Rules 17a-4 and 18a-6 are designed to modernize the electronic recordkeeping requirements for broker-dealers and SBS Entities, and to align the requirements in those rules more closely to the current electronic recordkeeping practices of broker-dealers and SBS Entities. As discussed in greater detail above, the amendments to Rule 17a-4 would provide an audit-trail alternative to the current requirement that broker-dealer electronic records be preserved exclusively in a non-rewriteable, non-erasable format. The audit-trail alternative would require that the electronic records be preserved in a manner that permits the recreation of an original record if it is altered, over-written, or erased. Rule 18a-6, which applies to SBS Entities, currently does not have a requirement to preserve electronic records: (1) In a manner that permits the recreation of an original record if it is altered, over-written or erased; or (2) exclusively in a non-rewriteable, non-erasable format. The amendments to Rule 18a-6 would require an SBS Entity without a prudential regulator that preserves records electronically to meet one of these two requirements. The Commission believes that the amendments will save many broker-dealers and SBS Entities from the burden of maintaining two sets of parallel records: one for business purposes, preserved in a manner that would fulfill the audit-trail alternative requirements that the Commission is proposing, and another set of records that is preserved in a non-rewritable, non-erasable method in order to comply with the current requirements of 17a-4(f).
The proposed amendments also would eliminate the third-party access and undertakings requirements and replace them with a requirement that a senior officer of the broker-dealer provide the access and undertakings. The Commission preliminarily believes that the existing third-party access and undertakings requirements are outdated in light of the changed technological environment and that providing a third party access to electronic recordkeeping systems and customer information needlessly exposes firms to data leakage and cybersecurity threats. The Commission preliminarily believes replacing the third-party access and undertakings requirements with a requirement that a senior officer provide access and the undertakings would address cybersecurity and trade-secret concerns about requiring a third party to fulfill this responsibility.
In addition, the amendments would add a requirement to Rule 17a-4(j) and 18a-6(g) that a broker-dealer or SBS Entity, respectively, furnish a record and its audit trail (if applicable) preserved on an electronic recordkeeping system pursuant Rules 17a-4(f) and 18a-6(g), respectively, in a reasonably usable electronic format, if requested by a representative of the Commission. The Commission believes that the production of records in a reasonably usable electronic format would facilitate examinations and other regulatory reviews by making them more efficient.
The amendments to Rule 17a-4 also would eliminate a requirement that the broker-dealer notify its DEA before employing an electronic recordkeeping system. The Commission preliminarily believes this requirement is no longer necessary because the rule was adopted at a time when the use of electronic recordkeeping systems by broker-dealers to meet the record preservation requirements of Rule 17a-4 was a relatively new phenomenon, and the staff of DEAs, including FINRA, now have substantial experience and familiarity with the topic.
Finally, the amendments to both rules would remove or replace text to make them more technology neutral and to improve readability.
Pursuant to Exchange Act Section 17, 15 U.S.C. 78q the Commission is proposing to revise § 240.17a-4(f) and (j) and § 240.18a-6(e) and (g) of title 17 of the Code of Federal Regulations.
As discussed above, the Commission estimates that approximately 3,551 broker-dealers and 25 SBSDs that are not broker-dealers would be subject to the new electronic recordkeeping requirements as a result of the amendments to Rules 17a-4(f) and (j) and to Rules 18a-6(e) and (g), respectively. For purposes of this Regulatory Flexibility Act (“RFA”) analysis, the Commission refers to broker-dealers that might be deemed small entities under the RFA as “small entities.”
Based on FOCUS Report data, the Commission estimates that as of June 30, 2021, approximately 1,439 of those broker-dealers might be deemed small entities for purposes of this analysis. Based upon the Commission's prior RFA certification that adoption of Rule 18a-6 would not have a significant economic impact on a substantial number of small entities for the purposes of the RFA,
The RFA requires a description of the projected reporting, recordkeeping, and other compliance requirements of the proposed amendments to Rules 17a-4(f) and (j) and Rules 18a-6(e) and (g), including an estimate of the classes of small entities that would be subject to the requirements and the type of professional skill necessary to prepare required reports and records. Following is a discussion of the associated costs and burdens of compliance with the proposed amendments, as incurred by small entities.
The Commission does not believe that the compliance costs of the proposed amendments would be significant. The Commission believes that the proposed audit-trail alternative to preserving electronic records would be consistent with existing broker-dealer practices. Broker-dealers have explained to the Commission that the electronic recordkeeping systems used for business purposes are dynamic and updated constantly (
The proposed replacement of the required third-party access and undertakings requirements in Rule 17a-4(f) with a requirement that a senior officer of the broker-dealer have the access and make the required undertakings should reduce the burden
The proposed amendments to Rule 17a-4(j) that would require a broker-dealer to furnish a record and its audit trail (if applicable) preserved on an electronic recordkeeping system pursuant Rule 17a-4(f) in a reasonably usable electronic format, if requested by a representative of the Commission, should not impose a burden on small entities.
The Commission does not believe that the proposed amendments impacting smaller entities that are broker-dealers would duplicate, overlap, or conflict with other Federal Rules.
The RFA directs the Commission to consider significant alternatives that would accomplish its stated objective, while minimizing any significant economic impact on small entities. The Commission considered the following alternatives for small entities in relation to our proposal: (1) Exempting broker-dealers that are small entities from the proposed requirements, to account for resources available to small entities; (2) establishing different requirements, including frequency, to account for resources available to small entities; (3) clarifying, consolidating, or simplifying the compliance requirements under the proposal for small entities; and (4) using performance rather than design standards.
The Commission considered exempting broker-dealers that are small entities from the proposal and considered establishing different requirements for these firms.
In this vein, the Commission considered proposing the elimination of the WORM alternative and requiring all broker-dealers and nonbank SBS Entities to comply with an audit-trail requirement. This alternative would require all affected entities to modernize their recordkeeping systems to meet the audit-trail requirement. While this alternative could produce long-term compliance efficiencies for a greater number of affected participants, it would also require all affected entities with WORM-compliant systems to upgrade their electronic recordkeeping systems. The Commission elected not to propose this alternative given its preliminary belief that the accompanying compliance costs could be particularly burdensome for smaller entities and that the alternative could have a disproportionate effect on smaller and medium-sized broker-dealers.
1. The Commission also considered simplifying compliance by proposing performance rather than design standards similar to the approach taken by the CFTC. The CFTC amended the electronic recordkeeping requirements by replacing prescriptive requirements for electronic recordkeeping systems with a principles-based approach.
The Commission encourages the submission of comments with respect to any aspect of this initial RFA analysis. In particular, the Commission requests comment regarding:
1. Whether there are more efficient or less burdensome ways for the Commission to modernize the electronic recordkeeping requirements for registrants compared to what the Commission has proposed;
2. The number of small entities that may be affected by the proposed rule amendments; and
3. Whether there are any Federal rules that duplicate, overlap, or conflict with the proposed amendments.
For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996 (“SBREFA,”)
• An annual effect on the economy of $100 million or more (either in the form of an increase or a decrease);
• A major increase in costs or prices for consumers or individual industries; or
• Significant adverse effect on competition, investment or innovation.
If a rule is “major,” its effectiveness will generally be delayed for 60 days pending Congressional review.
The Commission requests comment on the potential impact of the amendments to Rules 17a-5(f) and (j) and Rules 18a-6(e) and (g) on:
1. The U.S. economy on an annual basis,
2. Any potential increase in costs or prices for consumers or individual industries, and
3. Any potential effect on competition, investment, or innovation.
Commenters are requested to provide empirical data and other factual support for their view to the extent possible.
The Commission is revising Rules 17a-4 and 18a-6 under the Exchange Act (17 CFR 240.17a-4 and 17 CFR 240.18a-6) pursuant to the authority conferred by the Exchange Act, including Sections 15F and 17.
Brokers, Confidential business information, Fraud, 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 Federal Regulations as follows:
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78
Section 240.17a-4 also issued under secs. 2, 17, 23(a), 48 Stat. 897, as amended; 15 U.S.C. 78a, 78d-1, 78d-2; sec. 14, Pub. L. 94-29, 89 Stat. 137 (15 U.S.C. 78a); sec. 18, Pub. L. 94-29, 89 Stat. 155 (15 U.S.C. 78w);
(f) The records required to be maintained and preserved pursuant to §§ 240.17a-3 and 240.17a-4 may be immediately produced or reproduced by means of an electronic recordkeeping system or by means of micrographic media subject to the conditions set forth in this paragraph and be maintained and preserved for the required time in that form.
(1) For purposes of this paragraph,
(i) The term
(ii) The term
(2) An electronic recordkeeping system must:
(i)(A) Preserve the records for the duration of their applicable retention periods in a manner that maintains a complete time-stamped audit trail that includes:
(
(
(
(
(B) Preserve the records exclusively in a non-rewriteable, non-erasable format;
(ii) Verify automatically the completeness and accuracy of the processes for storing and retaining records electronically;
(iii) If applicable, serialize the original and duplicate units of the storage media, and time-date for the required period of retention the information placed on such electronic storage media; and
(iv) Have the capacity to readily download and transfer copies of a record and its audit trail (if applicable) in both a human readable format and in a reasonably usable electronic format and to readily download and transfer the information needed to locate the electronic record, as required by the staffs of the Commission, the self-regulatory organizations of which the member, broker, or dealer is a member, or any State securities regulator having jurisdiction over the member, broker or dealer.
(3) A member, broker, or dealer using an electronic recordkeeping system must:
(i) At all times have available, for examination by the staffs of the Commission, the self-regulatory organizations of which the member, broker, or dealer is a member, or any State securities regulator having jurisdiction over the member, broker or dealer facilities for immediate production of records preserved by means of the electronic recordkeeping system and for producing copies of those records;
(ii) Be ready at all times to provide, and immediately provide, any record or information needed to locate records stored by means of the electronic recordkeeping system that the staffs of the Commission, the self-regulatory organizations of which the member, broker, or dealer is a member, or any State securities regulator having jurisdiction over the member, broker or dealer may request;
(iii) Maintain a backup electronic recordkeeping system that meets the other requirements of this paragraph (f) and that retains the records required to be maintained and preserved pursuant to §§ 240.17a-3 and 240.17a-4 in accordance with this section;
(iv) Organize and maintain information necessary to locate records maintained by the electronic recordkeeping system;
(v)(A) Have in place an auditable system of controls that records, among other things: (
(
(
(B) At all times be able to produce a record of the results of the audit of the system of controls for examination by the staffs of the Commission, the self-regulatory organizations of which the member, broker, or dealer is a member, or any State securities regulator having jurisdiction over the member, broker or dealer; and
(C) Preserve the record of the results of the audit of the system of controls for the retention period required for the associated records;
(vi) Maintain, keep current, and provide promptly upon request by the staffs of the Commission, the self-regulatory organizations of which the member, broker, or dealer is a member, or any State securities regulator having jurisdiction over the member, broker or dealer all information necessary to access and locate records preserved by means of the electronic recordkeeping system; and
(vii) Have at all times a senior officer of the member, broker, or dealer (hereinafter, the “undersigned”), who has independent access to and the ability to provide records maintained and preserved on the electronic recordkeeping system, file with the designated examining authority for the member, broker or dealer the following undertakings with respect to such records:
The undersigned hereby undertakes to furnish promptly to the U.S. Securities and Exchange Commission (“Commission”), its designees or representatives, any self- regulatory organization of which [Name of the Member, Broker, or Dealer] is a member, or any State securities regulator having jurisdiction over [Name of the Member, Broker, or Dealer], upon reasonable request, such information as is deemed necessary by the staff of the Commission, any self-regulatory organization of which [Name of the Member, Broker, or Dealer] is a member, or any State securities regulator having jurisdiction over [Name of the Member, Broker, or Dealer], and to download copies of
Furthermore, the undersigned hereby undertakes to take reasonable steps to provide access to the information preserved by means of an electronic recordkeeping system of [Name of the Member, Broker, or Dealer], including, as appropriate, downloading any record required to be maintained and preserved by [Name of the Member, Broker, or Dealer] pursuant to §§ 240.17a-3 and 240.17a-4 in a format acceptable to the staff of the Commission, any self-regulatory organization of which [Name of the Member, Broker, or Dealer] is a member, or any State securities regulator having jurisdiction over [Name of the Member, Broker, or Dealer]. Specifically, the undersigned will take reasonable steps that, in the event of a failure on the part of [Name of the Member, Broker, or Dealer] to download the record into a human readable format or a reasonably usable electronic format and after reasonable notice to [Name of the Member, Broker, or Dealer], the undersigned will download the record into a human readable format or a reasonably usable electronic format at the request of the staff of the staffs of the Commission, any self-regulatory organization of which [Name of the Member, Broker, or Dealer] is a member, or any State securities regulator having jurisdiction over [Name of the Member, Broker, or Dealer].
(4) A broker-dealer using a micrographic media system must:
(i) At all times have available, for examination by the staffs of the Commission, self-regulatory organizations of which it is a member, and any State securities regulator having jurisdiction over the member, broker or dealer, facilities for immediate, easily readable projection or production of micrographic media and for producing easily readable images;
(ii) Be ready at all times to provide, and immediately provide, any facsimile enlargement which the staffs of the Commission, any self-regulatory organization of which it is a member, or any State securities regulator having jurisdiction over the member, broker or dealer may request;
(iii) Store, separately from the original, a duplicate copy of the record stored on any medium acceptable under § 240.17a-4 for the time required; and
(iv) Organize and index accurately all information maintained on both original and duplicate storage media.
(A) At all times, a member, broker, or dealer must be able to have such indexes available for examination by the staffs of the Commission, the self-regulatory organizations of which the broker or dealer is a member, and any State securities regulator having jurisdiction over the member, broker or dealer.
(B) Each index must be duplicated and the duplicate copies must be stored separately from the original copy of each index.
(C) Original and duplicate indexes must be preserved for the time required for the indexed records.
(j) Every member, broker and dealer subject to this section must furnish promptly to a representative of the Commission legible, true, complete, and current copies of those records of the member, broker or dealer that are required to be preserved under this section, or any other records of the member, broker or dealer subject to examination under section 17(b) of the Act (15 U.S.C. 78
(e) The records required to be maintained and preserved pursuant to §§ 240.18a-5 and 240.18a-6 may be immediately produced or reproduced by means of an electronic recordkeeping system subject to the conditions set forth in this paragraph and be maintained and preserved for the required time in that form.
(1) For purposes of this paragraph, the term
(2) An electronic recordkeeping system of a security-based swap dealer or major security-based swap participant without a prudential regulator must:
(i)(A) Preserve the records for the duration of their applicable retention periods in a manner that maintains a complete time-stamped audit trail that includes:
(
(
(
(
(B) Preserve the records exclusively in a non-rewriteable, non-erasable format;
(ii) Verify automatically the completeness and accuracy of the processes for storing and retaining records electronically;
(iii) If applicable, serialize the original and duplicate units of the storage media, and time-date for the required period of retention the information placed on such electronic storage media; and
(iv) Have the capacity to readily download and transfer copies of a record and its audit trail (if applicable) in both a human readable format and in a reasonably usable electronic format and to readily download and transfer the information needed to locate the electronic record, as required by the staffs of the Commission, or any State regulator having jurisdiction over the security-based swap dealer or major security-based swap participant.
(3) A security-based swap dealer or major security-based swap participant using an electronic recordkeeping system must:
(i) At all times have available, for examination by the staffs of the Commission or any State regulator having jurisdiction over the security-based swap dealer or major security-based swap participant, facilities for immediate production of records preserved by means of the electronic recordkeeping system and for producing copies of those records;
(ii) Be ready at all times to provide, and immediately provide, any record or information needed to locate records stored by means of the electronic recordkeeping system that the staffs of the Commission or any State regulator having jurisdiction over the security-based swap dealer or major security-based swap participant may request;
(iii) Maintain a backup electronic recordkeeping system that meets the other requirements of this paragraph (e), as applicable, and that retains the records required to be maintained and preserved pursuant to §§ 240.18a-5 and 240.18a-6 in accordance with this section;
(iv) Organize and maintain information necessary to locate records maintained by the electronic recordkeeping system; and
(v)(A) Have in place an auditable system of controls that records, among other things: (
(
(
(B) At all times be able to produce a record of the results of the audit of the system of controls for examination by the staffs of the Commission or any State regulator having jurisdiction over the security-based swap dealer or major security-based swap participant; and
(C) Preserve the record of the results of the audit of the system of controls for the retention period required for the associated records;
(vi) Maintain, keep current, and provide promptly upon request by the staffs of the Commission or any State regulator having jurisdiction over the security-based swap dealer or major security-based swap participant all information necessary to access and locate records preserved by means of the electronic recordkeeping system; and
(vii) Have at all times a senior officer of the security-based swap dealer or major security-based swap participant (hereinafter, the “undersigned”), who has independent access to and the ability to provide records maintained and preserved on the electronic recordkeeping system, file with the Commission the following undertakings with respect to such records:
The undersigned hereby undertakes to furnish promptly to the U.S. Securities and Exchange Commission (“Commission”) and its designees or representatives, or any State securities regulator having jurisdiction over [Name of the Security-Based Swap Dealer or Major Security-Based Swap Participant], upon reasonable request, such information as is deemed necessary by the staff of the Commission or any State regulator having jurisdiction over [Name of the Security-Based Swap Dealer or Major Security-Based Swap Participant], to download copies of a record and its audit trail (if applicable) preserved by means of an electronic recordkeeping system of [Name of the Security-Based Swap Dealer or Major Security-Based Swap Participant] into both a human readable format and a reasonably usable electronic format in the event of a failure on the part of [Name of the Security-Based Swap Dealer or Major Security-Based Swap Participant] to download a requested record or its audit trail (if applicable).
Furthermore, the undersigned hereby undertakes to take reasonable steps to provide access to the information preserved by means of an electronic recordkeeping system of [Name of the Security-Based Swap Dealer or Major Security-Based Swap Participant], including, as appropriate, downloading any record required to be maintained and preserved by [Name of the Security-Based Swap Dealer or Major Security-Based Swap Participant] pursuant to §§ 240.18a-5 and 240.18a-6 in a format acceptable to the staff of the Commission or any State regulator having jurisdiction over [Name of the Security-Based Swap Dealer or Major Security-Based Swap Participant]. Specifically, the undersigned will take reasonable steps that, in the event of a failure on the part of [Name of the Security-Based Swap Dealer or Major Security-Based Swap Participant] to download the record into a human readable format or a reasonably usable electronic format and after reasonable notice to [Name of the Security-Based Swap Dealer or Major Security-Based Swap Participant], the undersigned will download the record into a human readable format or a reasonably usable electronic format at the request of the staff of the Commission or any State regulator having jurisdiction [Name of the Security-Based Swap Dealer or Major Security-Based Swap Participant].
(g) Every security-based swap dealer and major security-based swap participant subject to this section must furnish promptly to a representative of the Commission legible, true, complete, and current copies of those records of the security-based swap dealer or major security-based swap participant that are required to be preserved under this section, or any other records of the security-based swap dealer or major security-based swap participant subject to examination or required to be made or maintained pursuant to section 15F of the Act that are requested by a representative of the Commission. The security-based swap dealer and major security-based swap participant must furnish a record and its audit trail (if applicable) preserved on an electronic recordkeeping system pursuant to paragraph (e) of this section in a reasonably usable electronic format, if requested by a representative of the Commission.
By the Commission.
Securities and Exchange Commission.
Final rule.
The Securities and Exchange Commission (“Commission”) is amending the Federal proxy rules to enhance the ability of shareholders to elect directors though the proxy process in a manner consistent with their ability to vote in person at a shareholder meeting. Specifically, the Commission is requiring the use of a universal proxy card in all non-exempt solicitations involving director election contests, except those involving registered investment companies and business development companies. To facilitate the use of a universal proxy card, the Commission is also amending the Federal proxy rules to establish certain notice, minimum solicitation, filing, formatting and presentation requirements, along with other related rule changes consistent with the adoption of a universal proxy requirement. In addition, the Commission is adopting new disclosure requirements relating to voting standards and further requiring certain voting options for all director elections, whether or not contested.
Christina Chalk, Senior Special Counsel, or David M. Plattner, Special Counsel, in the Office of Mergers and Acquisitions, at (202) 551-3440, Division of Corporation Finance, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.
We are adopting amendments to 17 CFR 240.14a-2 (“Rule 14a-2”), 17 CFR 240.14a-3 (“Rule 14a-3”), 17 CFR 240.14a-4 (“Rule 14a-4”), 17 CFR 240.14a-5 (“Rule 14a-5”), 17 CFR 240.14a-6 (“Rule 14a-6”), and 17 CFR 240.14a-101 (“Schedule 14A”), and new rule 17 CFR 240.14a-19 (“Rule 14a-19”), each under the Securities Exchange Act of 1934 [15 U.S.C. 78a
State statutes require corporations to hold an annual meeting of shareholders for the purpose of electing directors.
When a shareholder votes by proxy, the shareholder executes a written directive instructing the entity to whom the proxy is granted how to vote on that shareholder's behalf at the meeting. Although state law typically authorizes the use of proxies to vote shares without requiring in-person attendance at a shareholder meeting,
As described in greater detail in Section I.B of the Proposing Release (81 FR 79122, Nov. 10, 2016), the current proxy rules do not allow shareholders voting by proxy in a contested election
Although the Commission attempted to address some aspects of this problem by adopting the “short slate rule” in 1992, shareholders voting by proxy still lack the ability to make selections based solely on their preferences for particular director candidates as they could were they voting in person at a shareholder meeting.
In response to the concerns outlined above, the Commission proposed rule amendments in 2016 to mandate the use of universal proxy cards in contested director elections to allow shareholders to vote by proxy in the same manner as they could do if attending a shareholder meeting (“Proposed Rules”).
The new rules will require use of a “universal proxy card” in all non-exempt director election contests. This universal proxy card must include the names of all duly nominated director candidates presented for election by any party and for whom proxies are solicited. Requiring a universal proxy card in non-exempt director election contests is the most effective means to ensure that shareholders voting by proxy are able to elect directors in a manner consistent with their right to vote in person at a shareholder meeting.
The amendments that we are adopting in this document will not apply to investment companies registered under Section 8 of the Investment Company Act of 1940 or business development companies as defined by Section 2(a)(48) of the Investment Company Act of 1940 (“BDCs,” and together with registered investment companies, “funds”).
We are adopting the Proposed Rules largely as proposed to better align the Federal proxy rules with a shareholder's ability to vote in person at a shareholder meeting. The final rules:
• Require the use of a universal proxy card by all participants in a non-exempt director election contest. The universal proxy card must include the names of both registrant and dissident nominees, along with certain other shareholder nominees included as a result of proxy access;
• Expand the determination of a “bona fide nominee” to include a person who consents to being named in any proxy statement for a registrant's next shareholder meeting for the election of directors;
• Require dissidents to provide registrants with notice of their intent to solicit proxies and to provide the names of their nominees no later than 60 calendar days before the anniversary of the previous year's annual meeting;
• Require registrants to notify dissidents of the names of the registrants' nominees no later than 50 calendar days before the anniversary of the previous year's annual meeting;
• Require dissidents to file their definitive proxy statement by the later of 25 calendar days before the shareholder meeting or five calendar days after the registrant files its definitive proxy statement;
• Require each side in a proxy contest to refer shareholders to the other party's proxy statement for information about the other party's nominees and refer shareholders to the Commission's website to access the other side's proxy statement free of charge;
• Require that dissidents solicit the holders of shares representing at least 67% of the voting power of the shares entitled to vote at the meeting; and
• Establish presentation and formatting requirements for universal proxy cards that ensure that each party's nominees are presented in a clear, neutral manner.
We also are adopting, as proposed, changes to the form of proxy and proxy statement disclosure requirements applicable to all director elections. These amendments:
• Require proxy cards to include an “against” voting option in director elections, when there is a legal effect
• Require that the proxy card provide shareholders with the ability to “abstain” in a director election where a majority voting standard applies; and
• Require proxy statement disclosure about the effect of a “withhold” vote in an election of directors.
We discuss the final amendments in greater detail below.
The Commission proposed to require the use of universal proxy cards in all non-exempt solicitations in contested director elections except those involving funds.
A number of commenters expressed views on whether the use of a universal proxy card should be voluntary or mandatory. Most favored the mandatory approach because it more effectively replicates the voting options available through in-person voting at a shareholder meeting.
Several commenters favored making the use of a universal proxy card optional. One noted that this would allow the Commission to study the effect of its use before making it mandatory.
Some commenters did not support the use of a universal proxy card. Some argued that a mandate would increase the number of proxy contests and thereby expose more registrants to costly distraction or increased influence of short-term activist investors at the expense of other investors.
Another commenter supported mandated universal proxy for operating companies, but expressly opposed its use for funds, in part due to the additional protections afforded by the Investment Company Act of 1940.
We are adopting Rule 14a-19(e), as proposed, to require the mandatory use of universal proxy cards by operating companies in all non-exempt director election contests. A mandatory system better protects the shareholder voting franchise, while avoiding the confusion that could result from a voluntary universal proxy system, where one party or the other strategically uses universal proxy only when they perceive it to be to their advantage. The logistics of how votes are cast through the proxy voting system should not affect the substantive voting options of shareholders, and therefore potential outcomes of the vote. The ability of shareholders to fully exercise their right under state law to elect their preferred candidates through the proxy process represents a key reason to adopt the rule amendments. In particular, we note that under existing rules, institutional and other large shareholders can split their vote between registrant and dissident candidates—albeit with effort and expense—because they can arrange for a representative to attend the shareholder meeting and vote in person. Retail and other smaller investors, however, are unlikely to have the resources or sophistication to be able to do so.
Use of a universal proxy card should not be dependent on the potentially self-interested considerations of the contesting parties, the registrant's board of directors, or any controlling shareholders, as it would be under an optional system, or one where a registrant (through, for example, a board or shareholder vote) could opt out of a universal proxy requirement. Mandating a universal proxy is a more efficient and effective means to achieve the objective of allowing shareholders to elect their preferred candidates through the proxy process. Similarly, a universal proxy requirement should not be dependent on the size of a dissident's equity stake in a registrant or the period of time it has maintained its equity position. The purpose of requiring a universal proxy is to allow shareholders to exercise their right to vote for directors in the same manner as they could vote through in-person attendance at a shareholder meeting. Conditioning a universal proxy mandate on a minimum ownership threshold or holding period, as certain commenters advocated, would be contrary to this purpose. Conditioning a universal proxy mandate in such manner would inappropriately subject shareholders' ability to vote in director election contests through the proxy process to conditions that are not imposed upon shareholders' ability to vote if attending a shareholder meeting.
In response to commenters arguing for an optional universal proxy system, an optional system without additional accompanying rule changes would raise problems not presented by a mandatory requirement, such as issues related to how and when shareholders presented with a universal proxy card would access information about the other party's nominees in order to make an informed voting decision. Mandating a universal proxy in all non-exempt election contests is less likely to cause shareholder confusion than an optional system which would operate differently, depending on whether one or both sides elected to opt in or opt out of universal proxy. Finally, in response to the commenter who advocated an optional system to allow us to study the impact of universal proxy, we note that we already have experience with optional universal proxy. Our existing proxy rules already effectively allow optional universal proxy for registrants because a registrant can require dissident nominees to consent to being named on the registrant's proxy card as part of an advance notice bylaw provision and associated director and officer (D&O) questionnaire, a tactic used by registrants on multiple occasions.
As discussed in Section IV.C.4 below, it is unclear whether the rule changes we are adopting will increase or decrease the number of proxy contests. Similarly, it is unclear whether they will increase the influence, directly or indirectly, of dissidents, including short-term activist investors, as some commenters predicted. Under current rules, a shareholder may be forced to make an “all or nothing” choice between one or the other soliciting party's proxy card. However, a universal proxy card may result in increased split votes where dissidents do not gain majority control of a board of directors in one election. We view the arguments that mandatory universal proxy will lead to distraction for registrants, hamstring directors, and lead to greater “balkanization” of boards of directors as unpersuasive. Even with the use of universal proxy cards, registrants and dissidents will retain the same ability to advocate the election of their nominees and raise concerns about negative boardroom dynamics that they have today. Shareholders will continue to have the ability to evaluate these concerns, including potential “balkanization” of the board, when they make their voting decisions. The rule amendments we are adopting are intended to improve the mechanics of the proxy voting process, not influence its outcome. Further, it is not apparent that allowing shareholders to more easily base their vote on individual and collective characteristics of board candidates, rather than forcing an “either or” choice between dissident or registrant nominees, would negatively impact registrants or boardroom dynamics. We are also unaware of such arguments about mix and match voting being made in the context of in-person voting, where such a choice is already possible for larger shareholders and institutions who expend the effort to vote through an in-person representative. Lastly, even if the use of universal proxy will lead to greater frequency of “split” boards, it is unclear whether that effect will necessarily lead to detrimental changes in board dynamics, with some viewing a diversity of viewpoints among board members as a positive development.
For the same reason, we do not believe the universal proxy requirement we are adopting will result in promoting the interests of special interest groups and short term activists, at the expense of shareholders generally. Even with the use of universal proxy cards, a dissident must ultimately persuade shareholders that its agenda is in their best interests in order to successfully elect its nominees. Moreover, if elected to the board of directors, such dissident nominees will be subject to the same state-law fiduciary duties to the corporation and, and by extension, all of its shareholders as all other directors, many of whom are also commonly affiliated with other entities.
Similarly, it is unclear to us how these rule amendments, which improve the mechanics of the proxy process, would increase the influence of proxy advisory firms,
In response to the commenter questioning our authority to adopt a universal proxy requirement,
In our view, the suggestion that the Commission has not provided a sufficient justification for these rules is unfounded. We are adopting these rules now because they best effectuate the Commission's goal of having proxy voting mirror the choices that a shareholder has in person at a meeting. As noted above, the Commission has long understood the limitations that the proxy rules place on a shareholder's ability to select its preferred mix of registrant and dissident nominees.
For many years, we have received comments from shareholders and their advocates expressing strong concerns about the limitations on their rights when voting by proxy.
We recognize that whether proxy contests become more frequent may depend in part on whether the rule amendments increase a dissident's chances of electing some or all of its nominees. We discuss the costs associated with proxy contests in Section IV.C below. However, assuming these rule amendments result in more frequent proxy contests, the ultimate decision on who is elected to the board of directors rests with shareholders. In this sense, the mere fact that a dissident mounts a proxy contest does not necessarily mean it will be successful unless shareholders are persuaded that its platform will benefit them and the registrant. Again, these decisions at the heart of corporate governance are best left to shareholders.
The additional disclosure and presentation provisions adopted in this document and described in greater detail below will help to avoid some of the concerns of those who do not favor mandatory universal proxies. For example, participants in a contested election will not be required to include information about the opposing side's nominees in their own proxy statement. Rather, each side's proxy statement must direct shareholders to the opposing side's proxy statement for information about that participant's nominees.
The Commission proposed to require the dissident to provide notice to the registrant of the names of the dissident's nominees no later than 60 calendar days prior to the anniversary of the previous year's annual meeting date.
Several commenters discussed the requirement that dissidents provide the registrant with the names of its nominees no later than 60 calendar days prior to the anniversary of the prior year's annual meeting date.
Many commenters supported the requirement as proposed.
Other commenters expressed concern that the proposed deadline would compel the board of directors to vet nominees on an accelerated timeframe, to the detriment of shareholders at large, where a registrant's advance notice bylaw provision required dissidents to provide notice of their nominees before the 60-day period mandated in our proposed rules.
Several commenters supported allowing dissidents to launch a contest after the 60 calendar day deadline, as they could under existing rules, without the ability to use a universal proxy card.
We are adopting, as proposed, the requirement that a dissident provide the registrant with the names of the nominees for whom it intends to solicit proxies no later than 60 calendar days before the anniversary of the previous year's annual meeting date.
In our view, the Rule 14a-19(b) notice requirement is necessary to provide a definitive date by which the parties in a contested election will know that use of universal proxies has been triggered and to provide the parties with a definitive date by which they will have the names of all nominees to compile a universal proxy card. The 60-day deadline provides a definitive date far enough in advance of the meeting to give the parties sufficient time to prepare a proxy statement and form of proxy in accordance with the universal proxy requirements.
A dissident's obligation to comply with the notice requirement is in addition to its obligation to comply with any applicable advance notice provision in the registrant's governing documents. Rule 14a-19's notice requirement is a minimum period that does not override or supersede a longer period established in the registrant's governing documents.
We acknowledge that where the registrant does not have an advance notice provision in its governing documents, or has such a provision requiring less than 60 days' advance notice, Rule 14a-19(b) imposes an additional obligation. Such late-developing contests are rare.
Despite some commenters' suggestions,
The Rule 14a-19(b) notice requirement should not deter settlements between dissidents and registrants. Under current market practice, settlements often occur after the parties have filed their proxy statements and even after they have begun soliciting. The new notice requirement therefore is unlikely to affect this practice. Finally, the purpose of the notice requirement is not served by requiring that the notice be made public. However, in practice, each of the dissident and the registrant is likely to publicize the sending of the notice voluntarily.
Similar to the notice required from a dissident under Rule 14a-19(b), the Commission proposed to require the registrant to notify the dissident of the names of its nominees unless the names have already been provided in a preliminary or definitive proxy statement filed by the registrant.
Relatively few commenters addressed this proposed requirement. Two commenters expressly supported the proposed notice requirement for registrants.
We are adopting Rule 14a-19(d) as proposed. As discussed in the Proposing Release and as explained above in the context of the dissident's notice deadline, notification deadlines are important in a mandatory universal proxy system to provide the parties with a definitive date by which they will have the names of all nominees to compile a universal proxy card. Absent such a requirement for registrants, dissidents could face an informational and timing disadvantage in a universal proxy system. Registrants would know the names of dissident nominees no later than 60 days prior to the meeting,
A deadline that is 10 calendar days after the latest date the registrant will receive the dissident's notice of nominees is appropriate because it provides a sufficient period of time for the registrant to consider the dissident's notice, finalize its nominees, and respond with its own notice of nominees. The 10-day period is appropriate, given that the dissident's notice of nominees may be the first indication of a contested solicitation that the registrant receives. Moreover, the 50-day deadline is appropriate for providing dissidents with timely access to the names of registrant nominees for purposes of preparing a universal proxy card. While the deadline for registrants is 10 days after the deadline for dissidents, as a practical matter, dissidents are unlikely to be disadvantaged because registrant nominees are often existing directors about whom information will already be available.
Based on a review of recent contested elections and the staff's experience, dissidents typically do not file their definitive proxy statement more than 50 calendar days before the meeting date.
It is possible that a registrant could provide notice of the names of its nominees under Rule 14a-19 and later change its nominees. As with the notice requirement for dissidents, Rule 14a-19(d), as adopted, requires a registrant to promptly notify the dissident of any change in the registrant's nominees. If there is a change in the registrant's nominees after the dissident has disseminated a universal proxy card, the dissident could elect, but would not be required, to disseminate a new universal proxy card reflecting the change in registrant nominees. Each side will generally be incentivized to amend its own card if such a change occurs to make it more appealing to shareholders, who could otherwise turn to the other side's universal proxy card for a current list of director nominees. Votes for an individual nominee who withdraws his or her name from consideration are generally disregarded pursuant to state law, as under current rules.
The Commission proposed, as a key piece of the new universal proxy requirement, that the dissident in a contested election be required to solicit the holders of shares representing at least a majority of the voting power of shares entitled to vote on the election of directors. The Commission also proposed that the dissident would need to affirm its intention to meet the minimum solicitation requirement by making a statement to that effect in its proxy materials and in its notice to the registrant.
The minimum solicitation requirement was intended to strike the appropriate balance to ensure that, where a universal proxy requirement is implemented, dissidents must still engage in meaningful independent solicitation efforts in order to have their director nominees elected. Current proxy rules do not obligate a dissident to solicit any number of shareholders or percentage of voting power in an election contest; rather, current rules only require a dissident to furnish a proxy statement to each person solicited.
We received significant comment on the proposed minimum solicitation requirement for dissidents. Initially, there was significant support for the majority minimum solicitation requirement proposed.
Another commenter urged a minimum solicitation threshold of a majority of shareholder accounts (versus voting power) entitled to vote on director nominations, asserting that this would help ensure meaningful dissident solicitation efforts.
One commenter suggested that, “as a compliance mechanism, a dissident should provide the registrant with a written statement indicating that the dissident has taken the necessary steps to solicit shareholders of at least a majority of the voting power.”
For reasons described in more detail in the Proposing Release,
After careful consideration of the many comments received on this topic, and an updated economic analysis of the costs and benefits of setting the minimum solicitation threshold at various levels, we have decided to adopt the requirement that dissidents solicit holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors. We have raised the threshold from a majority of the voting power to 67% of the voting power in response to commenters' concerns that setting the threshold at the proposed majority of the voting power would insufficiently deter the potential for “freeriding” of dissident nominees on the registrant's proxy card. A 67% threshold represents an appropriate balance between achieving the benefits of the universal proxy requirement for shareholders and preventing dissidents from capitalizing on the inclusion of dissident nominees on the registrant's universal proxy card without undertaking meaningful solicitation efforts. Comments from a wide range of market participants, including comments received from the Universal Proxy Working Group and the IAC indicated that a 67% threshold enjoys broad support and represents a reasonable compromise between the competing policy objectives related to this topic.
The increase in the dissident minimum solicitation requirement to 67% should mitigate concerns that the originally-proposed threshold would have incentivized dissidents to solicit only the minimum number of shareholders while ignoring all others, particularly retail shareholders with small holdings. Notably, our analysis of data provided by a proxy services provider demonstrates that dissidents overwhelmingly tend to solicit a substantial majority of voting power despite not being subject to any minimum solicitation threshold in contested elections.
A requirement for dissidents to solicit holders of 100% of the voting power, as some commenters recommended, would represent a substantial burden on dissidents and would likely deter bona fide efforts by dissidents, particularly those with fewer resources, to elect directors to a registrant's board.
One commenter suggested imposing a threshold based on a minimum number of registered shareholders in addition to a voting power threshold “to prevent frivolous use of the Universal Proxy rule.”
For similar reasons, a requirement for the dissident to solicit a minimum number of all shareholder accounts (both registered and “street name” shareholders), as suggested by one commenter, could impose significantly higher burdens on dissidents, particularly those seeking to effect change at large, widely-held public companies.
We have not adopted a special mechanism for ensuring compliance with the minimum solicitation requirement because existing proxy rules are adequate in that regard. If a dissident fails to meet the 67% minimum solicitation threshold, that failure would constitute a violation of Rule 14a-19 and the dissident would face the same liability as if it had violated any other proxy rules. In addition, Rule 14a-19(a)(3) requires dissidents to include a statement in the proxy statement or form of proxy that it intends to solicit holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors. The dissident would be subject to liability under 17 CFR 240.14a-9 (Exchange Act Rule 14a-9), which prohibits material misstatements or omissions in proxy soliciting materials, if such a statement is false.
In response to the suggestion that registrants reimburse dissidents for the reasonable costs associated with the solicitation process when at least 50% of a dissident's nominees are elected, the universal proxy rules are not intended to address the appropriate cost-sharing between registrants and dissidents for soliciting fees, which is a separate issue. The purpose of the minimum solicitation requirement is to prevent freeriding by dissidents who want to take advantage of the benefits of the universal proxy requirement but do not intend to undertake meaningful solicitation efforts. We also note that registrants often have policies in their governing documents outlining when reimbursement can be sought, and the universal proxy requirement is not intended to intrude into those arrangements.
We acknowledge the concern regarding some retail investors not receiving proxy materials from dissidents electing to solicit the minimum required. Increasing the minimum solicitation threshold to 67% of the voting power may help address this concern. However, as explained above, we must balance this concern against the risk of imposing undue costs on dissidents and thereby deterring legitimate, potentially value-enhancing contests.
Finally, we recognize any minimum solicitation requirement imposes on the dissident the costs of delivering proxy materials to shareholders. To address this concern, the adopted rules, like the Proposed Rules, do not mandate a specific method of furnishing the proxy materials. A dissident may choose to use the less costly e-proxy delivery method (
The Commission proposed to require a dissident in a contested election to file its definitive proxy statement with the Commission by the later of 25 calendar days prior to the meeting date or five calendar days after the registrant files its definitive proxy statement, regardless of the proxy delivery method. As proposed, the five calendar day deadline would be triggered if the registrant files its definitive proxy statement fewer than 30 calendar days prior to the meeting date, in which case the dissident would be required to file its definitive proxy statement no later than five calendar days after the registrant files its definitive proxy statement.
We received few comments on this proposed requirement. Three commenters expressed support for the deadline imposed on dissidents to file their definitive proxy statement with the Commission.
We are adopting, as proposed, the requirement that a dissident in a contested director election file its definitive proxy statement with the Commission by the later of 25 calendar days prior to the meeting date or five calendar days after the registrant files its definitive proxy statement.
Due to the typical sequencing of registrant and dissident proxy filings, as well as the fact that dissidents may choose not to solicit all shareholders, shareholders may not have seen information about the dissident's nominees when they receive a universal proxy card from the registrant. Therefore, a dissident filing deadline is appropriate to help ensure that shareholders who receive a universal proxy card will have access to information about all nominees sufficiently in advance of the meeting.
We acknowledge that dissidents that use the full set delivery method in a contested election have not previously been subject to a filing deadline for their definitive proxy statement, and thus this new requirement will impose a new filing deadline for such dissidents.
We are not adopting a filing deadline for registrants. State corporate statutes generally require a registrant to hold an annual shareholder meeting for the purpose of electing directors, and those statutes generally impose a quorum requirement for such meetings.
We recognize that it is possible that a registrant will have prepared and disseminated its definitive proxy statement, including a universal proxy card more than 25 calendar days before the meeting (
In response to the commenter who suggested we adopt a specific penalty for dissidents who fail to file a definitive proxy statement by the deadline, we believe that existing proxy rules serve as an adequate deterrent, in a similar manner to that explained above in the context of a potential violation of the new minimum solicitation requirement. If a dissident fails to file its definitive proxy statement by the new deadline prescribed, that failure would constitute a violation of Rule 14a-19 and the dissident would face the same liability as if it had violated any other proxy rules.
Because a registrant may disseminate a universal proxy card before discovering that a dissident is not proceeding with its solicitation, we are requiring the registrant, as proposed, to include disclosure in its proxy statement advising shareholders how it intends to treat proxy authority granted in favor of a dissident's nominees in the event the dissident abandons its solicitation or fails to comply with Regulation 14A.
As a result of the adopted rules described above, and as set out in the Proposing Release, the overall timing of the process for soliciting universal proxies generally would operate as follows:
The Commission proposed new Item 7(h) of Schedule 14A (relettered as Item 7(f) in this document) to require that each party in a contested election refer shareholders to the other party's proxy statement for information about the other party's nominees and explain that shareholders can access the other party's proxy statement without cost on the Commission's website. The Commission also proposed to revise Rule 14a-5(c) to permit the parties to refer to information that would be furnished in a filing of the other party to satisfy their disclosure obligations.
Several commenters expressed support for the requirements that each soliciting person in a contested election must refer shareholders to the other party's proxy statement for information about the other party's nominees and must explain that shareholders can access the other party's proxy statement without cost on the Commission's website.
Several commenters expressed concern that retail investors would not receive proxy materials from dissidents electing to solicit the minimum required.
Two commenters argued that requiring both the registrant and dissident to “publicize the election campaign” of the opposing side in the contest is an inappropriate attempt by the Commission to compel corporate speech, in contravention of the First Amendment.
We are adopting, as proposed: (i) New Item 7(f) of Schedule 14A, (ii) the changes to Rule 14a-5(c) described above, and (iii) the changes to Items 4 and 5 of Schedule 14A described above, in each case for the reasons detailed in the Proposing Release.
Finally, we do not agree with commenters that suggest that the final rule runs afoul of the First Amendment. Far from being “controversial corporate speech,”
The Commission proposed Rule 14a-19(e) to include the following presentation and formatting requirements for universal proxy cards:
• The proxy card must set forth the names of all duly nominated director candidates;
• The proxy card must provide a means for shareholders to grant authority to vote for the nominees set forth;
• The proxy card must clearly distinguish among registrant nominees, dissident nominees, and any proxy access nominees;
• Within each group of nominees, the nominees must be listed in alphabetical order by last name on the proxy card;
• The same font type, style and size must be used to present all nominees on the proxy card;
• The proxy card must prominently disclose the maximum number of nominees for which authority to vote can be granted; and
• The proxy card must prominently disclose the treatment and effect of a proxy executed in a manner that grants authority to vote for more nominees than the number of directors being elected, in a manner that grants authority to vote for fewer nominees than the number of directors being elected, or in a manner that does not grant authority to vote with respect to any nominees.
In addition, where both parties have presented a full slate of nominees and there are no proxy access nominees, the Commission proposed Rule 14a-19(f), which would allow (but not require) the universal proxy card to provide the ability to vote for all dissident nominees as a group and all registrant nominees as a group.
The formatting and presentation requirements for the universal proxy card and whether each party in a contest should be permitted to customize and use its own universal proxy card were the subject of multiple comments. Many commenters expressly supported the Proposed Rules' presentation and formatting requirements.
We are adopting the formatting and presentation requirements for universal proxy cards as proposed. As under current rules, each side will disseminate its own proxy card. Each side will be free to choose the design of its card, subject to the requirements of the final rules.
As discussed in the Proposing Release, we considered the merits of creating a system whereby the registrant and dissident distribute an identical card, with the only difference being the persons given proxy authority on the card. In our view, such a system would be inferior to the one adopted in this document for the reasons discussed in the Proposing Release.
Though we understand the concern of commenters who worry about the potential for shareholder confusion in the absence of additional formatting and presentation requirements, including the standardization of proxy card colors, we disagree that such additional regulation is necessary. Existing disclosure requirements, such as the Rule 14a-4(a) requirement that the proxy card prominently identify whether the card is sent by the registrant or dissident, along with the new presentation requirements described above, will sufficiently inform shareholders as to the party sending the card and mitigate any potential confusion resulting from the universal proxy cards. We do not believe it is necessary to limit each soliciting party to a specific color proxy card to ensure shareholders know which party is soliciting their vote, and we note that this is not a limitation under current rules. Furthermore, any potential confusion over which side may be sending a particular card may be less consequential, as each side's card will list the full group of nominees from both sides.
In addition, permitting each side to use its own proxy card will preserve each side's ability to exercise discretionary authority under Rule 14a-4(c). As explained in the Proposing Release, we did consider a system whereby the registrant would distribute a single universal proxy card that would include the names of the registrant's nominees and the dissident's nominees, as well as all other proposals to be considered at the meeting.
Finally, we adopt, in slightly modified form, the rule that permits (but does not require) the universal proxy card to allow a shareholder to grant authority to vote for all of the nominees of either the dissident or the registrant as a group, so long as the card also provides a similar means by which a shareholder can withhold authority to vote for such group of nominees and so long as the number of nominees of the registrant or the dissident is less than the number of directors being elected.
The Commission proposed additional amendments to the form of proxy and disclosure requirements with respect to voting options and voting standards that would apply to all director elections.
Several commenters supported the proposed requirement that the form of proxy for a director election governed by a majority voting standard include a means for shareholders to vote “against” each nominee and a means for shareholders to “abstain” from voting in lieu of providing a means to “withhold authority to vote.”
Several commenters addressed the proposed changes to Item 21 of Schedule 14A. These commenters supported the proposed amendment to Item 21(b) of Schedule 14A to require the disclosure of the effect of a “withhold” vote.
We are adopting the rule amendments with the modifications described below. Rule 14a-4(b) mandates, as proposed, the inclusion of an “against” voting option in lieu of a “withhold authority to vote” option on the form of proxy for the election of directors where there is a legal effect to such a vote. It also provides shareholders who neither support nor oppose a director nominee an opportunity to “abstain” (rather than “withhold authority to vote”) in a director election governed by a majority voting standard. These changes will provide shareholders with a better understanding of the effect of their votes on the outcome of the election. We also have not eliminated Instruction 2 to Rule 14a-4(b)(4), as one commenter had requested, because it may provide useful guidance about voting options where applicable state law gives legal effect to votes cast against a nominee.
We agree with commenters, however, that including an “against” voting option on a proxy card where there is no legal effect to such vote is unnecessarily confusing for shareholders and have therefore amended Rule 14a-4(b) to prohibit such a voting option on the proxy card where such votes have no legal effect. Further, in light of comment received from the public, we are retaining the phrase “the method by which votes will be counted” from Item 21(b) of Schedule 14A to avoid any ambiguity regarding the need for clear disclosures in the proxy statement regarding the effect of each voting option presented to shareholders.
The Commission proposed to amend Rule 14a-4(d) to eliminate the short slate rule for registrants other than funds. The short slate rule allows dissidents soliciting in support of a partial slate of nominees that would make up a minority of the board of directors to seek authority to vote for some of a registrant's nominees.
Relatively few commenters addressed the proposed elimination of the short slate rule for operating companies that would be subject to a mandated universal proxy requirement. Several commenters supported its elimination in connection with the adoption of a universal proxy requirement, noting that such a system would eliminate many of the practical constraints associated with the short slate rule (as well as the bona fide nominee rule).
We are eliminating the short slate rule, as proposed, for operating companies that will be subject to the final rules mandating the use of universal proxy cards. The revisions we adopt to the bona fide nominee rule,
In order to facilitate the ability of both parties in a contested election to include the names of all nominees on each side's proxy card, the Proposed Rules would revise the bona fide nominee rule. To remove the technical impediment to including the names of the other side's nominees on a universal proxy card created by Rule 14a-4(d)(1) and (4), the Proposed Rules would revise the determination of a “bona fide nominee” in Rule 14a-4(d).
Multiple commenters who supported the adoption of a universal proxy requirement supported the proposed changes to the bona fide nominee rule to effectuate that system.
Some commenters advocated more limited changes to the consent required by the bona fide nominee rule to narrow its application. As proposed, revised Rule 14a-4 would permit (but not require) a dissident soliciting in favor of its own proposal, without its own slate of director candidates, to include some or all of the registrant's nominees on the dissident's proxy card. Similarly, a dissident conducting a “vote no” campaign against some of the registrant's nominees could (but would not be required to) include on the dissident's proxy card those registrant nominees it did not oppose. One commenter warned of the shareholder confusion that might result in those instances in which the dissident chooses not to include all registrant nominees on the dissident's card, and argued that such confusion could lead to under-voting that would distort voting results.
We are adopting changes to the consent requirement for a bona fide nominee in Rule 14a-4(d)(1)(ii) as proposed. This rule change expands the scope of a nominee's consent in an election contest to include consent to being named in
As a practical matter and as noted by commenters, it will also permit a dissident soliciting in favor of a proposal (but not its own director nominees) to include some or all of the registrant's nominees on its proxy card. It further allows a dissident conducting a “vote no” campaign without presenting its own slate of competing nominees to permit shareholders to vote for select registrant nominees on the dissident's card. In both of these circumstances, the changes to the bona fide nominee rule will further shareholder enfranchisement. Although including a registrant's nominees on its own proxy card in both of these circumstances will remain optional for the dissident under the final rules, this optionality will not limit shareholders' voting choices. If the dissident does not include some or all registrant nominees on the dissident's card, shareholders will always be able to vote on the registrant's proxy card. Where a dissident includes some but not all registrant nominees on its proxy card, or where it solicits in favor of a proposal but does not include registrant nominees on its proxy card, the dissident should—in order to avoid potential liability under Rule 14a-9 for omission of material facts—disclose the fact that its proxy card does not include some or all of the registrant nominees and that shareholders who wish to vote for nominees not included on the dissident's proxy card may do so on the registrant's proxy card. Such disclosure should mitigate the risk of shareholder confusion.
In addition, and in response to the commenter who was concerned with the potential of under-voting, we note that the potential for disenfranchisement exists under the status quo, but in a more severe form. Under current rules, dissidents who are ineligible to use the short slate rule (including those not soliciting on behalf of their own director nominees) lack the ability to list registrant nominees on their proxy card. The risk of any disenfranchisement under the final amendments may be mitigated because we expect that dissidents will have an incentive to include the registrant nominees on their proxy card (so as to increase the incentive for shareholders to use their card) and will generally not have strategic reasons to exclude registrant nominees from their proxy card due to the lack of a competing slate. Finally, to the extent that shareholders vote for fewer nominees than open board seats because they are voting on a dissident's proxy card that does not list all registrant nominees, this will occur in the context of an uncontested election, in which the consequences of casting fewer votes in favor of any particular nominee are less significant than in the context of a contested election.
The final rules maintain the requirement that a bona fide nominee consent to serve if elected.
The Proposed Rules excluded funds. Like operating companies, funds have boards of directors that are elected by shareholders. Also like operating companies, fund boards have significant responsibilities in protecting shareholder interests and funds are subject to the Federal proxy rules. However, fund shareholders also have important rights granted to them under the Investment Company Act of 1940 that distinguishes funds from operating companies. For reasons detailed in the Proposing Release,
Comments received in response to the Proposing Release and Reopening Release were mixed. On the one hand, many commenters supported excluding funds from the Proposed Rules because of the differences between funds and operating companies—including the investor protections provided by applicable securities laws and regulations and fund governance structures.
In addition to providing reasons that the universal proxy rules should not apply to funds generally, some commenters also discussed the application of those universal proxy rules to specific types of management investment companies. Specifically, some commenters stated that universal proxies are not necessary for open-end funds because open-end funds are not required to have annual shareholder meetings and investors are able to redeem at net asset value, resulting in contested elections being rare.
On the other hand, many commenters opposed the exclusion of funds generally, and registered closed-end funds and BDCs in particular, from the Proposed Rules.
The final rules we adopt in this document will not apply to funds at this time, as the Commission continues to consider any application of the rules to funds. Developments since 2016, along with various comments discussed above that we have received have led us to conclude that further consideration of potential application of the universal proxy rules to certain funds is warranted.
Because the rule amendments we adopt in this document involve significant changes to the manner in which election contests are conducted, a transition period is appropriate. New Rule 14a-19 imposes notice and other mandates that will require planning and coordination by both parties to an election contest. Therefore, to avoid disruption to the upcoming proxy season, the rule changes we adopt in this document will become effective for any shareholder meeting featuring an election contest held after August 31, 2022. The length of this transition period is designed to allow adequate time for affected parties to plan and prepare for compliance with the new rules, and to adjust to the elimination of existing provisions, such as the short slate rule.
Some of the rule amendments we adopt in this document will apply to all director elections, not just those that are contested. While these changes do not require coordination and notice to the other party, as is required in a contested election, they do involve enhanced disclosure of the legal effect of votes under the applicable voting standard for the election. The amendments also impose new voting options where the
If any of the provisions of these rules, or the application thereof to any person or circumstance, is held to be invalid, such invalidity shall not affect other provisions or application of such provisions to other persons or circumstances that can be given effect without the invalid provision or application.
Pursuant to the Congressional Review Act, the Office of Information and Regulatory Affairs has designated these rules a “major rule,” as defined by 5 U.S.C. 804(2).
We are attentive to the costs imposed by and the benefits obtained from the final amendments.
As discussed above, we are adopting amendments that will require the use of a universal proxy card in all contested elections with competing slates of director nominees to address concerns over the inability of shareholders using the proxy system to vote for the combination of candidates of their choice in a contested election. These amendments will allow shareholders voting by proxy to choose among director nominees in an election contest in a manner that more closely reflects the choice that could be made by voting in person at a shareholder meeting. Shareholders voting in person in a contested election with competing slates of nominees are able to choose among all of the duly nominated candidates. By contrast, shareholders currently voting by proxy are typically limited to voting for only registrant nominees or voting for only the dissident's nominees (or, in the case of certain short slate elections, for the dissident's nominees and certain registrant nominees chosen by the dissident).
The mandated use of universal proxies will allow shareholders to vote for any combination of nominees when voting their shares by proxy in advance of the meeting, which is generally the way in which the vast majority of shares are voted. For shareholders who would otherwise incur incremental costs to vote for a combination of candidates that could not be voted for by proxy, such as by attending the meeting in person, universal proxies will result in direct cost savings. Universal proxies will also enable shareholders who want to split their vote but are unwilling (or unable) to bear additional costs to be able to vote for their preferred combination of nominees to do so without incurring additional costs.
The nomination and election of directors by shareholders represents a fundamental governance mechanism that can mitigate conflicts of interest between shareholders and management. While the most direct effect of the final amendments will be to improve the efficiency of the voting process and permit shareholders greater choice when voting by proxy in contested director elections, they will also likely impose direct costs on dissidents and registrants in certain contests. The final amendments may also have broader impacts on corporate governance and the relationship between shareholders and management. For reasons discussed below,
At the outset, where possible, we have attempted to quantify the benefits, costs, and effects on efficiency, competition, and capital formation expected to result from the final amendments. In many cases, however, we are unable to quantify the potential economic effects because we lack information necessary to provide a reasonable estimate. For example, we are unable to quantify the
Although many commenters supported the mandated use of universal proxy in contested director elections, some commenters raised a number of economic concerns with the proposed amendments and also suggested alternatives in some cases. We have considered those concerns and, where appropriate, have expanded our economic analysis to address those concerns and alternatives.
To assess the economic impact of the final amendments, we are using as our baseline the current state of the proxy process. Our baseline includes existing Commission rules, state laws, and corporate governing documents that jointly govern the ability to solicit proxies in support of director nominees other than the registrant nominees and the manner in which contested elections are conducted. This section discusses the parties involved in director election contests under the current legal framework, current proxy voting practices, and the means available to shareholders to influence the composition of boards of directors.
We consider the impact of the final amendments on shareholders, registrants, dissidents in contested elections (who are typically also shareholders), and directors.
Different types of shareholders exhibit different degrees of involvement in voting on matters up for a vote at the companies they invest in. In particular, a study by a proxy services provider found that there are, on average, large differences in involvement by institutional investors compared to retail investors.
The number of beneficial shareholder accounts for U.S. public companies varies significantly by company market capitalization: The average (median) number of beneficial shareholder accounts is approximately 3,900 (1,400) for companies with less than $300 million in market capitalization, approximately 11,000 (5,700) for companies with between $300 million and $2 billion in market capitalization, approximately 28,300 (16,500) for companies with between $2 billion and $10 billion in market capitalization, and approximately 279,000 (102,700) for companies with market capitalization above $10 billion.
Retail and institutional shareholders exhibit very different voting behavior. In the main 2020 proxy season, while institutional investors voted 92% of their shares, retail investors voted only 28% of their shares.
Retail and institutional investors may also have differential access to resources that can be expended in order to cast a vote, and may have different levels of incentive to expend such resources. In general, we expect retail investors to face greater resource constraints than institutional investors. Differences across shareholders in the ability to take advantage of different approaches to voting and in the resources expended on voting are discussed in more detail in Sections IV.B.2.d and IV.C.1 below.
The final amendments mandating the use of universal proxy cards in director election contests will apply to all registrants that have a class of equity securities registered under Section 12 of the Exchange Act and are thereby subject to the Federal proxy rules, except funds. The amendments will not apply to foreign private issuers or companies with reporting obligations under only Section 15(d) of the Exchange Act, whose securities are not subject to the Federal proxy rules. As of December 31, 2020, we estimate that approximately 5,400 registrants had a class of securities registered under Section 12 of the Exchange Act and will be subject to the amendments mandating the use of a universal proxy card in contested director elections.
There is substantial variation across registrants in characteristics such as incumbent executive and director ownership and governance structure, which may affect the degree to which different registrants are affected by the final amendments.
We expect that incumbent executives and directors would vote in support of the registrant's slate of nominees in a director contest at the annual meeting,
Table 1 below reports estimates of the average combined vote ownership by incumbent executives and directors for a broad sample of 3,841 potentially affected registrants, as well as for several size-related sub-samples of registrants: Those included in the S&P 500 index (“large-cap stocks”), in the S&P 400 index (“mid-cap stocks”), in the S&P 600 index (“small-cap stocks”), and outside the S&P 1500 index that is composed of these three indices (and which tend to be smaller than those registrants in the S&P 1500). The average (median) percentage is 14.6% (5.8%) for all registrants, and this percentage is greatest for registrants outside the S&P 1500 index. We also estimate the percentage of registrants for which incumbent executives and directors hold a majority of the voting power, and hence can control who is elected to the board in most circumstances. Overall, incumbent executives and directors hold a majority of votes in 8.1% of registrants. This percentage ranges from 2.0% for S&P 500 registrants to 11.4% for non-S&P 1500 registrants.
The data in Table 1 indicates that to the extent incumbent executives and directors tend to vote for the registrant's slate of director nominees in contested elections, the impact of such behavior on the economic effects of the final amendments is likely to be more important in the non-S&P 1500 category of smaller registrants.
Registrants' governance characteristics may affect the incidence and outcomes of proxy contests currently as well as the effects, if any, of potential changes in the proxy rules on the incidence and outcomes of proxy contests.
As discussed in more detail in the Proposing Release, cumulative voting for directors may increase the ability of
Registrants' governing documents generally provide that one of two main standards be applied to the election of directors: Either a majority voting standard or a plurality voting standard. Under a majority voting standard, directors are elected only if they receive affirmative votes from a majority of the shares voting or present at the meeting, and shareholders can vote “for” each nominee, “against” each nominee, or “abstain” from voting their shares. By contrast, under a plurality voting standard, the nominees receiving the greatest number of “for” votes are elected, and shareholders can withhold votes from specific nominees but cannot vote “against” any of them. In those cases in which a majority standard is in place in director elections, registrants tend to have a carve-out in the bylaws (or charter) that applies a plurality standard in contested director elections. In the case of a majority voting standard in a contested election, there is a risk that some or all of the nominees receiving the highest relative shareholder support may still not win a majority of votes cast. This risk is especially high when nominees only appear on either the registrant's or the dissident's card, which is generally the case under the current proxy rules. Based on data that we have available for affected S&P 1500 registrants, we estimate that whereas approximately 70% have a majority standard in director elections, only approximately 6% of the affected S&P 1500 registrants have a majority standard without a carve-out for a plurality standard in the case of a contested election.
The dissidents in contested elections are typically shareholders of the registrant, but may fit into one of several categories. A common category of dissidents is activist hedge funds that take a proactive approach to the companies in their investment portfolios by trying to influence the management and decision-making through various means, such as proxy contests. Dissidents may also be former insiders or employees of the registrant. A party to a possible business combination may also contest the election of directors at a registrant when, for example, it is seeking to acquire the registrant but the registrant's current board does not approve of the transaction. In some cases, a group of dissatisfied shareholders other than activist hedge funds jointly contests an election. Section IV.B.2.a below provides further information about the relative frequency of different types of dissidents in recent director contests.
We note that reputational concerns may be an important consideration for directors and potential directors.
Currently, a shareholder voting by proxy is generally limited to voting for either the registrant slate or the dissident slate (and, when used to round out a slate, certain registrant nominees chosen by the dissident).
We identify 148 proxy contests
Approximately 30% of the contests with competing slates were contests for majority control of the board.
The Commission's proxy rules do not currently require dissidents to provide notice to registrants of their intention to solicit votes for their nominees. However, as discussed, advance notice bylaws are common among registrants. For example, at the end of 2020, 99% of S&P 500 registrants had advance notice provisions, and 95% of the Russell 3000 had such provisions.
Among the 101 director election contests initiated in years 2017-2020, approximately 90% of dissidents either publicly announced or communicated their intent to nominate directors to the registrant at least 60 days before the anniversary of the previous year's annual meeting date (or 60 days before the annual meeting date if the registrant did not hold an annual meeting during the previous year, or if the date of the meeting had changed by more than 30 calendar days from the previous year).
For the contests where dissidents ultimately file a definitive proxy statement (74 cases), approximately 80% of dissident definitive statements are filed at most 50 days before the anniversary of the previous year's annual meeting date (or 50 days before the annual meeting date if the registrant did not hold an annual meeting during the previous year, or if the date of the meeting had changed by more than 30 calendar days from the previous year).
While dissidents in proxy contests are required to make their proxy statements publicly available via the EDGAR system, they are not currently subject to any requirements as to how many shareholders they must solicit. When dissidents actively solicit shareholders they have the choice of sending shareholders a full package of proxy materials (“full set”) or sending only a one-page notice informing them of the online availability of proxy materials (“notice and access” or “notice-only”). We estimate that approximately 52% of dissidents solicited all shareholders in a sample of recent proxy contests.
In proxy contests, both registrants and dissidents incur direct costs of solicitation.
Beyond these estimated solicitation expenses, proxy contests may be associated with other indirect costs, such as the cost of management or dissident time spent in the process of conducting the contest and expenses associated with any discussions held between management and the dissident(s) or other participants who could influence the outcome (
In addition to the typical proxy contests
A proxy contest may result in several possible outcomes. Our staff's review of 101 proxy contests initiated in 2017-2020 found that approximately 53% (54 cases) did not make it to a vote. In these cases, registrants may have settled by agreeing to nominate or appoint some number of the dissident's candidates to the board of directors or by making other concessions, the dissident may have chosen to withdraw in the absence of any concessions, or other events may have precluded a vote.
Contests differ in the closeness of voting outcomes. The staff has analyzed the difference in votes between the elected director with the lowest number of votes and the nominee who came closest to being elected. Out of the 47 contests initiated in 2017-2020 that proceeded to a vote, registrants disclosed full voting results in Form 8-K filings in 41 contests. In these contests, the median director elected with the fewest votes received 73% more votes than the nominee with the next highest number of votes. The median difference in votes received between the director elected with the fewest votes and the nominee with the next highest number of votes as a percentage of total outstanding votes was approximately 19%, and around 24% of the contests (10 out of 41) had a difference in votes received as a percentage of outstanding votes of 5% or less. In the contests where the difference in votes received was 5% or less of total outstanding votes, the elected director who received the fewest votes received no more than 13% more votes than the non-elected nominee who received the greatest votes. For the purpose of our analysis below, we define “close contests” as those where the difference in votes received between the director elected with the fewest votes and the nominee with the next highest number of votes is 5% or less of total outstanding votes, because in such contests a relatively small number of shareholders could have been determinative of the outcome.
We are unaware of any nominal contest that has resulted in the dissident gaining seats for their nominees. Dissidents may nevertheless choose to initiate nominal contests to pursue goals other than changes in board composition, such as to publicize a particular issue or to encourage management to engage with the dissident. However, we do not have data that would allow us to measure success along those other dimensions.
Shareholders have the option of voting a split ticket but can do so only by attending the shareholder meeting in person and voting their shares at that meeting. In practice, however, in-person meeting attendance may be limited due to cost and other logistical constraints,
We recognize that the monetary costs and other burdens of attending a meeting in person will likely be lower to shareholders if the meeting is held virtually, because the time and expenses associated with travelling to the meeting would be eliminated. However, there may still be time or other resource constraints that would affect a shareholder's ability to attend a virtual meeting. Before the COVID-19 pandemic, fully virtual or hybrid annual meetings were a small fraction of annual meetings, but growing steadily. For example, one recent study of shareholder meetings by U.S. registrants found that virtual or hybrid shareholder meetings grew from 20 in 2011 to 285 in 2019, with about 60 to 70 new companies adopting meetings with a virtual component each year after 2015.
For shareholders that do not have ready access to other arrangements, the decision of whether or not to attend a meeting or seek other arrangements for splitting their ticket is likely to depend on having the ability and resources to do so, as well as having the incentive to incur the associated costs. To the extent an individual investor believes vote splitting is beneficial, the larger its ownership stake is, the greater the financial incentives to incur the current costs of arranging a split-ticket vote. However, beyond the direct financial incentives from a larger ownership stake, a large investor also has a voting impact commensurate with that stake, which increases the likelihood that its votes are determinative. This in turn, increases the large investor's incentives to arrange for vote splitting when deemed beneficial. We believe institutions are more likely than retail shareholders to have both the resources and the incentives to currently vote a split ticket (if they have the preference to do so).
Because the incentive to arrange a split-ticket vote when such a vote is preferred is dependent on having both a sizable financial stake, in dollar terms, as well as significant voting influence, in percentage terms, we consider the distribution of both of these factors for institutional shareholders. We use data from Form 13F filings to estimate these distributions, which limits us to considering institutions required to report their holdings on Form 13F.
We first consider the potential incentive to arrange split-ticket vote based on voting influence, as measured by fraction ownership of voting shares. Figure 1 shows the average percentage, across registrants, of the total outstanding shares held by Form 13F filers that each meet a given minimum threshold of ownership of voting shares. The average percentage of the total outstanding shares is calculated across all registrants within different size categories. As in previous analyses, registrant size is approximated by reference to the S&P index. The data suggest that there is currently a substantial portion of outstanding shares for which institutional holders may have enough individual voting influence to incentivize them to arrange split-ticket voting if preferred. For example, if we consider average total ownership by Form 13F filers that are larger block holders (individually owning 5% or more of shares) and therefore are likely to be pivotal voters, the average percentage of the total outstanding shares held by these institutions is approximately 14% for non-S&P 1500 registrants, 21% for S&P 600 registrants, 16% for S&P 400 registrants, and 11% for S&P 500 registrants. The large difference in ownership between S&P 600 and non-S&P 1500 registrants, despite both groups being relatively small registrants, is due to a smaller number of institutions holding stock (of any amount) in the non-S&P 1500 registrants. Figure 1 also shows the average total ownership of shares held by Form 13F filers meeting lower minimum thresholds of ownership of voting shares (0.5%, 1.0%, and 2.5% respectively), in case ownership less than 5% may provide sufficient voting influence to incentivize an institution to arrange split-ticket voting. Because we are only considering ownership by institutions required to report their holdings on Form 13F, there may be additional owners with incentives to arrange split-ticket voting (for any given minimum ownership threshold) that are not captured in the data presented in Figure 1.
Even
As discussed in more detail in the Proposing Release,
The economic benefits and costs of the final amendments, including impacts on efficiency, competition, and capital formation, are discussed below. We first address the effects of the changes to the proxy process together as a package, including both benefits and costs. In particular, we discuss the anticipated effects of the final amendments on shareholder voting and then consider anticipated effects with respect to the costs, outcomes, incidence, and perceived threat of contested elections at affected registrants. We then discuss the economic effects that can be attributed to specific implementation choices in the final amendments, to the extent possible, and the relative benefits and costs of the principal reasonable
Our economic analysis of the final amendments reflects our consideration of a number of broad issues related to corporate governance and the proxy system. First, the design of the voting process, as a primary mechanism through which shareholders provide input into the composition of boards, can affect the ability of shareholders to exercise one of their most fundamental rights—to select and hold accountable the fiduciaries responsible for overseeing their investments. Second, it is difficult to predict how the various parties involved in contested elections are likely to respond to any changes to the proxy process, complicating the evaluation of whether such changes would enhance or detract from board effectiveness and registrants' efficiency and competitiveness. Third, corporate governance involves a number of closely interrelated mechanisms, so any effects on contested elections may be either mitigated or magnified by changes in the use or effectiveness of other mechanisms. These issues are discussed in more detail in the Proposing Release and provide context for the discussion of potential economic effects that follows.
By mandating the use of a universal proxy in contested elections, the final amendments will allow all shareholders to vote through the proxy system for the combination of director nominees of their choice, as they will no longer be limited to voting for only nominees chosen by the registrant or for only nominees chosen by the dissident.
Several commenters expressed general support for the use of universal proxy to enable split-ticket voting, arguing that split-ticket voting is currently either too costly or outright impossible to achieve for most shareholders given currently available approaches.
As described in Section IV.B.2.d, the increased use of virtual meetings can reduce the cost for shareholders to vote a split-ticket at the annual meeting by eliminating the time and expenses associated with travelling to physically attend the meeting. However it is unclear how widespread the use of virtual meetings will be after the current COVID-19 pandemic is over, especially for meetings with contested director elections. Despite the lower cost of attending virtual meetings, voting by proxy card is likely to be less time-consuming and gives shareholders the flexibility to fill out the card with their votes at a time of their choosing, compared to having to attend a virtual meeting at one specific point in time. Supporting this, the evidence on shareholder attendance and voting at virtual meetings show that a vast majority of shareholders rely on the proxy process to vote even when the meeting is held virtually.
For reasons discussed in more detail in the Proposing Release, we expect that institutional shareholders and large shareholders are relatively more likely than other shareholders to implement a split-ticket vote under current rules, and therefore will experience cost savings by being able to do so more easily via the proxy process under the final amendments adopted in this document.
As discussed in more detail in the Proposing Release, the availability of universal proxies would also expand the voting alternatives of shareholders, such as retail shareholders or other small shareholders, for whom it would not otherwise be practical or feasible to vote for their preferred combination of candidates.
In addition, because dissidents currently are not required to solicit all shareholders, we observe that, in a substantial fraction of proxy contests, many shareholders do not receive the dissident's proxy card and thus cannot vote by proxy for dissident candidates.
Thus, by providing for a universal proxy card, the final amendments will allow all shareholders to vote for their preferred candidates. We expect that retail and small shareholders are more likely than other shareholders to vote differently under a universal proxy system than under the current system because they currently have limited access to other means of voting a split-ticket and a lower likelihood of being solicited by dissidents. However, we also note that such shareholders may be less likely to vote in general.
There is also a possibility that universal proxies could lead some shareholders to be confused about their voting options and how to properly mark the proxy cards to accurately reflect their choices, as noted by some commenters.
Finally, to the extent shareholders currently erroneously believe they can vote for a mix of nominees from the competing slates by using both the registrant's and the dissident's card, universal proxies are likely to mitigate any such behavior among shareholders.
The final amendments may directly impose minor costs on registrants
The total cost borne by a registrant or dissident in a typical proxy contest would generally include solicitation costs, such as basic proxy distribution and postage costs, expenditures on proxy solicitors, attorneys and public relations advisors, and any time spent by the parties or their staff on outreach efforts. The total cost to registrants would also reflect items such as any additional time spent by staff on determining and implementing a strategy in response to the contest and any costs of revising their proxy materials given the proxy contest. The total cost to dissidents would also reflect time spent by the dissident to pursue a contest, the cost to seek nominees and gain their consent to be nominated, and the cost of drafting a preliminary and definitive proxy statement and undergoing the staff's review and comment process for those filings. These total costs are difficult to estimate because the components of these costs (other than estimated solicitation expenditures) are not specifically required to be disclosed and may vary significantly across contests. However, we note that many of the components of these costs are not likely to be affected by the final amendments. In much of the discussion that follows, we focus primarily on solicitation costs because we believe that these costs are most likely to be affected by the final amendments.
We first consider the direct cost implications of the final amendments. As discussed in more detail in the Proposing Release,
In the infrequent cases in which dissidents in a typical proxy contest may currently not solicit shareholders holding 67% of the voting power, dissidents are still likely to solicit shareholders holding a significant proportion of these shares to have a chance of winning any board seats.
Specifically, in the infrequent case in which a dissident would otherwise have solicited shareholders representing a substantial fraction, but not 67%, of the voting power, we estimate that such a dissident would bear an incremental cost of approximately $5,400, if using the least expensive approach,
It is possible dissidents in future typical contests could target companies more similar to the general population of registrants rather than the type of target companies we have observed in recent contests. Based on aggregated data provided by a proxy services provider for more than 5,000 operating companies holding shareholder meetings from July 1, 2018 through June 30, 2019, we have information on the average distribution of shares by account size within four different size (in terms of market capitalization) categories of registrants. Using this data, we estimate that in the broader population of operating companies, the average fraction of accounts needed to be solicited to meet the minimum requirement ranges from approximately 0.2% for companies with more than $10 billion in market capitalization to approximately 1% for companies with less than $300 million in market capitalization. These estimated fractions fall within the range of the observed solicited fractions of accounts in the sample of recent proxy contests, which further supports our expectation that the solicitation requirement is unlikely to impose a large incremental cost burden on dissidents in typical proxy contests in which the dissident engages in substantial solicitation efforts.
Registrants may also incur minor incremental costs in typical proxy contests as a direct result of the final amendments to implement the required changes to their proxy cards. For example, under the final amendments, registrants must list dissident nominees on their proxy cards and provide disclosure about the consequences of voting for a greater or lesser number of nominees than available director positions. In addition, both registrants and dissidents may incur costs to make additional changes to their proxy statements in reaction to the final amendments, such as additional disclosures urging shareholders not to support their opponent's candidates using their card and expressing their views as to the importance of a unified or a mixed board. These costs are expected to be minimal in comparison to the total costs that registrants and dissidents bear in a typical proxy contest.
We next consider indirect effects of the final amendments on the costs of proxy contests. As noted in the Proposing Release, for both registrants and dissidents in typical proxy contests, other effects of the final amendments have the potential to result in more significant changes in costs than the effects related to revising proxy materials or the solicitation requirement. This is because the greatest potential impact on the cost of proxy contests is likely related to strategic increases or decreases in discretionary solicitation efforts in response to any changes that the final amendments may bring about in the (actual or perceived)
For example, registrants that expect that a universal proxy may otherwise result in more dissident nominees being elected may incur additional costs to increase outreach to shareholders in an effort to limit support for dissident nominees. Similarly, dissidents may increase solicitation expenditures in cases in which they expect the use of universal proxies and any corresponding increase in split-ticket voting to result in more registrant nominees retaining seats than otherwise expected. At the same time, registrants or dissidents may reduce solicitation expenditures in cases in which they believe that any increased split-ticket voting related to universal proxies would result on average in more support for their own nominees, given that they may therefore be able to achieve the same expected outcome at a lower cost than in the absence of universal proxies.
Supporting the possibility of no change in discretionary expenses at all, one commenter expressed doubt that dissidents or registrants will materially alter solicitation expenditures under the amendments, with the argument that proxy fights already put a premium on each side getting its message out to investors and that letting shareholders vote by proxy for their preferred mix of candidates will not alter this equation.
The final amendments may also have implications for nominal contests, in which the dissidents incur little more than the basic required costs to pursue a contest by refraining from material solicitation efforts, such as arranging for full set delivery, use of a proxy solicitor, and other outreach. As discussed in the Proposing Release, despite the fact that there may be a low chance of succeeding in obtaining a board seat if a dissident does not undertake substantial solicitation efforts as it would in a typical proxy contest, dissidents may nevertheless choose to initiate nominal contests to pursue goals other than changes in board composition. Such contests are currently rare
A dissident engaging in a nominal proxy contest currently must bear the cost of drafting a preliminary proxy statement and undergoing the staff's review and comment process for that filing. Under the final amendments, such a dissident would also be required to meet the notice requirements and bear the cost of meeting the solicitation requirements of the final amendments. Using aggregated data on average share account distributions by account size for registrants in four different size (market capitalization) categories,
The basic required cost to contest an election at a given registrant may also be affected by the dissident's own voting stake in the registrant and the characteristics of the shareholder base, such as whether share ownership is widely dispersed or more concentrated in a given registrant. In particular, these costs may be substantially lower in cases where a dissident can meet the solicitation requirement by disseminating materials on its own, without hiring a proxy services provider or similar intermediary, as in the case of a registrant with a very concentrated shareholder base and majority owners that are known and easily contacted. By contrast, these costs are likely to be substantially higher, for example, at larger registrants with highly dispersed ownership where the total number of shareholder accounts that will need to be solicited to reach at least 67% of the voting power can be very high.
Some commenters raised concerns that mandated use of universal proxy would increase the number of proxy contests and thereby expose more registrants to costly distraction.
In addition to reducing costs for certain shareholders who would submit split-ticket votes even in the absence of universal proxies, the mandated use of universal proxies we are adopting may result in additional shareholders submitting split-ticket votes. For those shareholders not solicited by dissidents, to the extent they do not support any of the registrant's nominees, universal proxies may also result in an increase in voting support for some or all of the dissident's nominees, as they will now have the ability to cast their votes for dissident nominees without being directly solicited by dissidents (or needing to make other arrangements to be able to vote for dissident nominees). Such changes in voting behavior could be significant enough to affect election outcomes in the contests that would have occurred even in the absence of the final amendments, as well as to change the incentive to initiate contests.
There may be elections in which universal proxies will result in changes to the percentage of the vote obtained by each director candidate, but in which the changes in vote totals would not be sufficient to change the ultimate election results. In our assessment this would be the likely outcome for the majority of contested elections that would have taken place in the absence of the final amendments. We estimate that approximately three-quarters of recent contests that went to a vote were not close contests and would require shareholders holding significant voting power (greater than 5%) to change their voting behavior to lead to a different election result.
However, any changes in voting behavior due to universal proxies could affect election outcomes in those contests that would otherwise have been very close contests. We estimate that in the 24% of contests that we consider to be close contests, the director elected with the fewest votes received no more than 13% more votes than the non-elected nominee with the most votes.
A recent study uses an alternative approach to estimate the percentage of contests in which universal proxies may be more likely to affect the election outcome.
To the extent universal proxies lead to changes in election outcomes, it is not clear how this would affect the composition of boards. There may be either more registrant nominees or more dissident nominees elected to boards, or there may be no change, on average, in the types of nominees elected.
Given some of these possible dynamics, we expect that the election of mixed boards will be somewhat more likely under the final amendments than under the current proxy system. We expect this in particular for typical contests where the dissidents are engaging in meaningful solicitation efforts.
Universal proxies may therefore result in either an increase or decrease in changes in control of a board, and in either dissidents or management winning more seats on the board, or a change in voting percentages without a change in the board composition. We expect that dissidents and registrants will take these potential impacts into consideration in their approach to potential proxy contests. For example, as discussed in more detail in the following section, if the parties to a contest anticipate that changes in voting behavior associated with universal proxies may change the number of seats that they expect to win, these expectations may affect the likelihood that they enter into a settlement agreement that results in changes to the board or other concessions. Such changes to board composition and concessions may either enhance or reduce, or have no significant effect on, the efficiency and the competitiveness of registrants.
It is also possible that parties will take measures to reduce the likelihood of changes in election outcomes. For example, proxy statements and other related communications could include additional disclosures intended to deter shareholders from voting split-tickets, such as emphasizing the importance of a unified board and clarifying whether some or all of one party's nominees might not agree to serve if their party does not hold a majority of board seats. Such disclosures might reduce the likelihood of split-ticket voting and limit any potential increase in mixed boards. Another potential tactical response may involve the adoption by registrants of additional defenses to shareholder interventions. For example, registrants might adopt director qualification bylaws or might limit the indemnification or committee membership of dissident-nominated directors.
While the measures discussed above would serve to blunt the effect of the final amendments on election outcomes, the effect of other potential responses may serve to magnify these effects. For example, the parties to a contested election may change what they spend on solicitation. Some parties may increase these expenditures to further capitalize on an advantage that they anticipate the final amendments would give them, or to mitigate a disadvantage they perceive. If so, that may result in a greater likelihood of the parties' candidates being selected.
The composition of boards may also be affected by changes in the set of potential nominees that may result from effects that the final amendments could have on the incentives of directors. As discussed above, reputational concerns may be an important consideration for directors and potential directors, and research has found that proxy contests may have an adverse effect on a director's reputation.
The effects of any changes in election outcomes on board effectiveness are difficult to predict. On the one hand, if more dissident nominees are elected or dissidents are more likely to gain control, it could result in greater efficiency and competitiveness to the extent dissident-nominated directors may be more effective monitors.
As discussed in Sections IV.C.2 and IV.C.3 above, the effects of the final amendments on the outcomes and costs to registrants and dissidents of contested elections are uncertain, but could be significant. In this section, we consider how any such effects of the final amendments may change the incentives of dissidents to initiate proxy contests and the manner in which registrants react to the possibility of a contested election (the perceived “threat” of a contest), even in the absence of a contest.
We first consider the potential impact of the final rule on the incidence or perceived threat of typical proxy contests, in which the dissident expends significant resources on solicitation. We then consider the impact on the incidence or perceived threat of nominal contests, in which dissidents, taking advantage of the mandatory use of universal proxies, expend significantly fewer resources than in a typical proxy contest.
Several commenters argued that mandating the use of universal proxy cards will likely increase the frequency of proxy contests, thereby increasing costs for registrants and distracting their managers.
Any effects on the expected outcomes of typical proxy contests may affect the incidence of such contests as well as the likelihood that a registrant makes changes (whether in board composition or with respect to other decisions) even in the absence of actual contests. The likely effects of universal proxies on the outcome of a typical contest depend on the dynamics of the particular contest. Thus, it is not clear whether, on average, the final amendments would increase or decrease the likelihood of changes in control or the number of board seats won by either party.
On the one hand, a dissident who expects to gain more seats under the final amendments than under the baseline may have an increased incentive to initiate a typical proxy contest. This would particularly be the case for a dissident that expects a greater likelihood of gaining control of the board, and for whom majority control of the board would be required to institute the changes the dissident desires. On the other hand, a dissident who expects, under the final amendments, to gain fewer seats or face a lower likelihood of gaining control than under the baseline may have a decreased incentive to initiate a typical contest.
If, under the final amendments, a registrant is expected to face a higher risk of losing seats or control of the board to dissident nominees, it is likely that a potential dissident could exercise greater influence over that registrant. Conversely, it is likely that the influence of potential dissidents would be reduced where a lower risk of losing seats or control to dissident nominees is expected under the final amendments. These changes in influence may derive from the outcomes of election contests or from negotiations with registrants in the course of, or in the absence of, a contest. In particular, registrants facing a greater likelihood of contests, or a higher chance of losing seats (or control) if a contest were initiated, may be more likely to enter into a settlement agreement with the dissident and may also be more likely to concede at earlier stages of engagement or to make changes in response to alternative interventions (such as “vote no” campaigns).
Thus, it is likely that any changes in expectations regarding the outcome of a potential contest would affect the degree of a dissident's influence relative to that of a registrant's incumbent board and management. It is difficult to generalize about the effects of the final amendments as they are very likely to depend on the dynamics of a particular contest (or potential contest). Also, it is not clear whether the actual incidence of contested elections would increase or decrease, because any change in a dissident's incentive to initiate contests may be accompanied by a change in the likelihood that a registrant makes earlier concessions to prevent a disagreement from proceeding to the stage of a proxy contest.
While it is unclear whether the final amendments are likely to change the expected costs of typical proxy contests to registrants and dissidents, any such changes in the expected costs may also affect the incidence or perceived threat of such contests. In particular, a dissident that expects to achieve a similar outcome at a lower cost may have a greater incentive to initiate a typical proxy contest.
To the extent that the incidence and perceived threat of typical proxy contests may change, certain registrants may be affected more than others. For example, relatively smaller to midsize registrants may be more affected because they are currently the most likely to be involved in proxy contests.
The governance structures of registrants are also likely to play a role in the impact of the final amendments. On the one hand, registrants with governance characteristics that may increase the potential impact of proxy contests, such as cumulative voting, may be more affected than others.
The final amendments may also affect the incidence or perceived threat of nominal proxy contests, in which the dissidents incur little more than the basic costs required to engage in a contest and which are currently rare.
Second, requiring that registrants use universal proxies will, in practice, allow dissidents in nominal contests to put the names of their director candidates in front of all shareholders, via the registrant's proxy card, without additional expense. This change could somewhat increase the likelihood that a dissident in a nominal contest succeeds in gaining seats for their nominees, though, as in the case of current nominal contests, dissidents may have a very limited chance of succeeding in gaining seats if they do not engage in meaningful independent solicitation efforts. Dissidents engaging in a nominal contest will not be required to meet the eligibility criteria that apply to other alternatives that would allow dissidents to include some form of information on the registrant's proxy card, such as the requirements of a proxy access bylaw, where available. Dissidents may therefore consider engaging in a nominal contest when they would not qualify to use alternatives such as proxy access or when these alternatives are not available. However, the information included in the registrant's proxy materials would likely be more limited in the case of a nominal contest (just a list of names and a reference that the dissident's proxy materials are available without cost at the Commission's website) than these other alternatives.
Based on staff experience, we expect that a dissident that solicits holders that represent at least 67% of voting power and files a preliminary and definitive proxy statement, without engaging in any other solicitation efforts, would generally have a very limited chance of having any of its nominees elected to the board despite their names being included on the registrant proxy card. The likelihood that a nominal contest results in dissident nominees winning seats may depend on many factors
As discussed in more detail in the Proposing Release, even if the chance of obtaining board representation through a nominal contest may be low, dissidents may be interested in other possible effects, such as attracting attention to themselves and their agenda.
It is difficult to say whether and to what extent the possibility of such publicity would lead dissidents to more frequently initiate nominal contests, and similarly, whether the ability of dissidents to run such contests would influence the incentives of management to pursue changes in response to such dissidents. We believe the likelihood of a significant increase in nominal contests will be mitigated by the new costs associated with the minimum solicitation requirement and the current availability to dissidents of other (potentially lower-cost) routes to obtaining publicity.
Overall, it is in the incidence or perceived threat of proxy contests, and thus a change in the level of engagement with and the influence of dissidents. However, to the extent that any of these factors is significantly affected, we cannot rule out the possibility that there may be significant effects on the efficiency and competitiveness of registrants. Several commenters expressed concerns that mandating the use of universal proxy cards would increase the number of contests and have a negative impact on the working of boards and managerial decision-making to the detriment of shareholders.
There is some evidence that proxy contests may be beneficial to shareholders. For example, studies have found proxy contests to be associated with positive share price reactions.
Conversely, an increase in the incidence and perceived threat of contests could also have a negative impact on the efficiency and competitiveness of registrants. For example, studies have found that proxy contests in which dissidents win one or more seats but there is no change in the incumbent management team and the registrant is not acquired are associated with underperformance in the years after the contest.
Given these competing factors, to the extent there is any change in the incidence and perceived threat of typical proxy contests, the effects are likely to vary from registrant to registrant, and it is difficult to predict the average effects of changes in the nature of proxy contests across all registrants. The possible effects of changes in the incidence or threat of nominal proxy contests are similarly unclear. To the extent that such contests have the potential to affect the outcomes of director elections, the actual incidence or perceived threat of such contests may either increase director discipline or create a distraction for boards, as in the case of typical proxy contests. However, as discussed above, because of the low level of solicitation efforts by dissidents in a nominal contest, we anticipate that these contests will be much less likely to affect the outcomes in director elections compared to typical contests. Nevertheless, such contests may be used to attract attention in the interest of pursuing other changes. In some cases, drawing attention to particular issues in this way could lead to value-enhancing changes. In other cases, dissidents may use such contests to pursue interests that may not be shared by other shareholders, in which case the average shareholder may be unlikely to benefit and yet likely bear the costs of registrants expending additional resources on solicitation in such contests. In these cases, the negotiations resulting from such contests or the perceived threat of such contests could also result in registrants making concessions to dissidents that may not be in the best interest of the average shareholder in order to reduce the costs of contending with such contests.
Finally, the effects of any changes in proxy contests may be affected by managers and market participants altering their behavior in reaction to the final amendments. In particular, changes in the nature of proxy contests may increase or decrease the use of complementary or substitute governance mechanisms.
Any effects that follow from increasing the incidence or perceived threat of proxy contests may be either mitigated or magnified by indirect effects on these substitute and complementary mechanisms. For example, any increase in the incidence of proxy contests could be offset by reductions in the use of substitute
Alternatively, an increase in the incidence or perceived threat of proxy contests could be magnified by complementary mechanisms whose effectiveness and therefore usage may increase (such as by activists being more likely to acquire blockholdings) in an environment in which proxy contests are more frequent. Such interactions may have significant effects on the overall economic effects of the final amendments. However, because so many different governance mechanisms are closely interrelated, it is difficult to predict the extent and impact of such interactions.
In this section, we discuss, to the extent possible, any costs and benefits specifically attributable to individual aspects of the final amendments. We also discuss significant implementation alternatives and their benefits and costs compared to the amendments.
For registrants other than funds, we are eliminating the short slate rule in Rule 14a-4(d)(4), which currently permits a dissident seeking to elect a minority of the board and running a slate of nominees that is less than the number of directors being elected to round out its slate by soliciting authority to also vote for certain registrant nominees. The elimination of the short slate rule will potentially impose costs on certain dissidents. Under the existing proxy rules, dissidents qualifying to use the short slate rule can select the set of registrant nominees that they prefer to round out their slate. Eliminating this rule, and requiring a universal proxy, will take away this choice on the part of the dissident, reducing any related strategic advantage that the dissident may expect to gain, and will instead allow shareholders voting on the dissident proxy card to select the registrant nominees, if any, that they prefer.
We have considered whether, as an alternative to the final amendments, the proxy rules should instead be revised to treat contests that do not involve a potential change in the majority of the board differently from contests in which control of the board is at stake, as in the current short slate rule and as previously recommended by some observers.
We are amending the definition of a bona fide nominee under Rule 14a-4(d)(4) for registrants other than funds to include all director nominees that have consented to being named in any proxy statement, whether that of the registrant or that of a dissident, relating to the registrant's next meeting of shareholders at which directors are to be elected.
The final amendment to the definition of a bona fide nominee will remove the impediment imposed by the current rule to including other parties' nominees on one's own proxy card. We believe that this amendment will, in and of itself, likely impose no direct cost on parties to contested elections because it would not require parties to change their slates of nominees or their proxy materials. However, revising Rule 14a-4(d)(4) is a prerequisite to any rule that would allow or require universal proxies. As such, all of the other costs and benefits discussed above, the details of which depend on the other implementation choices in the final rule, are conditional on this amendment. Additionally, revising Rule 14a-4(d)(4) alone, without the other amendments we are adopting, would permit the optional use of universal proxies, an alternative we discuss below.
Under existing rules, a party may solicit proxies without presenting a competing slate, such as when soliciting proxies against some or all of the registrant nominees (a “vote no” campaign) or when soliciting proxies in favor of one or more proposals on matters other than the current election of directors. The final amendment to the bona fide nominee rule would permit, but not require, proponents conducting solicitations without a competing slate to also solicit authority with respect to some or all registrant nominees in their proxy statements and proxy cards. Because the registrant in a contest without competing slates does not need to include the proponent's proposals on its own card, shareholders who are positively inclined to the proponent's proposals (and solicited by the proponent) may be more likely to use the proponent's card if they are also offered the ability to vote on the election of some or all of the director nominees. As a result, the change to the bona fide nominee rule may result in somewhat increased support for proponents in solicitations without a competing slate.
This potential increase in support may increase proponents' incentives to
Some commenters were concerned about negative unintended consequences from permitting proponents conducting solicitations without a competing slate to include nominees in their proxy statements and proxy cards, and therefore opposed this approach.
We do not think there is a high risk of confusion among shareholders in the case where the soliciting proponent includes all nominees. Instead, in these cases the amendments we are adopting will serve to further shareholder enfranchisement by adding the director election to the menu of voting choices faced by shareholders voting on the proponent's card. We acknowledge that there is some risk of confusion when the soliciting proponent includes some but not all nominees on its proxy card. However, above we have clarified that when a dissident includes some but not all nominees on its proxy card, the dissident should disclose that shareholders who wish to vote for nominees not included on the dissident's proxy card may do so on the registrant's proxy card in order to avoid potential liability under Rule 14a-9 for omission of material facts.
An alternative to the final amendments would be to require proponents conducting solicitations without a competing slate to include the names of all duly nominated director candidates on their proxy cards (unless they are soliciting votes against all nominees). This approach may have limited effect in the case of a “vote no” campaign, because shareholders would already be able to vote “for” and “against” their choice of any registrant nominees by using the registrant proxy card. By contrast, in the case of a proponent that solicits in favor of a particular proposal, the registrant may choose to not include the proposal on its proxy card, in which case, shareholders voting on the proponent's proxy card would be disenfranchised as to the selection of directors under current rules and similarly may be disenfranchised under the final approach unless the proponent chooses to include all director nominees on its proxy card. This alternative would remove the risk of such disenfranchisement with respect to voting for directors. However, the risk of such disenfranchisement under the final amendments is likely mitigated because we expect that such proponents would have the incentive to include the director nominees on their proxy card to increase the incentive for shareholders to use their card and would generally not have strategic reasons to exclude nominees from their proxy card because of the lack of a competing slate.
Requiring both the registrant and the dissident in any contested election with competing slates to use universal proxies will enable all shareholders to vote for the combination of candidates of their choice in all such elections, whether they vote by proxy or in person at the meeting. As discussed in more detail above, imposing this mandate on the registrant as well as the dissident may impose some direct costs on both parties and may result in potentially significant, but uncertain, strategic advantages or disadvantages for these parties, leading to further costs and benefits for these parties and either benefits or costs for shareholders at large. Mandating the use of universal proxies by registrants in particular may have certain significant implications. Specifically, requiring registrants to use universal proxies will likely result in all shareholders receiving a proxy card that will allow them to vote for any combination of the full set of director nominees, more accurately reflecting the voting options available to shareholders at the meeting. However, requiring the names of the dissident nominees to appear on the registrant's proxy card will allow a form of access to the registrant's proxy materials without the eligibility criteria that accompany other forms of access,
Some commenters were in favor of making the use of universal proxies optional for all parties rather than mandatory,
However, under an optional approach it is likely that in many cases neither registrants nor dissidents would include their opponent's nominees on their proxies, to avoid diluting the potential support for their own nominees among those shareholders that use their proxy card. To the extent that contesting parties were further given the option to determine how many and which of their opponent's nominees to include, it is likely that the contesting parties would often include fewer than all of the duly-nominated candidates on their proxy cards, even when they did include some of their opponent's nominees. In any such cases, shareholders would continue to have more limited voting options when voting by proxy than when voting in person. Thus, we expect that an optional approach would result in inconsistent application and not fully achieve the goal of allowing shareholders the ability to vote by proxy for their preferred combination of director candidates, as they could at a shareholder meeting. Several commenters also raised concerns about an optional approach based on the risk for such inconsistent application of universal proxy due to strategic considerations by both registrants and dissidents.
Some commenters recommended different versions of an opt-out approach rather than a mandatory approach. For example, one commenter advocated a mandatory requirement that registrants could opt out of with approval of a majority of (non-insider) shareholders.
In the Proposing Release, we also considered hybrid alternatives that would require at least one party to a contest to use a universal proxy, potentially allowing a greater number of shareholders to split their ticket using a proxy compared to an optional approach but also potentially allowing fewer shareholders the ability to split their ticket compared to the final rule. We discuss the potential economic effects of these hybrid alternatives in more detail in the Proposing Release.
As discussed above, the Commission is continuing to consider the application of a universal proxy mandate to some or all funds.
The final amendments would require that dissidents in all contested elections provide notice to registrants of their intention to solicit proxies in favor of other nominees, and the names of those nominees, no later than 60 calendar days prior to the anniversary of the previous year's annual meeting date.
Because advance notice bylaws commonly require a similar amount of notice by dissidents seeking to nominate alternative candidates, the effect of the notice requirement for dissidents may be limited.
Although we believe that only a small fraction of registrants do not already have a comparable or stricter notice requirement, because the bylaws at different registrants may have been designed to reflect their individual
To consider potential effects on late-breaking proxy contests, we reviewed the timing of recent proxy contests. As shown in Table 2 above, we estimate that dissidents filed their initial preliminary proxy statements on average 65 days before the meeting anniversary date for contested elections initiated in years 2017-2020.
We therefore cannot rule out that the notice requirement may prevent some proxy contests that would otherwise have occurred. However, dissidents who might have initiated late-breaking contests may simply adjust their timetable to be compatible with the notice requirement. Also, any effects of the notice requirements on the incidence or threat of late-breaking contested elections may be offset somewhat by the ability of dissidents who are unable to meet the notice deadline to take other actions, such as initiating a “vote no” campaign, using an exempt solicitation,
While advance notice bylaws currently apply to dissidents at many registrants, registrants are not currently subject to a requirement that they provide notice of their nominees to dissidents. Thus, the notice requirement for registrants would represent a new obligation for registrants in contested elections. We estimate that 61% of registrants filed a preliminary proxy statement (or definitive proxy statement if they did not file a preliminary) at least 50 days before the meeting anniversary date for contested elections initiated in years 2017-2020,
Also, to the extent that a registrant might consider changing its selected nominees after providing notice and after the dissident thereby disseminates its definitive proxy materials (but perhaps before the registrant does so), the notice requirement may provide registrants with an increased incentive not to make such changes because of the risk that votes for registrant nominees on the dissident card could be invalidated. Because the notice requirement may require some registrants to finalize their nominees earlier than they would otherwise and may increase registrants' incentives not to change their nominees, there is a possibility that this requirement could have a detrimental effect on the quality of candidates that registrants nominate. However, the majority of registrants in recent contests filed a preliminary proxy statement at least 50 days before the meeting anniversary date, so the notice deadline is close to the date by which registrants typically disclose their nominees. We therefore expect any such effects to generally be comparatively minor.
We have also considered alternatives to the notice requirements included in the final amendments, such as earlier as well as later potential notice deadlines for dissidents. In these alternatives, we have assumed that the notice deadline for registrants would also be revised to be 10 days after the revised deadline for the dissident, to allow the registrant sufficient time to prepare its notice and list of nominees in reaction to the receipt of a notice from a dissident. Under a later notice deadline, the risk of preventing late-breaking proxy contests that would otherwise have occurred, particularly at registrants without advance notice bylaws, would be reduced. For example, when considering a deadline of no later than 45 calendar days (as opposed to 60 calendar days, as in the final rule) prior to the meeting anniversary date, we found that in approximately 7% of contested elections initiated in years 2017-2020, the dissident announced its intent to pursue a proxy contest within 45 days of the anniversary (as compared to 10% within 60 days), and in 25% of the contests initiated in years 2017-2020, the dissident filed a preliminary proxy statement within 45 days of the meeting (as compared to 57% within 60 days).
Additionally, a later deadline for registrants would reduce the likelihood that some registrants may have to finalize their nominees earlier than they would otherwise. For example, we estimate that in approximately 19% of contested elections initiated in years 2017-2020, the registrant filed its preliminary proxy statement within the 35 days before the meeting anniversary date (as compared to 39% within 50 days).
However, a later deadline may increase the risk of confusion among shareholders and impose additional solicitation costs if the registrant's non-universal proxy card has already been disseminated and requires revision. In particular, we estimate that in 22% of contests initiated in years 2017-2020, registrants filed a definitive proxy statement at least 45 days before the
An earlier deadline, such as 90 days prior to the anniversary of the prior year's meeting, would reduce the risk, relative to the final amendments, of the potential confusion or costs related to notice being received after non-universal registrant proxy cards have already been disseminated. However, the risk that registrants will have distributed their proxy cards prior to the 60-day deadline seems relatively low, and an earlier deadline may further preclude late-breaking contests beyond those prevented by the required deadline. For example, when considering a deadline of no later than 90 calendar days (as opposed to 60 calendar days, as in the final rule) prior to the anniversary of the previous year's annual meeting date, we found that in a significant percentage of contested elections initiated in years 2017-2020, the dissident communicated or announced its intent to pursue a proxy contest or filed its preliminary proxy statement between 60 and 90 days prior to the meeting anniversary date. Some of these contests may have been permitted under a 60-day deadline but excluded in the case of a 90-day deadline.
Additionally, an earlier deadline for registrants would increase the likelihood that some registrants may have to finalize their nominees earlier than they would otherwise. For example, we estimate that in approximately 52% of contested elections initiated in years 2017-2020, the registrant filed its preliminary proxy statement between 80 and 50 days before the meeting anniversary date.
A further alternative would be to require universal proxies in cases where the dissident provides notice to the registrant, and not require them in cases where the dissident does not meet the notice deadline. Under this alternative, the dissident would be permitted to initiate a late-breaking proxy contest but, because of the risk of confusion if proxies have already been disseminated, would not trigger the use of universal proxies, while other contests (in which notice was provided) would require universal proxies. This alternative may raise similar concerns to those discussed above with respect to the optional use of universal proxies, in that there would still be some elections without universal proxies, and the dissident could strategically time its actions to avoid triggering universal proxies when it believes there is an advantage to doing so.
One commenter claimed that registrants typically re-evaluate their contemplated slate after receiving advance notice of a contest, often leading to recruitment of new nominees, and that such important decisions will not be possible within 10 days.
As discussed above, we have raised the threshold from the proposed majority of the voting power to 67% of the voting power in response to commenters' concerns that setting the threshold at the majority of the voting power would insufficiently deter the potential for “freeriding” of dissident nominees on the registrant's proxy card.
Nevertheless, we expect that the solicitation requirement in the final amendments will impose a cost on any dissidents that may try to capitalize on the ability to introduce the names of alternative candidates on the registrant's proxy card by running a nominal proxy contest, in which minimal resources are spent on solicitation. As discussed above, in addition to the existing cost of pursuing a nominal proxy contest, we estimate that, using the least expensive approach, it will cost on average between $5,300 and $9,800 depending on the size of the registrant to meet the minimum solicitation requirement through an intermediary.
In the Proposing Release we considered the alternative of requiring universal proxies without imposing any minimum solicitation requirement on
Although some of the commenters in favor of the solicitation requirement also supported the proposed threshold of a majority of the voting power, other commenters in favor recommended higher thresholds, such as two-thirds, 75%, or 100% of the voting power.
Specifically, we estimate that the average cost for a dissident soliciting all shareholders using the least expensive approach
In addition, a requirement that dissidents solicit all shareholders would also affect the cost to dissidents in more typical proxy contests. As discussed above, we understand that in 48% of recent proxy contests, dissidents solicited a number of shareholders fewer than all of the shareholders eligible to vote.
As another alternative, we have also considered a 75% threshold of the voting power for the minimum solicitation requirement, as recommend by at least one commenter.
As discussed above, it is our understanding that dissidents in very few typical contests in recent years solicit shareholders representing less than 75% of the voting power.
As an alternative to a solicitation requirement based on voting power, one commenter recommended a minimum solicitation threshold of a majority of shareholder accounts entitled to vote on director nominations, asserting that this would help ensure meaningful dissident solicitation efforts.
For the recent typical contests discussed above in which dissidents solicited a number of shareholders fewer than all of the shareholders eligible to vote,
In general, any solicitation requirement that imposes a very low cost on the dissident may increase the risks discussed above that are associated with permitting the dissident to obtain exposure for its nominees on the registrant's card with minimal expenditure of its own resources in the solicitation, while a solicitation requirement that imposes a very high cost may deter value-enhancing proxy contests. Based on the estimated dissident solicitation costs for both nominal and typical contests under different alternative minimum solicitation requirements, we think the 67% of the voting power solicitation requirement we are adopting achieves a reasonable balance of reducing the risk of frivolous contests without materially impeding legitimate contests.
One concern raised by several commenters related to the proposed minimum solicitation requirement is that retail shareholders would not receive solicitation materials from dissidents soliciting the minimum required.
We acknowledge that any approach that requires the dissident to solicit less than all of the shareholders entitled to vote (such as under the final amendments) may result in many shareholders, especially those with relatively few shares in their accounts such as many retail investors, not receiving proxy material directly from the dissident. As noted in the Proposing Release, any shareholders not solicited by the dissident will still see the names of the dissident's nominees on the registrant's proxy card but would have to seek out the dissident's proxy statement in the EDGAR system (as directed by the registrant's proxy
The final amendments will require any dissident in a contested election to file a proxy statement by the later of 25 calendar days prior to the meeting date, or five calendar days after the date that the registrant files its definitive proxy statement, regardless of the choice of proxy delivery method. This requirement will help to ensure that all shareholders who receive a universal proxy, which will not be required to include complete information about the opposing party's nominees, will have access to information about all nominees a sufficient time before the meeting. We do not expect this requirement to impose a substantial burden or constraint on dissidents given existing requirements and the notice requirement of the final amendments.
In particular, dissidents that elect notice-only delivery are currently required to make their proxy statement available at the later of 40 calendar days prior to the meeting date or 10 calendar days after the registrant files its definitive proxy statement. For such dissidents, the required filing deadline will provide five fewer days to furnish a proxy statement in cases in which the registrant files its definitive proxy statement within fewer than 30 calendar days of the meeting date, which we estimate occurred in approximately 11% of recent contested elections, and this new deadline should not otherwise present an incremental timing constraint for such dissidents.
In the absence of other requirements, the required filing deadline might prevent late-breaking proxy contests. However, because the final amendments separately require dissidents to provide notice of the contest and the names of their nominees by the 60th calendar day before the anniversary of the prior year's meeting (with alternative treatment for cases in which the meeting date has changed significantly since the prior year), we do not expect this requirement to impose a significant further limitation on late-breaking contests. Also, while the filing deadline will require some dissidents to prepare their proxy statements earlier than they would otherwise, we do not expect this requirement to impose a substantial incremental constraint or burden in most cases. In particular, because of the notice requirement, dissidents will generally have approximately one month to furnish a definitive proxy statement after having provided the names of their nominees to the registrant.
Alternatively, we have considered proposing an earlier filing deadline for dissidents. While an earlier filing deadline may reduce the risk that some shareholders receive the registrant's proxy statement and make their voting decisions before the dissident's proxy statement is available, such a deadline may also impose an incremental burden on dissidents and could prevent some late-breaking proxy contests beyond those prevented by the notice requirement.
One commenter expressed concerns that imposing a filing deadline on the dissident without imposing a similar filing deadline on registrants would confer a strategic advantage to registrants.
The final amendments specify certain presentation and formatting requirements for universal proxies. We do not expect the presentation and formatting requirements to impose any significant direct costs on registrants or dissidents, though they may bear some indirect costs in the form of reduced flexibility to strategically design their proxy card.
These presentation and formatting requirements are expected to mitigate the risk that shareholders receiving universal proxies may be confused about their voting choices and how to properly mark their card. For example, shareholders could otherwise be unsure about the total number of candidates for which they can grant authority to vote, or about which candidates are nominated by which party. Such confusion could increase the likelihood that some shareholders submit invalid proxies or submit proxies that do not reflect their intentions.
In addition to preventing confusion, these presentation and formatting requirements may also promote the fair and equal presentation of all nominees on the proxy cards. In particular, these requirements would prevent registrants and dissidents from strategically choosing the font, style, sizing, and order of candidate names in ways that could create an advantage for their slate. For example, political science research has found that the order of placement of
One commenter raised a concern that the presentation and formatting requirements we are adopting do not adequately address the risk that a shareholder who returns a paper universal proxy card may inadvertently vote for more nominees than are up for election, resulting in all of that shareholder's votes being wholly invalidated.
Some commenters argued for more standardization of the universal proxy, including some that wanted a requirement for identical proxy cards.
In the Proposing Release we also considered alternatives that would provide for more flexibility in presentation and formatting of the universal proxy card.
The final amendments require certain disclosures with respect to voting options and voting standards in proxy statements, which would also apply to funds. We expect that the costs to registrants of such additional disclosures will be minimal. In particular, as discussed below, even though we expect registrants may need to update certain standardized portions of their proxy statements and proxy cards, many of those disclosures, once revised, are not likely to require significant revision from year to year, and for the purpose of the Paperwork Reduction Act of 1995 (“PRA”), we estimate the average burden per affected registrant to be 10 minutes.
Certain provisions of our rules, schedules, and forms affected by the amendments contain “collection of information” requirements within the meaning of the PRA.
The hours and costs associated with preparing, filing, and distributing the schedules and forms constitute reporting and cost burdens imposed by each collection of information. An agency may not conduct or sponsor, and a person is not required to comply with, a collection of information unless it displays a currently valid OMB control number. Compliance with the information collections is mandatory. Responses to the information collections are not confidential and there is no mandatory retention period for the information disclosed. The titles for the affected collections of information are:
(1) Regulation 14A (Commission Rules 14a-1 through 14a-21 and Schedule 14A) (OMB Control No. 3235-0059); and
(2) 17 CFR 270.20a-1 (Rule 20a-1 under the Investment Company Act of 1940), Solicitations of Proxies, Consents, and Authorizations (OMB Control No. 3235-0158).
The Commission adopted Regulation 14A pursuant to the Exchange Act and Rule 20a-1 pursuant to the Investment Company Act. These rules set forth the disclosure and other requirements for proxy statements filed by soliciting parties to help investors make informed investment and voting decisions.
A description of the final amendments, including the need for the information and its use, as well as a description of the likely respondents, can be found in Section II above, and a discussion of the expected economic effects of the final amendments can be found in Section IV above.
For operating companies, the amendments revise the consent required of a bona fide nominee, eliminate the short slate rule, and establish new procedures for the solicitation of proxies, the preparation and use of proxy cards, and the dissemination of information about all director nominees in contested elections.
We are also amending the proxy rules for all director elections to:
• Specify that the proxy card must include an “against” voting option when applicable state law gives effect to a vote “against” a nominee;
• require proxy cards to give shareholders the ability to “abstain” in an election where a majority voting standard is in effect; and
• mandate disclosure about the effect of a “withhold” vote in an election.
We arrived at the estimates discussed below by reviewing our burden estimates for similar disclosure. The amendments regarding the use of a universal proxy card, required notices and related disclosure should result in only a small amount of additional required disclosure and the addition of only a limited amount of information (the names of duly nominated director candidates for which the soliciting party has complied with Rule 14a-19 on proxy cards). The application of these amendments will be limited to contested elections. In addition, the additional disclosure and changes to the proxy card relating to the appropriate use of “against,” “abstain” or “withhold” voting options should similarly result in only a small incremental increase in required disclosure; however, those changes will apply to proxy materials in all director elections, not just contested elections.
We derived our burden hour and cost estimates by estimating the total amount of time it will take to prepare and review the required disclosures called for by the final amendments. This estimate represents the average burden for all soliciting parties, both large and small. In deriving our estimates, we recognize that the burdens will likely vary among soliciting parties. Some soliciting parties may experience costs in excess of this average in the first year of compliance with the amendments and some parties may experience less than the average costs.
As discussed more fully in Section IV.C.4 above, it is unclear whether the amendments will result in an increase or decrease in the number of election contests, and we therefore estimate no change in the number of proxy statement filings as a result of the amendments. We estimate that the average incremental burden for a registrant to prepare a universal proxy card in a contested election and include the required disclosure will be two hours. We similarly estimate that the average incremental burden for a dissident to prepare a universal proxy card in a contested election and include the required disclosure will be two hours. We additionally estimate that the average incremental burden for a dissident and registrant to prepare the notice to the opposing party containing the names of its nominees in a contested election will be approximately one hour. Thus, we estimate that the total incremental burden for Schedule 14A will increase by three hours per election contest for registrants and three hours per election contest for other soliciting parties.
We estimate that the additional disclosure and changes to the proxy card relating to the appropriate use of “against,” “abstain” or “withhold” voting options in proxy materials for all director elections will be considerably less than one hour for each proxy statement and card relating to an election of directors. Unlike the other amendments relating specifically to election contests, these amendments will apply to all director elections, including director elections for funds. As a result of these amendments, registrants may need to update certain standardized portions of their proxy statements and proxy cards, and many of those disclosures, once revised, are not likely to require significant revision from year to year. We estimate that these changes will result in an average of 10 minutes of additional burden per response.
These estimates include the time and cost of preparing disclosure that has been appropriately reviewed, including, as applicable, by management, in-house counsel, outside counsel and members of the board of directors. This burden will be added to the current burden for Regulation 14A and Rule 20a-1, as applicable. For proxy statements under Regulation 14A, we estimate that 75% of the burden of preparation is carried internally and that 25% of the burden of preparation is carried by outside professionals retained at an average cost of $400 per hour. The portion of the burden carried by outside professionals is reflected as a cost, while the portion of the burden carried internally is reflected in hours. We estimate a similar allocation between internal burden hours and outside professional costs with respect to the PRA burden for Rule 20a-1.
As a result of the estimates discussed above, we estimate for purposes of the PRA that the total incremental burden on all soliciting parties of the final amendments under Regulation 14A will be 909 hours for internal time (1,212
A summary of the estimated changes is included in the table below.
The Regulatory Flexibility Act (“RFA”)
The final amendments will allow a shareholder voting by proxy to choose among director nominees in an election contest in a manner that more closely reflects the choice that could be made by voting in person at a shareholder meeting. To this end, we are amending the proxy rules applicable to operating companies to:
• Revise the consent required of a bona fide nominee;
• eliminate the short slate rule;
• require the use of universal proxy cards in all non-exempt solicitations in connection with contested elections; and
• prescribe requirements for universal proxy cards including notice, filing and solicitation requirements.
We are also adopting amendments that will apply to all director elections and will require disclosure regarding the effect of shareholder action to vote “against,” “withhold” or “abstain” and require that the appropriate voting option be included on the proxy card.
The need for, and objectives of, the amendments are discussed in more detail in Section I, above. We discuss the economic impact, including the estimated compliance costs and burdens, of the amendments in Sections IV and V above.
In the Proposing Release, we requested comment on all aspects of the IRFA, including how the Proposed Rules could further lower the burden on small entities, the number of small entities that would be affected by the Proposed Rules, the existence or nature of the potential impact of the proposals on small entities discussed in the analysis, and how to quantify the impact of the Proposed Rules. We did not receive any comments specifically addressing the IRFA. However, we received a number of comments on the Proposed Rules generally,
The final amendments will affect small entities that file proxy statements under the Exchange Act. The RFA defines “small entity” to mean “small business,” “small organization,” or “small governmental jurisdiction.”
As noted above, the purpose of the final amendments is to allow a shareholder voting by proxy to choose among director nominees in an election contest in a manner that more closely reflects the choice that could be made by voting in person at a shareholder meeting. In addition, we are adopting amendments that apply to all director elections and require disclosure
These amendments are unlikely to impose significant recordkeeping requirements. We discuss the economic effects, including the estimated costs and burdens, of the final amendments on all registrants, including small entities, in Sections IV and V above.
The RFA directs us to consider alternatives that would accomplish our stated objectives, while minimizing any significant adverse impact on small entities. Accordingly, we considered the following alternatives:
• Establishing different compliance or reporting requirements or timetables that take into account the resources available to small entities;
• clarifying, consolidating, or simplifying compliance and reporting requirements under the rule for small entities;
• using performance rather than design standards; and
• exempting small entities from all or part of the requirements.
The current proxy rules relating to election contests and the proxy rules generally do not impose different standards or requirements based on the size of the registrant or dissident. These rules contain both performance and design standards in order to achieve appropriate disclosure in the proxy voting process under the Exchange Act.
The final amendments require very limited additional disclosure by either the registrant or the dissident, but do impose additional filing and solicitation requirements on dissidents and an obligation on both parties in an election contest to include the other side's nominees on their respective proxy cards and to notify the other party of the names of their respective director nominees.
The final amendments are intended to permit shareholders voting by proxy in an election contest to reflect their choices as they could if voting in person at a shareholder meeting. We believe the final amendments are equally appropriate for parties of all sizes engaged in an election contest because they facilitate the important objective of shareholder enfranchisement, which does not depend on the size of the soliciting party. For that reason, we are not adopting different compliance or reporting requirements or timetables for small entities, or an exception for small entities. Similarly, we believe that the final amendments do not need further clarification, consolidation, or simplification for small entities.
Finally, as with the current proxy rules, the final amendments include both performance and design standards. In particular, the universal proxy card is subject to certain presentation and formatting requirements, but there is flexibility as to the exact design of the card within the guidelines established by the amendments.
We are adopting the rule amendments contained in this release under the authority set forth in Sections 14 and 23(a) of the Exchange Act.
Reporting and recordkeeping requirements, Securities.
In accordance with the foregoing, we are amending title 17, chapter II, of the Code of Federal Regulations as follows:
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
(b) Sections 240.14a-3 through 240.14a-6 (other than § 240.14a-6(g) and (p)), 240.14a-8, 240.14a-10, 240.14a-12 through 240.14a-15, and 240.14a-19 do not apply to the following:
The revisions and additions read as follows:
(b) * * *
(2) A form of proxy that provides for the election of directors shall set forth the names of persons nominated for election as directors, including any person whose nomination by a shareholder or shareholder group satisfies the requirements of an applicable state or foreign law provision, or a registrant's governing documents as they relate to the inclusion of shareholder director nominees in the registrant's proxy materials.
(3) Except as otherwise provided in § 240.14a-19, a form of proxy that provides for the election of directors may provide a means for the security holder to grant authority to vote for the nominees set forth, as a group, provided that there is a similar means for the security holder to withhold authority to vote for such group of nominees (or, when applicable state law gives legal effect to votes cast against a nominee, a similar means for the security holder to vote against such group of nominees and a means for security holders to abstain from voting for such group of nominees). Any such form of proxy which is executed by the security holder in such manner as not to withhold authority to vote for the election of any nominee, or not to grant authority to
(4) When applicable state law gives legal effect to votes cast against a nominee, then in lieu of providing a means for security holders to withhold authority to vote, the form of proxy shall provide a means for security holders to vote against each nominee and a means for security holders to abstain from voting. When applicable state law does not give legal effect to votes cast against a nominee, such form of proxy shall not provide a means for security holders to vote against any nominee and such form of proxy shall clearly provide any of the following means for security holders to withhold authority to vote for each nominee:
(i) A box opposite the name of each nominee which may be marked to indicate that authority to vote for such nominee is withheld; or
(ii) An instruction in bold-face type which indicates that the security holder may withhold authority to vote for any nominee by lining through or otherwise striking out the name of any nominee; or
(iii) Designated blank spaces in which the security holder may enter the names of nominees with respect to whom the security holder chooses to withhold authority to vote; or
(iv) Any other similar means, provided that clear instructions are furnished indicating how the security holder may withhold authority to vote for any nominee.
Instruction 1 to paragraphs (b)(2), (3), and (4). Paragraphs (b)(2), (3), and (4) do not apply in the case of a merger, consolidation or other plan if the election of directors is an integral part of the plan.
(c) * * *
(5) The election of any person to any office for which a bona fide nominee is named in a proxy statement and such nominee is unable to serve or for good cause will not serve.
(d) * * *
(1) To vote for the election of any person to any office for which a bona fide nominee is not named in the proxy statement:
(i) A person shall not be deemed to be a bona fide nominee and shall not be named as such unless the person has consented to being named in a proxy statement relating to the registrant's next annual meeting of shareholders at which directors are to be elected (or a special meeting in lieu of such meeting) and to serve if elected.
(ii) Notwithstanding paragraph (d)(1)(i) of this section, if the registrant is an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1
(A) Seeks authority to vote in the aggregate for the number of director positions then subject to election;
(B) Represents that it will vote for all the registrant nominees, other than those registrant nominees specified by the soliciting party;
(C) Provides the security holder an opportunity to withhold authority with respect to any other registrant nominee by writing the name of that nominee on the form of proxy; and
(D) States on the form of proxy and in the proxy statement that there is no assurance that the registrant's nominees will serve if elected with any of the soliciting party's nominees;
(4) To consent to or authorize any action other than the action proposed to be taken in the proxy statement, or matters referred to in paragraph (c) of this section.
The revisions and addition read as follows:
(c) Any information contained in any other proxy soliciting material which has been or will be furnished to each person solicited in connection with the same meeting or subject matter may be omitted from the proxy statement, if a clear reference is made to the particular document containing such information.
(e) * * *
(4) The deadline for providing notice of a solicitation of proxies in support of director nominees other than the registrant's nominees pursuant to § 240.14a-19 for the registrant's next annual meeting unless the registrant is an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1
(a) * * *
Solicitation in Opposition. For purposes of the exclusion from filing preliminary proxy material, a “solicitation in opposition” includes: {a} Any solicitation opposing a proposal supported by the registrant; {b} any solicitation supporting a proposal that the registrant does not expressly support, other than a security holder proposal included in the registrant's proxy material pursuant to § 240.14a-8; and {c} any solicitation subject to § 240.14a-19. The inclusion of a security holder proposal in the registrant's proxy material pursuant to § 240.14a-8 does not constitute a “solicitation in opposition,” even if the registrant opposes the proposal and/or includes a statement in opposition to the proposal. The inclusion of a shareholder nominee in the registrant's proxy materials pursuant to an applicable state or foreign law provision, or a registrant's governing documents as they relate to the inclusion of shareholder director nominees in the registrant's proxy materials does not constitute a “solicitation in opposition” for purposes of paragraph (a) of this section, even if the registrant opposes the shareholder nominee and solicits against the shareholder nominee and in favor of a registrant nominee.
(a) No person may solicit proxies in support of director nominees other than the registrant's nominees unless such person:
(1) Provides notice to the registrant in accordance with paragraph (b) of this section unless the information required by paragraph (b) of this section has been provided in a preliminary or definitive proxy statement previously filed by such person;
(2) Files a definitive proxy statement with the Commission in accordance with § 240.14a-6(b) by the later of:
(i) 25 calendar days prior to the security holder meeting date; or
(ii) Five (5) calendar days after the date that the registrant files its definitive proxy statement; and
(3) Solicits the holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors and includes a statement to that effect in the proxy statement or form of proxy.
(b) The notice shall:
(1) Be postmarked or transmitted electronically to the registrant at its principal executive office no later than 60 calendar days prior to the anniversary of the previous year's annual meeting date, except that, if the registrant did not hold an annual meeting during the previous year, or if the date of the meeting has changed by more than 30 calendar days from the previous year, then notice must be provided by the later of 60 calendar days prior to the date of the annual meeting or the 10th calendar day following the day on which public announcement of the date of the annual meeting is first made by the registrant;
(2) Include the names of all nominees for whom such person intends to solicit proxies; and
(3) Include a statement that such person intends to solicit the holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors in support of director nominees other than the registrant's nominees.
(c) If any change occurs with respect to such person's intent to solicit the holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors in support of director nominees other than the registrant's nominees or with respect to the names of such person's nominees, such person shall notify the registrant promptly.
(d) A registrant shall notify the person conducting a proxy solicitation subject to this section of the names of all nominees for whom the registrant intends to solicit proxies unless the names have been provided in a preliminary or definitive proxy statement previously filed by the registrant. The notice shall be postmarked or transmitted electronically no later than 50 calendar days prior to the anniversary of the previous year's annual meeting date, except that, if the registrant did not hold an annual meeting during the previous year, or if the date of the meeting has changed by more than 30 calendar days from the previous year, then notice must be provided no later than 50 calendar days prior to the date of the annual meeting. If any change occurs with respect to the names of the registrant's nominees, the registrant shall notify the person conducting a proxy solicitation subject to this section promptly.
(e) Notwithstanding the provisions of § 240.14a-4(b)(2), if any person is conducting a proxy solicitation subject to this section, the form of proxy of the registrant and the form of proxy of any person soliciting proxies pursuant to this section shall:
(1) Set forth the names of all persons nominated for election by the registrant and by any person or group of persons that has complied with this section and the name of any person whose nomination by a shareholder or shareholder group satisfies the requirements of an applicable state or foreign law provision or a registrant's governing documents as they relate to the inclusion of shareholder director nominees in the registrant's proxy materials;
(2) Provide a means for the security holder to grant authority to vote for the nominees set forth;
(3) Clearly distinguish between the nominees of the registrant, the nominees of the person or group of persons that has complied with this section and the nominees of any shareholder or shareholder group whose nominees are included in a registrant's proxy materials pursuant to the requirements of an applicable state or foreign law provision or a registrant's governing documents;
(4) Within each group of nominees referred to in paragraph (e)(3) of this section, list nominees in alphabetical order by last name;
(5) Use the same font type, style and size for all nominees;
(6) Prominently disclose the maximum number of nominees for which authority to vote can be granted; and
(7) Prominently disclose the treatment and effect of a proxy executed in a manner that grants authority to vote for the election of fewer or more nominees than the number of directors being elected and the treatment and effect of a proxy executed in a manner that does not grant authority to vote with respect to any nominees.
(f) If any person is conducting a proxy solicitation subject to this section, the form of proxy of the registrant and the form of proxy of any person soliciting proxies pursuant to this section may provide a means for the security holder to grant authority to vote for the nominees of the registrant set forth, as a group, and a means for the security holder to grant authority to vote for the nominees of any other soliciting person set forth, as a group, provided that there is a similar means for the security holder to withhold authority to vote for such groups of nominees unless the number of nominees of the registrant or of any other soliciting person is less than the number of directors being elected. Means to grant authority to vote for any nominees as a group or to withhold authority for any nominees as a group may not be provided if the form of proxy includes one or more shareholder nominees in accordance with an applicable state or foreign law provision or a registrant's governing documents as they relate to the inclusion of shareholder director nominees in the registrant's proxy materials.
(g) This section shall not apply to:
(1) A consent solicitation; or
(2) A solicitation in connection with an election of directors at an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1
Instruction 1 to paragraphs (b)(1) and (d). Where the deadline falls on a Saturday, Sunday, or holiday, the deadline will be treated as the first business day following the Saturday, Sunday, or holiday.
Instruction 2 to paragraph (f). Where applicable state law gives legal effect to votes cast against a nominee, the form of proxy may provide a means for the security holder to grant authority to vote for the nominees of the registrant set forth, as a group, and a means for the security holder to grant authority to vote for the nominees of any other soliciting person set forth, as a group, provided that, in lieu of the ability to withhold authority to vote as a group, there is a similar means for the security holder to
The revisions and addition read as follows:
(a) * * *
(i) In the case of a solicitation made on behalf of the registrant, the registrant, each director of the registrant and each of the registrant's nominees for election as a director;
(ii) In the case of a solicitation made otherwise than on behalf of the registrant, each of the soliciting person's nominees for election as a director;
(f) If a person is conducting a solicitation that is subject to § 240.14a-19, the registrant must include in its proxy statement a statement directing shareholders to refer to any other soliciting person's proxy statement for information required by Item 7 of this Schedule 14A with regard to such person's nominee or nominees and a soliciting person other than the registrant must include in its proxy statement a statement directing shareholders to refer to the registrant's or other soliciting person's proxy statement for information required by Item 7 of this Schedule 14A with regard to the registrant's or other soliciting person's nominee or nominees. The statement must explain to shareholders that they can access the other soliciting person's proxy statement, and any other relevant documents, without cost on the Commission's website.
(b) Disclose the method by which votes will be counted, including the treatment and effect under applicable state law and registrant charter and bylaw provisions of abstentions, broker non-votes, and, to the extent applicable, a security holder's withholding of authority to vote for a nominee in an election of directors.
(c) When applicable, disclose how the soliciting person intends to treat proxy authority granted in favor of any other soliciting person's nominees if such other soliciting person abandons its solicitation or fails to comply with § 240.14a-19.
By the Commission.
(a) Section 1 of this proclamation shall not apply to:
(A) seeking entry into or transiting the United States pursuant to one of the following visas: A-1, A-2, C-2, C-3 (as a foreign government official or immediate family member of an official), E-1 (as an employee of TECRO or TECO or the employee's immediate family members), G-1, G-2, G-3, G-4, NATO-1 through NATO-4, or NATO-6 (or seeking to enter as a nonimmigrant in one of those NATO categories); or
(B) whose travel falls within the scope of section 11 of the United Nations Headquarters Agreement;
(b) Nothing in this proclamation shall be construed to affect any individual's eligibility for asylum, withholding of removal, or protection under
(b) The Secretary of State, the Secretary of Transportation, and the Secretary of Homeland Security shall endeavor to ensure that any noncitizen subject to this proclamation does not board an aircraft traveling to the United States, to the extent permitted by law.
(c) The Secretary of Homeland Security may establish standards and procedures to ensure the application of this proclamation at and between all United States ports of entry.
(d) Where a noncitizen circumvents the application of this proclamation through fraud, willful misrepresentation of a material fact, or illegal entry, the Secretary of Homeland Security shall consider prioritizing such noncitizen for removal.
(b) This proclamation shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This proclamation is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.