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U.S. Office of Personnel Management.
Final rule.
The U.S. Office of Personnel Management is issuing a final rule to redefine the geographic boundaries of the St. Louis, MO; Southern Missouri; Cleveland, OH; and Pittsburgh, PA, appropriated fund Federal Wage System (FWS) wage areas. The final rule redefines Bollinger, Cape Girardeau, and Perry Counties, MO, from the Southern Missouri wage area to the St. Louis wage area and Mercer County, PA, from the Pittsburgh wage area to the Cleveland wage area. These changes are based on recent consensus recommendations of the Federal Prevailing Rate Advisory Committee to best match the counties proposed for redefinition to a nearby FWS survey area. This final rule makes two additional corrections. It renames the Champaign-Urbana, IL, wage area as the Central Illinois wage area and updates the name of the White Sands Proving Ground in the Albuquerque, NM, and El Paso, TX, wage areas to White Sands Missile Range.
This regulation is effective on May 13, 2013.
On November 15, 2012, the U.S. Office of Personnel Management (OPM) issued a proposed rule (77 FR 68073) to redefine Bollinger, Cape Girardeau, and Perry Counties, MO, from the Southern Missouri wage area to the St. Louis wage area and Mercer County, PA, from the Pittsburgh wage area to the Cleveland wage area. These changes are based on recent consensus recommendations of the Federal Prevailing Rate Advisory Committee to best match the above counties to a nearby FWS survey area.
This final rule makes two additional corrections. It renames the Champaign-Urbana, IL, wage area as the Central Illinois wage area and updates the name of the White Sands Proving Ground in the Albuquerque, NM, and El Paso, TX, wage areas to White Sands Missile Range. These corrections do not affect the pay of any FWS employees.
The proposed rule had a 30-day comment period during which OPM received no comments.
I certify that these regulations will not have a significant economic impact on a substantial number of small entities because they will affect only Federal agencies and employees.
Administrative practice and procedure, Freedom of information, Government employees, Reporting and recordkeeping requirements, Wages.
Accordingly, the U.S. Office of Personnel Management amends 5 CFR part 532 as follows:
5 U.S.C. 5343, 5346; § 532.707 also issued under 5 U.S.C. 552.
Merit Systems Protection Board.
Interim final rule.
The Merit Systems Protection Board (MSPB or Board) hereby amends its rules of practice and procedure to allow federal agencies, when issuing a decision notice to an employee on a matter that is appealable to MSPB, to satisfy the obligation to provide a copy of the MSPB appeal form (MSPB Form 185) to an employee by providing the employee with access to a copy of the appeal form, i.e., in paper or electronic form.
This interim final rule is effective on April 11, 2013. Submit written comments concerning this interim final rule on or before May 13, 2013.
Submit your comments concerning this interim final rule by one of the following methods and in accordance with the relevant instructions:
William D. Spencer, Clerk of the Board, Merit Systems Protection Board, 1615 M Street NW., Washington, DC, 20419; phone: (202) 653–7200; fax: (202) 653–7130; or email:
This interim final rule amends 5 CFR 1201.21(c). Currently, this regulation requires that, when a federal agency issues a decision notice to an employee on a matter that is appealable to MSPB, the federal agency must provide the employee with “[a] copy of the MSPB appeal form * * *” The amendment set forth herein will allow federal agencies to provide employees “[a] copy, or access to a copy, of the MSPB appeal form * * * ” This amendment will make paragraph (c) similar to paragraph (b), which requires a federal agency to provide the employee with “[a] copy, or access to a copy, of the Board's regulations” under the same circumstances.
The initial impetus to amend this regulation arose when MSPB realized that, under our current regulations, federal agencies that furlough their employees as a result of the implementation of government-wide “sequestration” on March 1, 2013, would be required to distribute potentially hundreds of thousands of copies of the 9-page MSPB appeal form to employees along with the furlough notifications. The existing MSPB regulations were not drafted with such a situation in mind. Moreover, widespread access by federal employees to the Internet, electronic mail, and MSPB's electronic filing system, e-Appeal Online (
This interim final rule is intended to avoid the costly duplication of hundreds of thousands of paper copies of the MSPB appeal form and to allow federal agencies to make better use of electronic means of making documents available to employees.
The Board is further convinced that this minor amendment to its regulations will not impose any hardship or disadvantage upon employees who receive a decision notice regarding a matter that is appealable to MSPB. A federal agency's obligation under 1201.21(b) and (c) to provide access to MSPB's regulations and the MSPB appeal form must be effective under the circumstances. For example, if a federal agency attempts to satisfy to 1201.21(b) and (c) by providing an employee access to MSPB's regulations and appeal form via the Internet or electronic mail and the employee informs the agency that he or she lacks Internet access, the agency would be required to take other steps to ensure that the employee has actual access to these documents, including providing the employee with a copy of these documents upon the employee's request. Thus, the regulation, as amended, continues to ensure that all employees subject to a final decision appealable to MSPB will have effective access to the MSPB appeal form.
The rulemaking process must normally observe notice-and-comment procedures outlined in the Administrative Procedure Act (APA). However, an exemption from notice and comment rulemaking requirements exists under 5 U.S.C. 553(b)(3)(B) where an “agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.” The good cause exception “is to be narrowly construed and only reluctantly countenanced.”
Regarding the “impracticable” prong, the United States Court of Appeals for the District of Columbia has held that agency action could be sustained on this basis if it addresses an “imminent hazard” to persons or property of the United States,
The “unnecessary” prong of the agency's good cause inquiry is “confined to those situations in which the administrative rule is a routine determination, insignificant in nature and impact, and inconsequential to the industry and to the public.”
The public interest prong of the good cause exception is met only in the rare circumstance when ordinary procedures—generally presumed to serve the public interest—would in fact harm that interest.
Finally, MSPB also elected to make the amendment set forth herein effective immediately upon publication of this interim final rule. Under 5 U.S.C. 553(d)(3), “the required publication or service of a substantive rule shall be made not less than 30 days before its effective date, except * * * as otherwise provided by the agency for good cause found and published with the rule.” For the reasons identified above, MSPB further finds that good cause exists under 5 U.S.C. 553(d)(3) to waive the 30-day publication requirement and implement this amendment immediately.
Administrative practice and procedure.
Accordingly, for the reasons set forth in the preamble, the Board amends 5 CFR part 1201 as follows:
5 U.S.C. 1204, 1305, and 7701, and 38 U.S.C. 4331, unless otherwise noted.
(c) A copy, or access to a copy, of the MSPB appeal form available at the Board's Web site (
Agricultural Marketing Service, USDA.
Affirmation of interim rule as final rule.
The Department of Agriculture (USDA) is adopting, as a final rule, without change, an interim rule that decreased the assessment rate established for the Washington Apricot Marketing Committee (Committee) for the 2012–13 and subsequent fiscal periods from $1.50 to $0.50 per ton of Washington apricots handled. The Committee locally administers the marketing order that regulates the handling of apricots grown in designated counties in Washington. The interim rule decreased the assessment rate to reflect a reduction in the manager's salary and the Committee's operating expenditures.
Effective April 12, 2013.
Manuel Michel, Marketing Specialist, or Gary Olson, Regional Director, Northwest Marketing Field Office, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA, 805 SW Broadway, Suite 930, Portland, OR 97205; Telephone: (503) 326–2724; Fax: (503) 326–7440; or Email:
Small businesses may obtain information on complying with this and other marketing order regulations by viewing a guide at the following Web site:
This rule is issued under Marketing Agreement and Order No. 922 (7 CFR part 922), as amended, regulating the handling of apricots grown in designated counties in Washington, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement
USDA is issuing this rule in conformance with Executive Order 12866.
Under the order, Washington apricot handlers are subject to assessments, which provide funds to administer the order. Assessment rates issued under the order are intended to be applicable to all assessable Washington apricots for the entire fiscal period, and continue indefinitely until amended, suspended, or terminated. The Committee's fiscal period begins April 1, and ends on March 31.
In an interim rule published in the
Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601–612), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.
There are approximately 94 producers of apricots in the production area and approximately 20 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those having annual receipts of less than $7,000,000. (13 CFR 121.201)
The National Agricultural Statistics Service reported that in 2011 the Washington apricot total utilization (including both fresh and processed markets) of 3,900 tons sold for an average of $1,830 per ton. Accordingly, the total farm-gate value in 2011 was approximately $7,132,000. Based on the number of producers in the production area (94), the 2011 average revenue from the sale of apricots is estimated at approximately $75,925 per producer. In addition, based on information from the USDA's Market News Service, 2011 f.o.b. prices for WA No. 1 apricots ranged from $20.00 to $26.00 per 24-pound loose-pack container, and from $22.00 to $30.00 for 2-layer tray-pack containers. Using average price and shipment information provided by the Committee, it is determined that each of the Washington apricot handlers currently ship less than $7,000,000 worth of apricots on an annual basis. Therefore, the majority of producers and handlers of Washington apricots may be classified as small entities.
This rule continues in effect the action that decreased the assessment rate established for the Committee and collected from handlers for the 2012–13 and subsequent fiscal periods from $1.50 to $0.50 per ton of Washington apricots handled under the order. The Committee unanimously recommended 2012–13 expenditures of $4,695 and an assessment rate of $0.50 per ton of Washington apricots. The assessment rate of $0.50 is $1.00 lower than the rate previously in effect. Applying the assessment rate of $0.50 per ton of Washington apricots to the Committee's crop estimate of 6,600 tons should provide approximately $3,300 in assessment income. Thus, income derived from handler assessments, along with funds from the Committee's monetary reserve, will be adequate to cover the budgeted expenses, while maintaining a financial reserve within the limit authorized by the order.
This rule continues in effect the action that decreased the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers and some of the costs may be passed on to producers. However, decreasing the assessment rate reduces the burden on handlers and may reduce the burden on producers.
In addition, the Committee's meeting was widely publicized throughout the Washington apricot industry. All interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the May 24, 2012, meeting was a public meeting, and all entities, both large and small, were able to express views on this issue.
In accordance with the Paperwork Reduction Act of 1995, (44 U.S.C. Chapter 35), the order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581–0189. No changes in those requirements as a result of this action are necessary. Should any changes become necessary, they would be submitted to OMB for approval.
This rule will not impose any additional reporting or recordkeeping requirements on either small or large Washington apricot handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. In addition, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.
Comments on the interim rule were required to be received on or before February 4, 2013. No comments were received. Therefore, for the reasons given in the interim rule, we are adopting the interim rule as a final rule, without change.
To view the interim rule, go to:
This action also affirms information contained in the interim rule concerning Executive Orders 12866 and 12988, the Paperwork Reduction Act (44 U.S.C. Chapter 35), and the E-Gov Act (44 U.S.C. 101).
After consideration of all relevant material presented, it is found that finalizing the interim rule, without change, as published in the
Apricots, Marketing agreements, Reporting and recordkeeping requirements.
Accordingly, the interim rule amending 7 CFR part 922, published at 77 FR 72681 on December 6, 2012, is adopted as a final rule, without change.
Agricultural Marketing Service, USDA.
Affirmation of interim rule as final rule.
The Department of Agriculture is adopting, as a final rule, without change, an interim rule that decreased the assessment rate established for the Washington Cherry Marketing Committee (Committee) for the 2012–2013 and subsequent fiscal periods from $0.40 to $0.18 per ton of sweet cherries handled. The Committee locally administers the marketing order for sweet cherries grown in designated counties in Washington. The interim rule was necessary to allow the Committee to reduce its monetary reserve.
Effective April 12, 2013.
Teresa Hutchinson or Gary Olson, Northwest Marketing Field Office, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA; Telephone: (503) 326–2724, Fax: (503) 326–7440, or Email:
Small businesses may obtain information on complying with this and other marketing order regulations by viewing a guide at the following Web site:
This rule is issued under Marketing Order No. 923, as amended (7 CFR part 923), regulating the handling of sweet cherries grown in designated counties in Washington, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601–674), hereinafter referred to as the “Act.”
The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.
Under the order, Washington sweet cherry handlers are subject to assessments, which provide funds to administer the order. Assessment rates issued under the order are intended to be applicable to all assessable Washington sweet cherries for the entire fiscal period, and continue indefinitely until amended, suspended, or terminated. The Committee's fiscal period begins on April 1, and ends on March 31.
In an interim rule published in the
Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601–612), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.
There are 53 handlers of Washington sweet cherries subject to regulation under the order and approximately 1,500 producers in the regulated production area. Small agricultural service firms are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $7,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000.
The National Agricultural Statistics Service prepared a preliminary report for the 2011 shipping season showing that the sweet cherry fresh market utilization of 165,000 tons sold for an average of $2,300 per ton. Based on the number of producers in the production area (1,500), the average producer revenue from the sale of sweet cherries in 2011 can therefore be estimated at approximately $253,000 per year. In addition, the Committee reports that most of the industry's 53 handlers would have each averaged gross receipts of less than $7,500,000 from the sale of fresh sweet cherries last season. Thus, the majority of producers and handlers of Washington sweet cherries may be classified as small entities.
This rule continues in effect the action that decreased the assessment rate established for the Committee and collected from handlers for the 2012–2013 and subsequent fiscal periods from $0.40 to $0.18 per ton of sweet cherries. The Committee also unanimously recommended 2012–2013 expenditures of $64,400. The assessment rate of $0.18 is $0.22 lower than the rate previously in effect. The quantity of assessable sweet cherries for the 2012–2013 fiscal period is estimated at 120,000 tons. Thus, the $0.18 rate should provide $21,600 in assessment income. Income derived from handler assessments, along with interest income and funds from the Committee's authorized reserve, will be adequate to cover budgeted expenses. This action will allow the Committee to reduce its monetary reserve.
This rule continues in effect the action that decreased the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to producers. However, decreasing the assessment rate reduces the burden on handlers, and may reduce the burden on producers.
In addition, the Committee's meeting was widely publicized throughout the Washington sweet cherry industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the May 15, 2012, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.
In accordance with the Paperwork Reduction Act of 1995, (44 U.S.C. Chapter 35), the order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581–0189, Generic Fruit Crops. No changes in those requirements as a result of this action are anticipated. Should any changes become necessary, they would be submitted to OMB for approval.
This action imposes no additional reporting or recordkeeping requirements on either small or large Washington sweet cherry handlers. As with all Federal marketing order programs,
USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.
Comments on the interim rule were required to be received on or before February 4, 2013. No comments were received. Therefore, for reasons given in the interim rule, we are adopting the interim rule as a final rule, without change.
To view the interim rule, go to:
This action also affirms information contained in the interim rule concerning Executive Orders 12866 and 12988, and the E-Gov Act (44 U.S.C. 101).
After consideration of all relevant material presented, it is found that finalizing the interim rule, without change, as published in the
Cherries, Marketing agreements, Reporting and recordkeeping requirements.
Accordingly, the interim rule amending 7 CFR part 923, which was published at 77 FR 72683 on December 6, 2012, is adopted as a final rule, without change.
Agricultural Marketing Service, USDA.
Affirmation of interim rule as final rule.
The Department of Agriculture is adopting, as a final rule, without change, an interim rule that decreased the assessment rate established for the Processed Pear Committee (Committee) for the 2012–2013 and subsequent fiscal periods from $7.73 to $7.00 per ton of summer/fall processed pears. The Committee locally administers the marketing order that regulates the handling of processed pears grown in Oregon and Washington. The Committee recommended the assessment rate decrease because the summer/fall processed pear promotion budget for the 2012–2013 fiscal period was reduced.
Effective April 12, 2013.
Teresa Hutchinson or Gary Olson, Northwest Marketing Field Office, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA; Telephone: (503) 326–2724, Fax: (503) 326–7440, or Email:
Small businesses may obtain information on complying with this and other marketing order regulations by viewing a guide at the following Web site:
This rule is issued under Marketing Order No. 927, as amended (7 CFR part 927), regulating the handling of pears grown in Oregon and Washington, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601–674), hereinafter referred to as the “Act.”
The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.
Under the order, processed pear handlers are subject to assessments, which provide funds to administer the order. Assessment rates issued under the order are intended to be applicable to all assessable processed pears for the entire fiscal period, and continue indefinitely until amended, suspended, or terminated. The Committee's fiscal period begins on July 1, and ends on June 30.
In an interim rule published in the
Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601–612), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.
There are approximately 1,500 producers of processed pears in the regulated production area and approximately 50 handlers of processed pears subject to regulation under the order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $7,000,000. (13 CFR 121.201)
According to the Noncitrus Fruits and Nuts 2011 Preliminary Summary issued in March 2012 by the National Agricultural Statistics Service, the total farm-gate value of summer/fall processed pears grown in Oregon and Washington for 2011 was $35,315,000. Based on the number of processed pear producers in Oregon and Washington, the average gross revenue for each producer can be estimated at approximately $23,543. Furthermore, based on Committee records, the Committee has estimated that each of the Oregon-Washington pear handlers currently ship less than $7,000,000 worth of processed pears all on an annual basis. From this information, it is concluded that the majority of producers and handlers of Oregon and Washington processed pears may be classified as small entities.
There are three pear processing plants in the production area, all located in Washington. All three pear processors would be considered large entities under the SBA's definition of small businesses.
This rule continues in effect the action that decreased the assessment rate established for the Committee and collected from handlers for the 2012–2013 and subsequent fiscal periods from $7.73 to $7.00 per ton of processed pears handled. The Committee also unanimously recommended 2012–2013 expenditures of $842,137. The assessment rate of $7.00 is $0.73 lower than the rate previously in effect.
The quantity of assessable summer/fall processed pears for the 2012–2013 fiscal period is estimated at 120,000 tons. Thus, the $7.00 rate should provide $840,000 in assessment income. Income derived from summer/fall processed pear handler assessments, monetary reserve, interest, and other income will be adequate to cover the budgeted expenses. The Committee recommended the assessment rate decrease because the 2012–2013 summer/fall processed pear promotion budget was reduced.
This rule continues in effect the action that decreased the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers and some of the costs may be passed on to producers. However, decreasing the assessment rate reduces the burden on handlers and may reduce the burden on producers.
In addition, the Committee's meeting was widely publicized throughout the Oregon-Washington pear industry. All interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the May 30, 2012, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581–0189, Generic Fruit Crops. No changes in those requirements as a result of this action are anticipated. Should any changes become necessary, they would be submitted to OMB for approval.
This action imposes no additional reporting or recordkeeping requirements on either small or large Oregon-Washington processed pear handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.
USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.
Comments on the interim rule were required to be received on or before February 4, 2013. No comments were received. Therefore, for the reasons given in the interim rule, we are adopting the interim rule as a final rule, without change.
To view the interim rule, go to:
This action also affirms information contained in the interim rule concerning Executive Orders 12866 and 12988, and the E-Gov Act (44 U.S.C. 101).
After consideration of all relevant material presented, it is found that finalizing the interim rule, without change, as published in the
Marketing agreements, Pears, Reporting and recordkeeping requirements.
Accordingly, the interim rule amending 7 CFR part 927, which was published at 77 FR 72197 on December 5, 2012, is adopted as a final rule, without change.
Commodity Futures Trading Commission.
Final rule.
The Commission is revising its regulations to add to its delegation of authority to staff respecting the disclosure of information to self-regulatory organizations newly established in the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and not previously enumerated in the relevant regulations.
This rulemaking is effective on April 11, 2013.
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581; David Van Wagner, Chief Counsel, Division of Market Oversight, telephone (202) 418–5481 and email
Section 8a(6) of the Commodity Exchange Act (“CEA”), 7 U.S.C. 12a(6), authorizes the Commission to communicate to the proper committee of any registered entity the “full facts concerning any transaction or market operation, including the names of parties thereto, which in the judgment of the Commission disrupts or tends to disrupt any market or is otherwise harmful or against the best interests of producers, consumers, or investors, or which is necessary or appropriate to effectuate the purposes of [the CEA].” The term “registered entity” has been defined to include boards of trade designated as contract markets, derivatives clearing organizations, swap execution facilities, swap data repositories, and certain electronic facilities on which a contract determined by the Commission to be a significant price discovery contract is executed or traded.
The definition of “registered entity” in the CEA was amended by the Dodd-Frank Act, which was enacted on July 21, 2010.
In order to mitigate market disruptions, ensure the best interests of market participants, and to effectuate any purpose of the CEA as amended, the Commission is revising regulation 140.72 to permit the provision of critical information to all of these registered entities. Presently, the delegation of authority in regulation 140.72 provides certain employees of the Commission with the authority to disclose confidential information only to any contract market, registered futures association, or certain self-regulatory organizations.
The revisions to the Commission's regulations in this rulemaking do not establish any new substantive or legislative rules, but rather relate solely to rules of agency organization, practice, or procedure. Therefore, this rulemaking is excepted from the public notice and comment provisions of the Administrative Procedure Act.
The Regulatory Flexibility Act requires the Commission to consider whether the regulations it adopts will have a significant economic impact on a substantial number of small entities.
The Commission may not conduct or sponsor, and a respondent is not required to respond to, a collection of information contained in a rulemaking unless the information collection displays a currently valid control number issued by the Office of Management and Budget (“OMB”) pursuant to the Paperwork Reduction Act.
Authority delegations (Government agencies), Organization and functions (Government agencies).
For the reasons stated in the preamble, the Commission hereby amends chapter I of title 17 of the Code of Federal Regulations as follows:
7 U.S.C. 2(a)(12) and 12(b).
Department of State.
Final rule.
The Department of State is amending the International Traffic in Arms Regulations (ITAR) to implement the Treaty Between the Government of the United States of America and the Government of Australia Concerning Defense Trade Cooperation, identify via a supplement to the ITAR the defense articles and defense services that cannot be exported pursuant to the licensing exemption created by the Treaty, and make certain other corrections to the supplement.
This rule is effective upon the entry into force of the Treaty Between the Government of the United States of America and the Government of Australia Concerning Defense Trade Cooperation. The Department will publish a final rule in the
Sarah Heidema, Office of Defense Trade Controls Policy, Department of State, telephone (202) 663–2809 or email
The Department of State is amending the International Traffic in Arms Regulations (ITAR) pursuant to the Security Cooperation Act of 2010 (Pub. L. 111–266), with the inclusion of other changes. Title I of the Security Cooperation Act, the Defense Trade Cooperation Treaties Implementation Act of 2010, implements the Treaty Between the Government of the United States of America and the Government of Australia Concerning Defense Trade Cooperation (Treaty Doc. 110–10), and the Treaty Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland Concerning Defense Trade Cooperation (Treaty Doc. 110–7). The U.S.-UK treaty entered into force on April 13, 2012. (
ITAR § 120.1 is amended to provide updated authorities and editorial changes. ITAR § 120.33 is added to provide a definition of “Defense Trade Cooperation Treaty between the United States and Australia.” New ITAR § 120.35 defines the Implementing Arrangement pursuant to the Treaty. ITAR § 126.16 is added to create the licensing exemption and provide guidance on its use. Supplement No. 1 to part 126 is amended to identify
In addition, the supplement is amended to make the following corrections and clarifications: the phrase, “defense articles and services related to” is removed from the row regarding USML Category I articles, and the USML citation for armored plates is changed from USML Category XIII(c) to XIII(e).
On November 22, 2011 (76 FR 72246, RIN 1400–AC95), the Department published for public comment a proposed rule to amend the ITAR to implement the Defense Trade Cooperation Treaty between the United States and the United Kingdom and the Defense Trade Cooperation Treaty between the United States and Australia, and to identify, via a supplement, the defense articles that may not be exported and the defense services that may not be furnished through use of the licensing exemptions created by the treaties. The comment period ended December 22, 2011. Fifteen parties filed comments that applied to the Treaty. The Department's evaluation of the comments and recommendations follows.
The majority of commenting parties expressed support for the Treaty's intention of facilitating defense exports with one of the United States' closest allies. However, the commenting parties expressed concern that the exemption is overly complicated and its requirements too burdensome to be truly workable. The Department appreciates these comments and believes the clarifying edits made in this final rule make application of the exemption clearer.
Several commenting parties requested additional guidance for various aspects of the exemption described in ITAR § 126.16. As part of Treaty implementation, the Department's Directorate of Defense Trade Controls (DDTC) has posted Frequently Asked Questions (FAQs) on its Web site (
Two commenting parties recommended that the Department add a definition for defense articles to ITAR § 126.16(a)(1) to clarify that ”defense articles” also includes technical data for purposes of the exemption. The Department does not believe this change is necessary as the definition for “defense articles” in ITAR § 120.6 clearly identifies technical data as within its scope. Unless specifically indicated otherwise, the use of the term “defense article” includes technical data.
One commenting party requested clarification of the term “access” as used in ITAR § 126.16(a)(1)(iv), indicating that it is common for U.S. Customs and Border Protection (CBP) to authorize a physical manipulation of a container, which would seemingly result in an intermediate consignee having “access” to an item in the shipment. The Department believes the meaning of “access” is plain, and does not include situations such as this, where there is a directive from a CBP official to open a container for the purpose as stated. Another party requested that the Department place in this section a reference to ITAR § 126.16(k), which discusses intermediate consignees. The Department accepted this recommendation and has revised the section accordingly.
One commenting party expressed concern that the process by which the U.S. Government would obtain records, as provided in ITAR § 126.16(l) and other sections of the exemption, is unclear. These sections are not intended to identify the process by which record requests are made, and therefore were not revised to provide this information. (The records-request process would be the same for ITAR § 126.16(l) as for requests made pursuant to any other section of the ITAR.)
One commenting party noted that ITAR § 126.16(a)(4) seemed to limit transfers just to exports to the United States. The Department has revised this section to clarify that it applies to transfers within the Approved Community.
Two commenting parties requested that the Department change the word “required” to “pursuant to” in ITAR § 126.16(a)(4)(iii). This change was not accepted because the word “required” is a requirement of the Treaty.
In response to the recommendation of two commenting parties, the Department revised ITAR § 126.16(a)(5) regarding the applicability of this exemption to defense articles delivered via the Foreign Military Sales program.
Three commenting parties recommended that the Department include an explanation of the vetting process for the Australian Community in ITAR § 126.16(d). The Department did not accept this recommendation for the rule itself, but notes that the vetting requirements are identified in the Treaty and Implementing Arrangement, which are available on DDTC's Web site.
Three commenting parties requested that the Department provide additional guidance on requesting confirmation of Treaty eligibility for operations, programs, and projects that cannot be publicly identified (
One commenting party inquired whether the Department will publish a complete list of U.S. Government contracts that are Treaty eligible. The Department will not do so. The U.S. Department of Defense has updated the Defense Federal Acquisition Regulation Supplement (DFARS) and certain contract clauses, which will identify Treaty eligibility when incorporated into a contract.
Three commenting parties requested that ITAR § 126.16(g)(1) be clarified to indicate whether it applies to marketing to members of the Approved Community, or requested its removal. This provision is part of the Treaty's Exempted Technology List, and therefore cannot be removed. However, the Department revised ITAR § 126.16(g)(1) to indicate that marketing to members of the Australian Community is covered so long as it is for an approved Treaty end-use and meets the other requirements of this section.
One commenting party recommended removal of ITAR § 126.16(g)(4) or, in the alternative, adding the parenthetical “(or foreign equivalent)” after “Milestone B.” The Department cannot remove this paragraph as it is part of the Treaty's Exempted Technology List. The Department also cannot add the parenthetical as there is no equivalent in Australia to “Milestone B.”
One commenting party requested changes to ITAR § 126.16(g)(5) to allow for the export of embedded exempted technologies in certain circumstances. The Department is not, at this time, prepared to broaden this provision to include embedded exempted technologies.
Two commenting parties commented on the complexity of using ITAR § 126.16(h) with a diverse supply chain and requested clarification on the applicability of ITAR § 123.9(e) to this exemption. The Department appreciates the diverse nature of global supply chains, but believes the mechanisms provided in ITAR § 126.16(h) are no more onerous than current retransfer or reexport requirements. Further, as indicated in ITAR § 126.16(h)(5), any retransfer, reexport, or change in end-use under ITAR § 126.16(h) shall be made in accordance with ITAR § 123.9.
In response to the recommendation of two commenting parties, the Department has deleted “any citizen of
Ten commenting parties commented on the marking requirements provided in ITAR § 126.16(j). Of most concern was a perception that the requirements of this section made using the exemption overly burdensome and costly. Various suggestions were provided, ranging from removal of the requirement to rewording of certain sections. The majority of these commenting parties requested removal of the requirement in paragraph (j)(2) for exporters to remove Treaty markings. The Department appreciates these comments; however, apart from minor clarifying changes, the marking requirements have not been removed or revised because they are made pursuant to the Treaty and its Implementing Arrangement.
One commenting party requested that the Department revise the text of the statement required by ITAR § 126.16(j)(5) to indicate that the items being exported are USML items and authorized only for export to Australia under the Treaty. The Department accepted this suggestion and revised the text accordingly.
One commenting party requested that registered brokers be included in ITAR § 126.16(k)(1)(ii). Australian intermediate consignees must meet the requirements of this section. If a registered broker meets these requirements, then it may be an intermediate consignee for purposes of this exemption. However, simply being a registered broker does not automatically qualify an entity as an Australian intermediate consignee.
One commenting party recommended changing “all exports” in ITAR § 126.16(l)(1) to “their exports” to acknowledge that the U.S. exporter may not be aware or have record of a reexport/retransfer request submitted by an Australian Community member. The Department accepted this recommendation and has revised the section accordingly.
One commenting party requested clarification of whether ITAR § 126.16(l)(1)(x) referred to the USML category or security classification. The Department revised this section to make clear that it refers to security classification.
The Department accepted the recommendation of one commenting party to remove reference to “defense services” in ITAR § 126.16(l)(2).
Two commenting parties requested that the Department clarify whether ITAR § 126.16(m) required exporters to submit negative reports. Reporting requirements under this section are contingent on meeting the requirements of ITAR § 130.9.
Two commenting parties requested clarification on whether the congressional notification requirement under the Treaty is identical to that required under normal license authorization processes. The Department confirms that the requirement is the same.
Ten commenting parties submitted comments regarding the scope and text of Supplement No. 1 to part 126. In particular, comments indicated concern that the supplement was too broad and possibly excluded too much to make the exemption useful. The Department appreciates these comments, and has made clarifying edits to Supplement No. 1 to the extent possible within the confines of the Treaty, the Implementing Arrangement, and the Exempted Technology List.
For clarification, the Department has added, “prior to movement,” to the text of ITAR § 126.16(j)(1), which is in conformance with the requirements of the Treaty's Implementing Arrangement.
Having thoroughly reviewed and evaluated the written comments and recommended changes, the Department has determined that it will accept, and hereby adopt with the noted changes, the proposed rule, as it pertained to the Treaty, as a final rule, to be effective when the Treaty enters into force.
The Department of State is of the opinion that controlling the import and export of defense articles and services is a foreign affairs function of the United States government and that rules implementing this function are exempt from sections 553 (rulemaking) and 554 (adjudications) of the Administrative Procedure Act (APA). In addition, this rulemaking is implementing the provisions of a treaty between the United States and Australia and related amendments to the Arms Export Control Act. Although the Department is of the opinion that this rule is exempt from the rulemaking provisions of the APA, the Department published this rule with a 30-day provision for public comment and without prejudice to its determination that controlling the import and export of defense services is a foreign affairs function (RIN 1400–AC95). This rule is effective upon the entry into force of the Treaty Between the Government of the United States of America and the Government of Australia Concerning Defense Trade Cooperation (Treaty Doc. 110–10). Once the Treaty is in force, exporters must be able to utilize the Treaty for qualifying exports of defense articles.
Since the Department is of the opinion that this rule is exempt from the provisions of 5 U.S.C. 553, there is no requirement for an analysis under the Regulatory Flexibility Act.
This rulemaking does not involve a mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.
The Department of State has determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not preempt tribal law. Accordingly, the requirement of Executive Order 13175 does not apply to this rulemaking.
This rulemaking is not a major rule within the meaning of the Small Business Regulatory Enforcement Fairness Act of 1996.
This rulemaking will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, it is determined that this rulemaking does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this rulemaking.
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic,
The Department of State has reviewed this rulemaking in light of sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.
This rule does not impose any new reporting or recordkeeping requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35.
Arms and Munitions, Exports.
Accordingly, for the reasons set forth above, Title 22, Chapter I, Subchapter M, parts 120 and 126 are amended as follows:
Secs. 2, 38, and 71, Pub. L. 90–629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2794; 22 U.S.C. 2651a; Pub. L. 105–261, 112 Stat. 1920; Pub. L. 111–266; Section 1261, Pub. L. 112–239; E.O. 13637, 78 FR 16129.
(a) Section 38 of the Arms Export Control Act (22 U.S.C. 2778), as amended, authorizes the President to control the export and import of defense articles and defense services. The statutory authority of the President to promulgate regulations with respect to exports of defense articles and defense services was delegated to the Secretary of State by Executive Order 13637. This subchapter implements that authority. By virtue of delegations of authority by the Secretary of State, these regulations are primarily administered by the Deputy Assistant Secretary of State for Defense Trade and Regional Security and the Managing Director of the Directorate of Defense Trade Controls, Bureau of Political-Military Affairs.
Secs. 2, 38, 40, 42, and 71, Pub. L. 90–629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); 22 U.S.C. 2651a; 22 U.S.C. 287c; E.O. 12918, 59 FR 28205; 3 CFR, 1994 Comp., p. 899; Sec. 1225, Pub. L. 108–375; Sec. 7089, Pub. L. 111–117; Pub. L. 111–266; Section 7045, Pub. L. 112–74; Section 7046, Pub. L. 112–74; E.O. 13637, 78 FR 16129.
(a)
(ii) A
(iii)
(iv)
(2) Persons or entities exporting or transferring defense articles or defense services are exempt from the otherwise applicable licensing requirements if such persons or entities comply with the regulations set forth in this section. Except as provided in Supplement No. 1 to part 126 of this subchapter, Port Directors of U.S. Customs and Border Protection and postmasters shall permit the permanent and temporary export without a license from members of the United States Community to members of the Australian Community (
(3)
(i) The exporter must be registered with the Directorate of Defense Trade Controls (DDTC) and must be eligible, according to the requirements and prohibitions of the Arms Export Control Act, this subchapter, and other provisions of United States law, to obtain an export license (or other forms of authorization to export) from any agency of the U.S. Government without
(ii) The recipient of the export must be a member of the Australian Community (
(iii) Intermediate consignees involved in the export must not be ineligible, according to the requirements and prohibitions of the Arms Export Control Act, this subchapter, and other provisions of United States law, to handle or receive a defense article or defense service without restriction (
(iv) The export must be for an end-use specified in the Defense Trade Cooperation Treaty between the United States and Australia and mutually agreed to by the U.S. Government and the Government of Australia pursuant to the Defense Trade Cooperation Treaty between the United States and Australia and the Implementing Arrangement thereto (the Australia Implementing Arrangement) (
(v) The defense article or defense service is not excluded from the scope of the Defense Trade Cooperation Treaty between the United States and Australia (
(vi) All required documentation of such export is maintained by the exporter and recipient and is available upon the request of the U.S. Government (
(vii) The Department of State has provided advance notification to the Congress, as required, in accordance with this section (
(4)
(i) The defense article or defense service must have been previously exported in accordance with paragraph (a)(3) of this section or transitioned from a license or other approval in accordance with paragraph (i) of this section;
(ii) The transferor and transferee of the defense article or defense service are members of the Australian Community (
(iii) The transfer is required for an end-use specified in the Defense Trade Cooperation Treaty between the United States and Australia and mutually agreed to by the Government of the United States and the Government of Australia pursuant to the terms of the Defense Trade Cooperation Treaty between the United States and Australia and the Australia Implementing Arrangement (
(iv) The defense article or defense service is not identified in paragraph (g) of this section and Supplement No. 1 to part 126 of this subchapter as ineligible for export under this exemption, and is marked or otherwise identified, at a minimum, as “Restricted USML” (
(v) All required documentation of such transfer is maintained by the transferor and transferee and is available upon the request of the U.S. Government (
(vi) The Department of State has provided advance notification to the Congress in accordance with this section (
(5) This section does not apply to the export of defense articles or defense services from the United States pursuant to the Foreign Military Sales program. Once such items are delivered to the Australian Government, they may be treated as if they were exported pursuant to the Treaty and then must be marked, identified, transmitted, stored and handled in accordance with the Treaty, the Australia Implementing Arrangement, and the provisions of this section.
(b)
(1) Departments and agencies of the U.S. Government, including their personnel acting in their official capacity, with, as appropriate, a security clearance and a need-to-know; and
(2) Non-governmental U.S. persons registered with DDTC and eligible, according to the requirements and prohibitions of the Arms Export Control Act, this subchapter, and other provisions of United States law, to obtain an export license (or other forms of authorization to export) from any agency of the U.S. Government without restriction, including their employees acting in their official capacity with, as appropriate, a security clearance and a need-to-know.
(c) An exporter that is otherwise an authorized exporter pursuant to paragraph (b) of this section may not export or transfer pursuant to the Defense Trade Cooperation Treaty between the United States and Australia if the exporter's president, chief executive officer, any vice-president, any other senior officer or official (
(d)
(1) Government of Australia authorities with entities identified as members of the Approved Community through the DDTC Web site at the time of a transaction under this section; and
(2) The non-governmental Australian entities and facilities identified as members of the Approved Community through the DDTC Web site at the time of a transaction under this section; non-governmental Australian entities and facilities that become ineligible for such membership will be removed from the Australian Community.
(e)
(1) United States and Australian combined military or counter-terrorism operations;
(2) United States and Australian cooperative security and defense research, development, production, and support programs;
(3) Mutually determined specific security and defense projects where the Government of Australia is the end-user; or
(4) U.S. Government end-use.
(f) Procedures for identifying authorized end-uses pursuant to paragraph (e) of this section:
(1) Operations, programs, and projects that can be publicly identified will be posted on the DDTC Web site;
(2) Operations, programs, and projects that cannot be publicly identified will be confirmed in written correspondence from DDTC; or
(3) U.S. Government end-use will be identified specifically in a U.S. Government contract or solicitation as being eligible under the Treaty.
(4) No other operations, programs, projects, or end-uses qualify for this exemption.
(g)
(1) An exporter authorized pursuant to paragraph (b)(2) of this section may market a defense article to members of the Australian Community if that exporter has been licensed by DDTC to export (as defined by § 120.17 of this subchapter) the identical type of defense article to any foreign person and end-use of the article is for an end-use identified in paragraph (e) of this section.
(2) The export of any defense article specific to the existence of (
(3) U.S.-origin classified defense articles or defense services may be exported only pursuant to a written request, directive, or contract from the U.S. Department of Defense that provides for the export of the classified defense article(s) or defense service(s).
(4) U.S.-origin defense articles specific to developmental systems that have not obtained written Milestone B approval from the U.S. Department of Defense milestone approval authority are not eligible for export unless such export is pursuant to a written solicitation or contract issued or awarded by the U.S. Department of Defense for an end-use identified pursuant to paragraph (e)(1), (2), or (4) of this section.
(5) Defense articles excluded by paragraph (g) of this section or Supplement No. 1 to part 126 of this subchapter (
(6) No liability shall be incurred by or attributed to the U.S. Government in connection with any possible infringement of privately owned patent or proprietary rights, either domestic or foreign, by reason of an export conducted pursuant to this section.
(7) Sales by exporters made through the U.S. Government shall not include either charges for patent rights in which the U.S. Government holds a royalty-free license, or charges for information which the U.S. Government has a right to use and disclose to others, which is in the public domain, or which the U.S. Government has acquired or is entitled to acquire without restrictions upon its use and disclosure to others.
(h)
(2) Any transfer or other provision of a defense article or defense service for an end-use that is not authorized by the exemption provided by this section is prohibited without a license or the prior written approval of DDTC (
(3) Any retransfer or reexport, or other provision of a defense article or defense service by a member of the Australian Community to a foreign person that is not a member of the Australian Community, or to a U.S. person that is not a member of the United States Community, is prohibited without a license or the prior written approval of DDTC (
(4) Any change in the use of a defense article or defense service previously exported, transferred, or obtained under this exemption by any foreign person, including a member of the Australian Community, to an end-use that is not authorized by this exemption is prohibited without a license or other written approval of DDTC (
(5) Any retransfer, reexport, or change in end-use requiring such approval of the U.S. Government shall be made in accordance with § 123.9 of this subchapter.
(6) Defense articles excluded by paragraph (g) of this section or Supplement No. 1 to part 126 of this subchapter (
(7) A license or prior approval from DDTC is not required for a transfer, retransfer, or reexport of an exported defense article or defense service under this section, if:
(i) The transfer of defense articles or defense services is made by a member of the United States Community to Australian Department of Defence (ADOD) elements deployed outside the Territory of Australia and engaged in an authorized end-use (
(ii) The transfer of defense articles or defense services is made by a member of the United States Community to an Approved Community member (either
(iii) The reexport is made by a member of the Australian Community to ADOD elements deployed outside the Territory of Australia engaged in an authorized end-use (
(iv) The reexport is made by a member of the Australian Community to an Approved Community member (either United States or Australian) that is operating in direct support of ADOD elements deployed outside the Territory of Australia engaged in an authorized end-use (
(v) The defense article or defense service will be delivered to the ADOD for an authorized end-use (
(8) U.S. persons registered, or required to be registered, pursuant to part 122 of this subchapter and members of the Australian Community must immediately notify DDTC of any actual or proposed sale, retransfer, or reexport of a defense article or defense service on the U.S. Munitions List originally exported under this exemption to any of the countries listed in § 126.1 of this subchapter or any person acting on behalf of such countries, whether within or outside the United States. Any person knowing or having reason to know of such a proposed or actual sale, reexport, or retransfer shall submit such information in writing to the Office of Defense Trade Controls Compliance, Directorate of Defense Trade Controls.
(i)
(2) If a U.S. exporter desires to transition from an existing license or other approval to the use of the provisions of this section, the following is required:
(i) The U.S. exporter must submit a written request to DDTC, which identifies the defense articles or defense services to be transitioned, the existing license(s) or other authorizations under which the defense articles or defense services were originally exported, and the Treaty-eligible end-use for which the defense articles or defense services will be used. Any license(s) filed with U.S. Customs and Border Protection should remain on file until the exporter has received approval from DDTC to retire the license(s) and transition to this section. When this approval is conveyed to U.S. Customs and Border Protection by DDTC, the license(s) will be returned to DDTC by U.S. Customs and Border Protection in accord with existing procedures for the return of expired licenses in § 123.22(c) of this subchapter.
(ii) Any license(s) not filed with U.S. Customs and Border Protection must be returned to DDTC with a letter citing approval by DDTC to transition to this section as the reason for returning the license(s).
(3) If a member of the Australian Community desires to transition defense articles received under an existing license or other approval to the processes established under the Treaty, the Australian Community member must submit a written request to the Government of Australia. The Government of Australia will submit the request to DDTC for review and approval. The defense article or defense service shall remain subject to the conditions and limitations of the existing license or other approval until the Australian Community member has received via the Government of Australia the approval from DDTC.
(4) Authorized exporters identified in paragraph (b)(2) of this section who have exported a defense article or defense service that has subsequently been placed on the list of exempted items in Supplement No. 1 to part 126 of this subchapter must review and adhere to the requirements in the relevant
(5) Any defense article or defense service transitioned from a license or other approval to treatment under this section must be marked in accordance with the requirements of paragraph (j) of this section.
(j)
(i) For classified defense articles and defense services the standard marking or identification shall read“//CLASSIFICATION LEVEL USML//REL AUS and USA Treaty Community//.” For example, for defense articles classified SECRET, the marking or identification shall be “//SECRET USML//REL AUS and USA Treaty Community//.”
(ii) Unclassified defense articles and defense services exported under or transitioned pursuant to this section shall be handled while in Australia as “Restricted USML” and the standard marking or identification shall read“//RESTRICTED USML//REL AUS and USA Treaty Community//.”
(2) Where U.S.-origin defense articles are returned to a member of the United States Community identified in paragraph (b) of this section, any defense articles marked or identified pursuant to paragraph (j)(1)(ii) of this section as “//RESTRICTED USML//REL AUS and USA Treaty Community//” will be considered unclassified and the marking or identification shall be removed; and
(3) The standard marking and identification requirements are as follows:
(i) Defense articles (other than technical data) shall be individually labeled with the appropriate identification detailed in paragraphs (j)(1) and (j)(2) of this section; or, where such labeling is impracticable (
(ii) Technical data (including data packages, technical papers, manuals, presentations, specifications, guides and reports), regardless of media or means of transmission (physical, oral, or electronic), shall be individually labeled with the appropriate identification
(4) Defense services shall be accompanied by documentation (contracts, invoices, shipping bills, or bills of lading) clearly labeled with the appropriate identification detailed in paragraphs (j)(1) and (j)(2) of this section.
(5) The exporter shall incorporate the following statement as an integral part of the bill of lading and the invoice whenever defense articles are to be exported: “These U.S. Munitions List commodities are authorized by the U.S. Government under the U.S.-Australia Defense Trade Cooperation Treaty for export only to Australia for use in approved projects, programs or operations by members of the Australian Community. They may not be retransferred or reexported or used outside of an approved project, program, or operation, either in their original form or after being incorporated into other end-items, without the prior written approval of the U.S. Department of State.”
(k)
(i) U.S. intermediate consignees who are:
(A) Exporters registered with DDTC and eligible;
(B) Licensed customs brokers who are subject to background investigation and have passed a comprehensive examination administered by U.S. Customs and Border Protection; or
(C) Commercial air freight and surface shipment carriers, freight forwarders, or other parties not exempt from registration under § 129.3(b)(3) of this subchapter, that are identified at the time of export as being on the U.S. Department of Defense Civil Reserve Air Fleet (CRAF) list of approved air carriers, a link to which is available on the DDTC Web site; or
(ii) Australian intermediate consignees who are:
(A) Members of the Australian Community; or
(B) Freight forwarders, customs brokers, commercial air freight and surface shipment carriers, or other Australian parties that are identified at the time of export as being on the list of Authorized Australian Intermediate Consignees, which is available on the DDTC Web site.
(2) Classified exports must comply with the security requirements of the National Industrial Security Program Operating Manual (DoD 5220.22–M and supplements or successors).
(l)
(i) Port of entry/exit;
(ii) Date of export/import;
(iii) Method of export/import;
(iv) Commodity code and description of the commodity, including technical data;
(v) Value of export;
(vi) Reference to this section and justification for export under the Treaty;
(vii) End-user/end-use;
(viii) Identification of all U.S. and foreign parties to the transaction;
(ix) How the export was marked;
(x) Security classification of the export;
(xi) All written correspondence with the U.S. Government on the export;
(xii) All information relating to political contributions, fees, or commissions furnished or obtained, offered, solicited, or agreed upon as outlined in paragraph (m) of this section;
(xiii) Purchase order or contract;
(xiv) Technical data actually exported;
(xv) The Internal Transaction Number for the Electronic Export Information filing in the Automated Export System;
(xvi) All shipping documentation (including, but not limited to the airway bill, bill of lading, packing list, delivery verification, and invoice); and
(xvii) Statement of Registration (Form DS–2032).
(2)
(i) For exports in support of United States and Australian combined military or counter-terrorism operations identify § 126.16(e)(1) (the name or an appropriate description of the operation shall be placed in the appropriate field in the EEI, as well);
(ii) For exports in support of United States and Australian cooperative security and defense research, development, production, and support programs identify § 126.16(e)(2) (the name or an appropriate description of the program shall be placed in the appropriate field in the EEI, as well);
(iii) For exports in support of mutually determined specific security and defense projects where the Government of Australia is the end-user identify § 126.16(e)(3) (the name or an appropriate description of the project shall be placed in the appropriate field in the EEI, as well); or
(iv) For exports that will have a U.S. Government end-use identify § 126.16(e)(4) (the U.S. Government contract number or solicitation number (
(m)
(n)
(2) U.S. Immigration and Customs Enforcement and U.S. Customs and Border Protection officers may take appropriate action to ensure compliance with this section as to the export or the attempted export of any defense article or technical data, including the inspection of loading or unloading of any vessel, vehicle, or aircraft.
(3) U.S. Immigration and Customs Enforcement and U.S. Customs and Border Protection officers have the authority to investigate, detain, or seize any export or attempted export of defense articles or technical data that does not comply with this section or that is otherwise unlawful.
(4) DDTC or a person designated by DDTC (
(o)
(i) A contract or other instrument for the export of major defense equipment in the amount of $25,000,000 or more, or for defense articles and defense services in the amount of $100,000,000 or more;
(ii) A contract for the export of firearms controlled under Category I of the U.S. Munitions List of the International Traffic in Arms Regulations in an amount of $1,000,000 or more;
(iii) A contract, regardless of value, for the manufacturing abroad of any item of significant military equipment (
(iv) An amended contract that meets the requirements of paragraphs (o)(1)(i) through (o)(1)(iii) of this section.
(2) The written notification required in paragraph (o)(1) of this section shall indicate the item/model number, general item description, U.S. Munitions List category, value, and quantity of items to be exported pursuant to the Defense Trade Cooperation Treaty between the United States and Australia and this section, and shall be accompanied by the following additional information:
(i) The information identified in § 130.10 and § 130.11 of this subchapter;
(ii) A statement regarding whether any offset agreement is final to be entered into in connection with the export and a description of any such offset agreement;
(iii) A copy of the signed contract; and
(iv) If the notification is for paragraph (o)(1)(ii) of this section, a statement of what will happen to the weapons in their inventory (for example, whether the current inventory will be sold, reassigned to another service branch, destroyed, etc.).
(3) The Department of State will notify the Congress of exports that meet the requirements of paragraph (o)(1) of this section.
Coast Guard, DHS.
Notice of deviation from drawbridge regulation.
The Coast Guard has issued a temporary deviation from the operating schedule that governs the Rock Island Railroad and Highway Drawbridge across the Upper Mississippi River, mile 482.9, at Rock Island, Illinois. The deviation is necessary to allow the Front Street 5K Run to cross the bridge. This deviation allows the bridge to be maintained in the closed-to-navigation position for one hour.
This deviation is effective from 7 p.m. to 8 p.m. on June 15, 2013.
The docket for this deviation, [USCG–2013–0183] is available at
If you have questions on this temporary deviation, call or email Eric A. Washburn, Bridge Administrator, Western Rivers, Coast Guard; telephone 314–269–2378, email
The U.S. Army Rock Island Arsenal requested a temporary deviation for the Rock Island Railroad and Highway Drawbridge, across the Upper Mississippi River, mile 482.9, at Rock Island, Illinois to remain in the closed-to-navigation position for a one hour period from 7 p.m. to 8 p.m., June 15, 2013, while a 5K run is held between the cities of Davenport, IA and Rock Island, IL. The Rock Island Railroad and Highway Drawbridge currently operates in accordance with 33 CFR 117.5, which states the general requirement that drawbridges shall open promptly and fully for the passage of vessels when a request to open is given in accordance with the subpart.
There are no alternate routes for vessels transiting this section of the Upper Mississippi River.
The Rock Island Railroad and Highway Drawbridge, in the closed-to-navigation position, provides a vertical clearance of 23.8 feet above normal pool. Navigation on the waterway consists primarily of commercial tows and recreational watercraft. This temporary deviation has been coordinated with waterway users. No objections were received.
In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.
Environmental Protection Agency (EPA).
Direct final rule.
EPA is taking direct final action to approve revisions to the Santa Barbara County Air Pollution Control District (SBCAPCD) and San Diego County Air Pollution Control District (SDCAPCD) portions of the California State Implementation Plan (SIP). These revisions concern volatile organic compound (VOC) emissions from surface coating of aerospace vehicles and components and from wood products coating operations. We are approving local rules that regulate these emission sources under the Clean Air Act as amended in 1990 (CAA or the Act).
This rule is effective on June 10, 2013 without further notice, unless EPA receives adverse comments by May 13, 2013. If we receive such comments, we will publish a timely withdrawal in the
Submit comments, identified by docket number EPA–R09–OAR–2013–0103, by one of the following methods:
1.
2.
3.
Adrianne Borgia, EPA Region IX, (415) 972–3576,
Table 1 lists the rules we are approving with the dates that they were adopted by the local air agencies and submitted by the California Air Resources Board (CARB).
We approved an earlier version of SBCAPCD Rule 337 into the SIP on February 12, 1997 (61 FR 5288). There are no approved earlier versions of SDCAPCD Rule 67.11.
VOCs help produce ground-level ozone and smog, which harm human health and the environment. Section 110(a) of the CAA requires States to submit regulations that control VOC emissions by limiting VOC content in coatings and solvents. EPA's technical support documents (TSDs) have more information about these rules.
Generally, SIP rules must be enforceable (see section 110(a) of the Act), and must not relax existing requirements (see sections 110(1) and 193). In addition, SIP rules must implement Reasonably Available Control Measures (RACM), including Reasonably Available Control Technology (RACT), in moderate and above ozone nonattainment areas. Guidance and policy documents that we use to evaluate enforceability and RACT requirements consistently include the following:
We believe these rules are consistent with the relevant policy and guidance regarding enforceability, RACT and SIP relaxations. The TSDs have more information on our evaluation.
The TSDs describe additional rule revisions that we recommend for the next time the local agency modifies the rules.
As authorized in section 110(k)(3) of the Act, EPA is fully approving the submitted rules because we believe they fulfill all relevant requirements. We do not think anyone will object to this approval, so we are finalizing it without proposing it in advance. However, in the Proposed Rules section of this
Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.
Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves State law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);
• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• does not provide EPA with the discretionary authority to address disproportionate human health or environmental effects with practical, appropriate, and legally permissible methods under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the State, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, 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. EPA will submit a report containing this action 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 of the rule in the
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by June 10, 2013. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the Proposed Rules section of today's
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Reporting and recordkeeping requirements, Volatile organic compounds.
Part 52, Chapter I, Title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
(c) * * *
(214) * * *
(i) * * *
(C) * * *
(
(307) * * *
(i) * * *
(C) * * *
(
Environmental Protection Agency (EPA).
Direct Final Rule.
EPA is taking direct final action to approve revisions to the Butte County Air Quality Management District (BCAQMD) and Sacramento Metropolitan Air Quality Management District (SMAQMD) portions of the California State Implementation Plan (SIP). These revisions concern volatile organic compound (VOC), oxides of nitrogen (NO
These rules are effective on June 10, 2013 without further notice, unless EPA receives adverse comments by May 13, 2013. If we receive such comments, we will publish a timely withdrawal in the
Submit comments, identified by EPA–R09–OAR–2012–0914, by one of the following methods:
1.
2.
3.
Rynda Kay, EPA Region IX, (415) 947–4118,
Throughout this document, “we,” “us,” and “our” refer to EPA.
III. Statutory and Executive Order Reviews
Table 1 lists the rules we are approving with the dates that they were adopted by the local air agency and submitted by the California Air Resources Board.
On June 7, 2012 and October 11, 2012, EPA determined that the submittals for BCAQMD Rule 207 and SMAQMD Rule 417 respectively, met the completeness criteria in 40 CFR Part 51 Appendix V, which must be met before formal EPA review.
There are no previous versions of Rules 207 and 417 in the SIP.
VOCs help produce ground-level ozone and smog, which harm human health and the environment. NO
BCAQMD Rule 207 includes requirements that (a) Retailers of wood burning devices provide public awareness materials with each wood burning device sold, (b) newly installed wood burning devices be District-approved and inspected upon installation, (c) all newly installed outdoor wood-fired boilers meet certain EPA or equivalent emission standards, (d) no person shall advertise, sell, supply, or transfer ownership of a used wood burning device, unless it has been deemed permanently inoperable or is a District-approved device, and (e) fuel
SMAQMD Rule 417 includes requirements that (a) No person sell, offer for sale, supply, install or transfer a wood burning appliance unless it is a U.S. EPA Phase II wood burning heater, a pellet fueled or masonry heater, or an appliance or fireplace that meets the emission standard set forth in 40 CFR Part 60 Subpart AAA and is approved by the Air Pollution Control Officer (APCO), (b) retailers of wood burning devices provide public awareness materials with each wood burning device sold, (c) no person advertise, sell, supply, or transfer ownership of a used wood burning device, unless it has been deemed permanently inoperable or is an approved device, (d) the burning of materials not intended for use in a fireplace/heater is prohibited, and (e) wood sold within the District as “seasoned” or “dry” must have a moisture content of 20 percent or less by weight. The TSD has more information about this rule, including the basis and conclusion that the rule requires all control measures that are reasonably available.
Generally, SIP rules must be enforceable (see section 110(a) of the Act) and must not relax existing requirements (see sections 110(l) and 193).
Guidance and policy documents that we use to evaluate enforceability requirements consistently include the following:
1. “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations; Clarification to Appendix D of November 24, 1987
2. “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001 (the Little Bluebook).
Effective December 14, 2009, EPA designated portions of Chico (Butte County), California and Sacramento, California as nonattainment for the 2006 24-Hour PM
We believe these rules are consistent with the relevant policy and guidance regarding enforceability, and SIP revisions. The TSDs have more information on our evaluation.
The TSDs describe additional rule revisions that we recommend for the next time the local agencies modify these rules.
As authorized in section 110(k)(3) of the Act, EPA is fully approving the submitted rules because we believe they fulfill all relevant requirements. We do not think anyone will object to this approval, so we are finalizing it without proposing it in advance. However, in the Proposed Rules section of this
Please note that if EPA receives adverse comment on an amendment, paragraph, or section of the rules and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rules that are not the subject of an adverse comment.
Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves State law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• Does not provide EPA with the discretionary authority to address disproportionate human health or environmental effects with practical, appropriate, and legally permissible methods under Executive Order 12898 (59 FR 7629, February 16, 1994).
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by June 10, 2013. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the Proposed Rules section of today's
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Volatile organic compounds.
Part 52, Chapter I, Title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
(c) * * *
(419) * * *
(i) * * *
(C) Butte County Air Quality Management District.
(
(423) * * *
(i) * * *
(B) Sacramento Metropolitan Air Quality Management District.
(
Environmental Protection Agency (EPA).
Direct final rule.
EPA is taking direct final action to approve revisions to the Santa Barbara County Air Pollution Control District (SBCAPCD) and South Coast Air Quality Management District (SCAQMD) portions of the California State Implementation Plan (SIP). These revisions concern volatile organic compound (VOC) and oxides of nitrogen (NO
This rule is effective on June 10, 2013 without further notice, unless EPA receives adverse comments by May 13, 2013. If we receive such comments, we will publish a timely withdrawal in the
Submit comments, identified by docket number EPA–R09–OAR–2012–0828, by one of the following methods:
1.
2.
3.
Nicole Law, EPA Region IX, (415) 947–4126,
Throughout this document, “we,” “us,” and “our” refer to EPA.
Table 1 lists the rules we are approving with the dates that they were amended by the local air agencies and submitted by the California Air Resources Board (CARB).
On March 13, 2012 and October 11, 2012, EPA determined that the submittal for SBCAPCD Rule 352 and SCAQMD Rule 461 met the completeness criteria in 40 CFR part 51 Appendix V, which must be met before formal EPA review.
We approved an earlier version of SBCAPCD Rule 352 into the SIP on December 20, 2000 (65 FR 79752). We approved an earlier version of SCAQMD Rule 461 into the SIP on April 11, 2006 (71 FR 18216). The SCAQMD adopted revisions to the SIP-approved version on March 7, 2008 but the revision was not submitted to EPA. While we can act on only the most recently submitted version, we have reviewed materials from previous rule revisions.
VOCs help produce ground-level ozone and smog, which harm human health and the environment. NO
Generally, SIP rules must be enforceable (see section 110(a) of the Act), must require Reasonably Available Control Technology (RACT) for each category of sources covered by a Control Techniques Guidelines (CTG) document as well as each major source in nonattainment areas (see sections 182(a)(2) and (b)(2)), and must not relax existing requirements (see sections 110(l) and 193). The SCAQMD regulates an ozone nonattainment area (see 40 CFR part 81), so Rule 461 must fulfill RACT. SBCAPCD is designated as unclassifiable/attainment for all National Ambient Air Quality Standards (NAAQS) so that submitted Rule 352 does not have to fulfill RACT requirements.
Guidance and policy documents that we use to evaluate enforceability and RACT requirements consistently include the following:
1. “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” EPA, May 25, 1988 (the Bluebook).
2. “Guidance Document for Correcting Common VOC & Other Rule
3. “
4. “Technical Guidance—Stage II vapor Recovery Systems for Control of Vehicle Refueling Emissions at Gasoline Dispensing Facilities.” (EPA–450/3–91–022a) November 1991.
5. “EPA's Draft
We believe these rules are consistent with the relevant policy and guidance regarding enforceability, RACT, and SIP relaxations. The TSDs have more information on our evaluation.
The TSDs describe additional rule revisions that we recommend for the next time the local agencies modify the rules.
As authorized in section 110(k)(3) of the Act, EPA is fully approving the submitted rules because we believe they fulfill all relevant requirements. We do not think anyone will object to this approval, so we are finalizing it without proposing it in advance. However, in the Proposed Rules section of this
Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.
Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves State law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);
• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• does not provide EPA with the discretionary authority to address disproportionate human health or environmental effects with practical, appropriate, and legally permissible methods under Executive Order 12898 (59 FR 7629, February 16, 1994).
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, 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. EPA will submit a report containing this action 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 of the rule in the
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by June 10, 2013. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the Proposed Rules section of today's
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
Part 52, Chapter I, Title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
(c) * * *
(411) * * *
(i) * * *
(G) Santa Barbara County Air Pollution Control District.
(
(423) * * *
(i) * * *
(C) South Coast Air Quality Management District.
(
Environmental Protection Agency (EPA).
Direct final rule.
EPA is taking direct final action to approve revisions to the Antelope Valley Air Quality Management District (AVAQMD) and Monterey Bay Unified Air Pollution Control District (MBUAPCD) and Santa Barbara County Air Pollution Control District (SBCAPCD) portions of the California State Implementation Plan (SIP). Under authority of the Clean Air Act as amended in 1990 (CAA or the Act), we are approving local rules that address emission statements for AVAQMD, rule rescissions that addresses public records for MBUAPCD, and define terms for SBCAPCD.
This rule is effective on June 10, 2013 without further notice, unless EPA receives adverse comments by May 13, 2013. If we receive such comments, we will publish a timely withdrawal in the
Submit comments, identified by docket number EPA–R09–OAR–2012–0886, by one of the following methods:
1.
2.
3.
Cynthia Allen, EPA Region IX, (415) 947–4120,
Throughout this document, “we,” “us,” and “our” refer to EPA.
Table 1 lists the rules we are approving and the rules we are rescinding with the dates that they were adopted by the local air agencies and submitted by the California Air Resources Board (CARB).
On August 18, 2005, EPA determined that the submittal for MBUAPCD Rules 900, 901, 902, 903, and 904 met the completeness criteria in 40 CFR Part 51 Appendix V, which must be met before formal EPA review.
On October 11, 2012, EPA determined that the submittal for AVAQMD Rule 107 and SBCAPCD Rule 102 met the completeness criteria in 40 CFR Part 51 Appendix V, which must be met before formal review.
There is no previous version of AVAQMD Rule 107 in the SIP. We approved an earlier version of MBUAPCD Rules 900, 901, 902, 903, and 904 into the SIP on July 13, 1987 (52 FR 26148) and SBCAPCD Rule 102 into the SIP on May 4, 2012 (77 FR 26448).
Section 110(a) of the CAA requires states to submit regulations that control volatile organic compounds, oxides of nitrogen, particulate matter, and other air pollutants which harm human health and the environment. These rules were developed as part of the local agency's program to control these pollutants.
Antelope Valley AQMD Rule 107, Certification of Submissions and Emission Statements, requires the owner or operator of a stationary sources emitting VOC or NO
Monterey Bay Unified APCD Rule 900, Inspection of Public Records—Disclosure, Rule 901, Public records—Definitions, Rule 902, Districts Request for Information, Rule 903, Inspection of Public Records—Disclosure Procedure and Rule 904, Trade Secrets—Procedure When Inspection is Requested, are being repealed. These rules are being repealed because the District has updated their Public Records Request Procedures pursuant to changes made to the California Public Records Act.
Santa Barbara County APCD Rule 102, Definitions, is being amended by adding new definitions to terms common to the proposed amended rules and to improve rule clarity. The District added and modified several solvent-related and surface-coating definitions that are used in various parts of the rulebook. The definition of reactive organic compound was updated to include most of the exempt compounds listed in 40 CFR 50.100(s) and an exempt compound definition was added.
EPA's technical support documents (TSD) have more information about these rules.
These rules describe administrative provisions and definitions that support emission controls found in other local agency requirements. In combination with the other requirements, these rules must be enforceable (see section 110(a) of the Act) and must not relax existing requirements (see sections 110(l) and 193). EPA policy that we used to evaluate enforceability requirements consistently includes the Bluebook (“Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” EPA, May 25, 1988) and the Little Bluebook (“Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001).
We believe these rules are consistent with the relevant policy and guidance regarding enforceability and SIP relaxations. The TSDs have more information on our evaluation.
As authorized in section 110(k)(3) of the Act, EPA is fully approving the submitted rules because we believe they fulfill all relevant requirements. We do not think anyone will object to this approval, so we are finalizing it without proposing it in advance. However, in the Proposed Rules section of this
Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.
Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves State law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);
• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• does not provide EPA with the discretionary authority to address disproportionate human health or environmental effects with practical, appropriate, and legally permissible methods under Executive Order 12898 (59 FR 7629, February 16, 1994).
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, 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. EPA will submit a report containing this action 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 of the rule in the
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by June 10, 2013. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the Proposed Rules section of today's
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
Part 52, Chapter I, Title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
(c) * * *
(159) * * *
(iii) * * *
(H) Previously approved on July 13, 1987 in (c)(159)(iii)(A) of this section and now deleted without replacement Rules 900, 901, 902, 903, and 904.
(423) * * *
(i) * * *
(D) Antelope Valley Air Quality Management District.
(
(E) Santa Barbara County Air Pollution Control District.
(
Environmental Protection Agency (EPA).
Direct final rule.
EPA is taking direct final action to approve the Limited Maintenance Plan (LMP) submitted by the State of Oregon on January 13, 2012, for the Eugene-Springfield nonattainment area (Eugene-Springfield NAA) and the State's request to redesignate the area to attainment for the National Ambient Air Quality Standards (NAAQS) for particulate matter with an aerodynamic diameter less than or equal to a nominal 10 micrometers (PM
This direct final rule will be effective June 10, 2013, without further notice, unless EPA receives adverse comments by May 13, 2013. If adverse comments are received, EPA will publish a timely withdrawal of the direct final rule in the
Submit your comments, identified by Docket ID No. EPA–R10–OAR–2012–0193, by any of the following methods:
•
•
•
•
Kristin Hall at telephone number: (206) 553–6357, email address:
Throughout this document wherever “we”, “us” or “our” are used, we mean EPA.
EPA is taking direct final action to approve the LMP submitted by the State of Oregon on January 13, 2012, for the Eugene-Springfield nonattainment area (Eugene-Springfield NAA) and concurrently to redesignate the area to attainment for the PM
“Particulate matter,” also known as particle pollution or PM, is a complex mixture of extremely small particles and liquid droplets. The size of particles is directly linked to their potential for causing health problems. EPA is concerned about particles that are 10 micrometers in diameter or smaller because those are the particles that generally pass through the throat and nose and enter the lungs. Once inhaled, these particles can affect the heart and lungs and cause serious adverse health effects. People with heart or lung diseases, children and older adults are the most likely to be affected by particle pollution exposure. However, even healthy individuals may experience temporary symptoms from exposure to elevated levels of particle pollution.
On July 1, 1987, EPA promulgated a NAAQS for PM
On August 7, 1987, EPA designated the Eugene-Springfield area as a PM
After the Eugene-Springfield NAA was designated nonattainment for PM
On January 13, 2012, the State submitted to EPA for approval the Eugene-Springfield PM
Section 110(a)(2) of the CAA requires that each SIP revision be adopted after reasonable notice and public hearing. This must occur prior to the revision being submitted by a State to EPA. The State of Oregon provided notice and an opportunity for public comment from August 26, 2011 through September 26, 2011. A notice of public hearing was
Nonattainment areas can be redesignated to attainment after the area has measured air quality data showing it has attained the NAAQS and when certain planning requirements are met. Section 107(d)(3)(E) of the CAA, and the General Preamble to Title I provide the criteria for redesignation (57 FR 13498, April 16, 1992). These criteria are further clarified in a policy and guidance memorandum from John Calcagni, Director, Air Quality Management Division, EPA Office of Air Quality Planning and Standards dated September 4, 1992, “Procedures for Processing Requests to Redesignate Areas to Attainment” (Calcagni memo). The criteria for redesignation are:
1. The Administrator has determined that the area has attained the applicable NAAQS;
2. The Administrator has fully approved the applicable SIP for the area under section 110(k) of the CAA;
3. The state containing the area has met all requirements applicable to the area under section 110 and part D of the CAA;
4. The Administrator has determined that the improvement in air quality is due to permanent and enforceable reductions in emissions; and
5. The Administrator has fully approved a maintenance plan for the area as meeting the requirements of section 175A of the CAA.
On August 9, 2001, EPA issued guidance on streamlined maintenance plan provisions for certain moderate PM
To qualify for the LMP Option, the area should have attained the PM
The transportation conformity rule and the general conformity rule (40 CFR parts 51 and 93) apply to nonattainment areas and maintenance areas covered by an approved maintenance plan. Under either conformity rule, an acceptable method of demonstrating that a Federal action conforms to the applicable SIP is to demonstrate that expected emissions from the planned action are consistent with the emissions budget for the area.
While EPA's LMP Option does not exempt an area from the need to affirm conformity, it explains that the area may demonstrate conformity without submitting an emissions budget. Under the LMP Option, emissions budgets are treated as essentially not constraining for the length of the maintenance period because it is unreasonable to expect that the qualifying areas would experience so much growth in that period that a violation of the PM
States must demonstrate that an area has attained the PM
The 24-hour PM
A comprehensive air quality monitoring plan, meeting the requirements of 40 CFR part 58, was submitted by Oregon to EPA on December 27, 1979 (40 CFR 52.1970), and approved by EPA on March 4, 1981 (46 FR 15136). This monitoring plan has been subsequently updated, with the most recent submittal dated July 1, 2011, and approved by EPA on January 6, 2012 (Oregon Air Monitoring Plan Approval Letter, dated January 6, 2012). The monitoring plan describes the PM
Data from the Highway 99/Key Bank Site has been quality assured by ODEQ and submitted to EPA's Air Quality System (AQS), accessible through EPA's AirData Web site at
In order to qualify for redesignation, the SIP for the area must be fully approved under section 110(k) of the CAA, and must satisfy all requirements that apply to the area. As discussed in Section II. B. above, Oregon submitted a moderate PM
Section 107(d)(3)(E) of the CAA requires that a state containing a nonattainment area must meet all applicable requirements under section 110 and Part D of the CAA for an area to be redesignated to attainment. EPA interprets this to mean that the state must meet all requirements that applied to the area prior to, and at the time of, the submission of a complete redesignation request. The following is a summary of how Oregon meets these requirements.
Section 110(a)(2) of the CAA contains general requirements for nonattainment plans. These requirements include, but are not limited to, submittal of a SIP that has been adopted by the state after reasonable notice and public hearing; provisions for establishment and operation of appropriate apparatus, methods, systems and procedures necessary to monitor ambient air quality; implementation of a permit program; provisions for Part C—Prevention of Significant Deterioration (PSD) and Part D—New Source Review (NSR) permit programs; criteria for stationary source emission control measures, monitoring and reporting, provisions for modeling; and provisions for public and local agency participation. See the General Preamble for further explanation of these requirements (57 FR 13498, April 16, 1992). For purposes of redesignation of the Eugene-Springfield PM
Part D of the CAA contains general requirements applicable to all areas designated nonattainment. The general requirements are followed by a series of subparts specific to each pollutant. All PM
Section 172(c) contains general requirements for nonattainment area plans. A thorough discussion of these requirements may be found in the General Preamble (57 FR 13538, April 16, 1992). CAA section 172(c)(2) requires nonattainment plans to provide for reasonable further progress (RFP). Section 171(1) of the CAA defines RFP as “such annual incremental reductions in emissions of the relevant air pollutant as are required by this part (part D of title I) or may reasonably be required by the Administrator for the purpose of ensuring attainment of the applicable national ambient air quality standard by the applicable date.” The requirements for reasonable further progress, identification of certain emissions increases and other measures needed for attainment were satisfied with the approved Eugene-Springfield PM
Section 172(c)(3) of CAA requires a comprehensive, accurate, current inventory of actual emissions from all sources in the Eugene-Springfield PM
The CAA requires all nonattainment areas to meet several requirements regarding NSR. The State must have an approved major NSR program that meets the requirements of section 172(c)(5). EPA evaluated and initially approved the Oregon major NSR program on August 13, 1982 (47 FR 35191), as being equivalent or more stringent than EPA's regulations on a program basis. EPA subsequently approved revisions to Oregon's major NSR program on January 22, 2003 (68 FR 2891), and most recently approved revisions to the major
Once an area is redesignated, the state must continue to operate an appropriate air monitoring network in accordance with 40 CFR part 58 to verify attainment status of the area. Oregon submitted a comprehensive air quality monitoring plan, meeting the requirements of 40 CFR part 58 to EPA on December 27, 1979 (40 CFR 52.1970), and EPA approved the plan on March 4, 1981 (46 FR 15136). This monitoring plan has been subsequently updated, with the most recent submittal dated July 1, 2011, and approved by EPA on January 6, 2012 (Oregon Air Monitoring Plan Approval Letter, dated January 6, 2012). As stated in the submittal, ODEQ and LRAPA operate a PM
The CAA requires that contingency measures take effect if an area fails to meet RFP requirements or fails to attain the NAAQS by the applicable attainment date. Since, as part of this action, EPA has determined the Eugene-Springfield NAA attained the PM
Section 189(a), (c) and (e) requirements apply to moderate PM
(a) Provisions to assure that reasonably available control measures were implemented by December 10, 1993 (section 189(a)(1)(C));
(b) either a demonstration that the plan provided for attainment as expeditiously as practicable, but not later than December 31, 1994, or a demonstration that attainment by that date was impracticable (section 189(a)(1)(B));
(c) quantitative milestones which were achieved every 3 years and which demonstrate RFP toward attainment by December 31, 1994 (section 189(c)(1)); and
(d) provisions to assure that the control requirements applicable to major stationary sources of PM
Provisions for reasonably available control measures, attainment demonstration, and RFP milestones were fully approved into the SIP upon EPA approval of the moderate PM
Section 107(d)(3)(E)(iii) of the CAA provides that a nonattainment area may not be redesignated unless EPA determines that the improvement in air quality is due to permanent and enforceable reductions in emissions resulting from implementation of the SIP. Therefore, a state must be able to reasonably attribute the improvement in air quality to permanent and enforceable emission reductions by demonstrating that air quality improvements are the result of actual enforceable emission reductions. This showing should consider emission rates, production capacities, and other related information. The analysis should assume that sources are operating at permitted levels (or historic peak levels) unless evidence is presented that such an assumption is unrealistic.
Permanent and enforceable control measures in the Eugene-Springfield moderate PM
EPA believes that areas that qualify for the LMP Option will meet the NAAQS, even under worst case meteorological conditions. Therefore, under the LMP Option, the maintenance demonstration is presumed to be satisfied if an area meets the qualifying criteria. A description of the LMP qualifying criteria and how the Eugene-Springfield area meets these criteria is provided below. By qualifying for the LMP Option, Oregon presumptively demonstrates that the air quality improvements in the Eugene-Springfield area are the result of permanent emission reductions and not a result of either economic trends or meteorology.
In this action, we are approving the LMP in accordance with the principles outlined in the LMP Option memo. Upon the effective date of this action, the area will have a fully approved maintenance plan.
The LMP Option memo outlines the requirements for an area to qualify for the LMP Option. First, the area should be attaining the NAAQS. In this action, EPA has determined that the Eugene-Springfield NAA attained the PM
Second, the average design value (ADV) for the past 5 years of monitoring data must be at or below the critical design value (CDV). The CDV is a margin of safety value and is the value at which an area has been determined to have a 1 in 10 probability of exceeding the NAAQS. The LMP Option memo provides two methods for review of monitoring data for the purpose of qualifying for the LMP Option. The first method is a comparison of a site's ADV with the CDV of 98 µg/m
Third, the area must meet the motor vehicle regional emissions analysis test in attachment B of the LMP Option memo. Using the methodology outlined in attachment B, Oregon submitted an analysis of whether increased emissions from on-road mobile sources would increase PM
As described above, the Eugene-Springfield NAA meets the qualification criteria set forth in the LMP Option memo and therefore qualifies for the LMP Option. The LMP Option memo also indicates that once a state selects the LMP Option and it is in effect, the state will be expected to determine, on an annual basis, that the LMP criteria are still being met. If the state determines that the LMP criteria are not being met, it should take action to reduce PM
As a result of the above analysis, EPA is approving the LMP for the Eugene-Springfield area and the State's request to redesignate the Eugene-Springfield NAA to attainment for PM
Pursuant to the LMP Option memo, the state's approved attainment plan should include an emissions inventory which can be used to demonstrate attainment of the NAAQS. The inventory should represent emissions during the same five-year period associated with air quality data used to determine whether the area meets the applicability requirements of the LMP Option. The state should review its inventory every three years to ensure emissions growth is incorporated in the inventory if necessary.
Oregon's submittal includes an emissions inventory for the year 2008. After reviewing the 2008 emissions inventory and determining that it is current, accurate and complete, as well as reviewing monitoring data for the years 2004–2008, EPA has determined that the 2008 emissions inventory is representative of the attainment year inventory since the NAAQS was not violated during 2008. In addition, the year 2008 is representative of the level of emissions during the time period used to calculate the average design value since 2008 is one of the years during the five year period used to calculate the design value (2004–2008). The submittal meets EPA guidance, as described above, for purposes of an attainment emissions inventory.
PM
CAA section 175A states that a maintenance plan must include contingency provisions, as necessary, to promptly correct any violation of the NAAQS which may occur after redesignation of the area to attainment. As explained in the LMP Option memo and Calcagni memo, these contingency provisions are considered to be an enforceable part of the SIP. The plan should clearly identify the provisions to be adopted, a schedule and procedures for adoption and implementation, and a specific time limit for action by the state. The maintenance plan should identify the events that would “trigger” the adoption and implementation of a contingency provision, the contingency provision that would be adopted and implemented, and the schedule indicating the time frame by which the state would adopt and implement the provision. The LMP Option memo and Calcagni memo state that EPA will
In the submittal, ODEQ and LRAPA have included maintenance plan contingency provisions to ensure the area continues to meet the PM
The contingency provisions submitted by ODEQ and LRAPA have been adopted by the local jurisdictions, are currently being implemented in the Eugene-Springfield area, and contain triggers based on forecasted PM
Under the LMP Option, emissions budgets are treated as essentially not constraining for the maintenance period because it is unreasonable to expect that qualifying areas would experience so much growth in that period that a NAAQS violation would result. While areas with maintenance plans approved under the LMP Option are not subject to the budget test, the areas remain subject to other transportation conformity requirements of 40 CFR part 93, subpart A. Thus, the metropolitan planning organization (MPO) in the area or the state must document and ensure that:
a. Transportation plans and projects provide for timely implementation of SIP transportation control measures (TCMs) in accordance with 40 CFR 93.113;
b. Transportation plans and projects comply with the fiscal constraint element per 40 CFR 93.108;
c. The MPO's interagency consultation procedures meet applicable requirements of 40 CFR 93.105;
d. Conformity of transportation plans is determined no less frequently than every three years, and conformity of plan amendments and transportation projects is demonstrated in accordance with the timing requirements specified in 40 CFR 93.104;
e. The latest planning assumptions and emissions model are used as set forth in 40 CFR 93.110 and 40 CFR 93.111;
f. Projects do not cause or contribute to any new localized carbon monoxide or particulate matter violations, in accordance with procedures specified in 40 CFR 93.123; and
g. Project sponsors and/or operators provide written commitments as specified in 40 CFR 93.125.
In a letter to LRAPA dated October 3, 1994, EPA determined that the Eugene-Springfield area met the criteria to be exempted from regional emissions analysis for PM
For Federal actions which are required to address the specific requirements of the general conformity rule, one set of requirements applies particularly to ensuring that emissions from the action will not cause or contribute to new violations of the NAAQS, exacerbate current violations, or delay timely attainment. One way that this requirement can be met is to demonstrate that “the total of direct and indirect emissions from the action (or portion thereof) is determined and documented by the State agency primarily responsible for the applicable SIP to result in a level of emissions which, together with all other emissions in the nonattainment area, would not exceed the emissions budgets specified in the applicable SIP” (40 CFR 93.158(a)(5)(i)(A)).
The decision about whether to include specific allocations of allowable emissions increases to sources is one made by the state and local air quality agencies. These emissions budgets are different than those used in transportation conformity. Emissions budgets in transportation conformity are required to limit and restrain emissions. Emissions budgets in general conformity allow increases in emissions up to specified levels. Oregon has not chosen to include specific emissions allocations for Federal projects that would be subject to the provisions of general conformity.
In the submittal, Oregon included revisions to Oregon Administrative Rules (OAR) and LRAPA rules in the SIP to reflect the redesignation of the Eugene-Springfield area. In this action, EPA is approving changes to OAR Chapter 340, Division 204 Designation of Air Quality Areas, Rule 0030 Designation of Nonattainment Areas and Rule 0040 Designation of Maintenance Areas to remove Eugene-Springfield from the list of PM
EPA is also approving changes to LRAPA Title 29 Designation of Air Quality Areas, Section 29–0030 Designation of Nonattainment Areas and Section 29–0040 Designation of
Finally, EPA is approving changes to LRAPA Title 32 Emission Standards, Section 32–060 Air Conveying Systems and Section 32–065 Sulfur Content of Fuels to ensure the requirements of these rules continue to apply to the Eugene-Springfield area after redesignation.
EPA is taking direct final action to approve the LMP submitted by the State of Oregon for the Eugene-Springfield NAA and concurrently redesignate the area to attainment for the PM
EPA is publishing this action without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, in the proposed rules section of this
If EPA receives such comments, then EPA will publish a timely withdrawal of the direct final rule informing the public that the rule will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. The EPA will not institute a second comment period on this rule. Any parties interested in commenting on this rule should do so at this time. If no such comments are received, the public is advised that this rule will be effective on June 10, 2013 and no further action will be taken on the proposed rule.
Oregon Revised Statute 468.126 prohibits ODEQ from imposing a penalty for violation of an air, water or solid waste permit unless the source has been provided five days' advanced written notice of the violation and has not come into compliance or submitted a compliance schedule within that five day period. By its terms, the statute does not apply to Oregon's Title V program or to any program if application of the notice provision would disqualify the program from Federal delegation. Oregon has previously confirmed that, because application of the notice provision would preclude EPA approval of the Oregon SIP, no advance notice is required for violation of SIP requirements.
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and it will not impose substantial direct costs on tribal governments or preempt tribal law.
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by June 10, 2013. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2)).
Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate Matter, and Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.
Environmental protection, Air pollution control, National parks, Wilderness areas.
42 U.S.C. 7401
This document was received by the Office of the Federal Register on April 5, 2013.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401 et seq.
(c) * * *
(155) On January 13, 2012, the Oregon Department of Environmental Quality submitted the Eugene-Springfield PM
(i) Incorporation by reference.
(A) The following revised sections of the Oregon Administrative Rules (OAR) Chapter 340, effective December 21, 2011: Division 204, Designation of Air Quality Areas: Rule 0010 Definitions; Rule 0030 Designation of Nonattainment Areas; and Rule 0040 Designation of Maintenance Areas.
(B) Letter from Merlyn Hough, dated January 8, 2013, certifying that Lane Regional Air Protection Agency (LRAPA) adopted LRAPA provisions from Titles 29 and 32 on September 26, 2011 as described in the LRAPA Board meeting minutes.
(C) Lane Regional Air Protection Agency (LRAPA) Board meeting minutes, dated September 26, 2011.
(D) The following revised sections of the Lane Regional Air Protection Agency (LRAPA) Rules, Title 29 Designation of Air Quality Areas, adopted September 26, 2011: Section 29–0010 Definitions (except paragraphs 1 through 5, and 7 through 14); Section 29–0030 Designation of Nonattainment Areas; and Section 29–0040 Designation of Maintenance Areas.
(E) The following revised sections of the Lane Regional Air Protection Agency (LRAPA) Rules Title 32 Emission Standards, adopted September 26, 2011: Section 32–060 Air Conveying Systems; and Section 32–065 Sulfur Content of Fuels (except paragraphs 1 and 2).
(e) * * *
(6) EPA approves as a revision to the Oregon State Implementation Plan, the Eugene-Springfield PM
42 U.S.C. 7401 et seq.
Federal Communications Commission.
Final rule.
In this document, the Federal Communications Commission (Commission) amends its rules concerning signal boosters for consumer and industrial use in effort to enhance wireless coverage for consumers, particularly in rural, underserved, and difficult-to-serve areas by broadening the availability of signal boosters while ensuring that boosters do not adversely affect wireless networks.
Effective May 13, 2013, except for amendments to §§ 1.1307(b)(1), 20.3, 20.21(a)(2), 20.21(a)(5), 20.21(e)(2), 20.21(e)(8)(i)(G), 20.21(e)(9)(i)(H), 20.21(f), 20.21(h), 22.9, 24.9, 27.9, 90.203(q), 90.219(b)(1)(i), 90.219(d)(5), and 90.219(e)(5), which contain information collection requirements that are not effective until approved by the Office of Management and Budget (“OMB”). The FCC will publish a document in the
Joyce Jones, Mobility Division, Wireless Telecommunications Bureau, (202) 418–1327, TTY (202) 418–7233.
This is a summary of the Federal Communications Commission's
1. In the
2.
3.
4. We establish a two-step transition process for equipment certification for both Consumer and Industrial Signal Boosters sold and marketed in the United States. First, on the release date of this
5. This document contains modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104–13. It has been submitted to the Office of Management and Budget (OMB) for review under Section 3507(d) of the PRA. OMB, the general public, and other Federal agencies are invited to comment on the new or modified information collection requirements contained in this proceeding. In addition, the Commission notes that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107–198,
6. In the present document, the Commission assessed the effects of the policies adopted in this
7. The Commission will send a copy of this
8. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the
9. In the
10. There were no comments that specifically addressed the IRFA. Nonetheless, we have considered the potential impact of the rules adopted herein on small entities, and conclude that such impact would be minimal, in terms of measurable economic costs associated with compliance with the rules.
11. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the rules adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA).
12.
13.
14.
15. Wireless providers must create and maintain a registration mechanism to allow Consumer Signal Booster operators to register their devices. In addition, on March 1, 2015 and March 1, 2016, the nationwide wireless providers must make public certain information regarding their consent for their subscribers to use Consumer Signal Boosters. Specifically, these wireless providers must publicly indicate their status regarding consent for each Consumer Signal Booster which has received FCC certification.
16. Consumer Signal Boosters must meet the Network Protection Standard with the following requirements: (1) Comply with existing technical parameters (
17. The new rules also clarify that Industrial Signal Boosters require an FCC license or licensee consent to operate, must be appropriately labeled, and must comply with our current RF exposure requirements. Regarding part 90 Private Land Mobile Radio (PLMR), non-consumer signal boosters operated by licensees, the Commission revised its technical and operational requirements aimed at preventing interference. In addition, Part 90 Class B signal booster operators much register their devices with the Commission.
18. The Commission established a two-step transition process for equipment certification: (1) On the release date of this
19. The RFA requires an agency to describe the steps it has taken to minimize the significant economic impact on small entities consistent with the stated objectives of applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each one of the other significant alternatives to the rule considered by the agency which affect the impact on small entities was rejected.
20. With the exception of the Consumer Signal Booster consent reporting requirement, the projected reporting, recordkeeping, and other compliance requirements resulting from the
21. Regarding the reporting of wireless providers' consent to Consumer Signal Booster, this requirement only applies to nationwide wireless providers. The Commission concluded that it was appropriate to monitor provider behavior with respect to signal boosters. Specifically, in the event the Commission observes that providers are refusing to give timely and reasonable consideration to signal booster consent requests, it could take appropriate action including measures such as vigorous investigation or revisiting the authorization mechanism for Consumer Signal Boosters. The Commission determined, however, that it would be able to obtain sufficient information in this regard while limiting the requirement to nationwide wireless providers. Thus, the Commission was able to minimize the impact of this requirement on small entities.
22. The Commission will send a copy of the
Administrative practice and procedure, Communications common carriers, Telecommunications.
Frequency allocations and radio treaty matters.
Commercial mobile radio service.
Public mobile services.
Personal communications services.
Miscellaneous wireless communications services.
Private land mobile radio services.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR parts 1, 2, 20, 22, 24, 27, and 90 as follows:
15 U.S.C. 79 et seq.; 47 U.S.C. 151, 154(i), 154(j), 155, 157, 225, 227, 303(r), and 309, the Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. 112–96, and 47 U.S.C. 1473.
(b) * * *
(1) * * *
(2) Mobile and portable transmitting devices that operate in the Commercial Mobile Radio Services pursuant to part 20 of this chapter; the Cellular Radiotelephone Service pursuant to part 22 of this chapter; the Personal Communications Services pursuant to part 24 of this chapter; the Satellite Communications Services pursuant to part 25 of this chapter; the Miscellaneous Wireless Communications Services pursuant to part 27 of this chapter; the Maritime Services (ship earth station devices only) pursuant to part 80 of this chapter; and the Specialized Mobile Radio Service, and the 3650 MHz Wireless Broadband Service pursuant to part 90 of this chapter are subject to routine environmental evaluation for RF exposure prior to equipment authorization or use, as specified in §§ 2.1091 and 2.1093 of this chapter. * * *
47 U.S.C. 154, 302a, 303, and 336, unless otherwise noted.
(c) Mobile devices that operate in the Cellular Radiotelephone Service pursuant to part 22 of this chapter; the Personal Communications Services pursuant to part 24 of this chapter; the Satellite Communications Services pursuant to part 25 of this chapter; the Miscellaneous Wireless Communications Services pursuant to part 27 of this chapter; the Maritime Services (ship earth station devices only) pursuant to part 80 of this chapter; and the Specialized Mobile Radio Service, and the 3650 MHz Wireless Broadband Service pursuant to part 90 of this chapter are subject to routine environmental evaluation for RF exposure prior to equipment authorization or use if they operate at frequencies of 1.5 GHz or below and their effective radiated power (ERP) is 1.5 watts or more, or if they operate at frequencies above 1.5 GHz and their ERP is 3 watts or more. * * *
(c) Portable devices that operate in the Cellular Radiotelephone Service pursuant to part 22 of this chapter; the Personal Communications Services pursuant to part 24 of this chapter; the Satellite Communications Services pursuant to part 25 of this chapter; the Miscellaneous Wireless Communications Services pursuant to part 27 of this chapter; the Maritime Services (ship earth station devices only) pursuant to part 80 of this chapter; and the Specialized Mobile Radio Service, the 4.9 GHz Band Service, and the 3650 MHz Wireless Broadband Service pursuant to part 90 of this chapter; the Wireless Medical Telemetry Service (WMTS) and the Medical Device Radiocommunication Service (MedRadio), pursuant to subparts H and I of part 95 of this chapter, respectively; and unlicensed personal communication service, unlicensed NII devices and millimeter wave devices authorized under 15.253(f), 15.255(g), 15.257(g), 15.319(i), and 15.407(f) of this chapter are subject to routine environmental evaluation for RF exposure prior to equipment authorization or use. * * *
47 U.S.C. 154, 160, 201, 251–254, 301–303 and 332 unless otherwise noted.
Other FCC rule parts applicable to licensees in the commercial mobile radio services include the following:
(a)
(b)
(a)
(1) Prior to operation, the subscriber obtains the consent of the licensee providing service to the subscriber;
(2) Prior to operation, the subscriber registers the Consumer Signal Booster with the licensee providing service to the subscriber;
(3) The subscriber only operates the Consumer Signal Booster with approved antennas, cables, and/or coupling devices as specified by the manufacturer of the Consumer Signal Booster;
(4) The subscriber operates the Consumer Signal Booster on frequencies used for the provision of subscriber-based services under parts 22 (Cellular), 24 (Broadband PCS), 27 (AWS–1, 700 MHz Lower A–E Blocks, and 700 MHz Upper C Block), and 90 (Specialized Mobile Radio) of this chapter. Operation on part 90 (Specialized Mobile Radio) frequencies is permitted upon the Commission's release of a public notice announcing the date Consumer Signal Boosters may be used in the band;
(5) The Consumer Signal Booster complies with paragraphs (e), (f), (g), and (h) of this section and § 2.907 of this chapter; and
(6) The subscriber may not deactivate any features of the Consumer Signal Booster which are designed to prevent harmful interference to wireless networks. These features must be enabled and operating at all times the signal booster is in use.
(b)
(c)
(1) Has an FCC license or obtains the express consent of the licensee(s) whose frequencies are being retransmitted by the device on a regular basis, and
(2) Uses an Industrial Signal Booster which complies with paragraph (f) of this section.
(d)
(1) The operation of signal boosters must not cause harmful interference to the communications of any primary licensed service.
(2) Upon request of an FCC representative or a licensee experiencing harmful interference, a signal booster operator must:
(i) Cooperate in determining the source of the interference, and
(ii) If necessary, deactivate the signal booster immediately, or as soon as practicable, if immediate deactivation is not possible.
(e)
(2)
(ii) In case of any conflict between the rules set forth in this section and the rules set forth in parts 22, 24, 27, and 90 of title 47, chapter I of the Code of Federal Regulations, the rules in this section shall govern.
(iii) The application for certification must satisfy the Commission that the Consumer Signal Boosters' features designed to prevent harmful interference and protect wireless networks cannot be easily defeated and must be enabled at all times.
(3)
(4)
(5)
(6)
(7)
(8)
(i)
Where RSSI (received signal strength indication) is the downlink composite received signal power in dBm at the booster donor port for all base stations in the band of operation. RSSI is expressed in negative dB units relative to 1 mW.
(
(
(
(
(B)
(C)
(
(
(
(
(
(
(D)
(E)
(F)
(G)
(H)
(I)
(ii)
(A)
(B)
(C)
(9)
(
(
(
(
(
(
(B)
(C)
(
(i) Where BSCL is the coupling loss between the booster's donor port and the base station's input port, and MSCL is the minimum coupling loss in dB between the wireless device and the booster's server port. MSCL must be calculated or measured for each band of operation and provided in compliance test reports.
(
(
Where, Frequency is the uplink mid-band frequency of the supported spectrum bands in MHz.
(D)
(E)
(
(
(
(
(F)
(G)
(H)
(I)
(J)
(ii)
(A)
(B)
(C)
(10)
(f)
(1) In on-line, point-of-sale marketing materials,
(2) In any print or on-line owner's manual and installation instructions,
(3) On the outside packaging of the device, and
(4) On a label affixed to the device:
(i) For Consumer Signal Boosters:
This is a CONSUMER device.
BEFORE USE, you MUST REGISTER THIS DEVICE with your wireless provider and have your provider's consent. Most wireless providers consent to the use of signal boosters. Some providers may not consent to the use of this device on their network. If you are unsure, contact your provider.
You MUST operate this device with approved antennas and cables as specified by the manufacturer. Antennas MUST be installed at least 20 cm (8 inches) from any person.
You MUST cease operating this device immediately if requested by the FCC or a licensed wireless service provider.
WARNING. E911 location information may not be provided or may be inaccurate for calls served by using this device.
(ii) For Industrial Signal Boosters:
WARNING. This is NOT a CONSUMER device. It is designed for installation by FCC LICENSEES and QUALIFIED INSTALLERS. You MUST have an FCC LICENSE or express consent of an FCC Licensee to operate this device. Unauthorized use may result in significant forfeiture penalties, including penalties in excess of $100,000 for each continuing violation.
(2) A Consumer Signal Booster label may contain an acknowledgement that particular provider(s) have given their consent for all consumers to use the device. Such an acknowledgement would be inserted prior to, “Some wireless providers may not consent to the use of this device on their network. If you are unsure, contact your provider.” The remaining language of the advisory shall remain the same.
(g)
(h)
(1) The name of the Consumer Signal Booster owner and/or operator, if different individuals;
(2) The make, model, and serial number of the device;
(3) The location of the device; and
(4) The date of initial operation. Licensee consent is voluntary and may be withdrawn at the licensee's discretion.
47 U.S.C. 154, 222, 303, 309, and 332.
Individuals and non-individuals may operate certificated Consumer Signal Boosters on frequencies regulated under this part provided that such operation complies with all applicable rules under this part and § 20.21 of this chapter. Failure to comply with all applicable rules voids the authority to operate a signal booster.
47 U.S.C. 154, 301, 302, 303, 309, and 332.
Individuals and non-individuals may operate certificated Consumer Signal Boosters on frequencies regulated under this part provided that such operation complies with all applicable rules under this part and § 20.21 of this chapter. Failure to comply with all applicable rules voids the authority to operate a signal booster.
47 U.S.C. 154, 301, 302, 303, 307, 309, 332, 336, and 337 unless otherwise noted.
Individuals and non-individuals may operate certificated Consumer Signal Boosters on frequencies regulated under this part provided that such operation complies with all applicable rules under this part and § 20.21 of this chapter. Failure to comply with all applicable rules voids the authority to operate a signal booster.
Sections 4(i), 11, 303(g), 303(r), and 332(c)(7) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 161, 303(g), 303(r), 332(c)(7), and Title VI of the Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. 112–96, 126 Stat. 156.
(q) Certification requirements for signal boosters are set forth in § 90.219.
This section contains technical and operational rules allowing the use of signal boosters in the Private Land Mobile Radio Services (PLMRS). Rules for signal booster operation in the Commercial Mobile Radio Services under part 90 are found in § 20.21 of this chapter.
(a)
(b)
(1) PLMRS licensees may also consent to operation of signal boosters by non-licensees (such as a building owner or a signal booster installation contractor) within their service contour and across their applicable frequencies, but must maintain a reasonable level of control over these operations in order to resolve interference problems.
(i) Non-licensees seeking to operate signal boosters must obtain the express consent of the licensee(s) of the frequencies for which the device or system is intended to amplify. The consent must be maintained in a recordable format that can be presented to an FCC representative or other relevant licensee investigating interference.
(ii) Consent is not required from third party (unintended) licensees whose signals are incidentally retransmitted. However, signal booster operation is on a non-interference basis and operations may be required to cease or alter the operating parameters due to a request from an FCC representative or a licensee's request to resolve interference.
(2) [Reserved]
(c)
(d)
(1) Signal boosters may be used to improve coverage in weak signal areas only.
(2) Signal boosters must not be used to extend PLMRS stations' normal operating range.
(3) Signal boosters must be deployed such that the radiated power of the each retransmitted channel, on the forward link and on the reverse link, does not exceed 5 Watts effective radiated power (ERP).
(4) Class B signal boosters may be deployed only at fixed locations; mobile operation of Class B signal boosters is prohibited after November 1, 2014.
(5) Class B signal booster installations must be registered in the FCC signal booster database that can be accessed at the following URL:
(6) Good engineering practice must be used in regard to the radiation of intermodulation products and noise, such that interference to licensed communications systems is avoided. In the event of harmful interference caused by any given deployment, the FCC may require additional attenuation or filtering of the emissions and/or noise from signal boosters or signal booster systems, as necessary to eliminate the interference.
(i) In general, the ERP of intermodulation products should not exceed −30 dBm in 10 kHz measurement bandwidth.
(ii) In general, the ERP of noise within the passband should not exceed −43 dBm in 10 kHz measurement bandwidth.
(iii) In general, the ERP of noise on spectrum more than 1 MHz outside of the passband should not exceed −70 dBm in a 10 kHz measurement bandwidth.
(7) Signal booster passbands are limited to the service band or bands for which the operator is authorized. In general, signal boosters should utilize the minimum passband that is sufficient to accomplish the purpose. Except for distributed antenna systems (DAS) installed in buildings, the passband of a Class B booster should not encompass both commercial services (such as ESMR and Cellular Radiotelephone) and part 90 Land Mobile and Public Safety Services.
(e)
(1) The output power capability of a signal booster must be designed for deployments providing a radiated power not exceeding 5 Watts ERP for each retransmitted channel.
(2) The noise figure of a signal booster must not exceed 9 dB in either direction.
(3) Spurious emissions from a signal booster must not exceed −13 dBm within any 100 kHz measurement bandwidth.
(4) A signal booster must be designed such that all signals that it retransmits meet the following requirements:
(i) The signals are retransmitted on the same channels as received. Minor departures from the exact provider or reference frequencies of the input signals are allowed,
(ii) There is no change in the occupied bandwidth of the retransmitted signals.
(iii) The retransmitted signals continue to meet the unwanted emissions limits of § 90.210 applicable to the corresponding received signals (assuming that these received signals meet the applicable unwanted emissions limits by a reasonable margin).
(5) On or after March 1, 2014, a signal booster must be labeled to indicate whether it is a Class A or Class B device, and the label must include the following advisory
(1) In on-line point-of-sale marketing materials,
(2) In any print or on-line owner's manual and installation instructions,
(3) On the outside packaging of the device, and
(4) On a label affixed to the device:
“WARNING. This is NOT a CONSUMER device. It is designed for installation by FCC LICENSEES and QUALIFIED INSTALLERS. You MUST have an FCC LICENSE or express consent of an FCC Licensee to operate this device. You MUST register Class B signal boosters (as defined in 47 CFR 90.219) online at
Federal Communications Commission.
Final rule.
The Commission has been notified by PMCM TV, LLC (“PMCM”), the licensee of KJWY(TV), channel 2, Jackson, Wyoming, that it agrees to the reallocation of channel 2 from Jackson, Wyoming to Wilmington, Delaware, this language. While the Commission denied PMCM's Reallocation Request, PMCM appealed the decision to the United States Court of Appeals for the District of Columbia, which subsequently reversed the Commission's denial and remanded the Commission to approve PMCM's Reallocation Request. Therefore, channel 2 is allocated at Wilmington, Delaware as requested, as it complies with the principle community coverage and technical requirements set forth in the Commission's rules.
This rule is effective April 11, 2013.
Adrienne Y. Denysyk,
This is a synopsis of the Commission's
This document does not contain information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104–13. In addition, therefore, it does not contain any information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107–198,
The Commission will send a copy of this
Television.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 73 as follows:
47 U.S.C. 154, 303, 334, 336, and 339.
Nuclear Regulatory Commission.
Petition for rulemaking; denial.
The U.S. Nuclear Regulatory Commission (NRC) is denying a petition for rulemaking (PRM), PRM–73–15, dated September 15, 2011, which was filed with the NRC by George Hamawy (the petitioner). The petitioner requested that the NRC amend its regulations to require the installation of radiation alarms for rooms housing neutron sources.
The docket for the petition for rulemaking, PRM–73–15, is closed on April 11, 2013.
Please refer to Docket ID NRC–2011–0251 when contacting the NRC about the availability of information for this petition. You may access information related to this petition, which the NRC possesses and is publicly available, by any of the following methods:
•
•
•
Merri Horn, Office of Federal and State Materials and Environmental Management Programs, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001; telephone: 301–415–8126, email:
On December 7, 2011, the NRC published a notice of receipt and request for comment (76 FR 76327) of a PRM filed by George Hamawy. The petitioner requested that the NRC amend its regulations to require installation of radiation alarms for rooms housing neutron sources. The petitioner stated that the use of alarms can be effective in preventing source removal, especially when an in-house person may be taken hostage to get the intruder into the room housing the source. The petitioner noted that the construction of the neutron sources used by universities for irradiating foils makes the source an easy target for theft. The petitioner also noted that the source is located at the end of a rod in the middle of a 55-gallon drum and that the drum has a cover that can be easily removed, facilitating the removal of the source. The petitioner stated that radiation alarms should be installed that are connected to the Public Safety Department. The alarm would be triggered when the source is removed.
The notice of receipt of the petition for rulemaking invited interested persons to submit comments. The comment period closed on February 21, 2012. The NRC received two comment letters from industry, one comment letter from an individual, and one comment letter from the Organization of Agreement States. The commenters all opposed the petition. Two of the commenters stated that the petition should not apply to the well logging industry. The commenters stated that the petition request was vague in terms of the definition of room, types of radiation alarms, connectivity to law enforcement, the isotopes included, and the threshold for action. Two of the commenters noted that their sources are stored by methods approved by the NRC (or Agreement State) and as prescribed in national standards established by the well logging industry and that additional requirements are not necessary. One of the commenters questioned why anyone would want to steal a neutron source and asked if any neutron sources have ever been stolen. The commenter also stated that natural background may contain more radiation than the neutron sources and, therefore, a radiation detector would not detect the removal of the sources. The commenter also asked if it would be possible to shield the neutron source from the detector while stealing the source. The commenter also stated that there is no reason that any person would respond to the alarm. The commenter stated that the best solution is to put the barrel in a locked room. One of the commenters noted that the typical strength of a neutron source used in a university is less than the category 2 threshold. The commenter also stated that the regulations currently require a licensee to have security measures in place to “secure from unauthorized removal or access licensed materials that are stored in controlled or unrestricted areas.”
As noted by the commenters on the petition, the petitioner did not provide information relative to the source strength of the neutron sources or the particular radionuclides for which the petitioner is requesting additional security measures be imposed by rulemaking. It is not clear whether the petitioner is requesting rulemaking on all neutron sources or only on the americium-241/beryllium (Am-241/Be or Am/Be) and plutonium-239/beryllium (Pu-239/Be or Pu/Be) sources mentioned in the petition. The NRC is taking the view that the petitioner is requesting rulemaking for all neutron sources regardless of source strength.
There are a number of different sources of neutrons, ranging from radioactive sources to operating and research reactors and spallation sources. Neutron sources are used in diverse applications in areas of physics, engineering, medicine, nuclear weapons, petroleum exploration, biology, chemistry, nuclear power, and other industries.
Radioactive materials used as neutron sources by NRC licensees include Am-241/Be, Pu/Be, and californium-252 (Cf-252). A licensee's decision to use a specific type of source may depend upon cost, availability, and the dependence upon historical data with which to compare current measurement results. The Am-241/Be and Pu/Be sources generate neutrons by the (α,n) reaction in which the americium or plutonium decays and emits an alpha particle, which is absorbed by the beryllium. Neutron sources that are not integrated into a specific device, regardless of type, are generally stored surrounded by paraffin wax or other similar low atomic number material as shielding.
Both Am-241/Be and Pu/Be sources have a wide range of uses. Neutron sources can be used with online elemental coal analyzers and bulk material analyzers in the coal and cement industries. Neutron penetration into materials makes these sources useful in analytical techniques such as radiography of aircraft components to detect corrosion, imperfections in welds, cracks, and trapped moisture. Moisture gauges use neutrons to find water and petroleum layers in oil wells, known as well logging. Neutron sources can be used for gold and silver prospecting for on-the-spot analysis, and to detect ground water movement for environmental surveys. Neutron sources are also used as calibration sources.
Californium-252 sources produce neutrons during spontaneous fission. The Cf-252 splits apart producing a number of neutrons in the process. Beyond the uses mentioned above for Am/Be and Pu/Be sources, the neutrons from Cf-252 are employed as a treatment of certain cervical and brain cancers where other radiation therapy is ineffective. The Cf-252 sources are also used to start up nuclear reactors.
The categorization of sources is established in International Atomic Energy Agency (IAEA) Safety Series RS–G–1.9, Categorization of Radioactive Sources. Safety SeriesRS–G–1.9 provides a risk-based ranking of radioactive sources in five categories in terms of their potential to cause severe deterministic effects for a range of scenarios that include both external exposure from an unshielded source and internal exposure following dispersal. The categorization system uses “D values” as normalizing factors. The “D value” is the radionuclide specific activity of a source that, if not under control, could cause severe deterministic effects for a range of scenarios that include both external exposure from an unshielded source and internal exposure following dispersal of the source material. Safety Series RS–G–1.9 is available on the IAEA Web site at:
As previously noted, neutron sources are used for a variety of purposes and in varying source strength. Depending on the source strength (activity), the source is considered a category 1 (higher activity) to a category 5 (lower activity) source. The threshold is established for each individual radionuclide. ForAm-241/Be and Pu-239/Be, a category 5 source is any source with an activity of less than 0.0006 Terabequerels (TBq) (0.016 curies (Ci)) and a category 1 source is any source with an activity of 60 TBq (1,620 Ci) or above. For Cf-252, the category 5 threshold is 0.0002 TBq (0.0.0054 Ci) and the category 1 threshold is 20 TBq (540 Ci).
The NRC's regulations in § 20.1801 of Title 10 of the
On March 19, 2013, the NRC published the final rule (78 FR 16922) that establishes the security requirements for category 1 and category 2 quantities of radioactive material (including Am-241/Be, Pu-239/Be, and Cf-252) in the regulations. Once the final rule is implemented, the security orders will be rescinded. The final rule establishes a new part to 10 CFR, part 37, “Physical Protection of Category 1 and Category 2 Quantities of Radioactive Material.” This final rule also applies to material that if aggregated equals or exceeds the category 2 threshold. Both the orders and 10 CFR part 37 contain general requirements that allow licensees flexibility in how they meet the requirements. For example, 10 CFR part 37 requires licensees to monitor and detect without delay all unauthorized entries into its security zone where category 1 or category 2 quantities of radioactive material are stored. Part 37 of 10 CFR further requires licensees to assess attempted or actual unauthorized entries and respond as appropriate. However, neither the orders nor 10 CFR part 37 specifies exactly how a particular licensee must monitor and detect such unauthorized entries. Instead, the orders and 10 CFR part 37 allow flexibility in the methods a licensee can select. A neutron detection alarm could be an acceptable method.
The NRC is denying the petition because we have determined that current NRC security requirements are adequate to protect public health and safety. The Commission has recently determined the appropriate activity threshold that warrants additional security measures in the 10 CFR part 37 rulemaking (category 2). The Commission did not find a need to change the requirements applicable to
For byproduct material below the category 2 thresholds, the security of radioactive material is covered by 10 CFR 20.1801 and 20.1802. The requirement to “secure, from unauthorized removal or access” and to “control and maintain constant surveillance” are considered performance-based requirements. Licensees are allowed to select methods that work best for their facility to ensure that there is no unauthorized removal of the category 3 and lower neutron sources. These requirements provide adequate protection for the neutron sources, without the need to require a specific measure.
In conclusion, no new information has been provided by the petitioner that calls into question the established thresholds (category 2) that warrant additional security measures or the performance based approach (non-prescriptive) for ensuring source security. This view has been validated by the Radiation Source Protection and Security Task Force's conclusions. Existing NRC regulations provide the basis for reasonable assurance that the common defense and security and public health and safety are adequately protected. Additional rulemaking would impose unnecessary regulatory burden and is not warranted for the adequate protection of the public health and safety and the common defense and security.
The NRC appreciates the views of the petitioner and encourages feedback from the public on any of the NRC processes.
For the reasons cited in this document, the NRC is denying PRM–73–15.
For the Nuclear Regulatory Commission.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for all The Boeing Company Model 727 airplanes. This proposed AD was prompted by reports of cracks on the elevator rear spar stiffener assembly. This proposed AD would require repetitive detailed inspections for cracking of the elevator rear spar stiffener assembly, and corrective actions if necessary. We are proposing this AD to detect and correct cracking of the elevator rear spar stiffener assembly, which could adversely affect elevator structural stiffness, that could lead to elevator vibration and possible interference with the tab control rod and which could result in flutter and consequent loss of control of the airplane.
We must receive comments on this proposed AD by May 28, 2013.
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 proposed AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H–65, Seattle, WA 98124–2207; telephone 206–544–5000, extension 1; fax 206–766–5680; Internet
You may examine the AD docket on the Internet at
Berhane Alazar, Aerospace Engineer, Airframe Branch, ANM–120S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue SW., Renton, WA 98057–3356; phone: 425–917–6577; fax: 425–917–6590; email:
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
We received reports of cracks on the elevator rear spar stiffener assembly. An operator reported finding a crack on the rear spar stiffener assembly while accomplishing Boeing Service Bulletin 727–55–0089 to address cracking of the elevator rear spar web at the elevator tab hinge fittings. A cracked elevator rear spar stiffener assembly, if not detected and corrected, could adversely affect elevator structural stiffness, which could result in elevator vibration and possible interference with the tab control rod and could lead to flutter and consequent loss of control of the airplane.
We reviewed Boeing Special Attention Service Bulletin 727–55–0094, dated March 21, 2012. For information on the procedures and compliance times, see this service information at
We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the actions specified in the service information described previously.
The phrase “related investigative actions” might be used in this proposed AD. “Related investigative actions” are follow-on actions that: (1) Are related to the primary actions, and (2) are actions that further investigate the nature of any condition found. Related investigative actions in an AD could include, for example, inspections.
In addition, the phrase “corrective actions” might be used in this proposed AD. “Corrective actions” are actions that correct or address any condition found. Corrective actions in an AD could include, for example, repairs.
We estimate that this proposed AD affects 98 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:
We estimate the following costs to do any necessary replacements that would be required based on the results of the proposed inspection. We have no way of determining the number of aircraft that might need this replacement:
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.
We are 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.
We 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) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by May 28, 2013.
None.
This AD applies to all The Boeing Company Model 727, 727C, 727–100, 727–100C, 727–200, and 727–200F series airplanes, certificated in any category.
Joint Aircraft System Component (JASC)/Air Transport Association (ATA) of America Code 55, Stabilizers.
This AD was prompted by reports of cracks on the elevator rear spar stiffener assembly. We are issuing this AD to detect and correct cracking of the elevator rear spar stiffener assembly, which could adversely affect elevator structural stiffness, that could lead to elevator vibration and possible interference with the tab control rod and which could result in elevator flutter and consequent loss of control of the airplane.
Comply with this AD within the compliance times specified, unless already done.
Except as provided by paragraph (h) of this AD, at the applicable time specified in table 1 of paragraph 1.E., “Compliance,” of Boeing Special Attention Service Bulletin 727–55–0094, dated March 21, 2012, do a detailed inspection for any cracking of the elevator rear spar stiffener assembly, and all applicable corrective actions, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 727–55–0094, dated March 21, 2012. Do all applicable corrective actions before further flight. Repeat the inspection thereafter at the applicable time specified in table 1 of paragraph 1.E., “Compliance,” of Boeing Special Attention Service Bulletin 727–55–0094, dated March 21, 2012, except as provided by paragraph (j) of this AD.
Where Boeing Special Attention Service Bulletin 727–55–0094, dated March 21, 2012, specifies a compliance time “from the original issue date of this service bulletin,” this AD requires compliance within the specified compliance time after the effective date of this AD.
Replacing the elevator rear spar stiffener assembly with a new assembly in accordance with Part 4 or 5, as applicable, of the Accomplishment Instructions of Boeing Special Attention Service Bulletin 727–55–0094, dated March 21, 2012, terminates the inspections required by paragraph (g) of this AD for that assembly, except as required by paragraph (j) of this AD.
For any elevator rear spar stiffener assembly replaced as required by paragraph (g) of the AD or as specified in paragraph (i) of this AD: Do the next inspection required by paragraph (g) of this AD for that assembly within 96 months after accomplishing the replacement and repeat thereafter at the times specified in paragraph (g) of this AD.
(1) The Manager, Seattle Aircraft Certification Office (ACO), 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 ACO, send it to the attention of the person identified in the Related Information section 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.
(3) An AMOC that provides an acceptable level of safety may be used for any repair required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO, to make those findings. For a repair method to be approved, the repair must meet the certification basis of the airplane, and the approval must specifically refer to this AD.
(1) For more information about this AD, contact Berhane Alazar, Aerospace Engineer, Airframe Branch, ANM–120S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue SW., Renton, WA 98057–3356; phone: 425–917–6577; fax: 425–917–6590; email:
(2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H–65, Seattle, WA 98124–2207; telephone 206–544–5000, extension 1; fax 206–766–5680; Internet
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain The Boeing Company Model 747–400, –400D, and –400F series airplanes. This proposed AD was prompted by a report of water leakage into the main deck cargo wire integration unit (WIU). The water flowed from the drip shield through disbonded floor seams into the aft main equipment center (MEC) drip shield gutter, then onto the WIU. This proposed AD would require removing the cargo liner support; cleaning the aft MEC drip shield gutter; and doing a one-time general visual inspection for disbonded seams, and repair if necessary. This proposed AD would also require installing a fiberglass reinforcement overcoat to the top surface of the aft MEC drip shield gutters and installing the cargo liner support. We are proposing this AD to prevent water penetration into the MEC, which could result in the loss of flight critical systems.
We must receive comments on this proposed AD by May 28, 2013.
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 proposed AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H–65, Seattle, Washington 98124–2207; telephone 206–544–5000, extension 1; fax 206–766–5680; Internet
You may examine the AD docket on the Internet at
Francis Smith, Aerospace Engineer, Cabin Safety and Environmental Systems Branch, ANM–150S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue SW., Renton, Washington 98057–3356; telephone (425) 917–6596; fax (425) 917–6590; email
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
We received a report indicating that water leakage into the main deck cargo WIU was found. The water flowed from the drip shield through disbonded floor seams into the aft MEC drip shield gutter, then onto the WIU. Liquids can leak through the MEC drip shield due to disbonded aft MEC drip shield gutters, resulting in water intrusion into the WIU of the MEC. Disbonding can occur due to improper preparation of the drip shield/gutter material and aging of materials. This condition, if not corrected, could result in water penetration into the MEC, and loss of flight critical systems.
We reviewed Boeing Alert Service Bulletin 747–25A3613, dated June 22, 2012. For information on the procedures and compliance times, see this service information at
We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the actions specified in the service information described previously.
The phrase “related investigative actions” might be used in this proposed AD. “Related investigative actions” are follow-on actions that: (1) are related to the primary actions, and (2) further investigate the nature of any condition found. Related investigative actions in an AD could include, for example, inspections.
In addition, the phrase “corrective actions” might be used in this proposed AD. “Corrective actions” are actions that correct or address any condition found. Corrective actions in an AD could include, for example, repairs.
We estimate that this proposed AD affects 79 airplanes of U.S. registry.
We estimate the following costs to comply with this proposed AD:
We have received no definitive data that would enable us to provide a cost estimate for the on-condition actions specified in this proposed 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.
We are 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.
We 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) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by May 28, 2013.
None.
This AD applies to The Boeing Company Model 747–400, –400D, and –400F series airplanes, certificated in any category, as identified in Boeing Alert Service Bulletin 747–25A3613, dated June 22, 2012.
Joint Aircraft System Component (JASC)/Air Transport Association (ATA) of America Code 25: Equipment/Furnishings.
This AD was prompted by a report indicating that water leakage into the main deck cargo wire integration unit (WIU) was found. The water flowed from the drip shield through disbonded floor seams into the aft main equipment center (MEC) drip shield gutter, then onto the WIU. We are issuing this AD to prevent water penetration into the MEC, which could result in the loss of flight critical systems.
Comply with this AD within the compliance times specified, unless already done.
Within 24 months after the effective date of this AD: Do the actions specified in paragraphs (g)(1) and (g)(2) of this AD, in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 747–25A3613, dated June 22, 2012.
(1) Remove the cargo liner support, clean the aft MEC drip shield gutter, and do a general visual inspection for disbonded seams; repair before further flight if any seam disbonding is found.
(2) Install a fiberglass reinforcement overcoat to the top surface of the aft MEC drip shield gutters, and install a cargo liner support.
(1) The Manager, Seattle ACO, 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 ACO, send it to the attention of the person identified in the Related Information section 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.
(3) An AMOC that provides an acceptable level of safety may be used for any repair required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO to make those findings. For a repair method to be approved, the repair must meet the certification basis of the airplane and the approval must specifically refer to this AD.
(1) For more information about this AD, contact Francis Smith, Aerospace Engineer, Cabin Safety and Environmental Systems Branch, ANM–150S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue SW., Renton, Washington 98057–3356; telephone (425) 917–6596; fax (425) 917–6590; email
(2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H–65, Seattle, Washington 98124–2207; telephone 206–544–5000, extension 1; fax 206–766–5680; Internet
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain Bombardier, Inc. Model DHC–8–102, –103, –106, –201, –202, –301, –311, and –315 airplanes. This proposed AD was prompted by reports of dual alternating current (AC) generator failure during flight. The failure was attributed to wire chafing along the wing lower flap shroud. This proposed AD would require revising the maintenance program to incorporate certain tasks for the electrical wiring interconnection system inspection program. We are proposing this AD to prevent failure of both AC generators due to wire chafing, which could result in loss of power to the anti-icing heaters for the elevator horn, engine inlet, and propeller, and consequent ice accumulation in these areas, which could adversely affect the controllability of the airplane.
We must receive comments on this proposed AD by May 28, 2013.
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 proposed AD, contact Bombardier, Inc., 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
Assata Dessaline, Aerospace Engineer, Avionics and Services Branch, ANE–172, FAA, New York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite 410, Westbury, New York 11590; telephone (516) 228–7301; fax (516) 794–5531.
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF–2012–25, dated August 28, 2012 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:
There have been several reported occurrences of dual [alternating current] AC Generator failure during flight, resulting in the loss of the variable frequency AC System.
Investigations revealed wire chafing along the wing lower flap shroud due to sagging wiring harnesses resting on the support structure, missing teflon tape at the fairlead locations, and missing grommets. Chafed wires may lead to arcing, local overheating, and AC generator failure. The AC generators provide power to the anti-icing heaters, including elevator horn heater, engine inlet heater and propeller heater. Failure of both AC generators would result in the loss of these systems and poses a safety concern.
This [Canadian] AD mandates the inspection and rectification of the wiring harness installations along the centre wing lower flap shroud.
Bombardier, Inc. has issued the following service information:
• de Havilland Dash 8 Series 100 Maintenance Task Card 531X1, Revision 25, in Section 8, Electrical Wiring Interconnection System Inspection Program, of Part 1, Maintenance Review Board Report, of the Bombardier DHC–8 Maintenance Program Manual PSM 1–8–7, dated February 20, 2012.
• de Havilland Dash 8 Series 100 Maintenance Task Card 631X1, Revision 25, in Section 8, Electrical Wiring Interconnection System Inspection Program, of Part 1, Maintenance Review Board Report, of the Bombardier DHC–8 Maintenance Program Manual PSM 1–8–7, dated February 20, 2012.
• de Havilland Dash 8 Series 200 Maintenance Task Card 531X1, Revision 16, in Section 8, Electrical Wiring Interconnection System Inspection Program, of Part 1, Maintenance Review Board Report, of the Bombardier DHC–8 Maintenance Program Manual PSM 1–82–7, dated February 20, 2012.
• de Havilland Dash 8 Series 200 Maintenance Task Card 631X1, Revision 16, in Section 8, Electrical Wiring Interconnection System Inspection Program, of Part 1, Maintenance Review Board Report, of the Bombardier DHC–8 Maintenance Program Manual PSM 1–82–7, dated February 20, 2012.
• de Havilland Dash 8 Series 300 Maintenance Task Card 531X1, Revision 25, in Section 8, Electrical Wiring Interconnection System Inspection Program, of Part 1, Maintenance Review Board Report, of the Bombardier DHC–8 Maintenance Program Manual PSM 1–83–7, dated February 20, 2012.
• de Havilland Dash 8 Series 300 Maintenance Task Card 631X1, Revision 25, in Section 8, Electrical Wiring Interconnection System Inspection Program, of Part 1, Maintenance Review Board Report, of the Bombardier DHC–8 Maintenance Program Manual, PSM 1–83–7, dated February 20, 2012.
The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.
This proposed AD requires revisions to certain operator maintenance documents to include new inspections. Compliance with these inspections is required by section 91.403(c) of the Federal Aviation Regulations (14 CFR 91.403(c)). For airplances that have been previously modified, altered, or repaired in the areas addressed by these inspections, an operator might not be able to accomplish the inspections described in the revisions. In this situation to comply with 14 CFR 91.403(c), the operator must request approval of an alternative method of compliance (AMOC) in accordance with the provisions of paragraph (j)(1) of this proposed AD. The request should include a description of changes to the required inspections that will ensure the continued damage tolerance of the affected structure.
Based on the service information, we estimate that this proposed AD would affect about 89 products of U.S. registry.
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.
We are 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.
We 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) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) 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.
We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.
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.
We must receive comments by May 28, 2013.
None.
This AD applies to Bombardier, Inc. Model DHC–8–102, –103, –106, –201, –202, –301, –311, and –315 airplanes, certificated in any category, serial numbers 003 and subsequent.
Joint Aircraft System Component (JASC)/Air Transport Association (ATA) of America Code 24, Electrical power.
This AD was prompted by reports of dual alternating current (AC) generator failure during flight. The failure was attributed to wire chafing along the wing lower flap shroud. We are issuing this AD to prevent failure of both AC generators due to wire chafing, which could result in loss of power to the anti-icing heaters for the elevator horn, engine inlet, and propeller, and consequent ice accumulation in these areas, which could adversely affect the controllability of the airplane.
You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done.
Within 30 days after the effective date of this AD: Revise the airplane maintenance program by incorporating de Havilland Dash 8 Maintenance Task Cards 531X1 and 631X1, General visual inspection of the wiring and associated electrical wiring interconnection system (EWIS), in Section 8, Electrical Wiring Inspection Program, of Part 1, Maintenance Review Board Report into the applicable maintenance program manual specified in paragraphs (g)(1), (g)(2), and (g)(3) of this AD.
(1) For Model DHC–8–100 series airplanes: Bombardier DHC–8 Maintenance Program Manual PSM 1–8–7, Revision 25, dated February 20, 2012.
(2) For Model DHC–8–200 series airplanes: Bombardier DHC–8 Maintenance Program Manual PSM 1–82–7, Revision 16, dated February 20, 2012.
(3) For Model DHC–8–300 series airplanes: Bombardier DHC–8 Maintenance Program Manual PSM 1–83–7, Revision 25, dated February 20, 2012.
The initial compliance time for the tasks specified in the maintenance task cards specified in paragraph (g) of this AD is at the applicable time specified in paragraph (h)(1) or (h)(2) of this AD.
(1) For airplanes with 45,000 total flight hours or more as of the effective date of this AD: Within 1,000 flight hours after the effective date of this AD.
(2) For airplanes with less than 45,000 total flight hours as of the effective date of this AD: Within 6,000 flight hours after the effective date of this AD, but not to exceed 46,000 total flight hours.
After accomplishing the revisions required by paragraph (g) of this AD, no alternative actions (e.g., inspections) or intervals may be used, unless the actions and intervals are approved as an alternative method of compliance (AMOC) in accordance with the procedures specified in paragraph (j)(1) of this AD.
The following provisions also apply to this AD:
(1)
(2)
(1) Refer to MCAI Canadian Airworthiness Directive CF–2012–25, dated August 28, 2012, and the service information specified in paragraphs (k)(1)(i) through (k)(1)(vi) of this AD, for related information.
(i) de Havilland Dash 8 Series 100 Maintenance Task Card 531X1, in Section 8, Electrical Wiring Interconnection System Inspection Program, of Part 1, Maintenance Review Board Report, of the Bombardier DHC–8 Maintenance Program Manual PSM 1–8–7, Revision 25, dated February 20, 2012.
(ii) de Havilland Dash 8 Series 100 Maintenance Task Card 631X1, in Section 8, Electrical Wiring Interconnection System Inspection Program, of Part 1, Maintenance Review Board Report, of the Bombardier DHC–8 Maintenance Program Manual PSM 1–8–7, Revision 25, dated February 20, 2012.
(iii) de Havilland Dash 8 Series 200 Maintenance Task Card 531X1, in Section 8, Electrical Wiring Interconnection System Inspection Program, of Part 1, Maintenance Review Board Report, of the Bombardier DHC–8 Maintenance Program Manual PSM 1–82–7, Revision 16, dated February 20, 2012.
(iv) de Havilland Dash 8 Series 200 Maintenance Task Card 631X1, in Section 8, Electrical Wiring Interconnection System Inspection Program, of Part 1, Maintenance Review Board Report, of the Bombardier DHC–8 Maintenance Program Manual PSM 1–82–7, Revision 16, dated February 20, 2012.
(v) de Havilland Dash 8 Series 300 Maintenance Task Card 531X1, in Section 8, Electrical Wiring Interconnection System Inspection Program, of Part 1, Maintenance Review Board Report, of the Bombardier DHC–8 Maintenance Program Manual PSM 1 83–7, Revision 25, dated February 20, 2012.
(vi) de Havilland Dash 8 Series 300 Maintenance Task Card 631X1, in Section 8, Electrical Wiring Interconnection System Inspection Program, of Part 1, Maintenance Review Board Report, of the Bombardier DHC–8 Maintenance Program Manual, PSM 1–83–7, Revision 25, dated February 20, 2012.
(2) For service information identified in this AD, contact Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416–375–4000; fax 416–375–4539; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain The Boeing Company Model 757–200, 757–200CB, and 757–200PF airplanes. This proposed AD was prompted by a report that a forward-most cam latch of the forward center cam latch pair on a main cargo door (MCD) broke during flight. This proposed AD would require performing repetitive inspections of the MCD cam latches; replacing cam latches, certain bolts, and door hinge fittings; performing related investigative and corrective actions, if necessary; and MCD rigging. We are proposing this AD to detect and correct cracked or damaged cam latches, latch pins, and latch pin cross bolts, which could reduce the structural integrity of the MCD, and result in potential rapid decompression of the airplane and potential loss of the cargo door from the airplane.
We must receive comments on this proposed AD by May 28, 2013.
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 proposed AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H–65, Seattle, Washington 98124–2207; telephone 206–544–5000, extension 1; fax 206–766–5680; Internet
You may examine the AD docket on the Internet at
Kimberly DeVoe, Aerospace Engineer, Cabin Safety and Environmental Systems Branch, ANM–150S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue SW., Renton, WA 98057–3356; phone: (425) 917–6495; fax: (425) 917–6590; email:
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
We received a report that the forward-most cam latch on the forward center cam latch pair on a main cargo door (MCD) broke during flight on a Model 757 airplane. Cracked or damaged cam latches, latch pins, and latch pin cross bolts, if not corrected, could reduce the structural integrity of the MCD, and result in potential rapid decompression of the airplane and potential loss of the
We reviewed Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010. For information on the procedures and compliance times, see this service information at
We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of these same type designs.
This proposed AD would require accomplishing the actions specified in the service information identified previously under “Relevant Service Information,” except as discussed under “Differences Between the Proposed AD and the Service Information.”
The phrase “related investigative actions” might be used in this proposed AD. “Related investigative actions” are follow-on actions that (1) are related to the primary actions, and (2) are actions that further investigate the nature of any condition found. Related investigative actions in an AD could include, for example, inspections.
In addition, the phrase “corrective actions” might be used in this proposed AD. “Corrective actions” are actions that correct or address any condition found. Corrective actions in an AD could include, for example, repairs.
The Accomplishment Instructions of Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010, specify to contact the manufacturer for disposition of certain repair conditions, this proposed AD would require operators to repair those conditions using a method approved by the FAA.
We estimate that this proposed AD affects 9 airplanes of U.S. registry.
We estimate the following costs to comply with this proposed 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.
We are 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.
We 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) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by May 28, 2013.
None.
This AD applies to The Boeing Company Model 757–200, 757–200CB, and 757–200PF airplanes; certified in any category; as identified in Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010.
Joint Aircraft System Component (JASC)/Air Transport Association (ATA) of America Code 52, Doors.
This AD was prompted by a report that a forward most cam latch on the forward center cam latch pair on a main cargo door (MCD) broke during flight. We are issuing to detect and correct cracked or damaged cam latches, latch pins, and latch pin cross bolts, which could reduce the structural integrity of the MCD, and result in potential rapid decompression of the airplane and potential loss of the cargo door from the airplane.
Comply with this AD within the compliance times specified, unless already done.
At the applicable times specified in table 1 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010, except as specified in
Repeat the applicable inspections specified in paragraph (g) of this AD, as specified in paragraphs (h)(1), (h)(2), and (h)(3) of this AD, at the applicable times specified in table 1 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010. The inspection conditions are defined in Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010.
(1) For airplanes found with Inspection Condition 5: Repeat the general visual inspection for broken, cracked, missing, or migrated parts of the cam latches and latch pins.
(2) For airplanes found with Inspection Condition 2, 4.2, or 5: Repeat the detailed inspection for damage, distress, and incorrect rigging of the cam latches and latch pins.
(3) For airplanes found with Inspection Condition 5: Repeat the high frequency eddy current or magnetic particle inspection to detect signs of cracking of cam latches 1 and 2.
At the applicable times specified in table 2 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010: Do a general visual inspection of the cam latches and latch pins for discrepancies; a detailed inspection of the cam latches and latch pins for discrepancies; and an HFEC or magnetic particle inspection of cam latch 1 and cam latch 2 for cracking; and do all applicable related investigative and corrective actions, except as required by paragraph (l)(2) of this AD; in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010. Do all applicable related investigative and corrective actions at the applicable time specified in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010.
(1) For all airplanes: Repeat the inspections specified in paragraph (i) of this AD, at the applicable times specified in table 2 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010.
(2) For airplanes found with Inspection Condition 2 as defined in Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010: Repeat the detailed inspection for damage, distress, and incorrect rigging of the cam latches and latch pins specified in paragraph (i) of this AD on remaining cam latches and cam pins at the applicable times specified in table 2 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010.
As of the effective date of this AD, no person may install an alloy steel bolt as a cross bolt through any latch pin fitting assembly in the lower sill of the MCD on any airplane.
The following exceptions apply in this AD.
(1) Where Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010, specifies a compliance time after the date of that service bulletin, this AD requires compliance within the specified compliance time after the effective date of this AD.
(2) Where Boeing Alert Service Bulletin 757–52A0091, dated March 9, 2010, specifies to contact Boeing for appropriate action: Before further flight, repair the discrepancy in accordance with a method approved by the Manager, Seattle, Aircraft Certification Office (ACO), FAA. For a repair method to be approved, the repair must meet the certification basis of the airplane, and the approval must specifically refer to this AD.
(1) The Manager, Seattle Aircraft Certification Office (ACO), 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 ACO, send it to the attention of the person identified in the Related Information section 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.
(3) An AMOC that provides an acceptable level of safety may be used for any repair required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO to make those findings. For a repair method to be approved, the repair must meet the certification basis of the airplane and the approval must specifically refer to this AD.
(1) For more information about this AD, contact Kimberly DeVoe, Aerospace Engineer, Cabin Safety and Environmental Systems Branch, ANM–150S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue SW., Renton, WA 98057–3356; phone: (425) 917–6495 ; fax: (425) 917–6590; email:
(2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H–65, Seattle, Washington 98124–2207; telephone 206–544–5000, extension 1; fax 206–766–5680; Internet
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for all General Electric Company (GE) model GEnx-2B67 and GEnx-2B67B turbofan engines with booster anti-ice (BAI) air duct, part number (P/N) 2469M32G01, and support bracket, P/N 2469M46G01, installed. This proposed AD was prompted by reports of cracks in the BAI air duct. This proposed AD would require initial and repetitive visual inspections of the BAI air duct, removal from service of the BAI air duct if it fails inspection and, as a mandatory terminating action, the installation of new BAI air duct support brackets. We are proposing this AD to prevent failure of the BAI air duct, resulting in an in-flight shutdown of one or more engines, loss of thrust control, and damage to the aircraft.
We must receive comments on this proposed AD by June 10, 2013.
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 proposed AD, contact General Electric, One Neumann Way, MD Y–75, Cincinnati, OH; phone: 513–552–2913; email:
You may examine the AD docket on the Internet at
Jason Yang, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 12 New England Executive Park, Burlington, MA 01803; phone: 781–238–7747; fax: 781–238–7199; email:
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
We propose to adopt a new AD for all GE model GEnx-2B67 and GEnx-2B67B turbofan engines with BAI air duct, P/N 2469M32G01, and support bracket, P/N 2469M46G01, installed. This proposed AD was prompted by 11 reports of cracks in the BAI air duct, P/N 2469M32G01, caused by resonant vibration of the BAI valve system. Engineering analysis determined that the single support bracket is not sufficient to prevent the vibration and cracking in the BAI air duct, and that additional support brackets are needed. This proposed AD would require initial visual inspection of the BAI air duct before it reaches 400 cycles since new (CSN), and repetitive visual inspections every 100 cycles thereafter. If the BAI air duct fails inspection, the proposed AD would require removal of the BAI air duct from service. As a mandatory terminating action, the proposed AD would also require installation of new BAI air duct support brackets at the next removal of the BAI air duct, and replacement of the BAI air duct with a duct eligible for installation. This condition, if not corrected, could result in failure of the BAI air duct, resulting in an in-flight shutdown of one or more engines, loss of thrust control, and damage to the aircraft.
We reviewed GE Service Bulletin (SB) No. GEnx-2B S/B 75–0006, dated July 23, 2012, and GE SB No. GEnx-2B S/B 75–0008, Revision 1, dated February 4, 2013. GE SB No. GEnx-2B S/B 75–0006 describes procedures for inspecting and, if necessary, removing and replacing the BAI air duct. GE SB No. GEnx-2B S/B 75–0008, Revision 1, describes procedures for installing new BAI air duct support brackets, and inspection and possible replacement of BAI air ducts.
We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require initial and repetitive visual inspections of the BAI air duct, replacement of the BAI air duct if it fails inspection and, as mandatory terminating action, installation of new BAI air duct support brackets.
We estimate that this proposed AD affects 16 engines installed on airplanes of U.S. registry. We also estimate that it would take about 4 hours per engine to comply with this proposed AD. The average labor rate is $85 per hour. Required parts would cost about $11,000 per engine. Based on these figures, we estimate the cost of the proposed AD to U.S. operators to be $181,440.
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.
We are 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.
We 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) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by June 10, 2013.
None.
This AD applies to all General Electric Company (GE) model GEnx-2B67 and GEnx-2B67B turbofan engines with booster anti-ice (BAI) air duct, part number (P/N) 2469M32G01, and support bracket, P/N 2469M46G01, installed.
This AD was prompted by reports of cracks in the BAI air duct, P/N 2469M32G01. We are issuing this AD to prevent failure of the BAI air duct, resulting in an in-flight shutdown of one or more engines, loss of thrust control, and damage to the aircraft.
Comply with this AD within the compliance times specified, unless already done.
(1) Perform an initial visual inspection of the BAI air duct, P/N 2469M32G01, for cracks prior to accumulating 400 cycles since new (CSN).
(2) Thereafter, repeat the visual inspection within every 100 cycles since last inspection.
(3) If cracks in the BAI air duct are found during any inspection required by this AD, remove the BAI air duct from service.
As mandatory terminating action to the repetitive inspection requirement of this AD, at the next removal of BAI air duct, P/N 2469M32G01, or if the BAI air duct is found cracked, after the effective date of this AD, do the following:
(1) Install new BAI air duct support brackets, P/Ns 2550M03G01, 2548M66G01, 2548M67P01, 2550M18G01, and 2550M17P01.
(2) Replace the BAI air duct with one that is eligible for installation.
For the purpose of this AD, a BAI air duct that is eligible for installation is one that has accumulated 25 CSN or fewer.
The Manager, Engine Certification Office, FAA, may approve AMOCs for this AD. Use the procedures found in 14 CFR 39.19 to make your request.
(1) For more information about this AD, contact Jason Yang, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 12 New England Executive Park, Burlington, MA 01803; phone: 781–238–7747; fax: 781–238–7199; email:
(2) Refer to GE Service Bulletin (SB) No. GEnx-2B S/B 75–0006, dated July 23, 2012, and GE SB No. GEnx-2B S/B 75–0008, Revision 1, dated February 4, 2013, for guidance on inspecting and, if necessary, removing and replacing the BAI air duct, as well as procedures for installation of new BAI air duct support brackets.
(3) For service information identified in this proposed AD, contact General Electric, One Neumann Way, MD Y–75, Cincinnati, OH; phone: 513–552–2913; email:
Environmental Protection Agency (EPA).
Proposed rule.
EPA is proposing to approve revisions to the Santa Barbara County Air Pollution Control District (SBCAPCD) and San Diego County Air Pollution Control District (SDCAPCD) portions of the California State Implementation Plan (SIP). These revisions concern volatile organic compound (VOC) emissions from surface coating of aerospace vehicles and components and from wood products coating operations. We are proposing to approve local rules to regulate these emission sources under the Clean Air Act as amended in 1990 (CAA or the Act).
Any comments on this proposal must arrive by May 13, 2013.
Submit comments, identified by docket number EPA–R09–OAR–2013–0103, by one of the following methods:
1.
2.
3.
Andy Steckel, EPA Region IX, (415) 947–4115,
This proposal addresses the following local rules: SBCAPCD Rule 337, Surface Coating of Aerospace Vehicles and Components and SDCAPCD Rule 67.11, Wood Products Coating Operations. In the Rules and Regulations section of this
We do not plan to open a second comment period, so anyone interested in commenting should do so at this time. If we do not receive adverse comments, no further activity is planned. For further information, please see the direct final action.
Environmental Protection Agency (EPA).
Proposed rule.
EPA is proposing to approve revisions to the Santa Barbara County Air Pollution Control District (SBCAPCD) and South Coast Air Quality Management District (SCAQMD) portions of the California State Implementation Plan (SIP). These revisions concern volatile organic compound (VOC) and oxides of nitrogen (NO
Any comments on this proposal must arrive by May 13, 2013.
Submit comments, identified by docket number EPA–R09–OAR–2012–0828, by one of the following methods:
1.
2.
3.
Nicole Law, EPA Region IX, (415) 947–4126,
This proposal addresses the following local rules: SBCAPCD Rule 352 Natural Gas-Fire Fan-Type Central Furnaces and Small Water Heaters and SCAQMD Rule 461 Gasoline Transfer and Dispensing. In the Rules and Regulations section of this
We do not plan to open a second comment period, so anyone interested in commenting should do so at this time. If we do not receive adverse comments, no further activity is planned. For further information, please see the direct final action.
Environmental Protection Agency (EPA).
Proposed rule.
EPA is proposing to approve revisions to the Antelope Valley Air Quality Management District (AVAQMD), Monterey Bay Unified Air Pollution Control District (MBUAPCD) and Santa Barbara County Air Pollution Control District (SCAPCD) portions of the California State Implementation Plan (SIP). We are proposing to approve revisions local rules that address
Any comments on this proposal must arrive by May 13, 2013.
Submit comments, identified by docket number EPA–R09–OAR–2012–0886, by one of the following methods:
1.
2.
3.
Cynthia Allen, EPA Region IX, (415) 947–4120,
This proposal addresses the following local rules: AVAQMD Rule 107; MBUAPCD Rules 900, 901, 902, 903, and 904; and SBCAPCD Rule 102. In the Rules and Regulations section of this
We do not plan to open a second comment period, so anyone interested in commenting should do so at this time. If we do not receive adverse comments, no further activity is planned. For further information, please see the direct final action.
Environmental Protection Agency (EPA).
Proposed rule.
EPA is proposing to approve revisions to the Butte County Air Quality Management District (BCAQMD) and Sacramento Metropolitan Air Quality Management District (SMAQMD) portions of the California State Implementation Plan (SIP). These revisions concern volatile organic compound (VOC), oxides of nitrogen (NO
Any comments on this proposal must arrive by May 13, 2013.
Submit comments, identified by docket number [EPA–R09–OAR–2012–0914], by one of the following methods:
1.
2.
3.
Rynda Kay, EPA Region IX, (415) 947–4118,
This proposal addresses the following local rules: BCAQMD 207 Wood Burning Devices and SMAQMD 417 Wood Burning Appliances. In the Rules and
We do not plan to open a second comment period, so anyone interested in commenting should do so at this time. If we do not receive adverse comments, no further activity is planned. For further information, please see the direct final action.
Environmental Protection Agency (EPA).
Proposed rule.
EPA is proposing to approve the Limited Maintenance Plan (LMP) submitted by the State of Oregon on January 13, 2012, for the Eugene-Springfield nonattainment area (Eugene-Springfield NAA) and the State's request to redesignate the area to attainment for the National Ambient Air Quality Standards (NAAQS) for particulate matter with an aerodynamic diameter less than or equal to a nominal 10 micrometers (PM
Comments must be received on or before May 13, 2013.
Submit your comments, identified by Docket ID No. EPA–R10–OAR–2012–0193, by any of the following methods:
•
•
•
•
Kristin Hall at telephone number: (206) 553–6357, email address:
For further information, please see the direct final action, of the same title, which is located in the Rules section of this
If EPA receives adverse comments, EPA will withdraw the direct final rule and it will not take effect. EPA will then address all public comments in a subsequent final rule based on this proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting on this action should do so at this time. Please note that if we receive adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; request for comments; notice of public hearings.
NMFS proposes 2013 quota specifications for the Atlantic bluefin tuna (BFT) fishery, and seeks comments from the public on the allocation of available underharvest among the fishery categories under certain circumstances. This action is necessary to implement binding recommendations of the International Commission for the Conservation of Atlantic Tunas (ICCAT), as required by the Atlantic Tunas Convention Act (ATCA), and to achieve domestic management objectives under the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).
Written comments must be received on or before May 13, 2013. Public hearings will be held on April 29, 2013, from 2 to 4 p.m., and on May 3, 2013, from 1 to 3 p.m. See
You may submit comments on this document, identified by “NOAA–NMFS–2013–0042,” by any of the following methods:
•
•
•
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The public hearing locations are:
1. Gloucester, MA—NMFS, 55 Great Republic Drive, Gloucester, MA 01930.
2. Silver Spring, MD—NMFS Science Center, 1301 East-West Highway, Silver Spring, MD 20910.
Supporting documents, including the Supplemental Environmental Assessment, as well as others, such as the Fishery Management Plans described below may be downloaded from the HMS Web site at
Sarah McLaughlin or Brad McHale, 978–281–9260.
Atlantic bluefin tuna, bigeye tuna, albacore tuna, yellowfin tuna, and skipjack tuna (hereafter referred to as “Atlantic tunas”) are managed under the dual authority of the Magnuson-Stevens Act and ATCA. As an active member of ICCAT, the United States implements binding ICCAT recommendations to comply with this international treaty. ATCA authorizes the Secretary of Commerce (Secretary) to promulgate regulations, as may be necessary and appropriate to carry out ICCAT recommendations. The authority to issue regulations under the Magnuson-Stevens Act and ATCA has been delegated from the Secretary to the Assistant Administrator for Fisheries, NMFS.
On May 28, 1999, NMFS published in the
On October 2, 2006, NMFS published a final rule in the
The baseline quota has remained unchanged from 2012, and the 2013 BFT quota specifications are necessary to adjust the annual U.S. baseline BFT quota to account for any underharvest or overharvest of the adjusted 2012 U.S. BFT quota. Preliminary information indicates an underharvest of the 2012 adjusted BFT quota. Final 2012 landings and dead discard information will be available in late spring 2013.
In May 2011, NMFS prepared an Environmental Assessment (EA)/Regulatory Impact Review and Final Regulatory Flexibility Analysis for a final rule that: (1) implemented and allocated the U.S. BFT quota for 2011 and for 2012, (2) adjusted the 2011 U.S. quota and subquotas to account for unharvested 2010 quota allowed to be carried forward to 2011, and to account for a portion of the estimated 2011 dead discards up front, and implemented several other BFT management measures (76 FR 39019, July 5, 2011). Although it is not necessary to prepare an EA for quota specifications alone (in accordance with the approach described in the Consolidated HMS FMP), NMFS has prepared a Supplemental EA to present updated information regarding the affected environment, including information from a 2012 ICCAT stock assessment for BFT, among other things. The results of the 2012 stock assessment update were not substantively different than those of an assessment that ICCAT conducted in 2010.
At its 2010 annual meeting, ICCAT recommended a TAC of 1,750 mt
Through the final rule implementing the BFT quotas and Atlantic tuna fisheries management measures (76 FR 39019, July 5, 2011), NMFS implemented the 923.7–mt baseline quota consistent with ICCAT Recommendation 10–03 and set the domestic BFT fishing category subquotas per the allocation percentages established in the Consolidated HMS FMP and implementing regulations (71 FR 58058, October 2, 2006). The baseline quota and category subquotas are codified and remain effective until changed (for instance, if any new ICCAT BFT TAC recommendation is adopted).
At its 2012 annual meeting, ICCAT recommended a one-year rollover of the 1,750–mt TAC as part of ICCAT Recommendation 12–02—Supplemental Recommendation by ICCAT concerning the Western Atlantic BFT Rebuilding Program. This amount is expected to allow for continued stock growth under the both the low and high stock recruitment scenarios, considering the 2012 ICCAT BFT stock assessment results. The annual U.S. baseline quota for 2013 continues to be 923.7 mt, and the annual total U.S. quota, including 25 mt to account for bycatch related to pelagic longline fisheries in the NED, continues to be 948.7 mt.
Although the baseline quota is unchanged this year because the 2012 ICCAT recommendation included the same TAC as the prior recommendation, NMFS is proposing underharvest or overharvest adjustments as necessary for the 2013 fishing year through quota specifications, consistent with the Consolidated HMS FMP. Until the final specifications for 2013 are effective, the existing BFT base quotas continue to apply as codified. See Table 1, second column. As mentioned above, ICCAT limits the amount of underharvest that may be carried forward from one year to the next to no more than 10 percent of a country's quota. Applied to the 2012 catch figures, this provision limits the amount of U.S. underharvest that may be carried forward this year to 94.9 mt (10 percent of the 948.7–mt total U.S. quota).
The United States must report BFT landings data and BFT dead discard estimates to ICCAT annually. Currently, the best available annual estimate of dead discards is the 2011 estimate of 145.2 mt. Using the 2011 estimate as a proxy for estimated 2013 dead discards for the proposed action is appropriate because it is the best available and most complete information that NMFS currently has regarding dead discards and follows the established protocol in the regulations. When the 2012 BFT dead discard estimate becomes available (late spring 2013), it will be used to prepare the final specifications and will be reported to ICCAT along with total 2012 BFT landings. Only pelagic longline dead discard estimates are available at this time. Estimates from other gear types and fishing sectors that are not observed at sufficient levels for estimation and that do not report via a logbook are not included in this calculation. However, bycatch and bycatch mortality of BFT by vessels using handgear and purse seine gear is considered to be relatively low.
The 2013 BFT quota specifications NMFS proposes here are necessary to adjust the current annual U.S. baseline BFT quota to account for underharvest or overharvest of the adjusted 2012 U.S. BFT quota. Based on preliminary data available as of February 26, 2013, BFT landings in 2012 totaled 713.2 mt. Adding the 145.2–mt estimate of dead discards results in a preliminary 2012 total catch of 858.4 mt, which is 185.2 mt less than the amount of quota (inclusive of dead discards) allowed under ICCAT Recommendation 10–03, which applied in 2012 (i.e., 948.7 mt plus 94.9 mt of 2011 underharvest carried forward to 2012, totaling 1,043.6 mt). ICCAT limits the amount of underharvest that may be carried forward from one year to the next to no more than 10 percent of a country's quota, which limits the amount of 2012 U.S. underharvest that may be carried forward to 2013 to 94.9 mt.
NMFS proposes to account up front (i.e., at the beginning of the fishing year) for half of the expected dead discards for 2013, using the best available estimate of dead discards, and deducting that portion directly from the Longline category subquota. This is the same approach that NMFS took for the 2011 and 2012 BFT quota specifications. Accounting for dead discards in the Longline category in this way may provide further incentive for pelagic longline fishermen to reduce those interactions that may result in dead discards. NMFS would apply half of the amount of underharvest that is allowed to be carried forward to 2013 to the Longline category, and maintain the other half in the Reserve category. Maintaining this portion of the underharvest in the Reserve category until later in the fishing year would provide maximum flexibility in accounting for 2013 landings and dead discards. Consistent with determination criteria at 50 CFR § 635.27(a)(8), NMFS may allocate any portion of the Reserve category quota for inseason or annual adjustments to any other quota category.
Specifically, NMFS would deduct half of the dead discard estimate of 145.2 mt (i.e., 72.6 mt) from the 2013 baseline Longline category subquota of 74.8 mt and apply half of the 94.9 mt allowed to be carried forward to 2013 to the Longline category (i.e., 74.8 − 72.6 + 47.5 = 49.7 mt adjusted Longline subquota, not including the 25–mt allocation set aside by ICCAT for the NED). NMFS would add the remainder of the 2012 underharvest that can be carried forward to 2013 (47.4 mt) to the Reserve category's baseline allocation of 23.1 mt, for an adjusted Reserve category quota of 70.5 mt. The adjusted Longline category subquota (49.7 mt) would be further subdivided in accordance with the Consolidated HMS FMP (i.e., allocation of no more than 60 percent to the south of 31° N. latitude) as follows: 19.9 mt to pelagic longline vessels landing BFT north of 31° N. latitude, and 29.8 mt to pelagic longline vessels landing BFT south of 31° N. latitude. NMFS would account for landings under the 25–mt NED allocation separately from other Longline category landings.
For the directed fishing categories (i.e., the Angling, General, Harpoon, Purse Seine categories) as well as the Trap category, in which BFT may be caught incidentally, NMFS is not proposing adjustments to the baseline BFT subquotas (i.e., the allocations that result from applying the scheme established in the Consolidated HMS FMP to the baseline U.S. BFT quota).
Thus, in accordance with the ICCAT Recommendation 12–02, the Consolidated HMS FMP allocation scheme for the domestic categories, and regulations regarding annual adjustments at § 635.27(a)(10), NMFS proposes quota specifications for the 2013 fishing year as follows: General category—435.1 mt; Harpoon category—36 mt; Purse Seine category—171.8 mt; Angling category—182 mt; Longline category—49.7 mt; and Trap category—0.9 mt. The amount allocated to the Reserve category for inseason adjustments, scientific research collection, potential overharvest in any category except the Purse Seine category, and potential quota transfers would be 70.5 mt. These allocations are shown in Table 1.
NMFS will make any necessary adjustments to the 2013 specifications in the final rule after considering updated 2012 landings information and the final dead discard estimate for 2012. It is important to note that NMFS and ICCAT have separate schedules and approaches for accounting for landings and dead discards. At the beginning of the year, NMFS accounts proactively for half of the best estimate of dead discards, whereas total 2013 U.S. landings and dead discards will be accounted for at the end of the year and reported to ICCAT in 2014. ICCAT usually assesses quota compliance at its annual meeting in November by comparing the prior year's landings and reported dead discards against the adjusted U.S. quota. At the 2013 ICCAT annual meeting, ICCAT will compare actual U.S. 2012 landings and dead discards against the total 2012 adjusted U.S. quota of 1,043.6 mt (i.e., the 948.7–mt base quota for 2012, plus the 94.9 mt allowed to be carried forward from 2011 to 2012), to determine the United States' compliance with 2012 ICCAT recommendations.
If the final 2012 landings and dead discards information result in a total of greater than 948.7 mt, but less than 1,043.6 mt, then the amount of 2012 underharvest that the United States may carry forward to 2013 would need to be reduced from 94.9 mt accordingly. NMFS invites public comment on possible allocation approaches should the carry forward amount be reduced. One option might be to provide half of the carry forward amount to the Longline category and the other half to the Reserve category. For example, if the 2012 landings and the final dead discard estimate total 963.6 mt, 80 mt would be available to carry forward and NMFS could provide 40 mt to each of these two categories). Another option might be to provide the entire amount to the Longline or Reserve category, particularly if the amount is small (e.g., 20 mt) or to allocate the amount other ways after considering domestic management needs for 2013. As described below, NMFS took this approach in the 2012 final BFT specifications (77 FR 44161, July 27, 2012). In any event, the baseline subquotas for the directed fishing categories and Trap category would not be changed.
In exploring options, one consideration is the possibility that deducting of half of the final estimate of dead discards from the baseline Longline category subquota would result in little to no quota for that category for 2013 prior to application of any available underharvest. Another consideration is the possibility that NMFS may, in the final specifications, need to close the Longline category fishery to BFT retention based on codified quotas. This was the case in 2012. NMFS closed the Longline category fishery to BFT retention in the southern area on May 29, 2012 (77 FR 31546), and in the northern area on June 30, 2012 (77 FR 38011), for the remainder of the year, because landings had met the codified subquotas for those areas. Given that the incidental Longline fishery for BFT was closed, NMFS accounted fully for those landings in the final rule by applying 76.2 of the available 94.9-mt underharvest to the Longline category and maintaining the remaining underharvest (18.7 mt) in the Reserve category. Providing this amount to the Longline category allowed NMFS to adjust the Longline South and Longline North subquotas to the amounts actually taken in those areas at the time of the closure, and to provide greater transparency than year-end accounting would.
If the complete 2012 landings information and final dead discard estimate exceed the adjusted 2012 U.S. BFT quota of 1,043.6 mt, NMFS may need to take further action, consistent with the BFT quota adjustment regulations and with ICCAT Recommendation 10–03. Also, the United States may be subject to adjustment of the U.S. BFT quota, consistent with ICCAT recommendations. Given the amount of dead discards the United States has reported to ICCAT in the last few years (ranging from 122 to 204 mt), NMFS considers this potential situation to be unlikely, as the dead discard estimate would need to be approximately 330 mt. To address the possibility of overharvest of the adjusted U.S. quota, NMFS requests public comment on potential regulatory options to consider for the final 2013 quota and subquotas. For example, the Longline and/or the Reserve category quotas could be reduced as necessary, or the overall 2013 BFT quota could be reduced, which would affect all category subquotas.
NMFS considers the proposed specifications approach as a transition from the method used for 2007 through 2010, as NMFS continues to develop draft Amendment 7 to the 2006 Consolidated HMS FMP. From 2007 through 2010, there were substantial underharvests of some of the commercial BFT subquotas. Consistent with the Consolidated HMS FMP and its implementing regulations, NMFS provided the Longline category a substantial portion of prior year U.S. underharvest that was allowed to be carried forward (limited to 50 percent of the total U.S. quota at that time) during the annual specification process at the beginning of the fishing year. This provided quota sufficient for the pelagic longline fleet to operate for the entire fishing year while also accounting for dead discards “up front,” using the best available estimate of anticipated dead discards. NMFS was also able to increase the directed categories' quotas and the Reserve category quota using available underharvest.
Draft Amendment 7 to the 2006 Consolidated HMS FMP will explore related BFT fishery management issues consistent with the need to end overfishing and rebuild the stock. NMFS anticipates that measures in draft Amendment 7 would address several of the long-standing challenges facing the fishery and will examine, among other things, revisiting quota allocations; reducing and accounting for dead discards; adding or modifying time/area closures or gear-restricted areas; and improving the reporting and monitoring of dead discards and landings in all categories. NMFS anticipates that draft Amendment 7 will publish in mid-2013.
In the meantime, management of the BFT fishery continues under the current Consolidated HMS FMP, implementing regulations, and ICCAT Recommendations. In contemplating how to account for dead discards within the BFT quota and allocate the underharvest that is allowed to be carried forward, NMFS believes that the operational issues facing the pelagic longline fishery as the fleet continues directed fishing operations for swordfish and other tunas should be considered. NMFS anticipates that dead discards in the pelagic longline fishery may be reduced due to continued
NMFS solicits comments on this proposed rule through May 13, 2013. See instructions in
1. April 29, 2013, 2 to 4 p.m., Gloucester, MA—NMFS, 55 Great Republic Drive, Gloucester, MA 01930
2. May 3, 2013, 1 to 3 p.m., Silver Spring, MD—NMFS Science Center, 1301 East-West Highway, Silver Spring, MD 20910
The public hearing locations will be physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Sarah McLaughlin at (978) 281–9279, at least 7 days prior to the meeting. The public is reminded that NMFS expects participants at the public hearings to conduct themselves appropriately. At the beginning of each public hearing, a representative of NMFS will explain the ground rules (e.g., alcohol is prohibited from the hearing room; attendees will be called to give their comments in the order in which they registered to speak; each attendee will have an equal amount of time to speak; and attendees should not interrupt one another). The NMFS representative will attempt to structure the meeting so that all attending members of the public will be able to comment, if they so choose, regardless of the controversial nature of the subject(s). Attendees are expected to respect the ground rules, and, if they do not, they will be asked to leave the hearing.
The NMFS Assistant Administrator has determined that the proposed rule is consistent with the Consolidated HMS FMP, the Magnuson-Stevens Act, ATCA, and other applicable law, subject to further consideration after public comment.
This proposed rule is exempt from the procedures of E.O. 12866 because this action contains no implementing regulations.
Pursuant to the Regulatory Flexibility Act (RFA), 5 U.S.C. 601
These annual BFT quota specifications (effective January 1 through December 31, 2013) are necessary to implement ICCAT recommendations, as required by ATCA, and to achieve domestic management objectives under the Magnuson-Stevens Act. Under ATCA, the United States must promulgate regulations as necessary and appropriate to implement binding recommendations of ICCAT.
The proposed rule would adjust the annual U.S. baseline BFT quota to account for any underharvest or overharvest of the adjusted 2012 U.S. BFT quota. Preliminary information indicates an underharvest of the 2012 adjusted BFT quota. This proposed action was developed in accordance with the framework process set forth in the Consolidated HMS FMP, and is supported by the Environmental Impact Statement/Regulatory Impact Review/Final Regulatory Flexibility Analysis prepared for the Consolidated HMS FMP, the Environmental Assessment/Regulatory Impact Review/Final Regulatory Flexibility Analysis prepared for the 2011 final rule implementing BFT quotas and Atlantic tuna fisheries management, and the Supplemental Environmental Assessment prepared for these 2013 quota specifications (see
On July 5, 2011, NMFS published a final rule (76 FR 39019) that modified the U.S. baseline quota to 923.7 mt to implement ICCAT Recommendation 10–03 (Supplemental Recommendation by ICCAT concerning the Western Atlantic Bluefin Tuna Rebuilding Program) and set the category subquotas per the allocation percentages established in the 2006 Consolidated Atlantic Highly Migratory Species Fishery Management Plan (Consolidated HMS FMP, 71 FR 58058, October 2, 2006). At its 2012 annual meeting, ICCAT recommended a one-year rollover of the annual Total Allowable Catch (TAC) of 1,750 mt that was set in 2010 for 2011 and 2012 (ICCAT Recommendation 12–02).
Although the baseline quota is unchanged this year because the 2012 ICCAT recommendation included the same TAC as the prior recommendation, NMFS will make underharvest and overharvest adjustments as necessary for the 2013 fishing year through quota specifications, consistent with the Consolidated HMS FMP. Preliminary information indicates an underharvest of the 2012 adjusted bluefin tuna quota. The proposed quota specifications were developed in accordance with the framework process set forth in the Consolidated HMS FMP, and is supported by the Environmental Impact Statement/Regulatory Impact Review/Final Regulatory Flexibility Analysis prepared for the Consolidated HMS FMP and the Supplemental Environmental Assessment prepared for this action.
As summarized in the 2012 Stock Assessment and Fishery Evaluation Report for Atlantic Highly Migratory Species, there were approximately 8,492 commercial Atlantic tunas or Atlantic HMS permits in 2012, as follows: 4,084 in the Atlantic Tunas General category; 13 in the Atlantic Tunas Harpoon category; 5 in the Atlantic Tunas Purse Seine category; 253 in the Atlantic Tunas Longline category; 8 in the Atlantic Tunas Trap category; and 4,129 in the HMS Charter/Headboat category. This constitutes the best available information regarding the universe of permits and permit holders recently analyzed.
Under the Small Business Administration's (SBA) regulations implementing the Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., a small fishing entity is one that has less than $4 million in annual revenue ($6.5 million for charter/party boats). This action would apply to all participants in the Atlantic bluefin tuna fishery, all of which are considered small entities.
The U.S. Atlantic bluefin tuna quota includes dead discards. Although the United States is not required by ICCAT or current regulations to account for the total amount of dead discards until the end of the fishing season, in both the 2011 and 2012 proposed specifications, NMFS took the proactive measure of accounting for half of the dead discard estimate “up front,” (i.e., at the beginning of the fishing year) and deducting that portion directly from the Longline category quota.
The current ICCAT recommendation limits the amount of underharvest that may be carried forward from one year to the next to no more than 10 percent of a country's quota. This restriction limits the amount of underharvest that may be carried forward to 94.9 mt (10 percent of the 948.7-mt total U.S. quota). In both 2011 and 2012, NMFS proposed allocating half of the amount of underharvest that was allowed to be carried forward to the Longline category and maintaining the other half in the Reserve category. This recommendation was intended to provide maximum flexibility in accounting for landings and dead discards at the end of the year. In 2012, when the pelagic longline fishery reached the incidental Longline bluefin tuna subquota, NMFS prohibited further retention of bluefin tuna in that fishery for the remainder of the year before finalizing the quota specifications. Therefore, NMFS provided a slightly larger portion to the Longline category in the final rule to account for actual bluefin tuna landings, and placed the remainder in the Reserve category. For the last two years, NMFS has maintained the directed fishing categories at their baseline quotas.
NMFS proposes to carry 94.9 mt forward to 2013 and distribute that amount in the same manner as proposed for 2011 and 2012, i.e., half to the
The most recent ex-vessel average price per pound information for each commercial quota category is used to estimate potential ex-vessel gross revenues under the proposed 2013 subquotas (i.e., 2012 prices for the General, Harpoon, and Longline/Trap, and Purse Seine categories). The 2013 subquotas could result in estimated gross revenues for each category, if finalized and fully utilized, as follows: General category: $8.8 million (435.1 mt * $9.13/lb); Harpoon category: $724,600 (36 mt * $9.13/lb); Purse Seine category: $4.7 million (171.8 mt * $12.46/lb); Trap category: $12,300 (0.9 mt * $6.19/lb); and Longline category: $678,000 (49.7 mt * $6.19/lb). Estimated potential 2013 revenues on a per vessel basis, considering the number of permit holders listed above and the proposed subquotas, could be $2,144 for the General category; $55,739 for the Harpoon category; $2,681 for the Longline category; $943,845 for the Purse Seine category; and $1,535 for the Trap category. Thus, all of the entities affected by this rule are considered to be small entities for the purposes of the RFA.
This proposed rule would not change the U.S. Atlantic bluefin tuna baseline quota, amount of carryover, or implement any new management measures not previously considered. The baseline quota and category subquotas are codified and remain effective until changed (for instance, if any new ICCAT bluefin tuna TAC recommendation is adopted). Thus, the affected entities will not experience any negative, direct economic impacts as a result of this rule.
The annual specification process that this proposed rule follows, including application of underharvests and overharvests, is described in detail in Chapters 2 and 4 of the Consolidated HMS FMP. Because the economic impacts of the carryover of underharvest, to the extent that there are any, are expected to be generally positive, this rule, if adopted, would not have a significant economic impact on a substantial number of small entities. Accordingly, no initial regulatory flexibility analysis is required, and none has been prepared.
16 U.S.C. 971
Forest Service, USDA.
Notice of intent to prepare an environmental impact statement.
The Forest Service is preparing an environmental impact statement (EIS) to document the potential effects of the Flagstaff Watershed Protection Project (FWPP). The analysis will evaluate and disclose the effects of implementing treatments on the National Forest to reduce the threat of high severity wildfire and subsequent flooding in two watersheds around Flagstaff. Specifically, two key areas have been identified for analysis and treatment under this project: The Dry Lake Hills portion of the Rio de Flag Watershed north of Flagstaff, and the Mormon Mountain portion of the Upper Lake Mary Watershed south of Flagstaff. The project area includes approximately 10,543 acres (roughly 7,569 acres in the Dry Lake Hills portion and 2,974 on Mormon Mountain), and proposed treatments would include thinning and prescribed fire on roughly 8,810 of those acres. The EIS will analyze a variety of harvesting methods, including the use of traditional ground-based equipment, hand thinning, and also methods atypical for the region, including cable and helicopter logging, in order to treat steep, inaccessible terrain.
Comments concerning the scope of the analysis must be received by May 13, 2013. The draft environmental impact statement is expected in early 2014 and the final environmental impact statement is expected in the summer of 2014.
Send written comments to Erin Phelps, Project Leader, USDA Forest Service, Coconino National Forest, 5075 N. Hwy 89, Flagstaff, AZ 86004. Comments may also be sent via email to
Visit our planning Web site at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1–800–877–8339 between 8 a.m. and 8 p.m., Eastern Time, Monday through Friday.
The primary purpose of the Flagstaff Watershed Protection Project (FWPP) is to reduce the risk of high severity wildfire and subsequent flooding in two key watersheds around Flagstaff, Arizona: In the Dry Lake Hills portion of the Rio de Flag Watershed, and the Mormon Mountain portion of the Upper Lake Mary Watershed.
The FWPP analysis area includes portions of the Coconino National Forest that have either not been analyzed or not been treated previously due to prohibitive costs associated with very steep terrain, low value material, and other challenging issues such as potential impacts to wildlife and visual concerns.
There is a need to reduce the risk of high intensity wildfire in watersheds that contribute to the drinking water for the City of Flagstaff as well as reducing the risk of high intensity wildfire in the watershed that drains into the city itself. There is also a need to reduce the risk of severe flooding that would likely damage the drinking water infrastructure south of town, and which could also cause extensive damage to private municipal property should a high-intensity wildfire occur in mountainous areas that make-up the Upper Lake Mary and Rio de Flag watersheds.
In general, fire regimes in the analysis area have shifted from historically more frequent, lower-intensity surface fires (Fire Regime I and III, Condition Class I) to less frequent, higher-intensity crown fires (Condition Class III). There is a need to reduce the potential for crown fire and high intensity surface fire, and to reduce the likelihood of human-caused ignitions. The desired condition is to reduce the threat of high severity wildfire and subsequent flooding to values at risk within and adjacent to the project area, including the City of Flagstaff, outlying communities, the Kachina Peaks Wilderness, and Upper Lake Mary. For the majority of the project area, the desired condition is to decrease the departure from historic conditions, and return the majority of the analysis area in FRI and FRIII to Condition Class 1.
To meet the project's purpose and need, the Forest Service proposes a combination of thinning and prescribed burning activities, establishing a permanent campfire closure order in the Dry Lake Hills area and decommissioning about 34 miles of road in the Flagstaff Watershed Protection Project area. To facilitate timber removal, approximately 15.5 miles of temporary road are also proposed, and three non-significant Forest Plan amendments would be necessarily to implement the proposed activities.
Treatments would include mechanical and hand thinning as well as prescribed fire on approximately 8,810 acres. Mechanical tree thinning would occur within Mexican spotted owl protected activity centers (MSO PACs) with a desired condition of trees greater than 16 inches dbh contributing more than 50 percent of the stand basal area and maintaining a minimum of 40 percent canopy cover in pine-oak and 60 percent in mixed conifer per the MSO Recovery Plan (2012), followed by prescribed burning. Thinning treatments have been designed in coordination with the US Fish and Wildlife Service (FWS) to occur within MSO nest/roost habitat to reduce the risk of high severity wildfire. Some treatments proposed within occupied PACs may need to occur during the breeding season (March 1–August 31); however treatments within PACs would be prioritized to be completed as quickly as possible to avoid long-term impacts and would be coordinated with FWS.
Prescribed fire would include initial pile burning to remove slash
Three project-specific, non-significant amendments to the Coconino National Forest Land Management Plan (Forest Plan; 1987, as amended) would be required to implement the proposed action. A site (project) specific plan amendment is a one-time variance in Forest Plan direction for the project; Forest Plan direction reverts back to its original language/direction upon completion of the specified project. The language proposed does not apply to any other forest project.
The Forest Plan is currently under revision; depending on the timing of the release of the final Forest Plan document, the final FWPP analysis will be consistent with the revised Forest Plan. Additionally, a revised MSO Recovery Plan, issued by the U.S. Fish and Wildlife Service (FWS) was finalized in December of 2012 (USDI 2012). The current Forest Plan is consistent with the previous MSO Recovery Plan (USDI 1995). For this project, a Forest Plan amendment would be needed to utilize the revised recovery plan direction if it is different than what is currently included in the Forest Plan. The proposed Forest Plan amendments include:
A full range of alternatives to the proposed action, including a no-action alternative, will be considered. The no-action alternative represents no change and serves as the baseline for the comparison among the action alternatives.
The City of Flagstaff is a Cooperating Agency for the Flagstaff Watershed Protection Project, and is participating in the planning and analysis process.
M. Earl Stewart, Forest Supervisor, Coconino National Forest.
The Forest Supervisor is the responsible official for deciding whether or not, and in what manner, lands within the Flagstaff Watershed Protection Project area would be treated to reduce wildfire and flooding hazards.
Items in this decision will include: Number of acres treated mechanically; number of acres treated by hand thinning; number of acres treated with prescribed fire; treatments within the MSO restricted habitat; treatments within MSO PACs and protected habitat; treatments within northern goshawk habitat; construction of new temporary roads; decommissioning/obliteration of closed roads; type of implementation method to be used; issuance of a permanent camfire restriction order in the Dry Lake Hills; project-specific Forest Plan amendments; and design features to protect forest resources of soil, water, scenery values, wildlife and habitat, and rare plants.
The decision will be based on a consideration of the environmental effects of implementing the proposed action or alternatives. The Forest Supervisor may select the proposed action, any alternative analyzed in detail, a modified proposed action or alternative, or no action.
This notice of intent initiates the formal scoping process, which guides the development of the environmental impact statement. Multiple public meetings will be held throughout the planning process for the FWPP project, including a general information sharing and comment gathering meeting scheduled for May 1, 2013 at the Aquaplex in Flagstaff (1702 N. 4th Street) from 6:00 to 8:00 p.m. The Greater Flagstaff Forests Partnership (GFFP) will also be hosting meetings on behalf of the City of Flagstaff. Please visit the FWPP project Web site at
This project is subject to the objection process pursuant to 36 CFR part 218 (March 27, 2013), and is not being authorized under the Healthy Forest Restoration Act (HFRA). As such, those who provide specific written comments during the formal scoping and/or the comment periods in accordance with § 218.5 will be eligible to participate in the objection process. Issues raised in objections must be based on previously submitted timely, specific written comments regarding the proposed project unless new information arises after designated opportunities (36 CFR 218.7).
It is important that reviewers provide their comments at such times and in such manner that they are useful to the agency's preparation of the environmental impact statement. Therefore, comments should be provided prior to the close of the 30 day scoping period and should clearly articulate the reviewer's concerns and contentions.
Comments received in response to this solicitation, including names and addresses of those who comment, will be part of the public record for this proposed action. Comments submitted anonymously will be accepted and considered, but will not be eligible for objection per § 218.5.
Bureau of Industry and Security, Department of Commerce.
Notice; annual reporting requirements.
This notice is to remind the public that U.S. firms are required to report annually to the Department of Commerce (Commerce) information on contracts for the sale of defense articles or defense services to foreign countries or foreign firms that are subject to offsets agreements exceeding $5,000,000 in value. U.S. firms are also required to report annually to Commerce information on offsets transactions completed in performance of existing offsets commitments for which offsets credit of $250,000 or more has been claimed from the foreign representative. This year, such reports must include relevant information from calendar year 2012, and must be submitted to Commerce no later than June 15, 2013.
Reports should be addressed to “Offsets Program Manager, U.S. Department of Commerce, Office of Strategic Industries and Economic Security, Bureau of Industry and Security, Room 3878, Washington, DC 20230.”
Ronald DeMarines, Office of Strategic Industries and Economic Security, Bureau of Industry and Security, U.S. Department of Commerce, telephone: 202–482–3755; fax: 202–482–5650; email:
Section 723(a)(1) of the Defense Production Act of 1950, as amended (DPA, 50 U.S.C. 2172(a)(1)) requires the President to submit an annual report to Congress on the impact of offsets on the U.S. defense industrial base. Section 723(a)(2) (50 U.S.C. 2172(a)(2)) directs the Secretary of Commerce (Secretary) to prepare the President's report, and to develop and administer the regulations necessary to collect offsets data from U.S. defense exporters.
The authorities of the Secretary regarding offsets have been delegated to the Under Secretary of Commerce for Industry and Security. The regulations associated with offsets reporting are set forth in part 701 of title 15 of the Code of Federal Regulations. Offsets are compensation practices required as a condition of purchase in either government-to-government or commercial sales of defense articles and/or defense services, as defined by the Arms Export Control Act and the International Traffic in Arms Regulations. For example, a company that is selling a fleet of military aircraft to a foreign government may agree to offset the cost of the aircraft by providing training assistance to plant managers in the purchasing country. Although this distorts the true price of the aircraft, the foreign government may require this sort of extra compensation as a condition of awarding the contract to purchase the aircraft. As described in the regulations, U.S. firms are required to report information on contracts for the sale of defense articles or defense services to foreign countries or foreign firms that are subject to offsets agreements exceeding $5,000,000 in value. U.S. firms are also required to report annually information on offsets transactions completed in performance of existing offsets commitments for which offsets credit of $250,000 or more has been claimed from the foreign representative.
Commerce's annual report to Congress includes an aggregated summary of the data reported by industry in accordance with the offsets regulation and the DPA. As provided by section 723(c) (50 U.S.C. 2172(c)) of the DPA, BIS will not publicly disclose individual firm information it receives through offsets reporting unless the firm furnishing the information specifically authorizes public disclosure. The information collected is sorted and organized into an aggregate report of national offsets data, and therefore does not identify company-specific information.
In order to enable BIS to prepare the next annual offset report reflecting calendar year 2012 data, U.S. firms must submit required information on offsets agreements and offsets transactions from calendar year 2012 to BIS no later than June 15, 2013.
Import Administration, International Trade Administration, Department of Commerce.
Based on affirmative final determinations by the Department of Commerce (the “Department”) and the International Trade Commission (“ITC”), the Department is issuing an antidumping duty order on drawn stainless steel sinks (“drawn sinks”) from the People's Republic of China (“PRC”). In addition, the Department is amending its final determination to correct a ministerial error.
Brooke Kennedy or Eve Wang, AD/CVD Operations, Office 8, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–3818 or (202) 482–6231, respectively.
On February 26, 2013, the Department published the final determination of sales at less than fair value in the antidumping duty investigation of drawn sinks from the PRC.
The products covered by the scope of this order are drawn stainless steel sinks
Excluded from the scope of the order are stainless steel sinks with fabricated bowls. Fabricated bowls do not have seamless corners, but rather are made by notching and bending the stainless steel, and then welding and finishing the vertical corners to form the bowls. Stainless steel sinks with fabricated bowls may sometimes be referred to as “zero radius” or “near zero radius” sinks.
The products covered by this order are currently classified in the Harmonized Tariff Schedule of the United States (“HTSUS”) under statistical reporting number 7324.10.0000 and 7324.10.00.10. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope is dispositive.
On February 26, 2013, the Department published its affirmative final determination in this proceeding.
After analyzing all interested party comments, we have determined, in accordance with section 735(e) of the Act and 19 CFR 351.224(e), that we made the following ministerial error in the
• We inadvertently assigned a separate rate to the exporter Zoje in combination with Jiangxi Offidun Industry Co., Ltd. as the only producer of the subject merchandise. Information provided in Zoje's separate rate application indicated that Zoje qualified for two producer-exporter combinations.
In accordance with sections 735(b)(1)(A)(i) and 735(d) of the Act, the ITC has notified the Department of its final determination in this investigation, in which it found that imports of drawn sinks from the PRC are materially injuring a U.S. industry. Therefore, in accordance with section 735(c)(2) of the Act, we are publishing this antidumping duty order.
As a result of the ITC's final determination, in accordance with section 736(a)(1) of the Act, the Department will direct U.S. Customs and Border Protection (“CBP”) to assess, upon further instruction by the Department, antidumping duties equal to the amount by which the normal value of the merchandise exceeds the export price (or constructed export price) of the merchandise, for all relevant entries of drawn sinks from the PRC. These antidumping duties will be assessed on unliquidated entries from the PRC entered, or withdrawn from warehouse, for consumption on or after October 4, 2012, the date on which the Department published the
In accordance with section 735(c)(1)(B) of the Act, we will instruct CBP to continue to suspend liquidation on entries of subject merchandise from the PRC. We will also instruct CBP to require cash deposits equal to the estimated amount by which the normal value exceeds the U.S. price as indicated in the chart below. These cash deposit rates will be adjusted, where appropriate, for export subsidies and estimated domestic subsidy pass-through. These instructions suspending liquidation will remain in effect until further notice.
Accordingly, effective on the date of publication of the ITC's final affirmative injury determination, CBP will require, at the same time as importers would normally deposit estimated duties on this subject merchandise, a cash deposit equal to the estimated weighted-average antidumping duty margins as discussed above, adjusted, where appropriate, for export subsidies and estimated domestic subsidy pass-through.
Section 733(d) of the Act states that instructions issued pursuant to an affirmative preliminary determination may not remain in effect for more than four months except where exporters representing a significant proportion of exports of the subject merchandise request the Department to extend that four-month period to no more than six months. At the request of the exporters that account for a significant proportion of exports of drawn stainless steel sinks from the PRC, we extended the four-month period to no more than six months.
Therefore, in accordance with section 733(d) of the Act and our practice, we will instruct CBP to terminate the suspension of liquidation and to liquidate, without regard to antidumping duties, unliquidated entries of drawn sinks from the PRC entered, or withdrawn from warehouse, for consumption after April 2, 2013, the date the provisional measures expired, and through the day preceding the date of publication of the ITC's final injury determination in the
The weighted-average dumping margins are as follows:
This notice constitutes the antidumping duty order with respect to drawn sinks from the PRC pursuant to section 736(a) of the Act. Interested parties may contact the Department's Central Records Unit, Room 7043 of the main Commerce building, for copies of an updated list of antidumping duty orders currently in effect.
This order and amended final determination are published in accordance with sections 736(a) and 735(e) of the Act and 19 CFR 351.211 and 351.224(e).
Import Administration, International Trade Administration, Department of Commerce.
The Department of Commerce (“Department”) has completed its administrative review of the countervailing duty (“CVD”) order on certain kitchen appliance shelving and racks from the People's Republic of China (“PRC”) for the period January 1, 2010, through December 31, 2010. The final net subsidy rate for New King Shan (Zhu Hai) Co., Ltd. (“NKS”) is listed below in the section entitled “Final Results of the Review.”
Jennifer Meek or Mary Kolberg, Office of AD/CVD Operations, Office 1, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–2778 and (202) 482–1785, respectively.
Following the
On February 4, 2013, we placed on the record of this review pricing information for wire rod, hot-rolled steel coil, and cold- rolled steel coil.
The merchandise subject to the order is shelving and racks for refrigerators, freezers, combined refrigerator-freezers, other refrigerating or freezing equipment, cooking stoves, ranges, and ovens. These products are currently classified under the Harmonized Tariff Schedule of the United States (“HTSUS”) item numbers 8418.99.80.50, 7321.90.50.00, 7321.90.60.40, 7321.90.60.90, 8418.99.80.60, 8419.90.95.20, 8516.90.80.00, and 8516.90.80.10. The HTSUS subheadings are provided for convenience and customs purposes. A full description of the scope is contained in the Memorandum from Gary Taverman, Senior Advisor for Antidumping and Countervailing Duty Operations, to Ronald K. Lorentzen, Acting Assistant Secretary for Import Administration, entitled “Issues and Decision Memorandum for the Final Results of the Countervailing Duty Administrative Review: Certain Kitchen Appliance Shelving and Racks from the People's Republic of China,” dated concurrently with this notice (“Issues and Decision Memorandum”), which is hereby adopted by this notice.
All issues raised in the parties' briefs are addressed in the Issues and Decision Memorandum. A list of the issues raised is attached to this notice as Appendix I. The Issues and Decision Memorandum is a public document and is on file electronically via Import Administration's Antidumping and Countervailing Duty Centralized Electronic Service System (“IA ACCESS”). IA ACCESS is available to registered users at
For purposes of these final results, we have continued to rely on facts available and apply adverse inferences in accordance with sections 776(a) and (b), respectively, of the Tariff Act of 1930, as amended (“Act”), with regard to: (1) Whether suppliers of steel strip and wire rod are authorities under the Wire Rod and Steel Strip at Less than Adequate Remuneration programs; and (2) the specificity of various grants listed in NKS' financial statements. A full discussion of our decision to apply adverse facts available is presented in the Issues and Decision Memorandum under the section “Use of Facts Otherwise Available and Adverse Inferences.”
In accordance with 19 CFR 351.221(b)(5), we calculated the subsidy rate shown below for the mandatory respondent, NKS.
The Department intends to issue appropriate assessment instructions directly to U.S. Customs and Border Protection (“CBP”) 15 days after publication of these final results of review, to liquidate shipments of subject merchandise by NKS entered, or withdrawn from warehouse, for consumption on or after January 1, 2010, through December 31, 2010.
The Department also intends to instruct CBP to collect cash deposits of estimated countervailing duties in the amount shown above on shipments of subject merchandise by NKS entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this review. For all non-reviewed companies, we will instruct CBP to continue to collect cash deposits at the most recent company-specific or country-wide rate applicable to the company. Accordingly, the cash deposit rates that will be applied to companies covered by this order, but not examined in this review, are those established in the most recently completed segment of the proceeding for each company. These cash deposit requirements, when imposed, shall remain in effect until further notice.
This notice serves as a reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.
We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
List of Comments in the Issues and Decision Memorandum:
Import Administration, International Trade Administration, Department of Commerce.
Based on affirmative final determinations by the Department of Commerce (the “Department”) and the International Trade Commission (“ITC”), the Department is issuing a countervailing duty order on drawn stainless steel sinks (“drawn sinks”) from the People's Republic of China (“PRC”).
Shane Subler or Austin Redington, AD/CVD Operations, Office 1, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–0189 and (202) 482–1664, respectively.
On February 26, 2013, the Department published its final determination in the countervailing duty investigation of drawn sinks from the PRC.
The products covered by the scope of this order are drawn stainless steel sinks with single or multiple drawn bowls, with or without drain boards, whether finished or unfinished, regardless of type of finish, gauge, or grade of stainless steel. Mounting clips, fasteners, seals, and sound-deadening pads are also covered by the scope of this order if they are included within the sales price of the drawn stainless steel sinks.
Excluded from the scope of the order are stainless steel sinks with fabricated bowls. Fabricated bowls do not have seamless corners, but rather are made by notching and bending the stainless steel, and then welding and finishing the vertical corners to form the bowls. Stainless steel sinks with fabricated bowls may sometimes be referred to as “zero radius” or “near zero radius” sinks.
The products covered by this order are currently classified in the Harmonized Tariff Schedule of the United States (“HTSUS”) under statistical reporting number 7324.10.0000 and 7324.10.00.10. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope is dispositive.
In accordance with sections 705(b)(1)(A)(i) and 705(d) of the Act, the ITC has notified the Department of its final determination that the industry in the United States producing drawn sinks is materially injured by reason of subsidized imports of drawn sinks from the PRC. Therefore, in accordance with section 705(c)(2) of the Act, we are publishing this countervailing duty order.
As a result of the ITC's final determination, in accordance with section 706(a) of the Act, the Department will direct U.S. Customs and Border Protection (“CBP”) to assess, upon further instruction by the Department, countervailing duties on unliquidated entries of drawn sinks from the PRC entered, or withdrawn from warehouse, for consumption on or after August 6, 2012, the date on which the Department published its preliminary countervailing duty determination in the
In accordance with section 706 of the Act, the Department will direct CBP to reinstitute the suspension of liquidation of drawn sinks from the PRC, effective the date of publication of the ITC's notice of final determination in the
This notice constitutes the countervailing duty order with respect to drawn sinks from the PRC, pursuant to section 706(a) of the Act. Interested parties may contact the Department's Central Records Unit, Room 7046 of the main Commerce Building, for copies of an updated list of countervailing duty orders currently in effect.
This order is issued and published in accordance with section 706(a) of the Act and 19 CFR 351.211(b).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public workshops.
NMFS will hold two public workshops to solicit input from stakeholders regarding our advance notice of proposed rulemaking (ANPR) on potential management measures to protect glacially-associated harbor seal habitats in Alaska (78 FR 15669; March 12, 2013). During the workshops NMFS will present information regarding harbor seal habitat usage and available research on the effects of vessel disturbance. NMFS will seek input as to whether management measures are needed, and if so, what types of measures should be considered.
We will conduct public workshops on the harbor seal ANPR on the specific dates listed below:
1. April 22, 2013, from 2 p.m. to 4 p.m. Alaska Daylight Time (ADT) in Juneau, Alaska.
2. April 23, 2013, from 2 p.m. to 4 p.m. (ADT) in Yakutat, Alaska.
The workshop locations are:
1. Juneau, AK—Centennial Hall, Hickel Room, 101 Egan Drive, Juneau, AK 99801.
2. Yakutat, AK—ANB Hall, 522 Max Italio Dr., Yakutat, AK 99689.
You may submit written comments, identified by FDMS Docket Number NOAA–NMFS–2011–0284, before May 12, 2013 by any one of the following methods:
•
•
•
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• Hand delivery to NMFS at one of the public workshops listed in this notice.
Comments must be submitted by one of the above methods to ensure that the comments are received, documented, and considered by NMFS. Comments sent by any other method, to any other address or individual, or received after the end of the comment period, may not be considered.
All comments received are a part of the public record and will generally be posted to
NMFS will accept anonymous comments (enter N/A in the required fields, if you wish to remain anonymous). Attachments to electronic comments will be accepted in Microsoft Word, Excel, WordPerfect, or Adobe portable document file (pdf) formats only.
Electronic copies of the ANPR may be obtained from
Alicia Bishop, NMFS Alaska Regional Office, (907) 586–7224; or Shannon Bettridge, NMFS Office of Protected Resources, (301) 427–8402.
On March 12, 2013, NMFS published an ANPR in the
In response to the ANPR, and at the workshops, we are seeking information and comments concerning: (1) The advisability of and need for regulations; (2) the geographic scope and time horizon of regulations; (3) management options for regulating vessel interactions with harbor seals, including but not limited to the options listed in this notice; (4) scientific and commercial information regarding the effects of vessels on harbor seals and their habitat; (5) information regarding potential economic effects of regulating vessel interactions; (6) the feasibility of any management measure or regulation (for example, navigational safety or security concerns); and (7) any additional relevant information that NMFS should consider should it undertake rulemaking.
Oral statements will not be recorded at the workshop. We encourage interested people, groups, and organizations to provide a written copy of their statement and present it to us at
Office of Oceanic and Atmospheric Research (OAR), National Oceanic and Atmospheric Administration (NOAA), Department of Commerce (DOC).
Notice of Open Meeting.
This notice sets forth the schedule of a forthcoming meeting of the DoC NOAA National Climate Assessment and Development Advisory Committee (NCADAC).
Please refer to the Web page
Dr. Cynthia Decker, Designated Federal Officer, National Climate Assessment and Development Advisory Committee, NOAA, Rm. 11230, 1315 East–West Highway, Silver Spring, Maryland 20910. (Phone: 301–734–1156, Fax: 301–713–1459, Email:
The National Climate Assessment and Development Advisory Committee was established in December 2010. The committee's mission is to synthesize and summarize the science and information pertaining to current and future impacts of climate change upon the United States; and to provide advice and recommendations toward the development of an ongoing, sustainable national assessment of global change impacts and adaptation and mitigation strategies for the Nation. Within the scope of its mission, the committee's specific objective is to produce a National Climate Assessment.
Office of the Assistant Secretary of Defense for Health Affairs, DoD.
Notice.
In compliance with Section 3506(c)(2)(A) of the
Consideration will be given to all comments received by June 10, 2013.
You may submit comments, identified by docket number and title, by any of the following methods:
•
•
Any associated form(s) for this collection may be located within this same electronic docket and downloaded for review/testing. Follow the instructions at
To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the TRICARE Management Activity, TRICARE Overseas Program Office, ATTN: Ms. Kimberly Stakes, 7700 Arlington Boulevard, Suite 5101, Falls Church, VA 22042–5101, or call 703–681–0039.
The purpose of the program is to provide supplemental foods and nutrition education to serve as an adjunct to good health care during critical times of growth and development, in order to prevent the occurrence of health problems, including drug and other substance abuse, and to improve the health status of program participants. The benefit is similar to the benefit provided under the domestic WIC program.
Respondents are individuals who are dependents of members of the armed forces stationed overseas, dependents of a civilian employee of a military department stationed overseas, and DoD contractors and their dependents stationed overseas who desire to receive supplemental food and nutrition education services. To be eligible for program, a person must meet specific income guidelines. In determining income eligibility, the Department will use the Department of Health and Human Services income poverty table for the state of Alaska.
Defense Acquisition University, DoD.
Meeting notice.
Under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C., Appendix, as amended), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), and 41 CFR 102–3.150, the Department of Defense announces that the following Federal advisory committee meeting of the Defense Acquisition University Board of Visitors will take place.
Wednesday, May 15, 2013, from 8:30 a.m. to 11:30 a.m.
DAU Headquarters, 9820 Belvoir Road, Fort Belvoir, VA 22060.
Christen Goulding, Protocol Director, DAU, Phone: 703–805–5134, Fax: 703–805–5940, Email:
Defense Information Systems Agency, DoD.
Notice to delete three Systems of Records Notices.
The Defense Information Systems Agency is deleting three systems of records notices in its existing inventory of record systems subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended.
This proposed action will be effective on May 13, 2013 unless comments are received which result in a contrary determination. Comments will be accepted on or before May 13, 2013.
You may submit comments, identified by docket number and title, by any of the following methods:
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Jeanette Weathers-Jenkins, 6916 Cooper Avenue, Fort Meade, MD 20755–7901, or (301) 225–8158.
The Defense Information Systems Agency systems of records notices subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended, have been published in the
K317.01, Mishap Report (February 22, 1993, 58 FR 10562)
KPAC–05, 403–03 Injury Records (February 22, 1993, 58 FR 10562)
K232.02, Injury Record File (February 22, 1993, 58 FR 10562)
Based on a recent review of the systems of records notices, K317.01, Mishap Report, KPAC–05, 403–03 Injury Records, and K232.02, Injury Record File, are covered by the Government wide system of records notice OPM/GOVT–10, Employee Medical File System Records (June 21, 2010, 75 FR 35099). Therefore, these notices can be deleted. Government-wide notices can be found at
National Geospatial-Intelligence Agency, DoD.
Notice to delete a System of Records.
The National Geospatial-Intelligence Agency is deleting a system of records notice in its existing inventory of record systems subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended.
This proposed action will be effective on May 13, 2013 unless comments are received which result in a contrary determination. Comments will be accepted on or before May 13, 2013.
You may submit comments, identified by docket number and title, by any of the following methods:
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For privacy questions please contact: NGA Privacy Office, National Geospatial-Intelligence Agency, 7500 GEOINT Drive, Springfield, VA 22150.
The National Geospatial-Intelligence Agency systems of records notices subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended, have been published in the
B0503–09, Key Accountability Files (67 FR 12532, March 19, 2002).
This system was originally established to maintain documentation on periodic inspections, key accountability, reference checks and daily use records and investigations into lost or destruction of secure areas. The system no longer exists, the records have met their retention, and therefore B0503–09, Key Accountability Files can be deleted.
Defense Logistics Agency, DoD.
Notice to delete a Systems of Records.
The Defense Logistics Agency is deleting a system of records notice in its existing inventory of record systems subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended.
This proposed action will be effective on May 13, 2013 unless comments are received which result in a contrary determination. Comments will be accepted on or before May 13, 2013.
You may submit comments, identified by docket number and title, by any of the following methods:
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•
Ms. Jody Sinkler, DLA FOIA/Privacy Act Office, Headquarters, Defense Logistics Agency, ATTN: DGA, 8725 John J. Kingman Road, Suite 1644, Fort Belvoir, VA 22060–6221, or by phone at (703) 767–5045.
The Defense Logistics Agency system of records notice subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended, have been published in the
S380.50
DLA Drug-Free Workplace Program Records (May 20, 2010; 75 FR 28242)
Records are covered under the Office of Personnel Management (OPM) government-wide Privacy Act system of records notice OPM/Govt-10, entitled “Employee Medical File System Records” last published in the
Therefore, S380.50, DLA Drug-Free Workplace Program Records can be deleted.
Department of the Air Force, DoD.
Notice to delete a System of Records.
The Department of the Air Force is deleting a system of records notice in its existing inventory of record systems subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended.
This proposed action will be effective on May 13, 2013 unless comments are received which result in a contrary determination. Comments will be accepted on or before May 13, 2013.
You may submit comments, identified by docket number and title, by any of the following methods:
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•
Mr. Charles J. Shedrick, Department of the Air Force Privacy Office, Air Force Privacy Act Office, Office of Warfighting Integration and Chief Information Officer, ATTN: SAF/CIO A6, 1800 Air Force Pentagon, Washington, DC 20330–1800, or by phone at (571) 256–2515.
The Department of the Air Force systems of records notices subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended, have been published in the
The Department of the Air Force proposes to delete one system of records notice from its inventory of record systems subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended. The proposed deletion is not within the purview of subsection (r) of the Privacy Act of 1974 (5 U.S.C. 552a), as amended, which requires the submission of a new or altered system report.
Air Force Personnel Accountability and Assessment System (AFPAAS) (May 6, 2009, 74 FR 20935).
Records are now covered by DoD System of Records Notice DPR 39 DoD, DoD Personnel Accountability and Assessment System (March 24, 2010, 75 FR 14141). Therefore, F036 AFPC R, Air Force Personnel Accountability and Assessment System (AFPAAS) can be deleted.
Department of Education (ED), Institute of Education Sciences/National Center for Education Statistics (IES).
Notice.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 3501
Interested persons are invited to submit comments on or before May 13, 2013.
Comments submitted in response to this notice should be submitted electronically through the Federal eRulemaking Portal at
Electronically mail
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy.
Notice and Request for Comments.
The Department of Energy (DOE) invites public comment on a proposed collection of information that DOE is developing for submission to the Office of Management and Budget (OMB) pursuant to the Paperwork Reduction Act of 1995. The proposed collection of information relates to three of DOE's Better Buildings Programs. Comments are invited on: (a) Whether the proposed 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 proposed collection of information, including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (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.
Comments regarding this proposed information collection must be received on or before June 10, 2013. If you anticipate difficulty in submitting comments within that period, contact the person listed in
Written comments may be sent Nancy Gonzalez, EE–2F/Forrestal Building, 1000 Independence Avenue SW., Washington, DC 20585, by fax at 202–586–5234, or by email at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Nancy Gonzalez, EE–2F/Forrestal Building, 1000 Independence Avenue SW., Washington, DC 20585, by fax at 202–586–5234, or by email at
This information collection request contains:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Section 421 of the Energy Independence and Security Act of 2007 (42 U.S.C. 17081); Section 911 of the Energy Policy Act of 2005, as amended (42 U.S.C. 16191).
Environmental Protection Agency (EPA).
Notice.
The Agency is issuing this notice to change the meeting dates of the Federal Insecticide, Fungicide, and Rodenticide Act Scientific Advisory Panel (FIFRA SAP) to consider and review the Endocrine Disruptor Screening Program (EDSP) Tier 1 Screening Assays and Battery Performance. The meeting was originally scheduled for May 21–24, 2013. The new meeting dates are shown below.
The meeting will be held on May 21–23, 2013, from approximately 9 a.m. to 5 p.m.
The meeting will be held at the Environmental Protection Agency, Conference Center, Lobby Level, One Potomac Yard (South Bldg.), 2777 S. Crystal Dr., Arlington, VA 22202.
Fred Jenkins, Designated Federal Official (DFO), Office of Science Coordination and Policy (7201M), Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460–0001; telephone number: (202) 564–3327; fax number: (202) 564–8382; email address:
All other information provided in the February 22, 2013,
Environmental protection, Pesticides, and pests Endocrine disruptors.
Federal Accounting Standards Advisory Board.
Notice.
The Standard is available at
Copies can be obtained by contacting FASAB at (202) 512–7350.
Respondents are encouraged to comment on any part of the exposure draft. Written comments are requested by July 3, 2013, and should be sent to:
For assistance in accessing the document contact FASAB at (202) 512–7350.
Wendy Payne, Executive Director, at (202) 512–7350.
Federal Advisory Committee Act, Pub. L. 92–463.
The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than April 26, 2013.
A. Federal Reserve Bank of Chicago (Colette A. Fried, Assistant Vice President) 230 South LaSalle Street, Chicago, Illinois 60690–1414:
1.
B. Federal Reserve Bank of St. Louis (Yvonne Sparks, Community Development Officer) P.O. Box 442, St. Louis, Missouri 63166–2034:
1.
Section 7A of the Clayton Act, 15 U.S.C. 18a, as added by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, requires persons contemplating certain mergers or acquisitions to give the Federal Trade Commission and the Assistant Attorney General advance notice and to wait designated periods before consummation of such plans. Section 7A(b)(2) of the Act permits the agencies, in individual cases, to terminate this waiting period prior to its expiration and requires that notice of this action be published in the
The following transactions were granted early termination—on the dates indicated—of the waiting period provided by law and the premerger notification rules. The listing for each transaction includes the transaction number and the parties to the transaction. The grants were made by the Federal Trade Commission and the Assistant Attorney General for the Antitrust Division of the Department of Justice. Neither agency intends to take any action with respect to these proposed acquisitions during the applicable waiting period.
By Direction of the Commission.
Notice is hereby given that in furtherance of the delegation of authority to the Assistant Secretary for Health on September 28, 1979, by the Secretary of Health and Human Services, the Assistant Secretary for Health has delegated to the Director, National Vaccine Program Office the authority under Section 1702(a) [42 U.S.C. 300u–1(a)] and Section 1703(a) and (c) [42 U.S.C. 300u–2(a) and (c)] of the Public Health Service Act, as amended, to conduct and support research programs and to conduct and support programs in health information and health promotion, preventive health services, and education in the appropriate use of health care and to support such work by private non-profit entities, respectively.
All previous delegations and redelegations under Title XVII of the Public Health Service Act shall continue in effect, provided that they are consistent with this delegation.
This delegation excludes the authority to issue regulations and to establish advisory committees and councils and appoint their members and shall be exercised in accordance with the Department's applicable policies, procedures, and guidelines.
I hereby affirm and ratify any actions taken by the Director, National Vaccine Program Office, or other NVPO officials, which involved the exercise of these authorities prior to the effective date of this delegation.
Office of the President's Council on Fitness, Sports, and Nutrition, Office of the Assistant Secretary for Health, Office of the Secretary, Department of Health and Human Services.
Notice of meeting.
As stipulated by the Federal Advisory Committee Act, the U.S. Department of Health and Human Services is hereby giving notice that the President's Council on Fitness, Sports, and Nutrition (PCFSN) will hold a meeting. The meeting will be open to the public.
The meeting will be held on May 7, 2013, from 10:00 a.m. to 4:30 p.m.
Department of Health and Human Services, 200 Independence Ave. SW., Room 800, Washington, DC 20201.
Ms. Shellie Pfohl, Executive Director, President's Council on Fitness, Sports, and Nutrition, 1101 Wootton Parkway, Suite 560, Rockville, MD 20852. Telephone: (240) 276–9866. Information about PCFSN, including details about the upcoming meeting, also can be obtained at
The primary functions of the PCFSN include (1) Advising the President, through the Secretary, concerning progress made in carrying out the provisions of Executive Order 13545 and recommending to the President, through the Secretary, actions to accelerate progress; (2) advising the Secretary on ways to promote regular physical activity, fitness, sports participation, and good nutrition. Recommendations may address, but are not necessarily limited to, public awareness campaigns; federal, state, and local physical activity; fitness, sports participation, and nutrition initiatives; and partnership opportunities between public- and private-sector health promotion entities; (3) functioning as a liaison to relevant state, local, and private entities in order to advise the Secretary regarding opportunities to extend and improve physical activity, fitness, sports, and nutrition programs and services at the local, state, and national levels; and (4) monitoring the need to enhance programs and educational and promotional materials sponsored, overseen, or disseminated by the Council, and advising the Secretary, as necessary, concerning such need. In performing its functions, the Council shall take into account the federal Dietary Guidelines for Americans and the Physical Activity Guidelines for Americans.
The PCFSN will hold, at a minimum, one meeting per fiscal year. The meeting will be held to (1) assess ongoing Council activities and (2) discuss and plan future projects and programs. The agenda for the planned meeting is being developed and will be posted at
The meeting that is scheduled to be held on May 7, 2013 is open to the public. Every effort will be made to provide reasonable accommodations for persons with disabilities and/or special needs who wish to attend the meeting. Persons with disabilities and/or special needs should call (240) 276–9567 no later than close of business on April 23, 2013, to request accommodations. Members of the public who wish to attend the meeting are asked to pre-register by sending an email to
The U.S. Department of Health and Human Services (HHS)—charged with leading the U.S. delegation to the 66th World Health Assembly—will hold an informal Stakeholder Listening Session on Monday, May 6, 3–4:30 p.m., in the Great Hall of the HHS Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201.
The Stakeholder Listening Session will help the HHS's Office of Global Affairs prepare for the World Health Assembly by taking full advantage of the knowledge, ideas, feedback, and suggestions from all communities interested in and affected by agenda items to be discussed at the 66th World Health Assembly. Your input will contribute to US positions as we negotiate these important health topics with our international colleagues.
The listening session will be organized around the interests and perspectives of stakeholder communities, including, but not limited to:
• Public health and advocacy groups;
• State, local, and Tribal groups;
• Private industry;
• Minority health organizations; and
• Academic and scientific organizations.
It will allow public comment on all agenda items to be discussed at the 66th World Health Assembly
Due to security restrictions for entry into the HHS Hubert H. Humphrey Building, we will need to receive RSVPs for this event. Please include your first and last name as well as organization and send it to
Written comments are welcome and encouraged, even if you are planning on attending in person. Please send these to the same email address
We look forward to hearing your comments relative to the 66th World Health Assembly agenda items.
National Institute for Occupational Safety and Health (NIOSH) of the Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice of opportunity to support research.
The NIOSH National Personal Protective Technology Laboratory is initiating a research study in support of American Society for Testing and Materials (ASTM) International standards development to establish minimum performance requirements for isolation gowns for health care workers. NIOSH is seeking to identify currently marketed isolation gown products. All manufacturers are requested to submit samples to NIOSH free of charge for testing. There will be no cost to the manufacturers for testing. Not all submitted products may be tested, depending on the response to this announcement and the results of screening tests. Each manufacturer that submits gowns that are tested will receive the test results from their gowns. Through submission of the gown samples, manufacturers will be making an important contribution to ASTM, International's process to establish an important standard for evaluating the protection provided for health care workers by isolation gowns. Participating manufacturers will be recognized as contributing to the establishment of the performance standard. Manufacturers whose products are tested will also receive the results of all gowns tested in a blinded format.
Submit letters of interest to provide gowns and participate in this research program prior to May 13, 2013.
Interested manufacturers should submit a letter of interest with information about their isolation gowns' capabilities to: NIOSH, National Personal Protective Technology Laboratory, Attn: Selcen Kilinc, PO Box 18070, Pittsburgh, PA 15236, Email address:
Product testing results will be provided to the ASTM Committee on Personal Protective Clothing and Equipment—Biological Subcommittee (a.k.a. ASTM Task Force), which will utilize the data as the scientific basis to develop a standard establishing minimum performance criteria for single-use and reusable isolation gowns. The research objective is to evaluate performance properties, such as strength and barrier properties, of isolation gowns to be provided to the ASTM Task Force as scientific input for establishing minimum performances for conformance to this standard.
In this study, all testing will be conducted blind. Results will be shared with the ASTM Task Force only in a blinded format. Results will be shared with the individual manufacturers for their gowns only. The final summary of the testing will be shared in a blinded format only with all manufacturers that participated.
Randomized samples will be tested by both NIOSH and Nelson Labs. The ASTM Task Force will review and analyze all test results. Establishment of the minimum requirement for each property will be the responsibility of the ASTM Task Force. NIOSH plans to conduct testing to measure the following properties: Fabric weight, breaking strength, tear strength, seam strength, water resistance (impact penetration and hydrostatic pressure), microbial/viral penetration resistance, air permeability, evaporative resistance, and thermal insulation.
Neither this announcement, nor product submittals in response to this announcement, obligates NIOSH to enter into a contractual agreement with any respondent. Inquiries should be sent to Selcen Kilinc at
Centers for Medicare & Medicaid Services (CMS), HHS.
Notice of hearing.
This notice announces an administrative hearing to be held on May 23, 2013, at the CMS Boston Regional Office, JFK Federal Building, 15 N. Sudbury Street, Room 2050, Boston, Massachusetts 02203–0003 to reconsider CMS' decision to disapprove Maine SPA 12–010.
Benjamin Cohen, Presiding Officer, CMS, 2520 Lord Baltimore Drive, Suite L, Baltimore, Maryland 21244, Telephone: (410) 786–3169.
This notice announces an administrative hearing to reconsider CMS' decision to disapprove Maine SPA 12–010 which was submitted on August 1, 2012, and disapproved on January 7, 2013. The SPA proposed changes to eligibility for parents, caretaker relatives, and children whose income is at or below 133 percent of the federal poverty level (FPL). The proposal would make eligibility standards, methods, and procedures more restrictive than those in effect on March 23, 2010.
CMS disapproved this SPA after consulting with the Secretary as required by 42 CFR 430.15(c)(2) because it appeared the proposal would have eliminated Medicaid eligibility for parents and caretaker relatives eligible under sections 1902(a)(10)(A)(i)(I) and 1931 whose incomes are between 100 percent and 133 percent of the FPL, and Medicaid eligibility of certain individuals considered “children” under Maine's state Medicaid plan. Both proposals constituted more restrictive eligibility standards than those in effect in Maine as of March 23, 2010, that could not be excepted from the maintenance-of-effort (MOE) mandate that Maine is subject to under section 1902(a)(74) and (gg) of the Social Security Act (hereafter “the Act”). At issue in this appeal are the following issues.
While states generally have authority to modify Medicaid eligibility rules, sections 1902(a)(74) and (gg) of the Act require that states maintain eligibility standards, methodologies, and procedures that are no more restrictive than those in effect under a state's plan as of the date of enactment of the Patient Protection and Affordable Care Act (March 23, 2010). This MOE requirement applies to adults until a state's health insurance exchange is operational (January 1, 2014) and to children until October 1, 2019.
Section 1902(gg)(3) of the Act offers a partial non-application of the MOE requirement during the period between January 1, 2011, and December 31, 2013, when a state certifies to the Secretary that it has a budget deficit during the fiscal year for which it is seeking a non-application, or projects a budget deficit during the succeeding fiscal year. This provision limits the non-application to “nonpregnant, nondisabled adults who are eligible for medical assistance under the state plan or under a waiver of the plan at the option of the state and whose income exceeds 133 percent of the poverty line.”
Maine certified a projected budget deficit for state fiscal year 2013 in December 2011 and requested a non-application of the MOE requirement for the period of July 1, 2012, through June 30, 2013. On February 10, 2012, CMS notified Maine that it qualified for the non-application for the requested period.
Maine submitted SPA #12–010 on August 1, 2012, which proposed changes to its Medicaid eligibility rules for parents, caretaker relatives, children, and to Medicare savings programs (MSPs). Specifically, Maine proposed: Reducing the income eligibility limit from 150 percent of the FPL to 100 percent for parents and caretaker relatives who may qualify under section 1902(a)(10)(A)(i)(I) and 1931 of the Act; lowering the age limit of eligibility from 20 to 18 for children who meet the eligibility requirements for the aid to families with dependent children (AFDC) state plan but who would not have received AFDC based on age; and reducing income eligibility for the MSPs through the elimination of certain income disregards. Maine eventually split the SPA into two, with the proposal relating to families, caretaker relatives, and children identified as SPA #12–010, and the proposal relating to MSPs identified as SPA #12–010A.
On January 7, 2013, CMS approved SPA #12–010A, but disapproved SPA #12–010. CMS determined that Maine's SPAs proposed eligibility rules more restrictive than Maine's rules in effect on March 23, 2010. However, due to Maine's FY 2013 budget deficit
However, CMS determined that Maine was not permitted an exception from the MOE for the eligibility rule changes proposed by SPA #12–010. The changes proposed by SPA #12–010 applied to individuals who are exempted from the non-application provisions of the MOE requirement, specifically, adults whose incomes are below 133 percent of the FPL and children.
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 a copy of the notice to a State Medicaid agency that informs the agency of the time and place of the hearing, and the issues to be considered. If we subsequently notify the agency of additional issues that will be considered at the hearing, we will also publish that notice.
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
The notice to Maine announcing an administrative hearing to reconsider the disapproval of its SPA reads as follows:
Dear Ms. Mayhew:
I am responding to your request for reconsideration of the decision to disapprove the Maine State Plan Amendment (SPA) 12–010 which was submitted on August 1, 2012, and disapproved on January 7, 2013. The SPA proposed changes to eligibility for parents, caretaker relatives, and children whose income is at or below 133 percent of the federal poverty level (FPL). The proposal would make eligibility standards, methods, and procedures more restrictive than those that were in effect on March 23, 2010.
I disapproved Maine SPA 12–010 because the proposal would have eliminated Medicaid eligibility for parents and caretaker relatives eligible under sections 1902(a)(10)(A)(i)(I) and 1931 whose incomes are between 100 percent and 133 percent of the FPL, and Medicaid eligibility of certain individuals considered “children” under Maine's state Medicaid plan. Both proposals constituted more restrictive eligibility standards than those in effect in Maine as of March 23, 2010, that could not be excepted from the maintenance-of-effort (MOE) mandate that Maine is subject to under section 1902(a)(74) and (gg) of the Social Security Act (hereafter “the Act”). At issue in this appeal are the following issues, which are more detailed than set out in the disapproval letter:
While states generally have authority to modify Medicaid eligibility rules, sections 1902(a)(74) and (gg) of the Act require that states maintain eligibility standards, methodologies, and procedures that are no more restrictive than those in effect under a state's plan as of the date of enactment of the Patient Protection and Affordable Care Act (March 23, 2010). This MOE requirement applies to adults until a state's health insurance exchange is operational (January 1, 2014) and to children until October 1, 2019.
Section 1902(gg)(3) of the Act offers a partial non-application of the MOE requirement during the period between January 1, 2011, and December 31, 2013, when a state certifies to the Secretary that it has a budget deficit during the fiscal year for which it is seeking a non-application, or projects a budget deficit during the succeeding fiscal year. This provision limits the non-application to “nonpregnant, nondisabled adults who are eligible for medical assistance under the state plan or under a waiver of the plan at the option of the state and whose income exceeds 133 percent of the poverty line.”
Maine certified a projected budget deficit for state fiscal year 2013 in December 2011 and requested a non-application of the MOE requirement for the period of July 1, 2012, through June 30, 2013. On February 10, 2012, the Centers for Medicare & Medicaid Services (CMS) notified Maine that it qualified for the non-application for the requested period.
Maine submitted SPA #12–010 on August 1, 2012, which proposed changes to its Medicaid eligibility rules for parents, caretaker relatives, children, and to Medicare savings programs (MSPs). Specifically, Maine proposed: reducing the income eligibility limit from 150 percent of the FPL to 100 percent for parents and caretaker relatives who may qualify under section 1902(a)(10)(A)(i)(I) and 1931 of the Act; lowering the age limit of eligibility from 20 to 18 for children who meet the eligibility requirements for the aid to families with dependent children (AFDC) state plan but who would not have received AFDC based on age; and reducing income eligibility for the MSPs through the elimination of certain income disregards. Maine eventually split the SPA into two, with the proposal relating to families, caretaker relatives and children identified as SPA #12–010, and the proposal relating to MSPs identified as SPA #12–010A.
On January 7, 2013, CMS approved SPA #12–010A, but disapproved SPA #12–010. CMS determined that Maine's SPAs proposed eligibility rules more restrictive than Maine's rules in effect on March 23, 2010. However, due to Maine's FY 2013 budget deficit certification, CMS determined that non-application of the MOE requirement could apply to the changes to the MSP eligibility rules in SPA #12–010A. (The SPA will be effective only through June 30, 2013, unless the state certifies that in the fiscal year beginning July 1, 2013, it again projects a budget deficit.) CMS concluded that SPA #12–010A did not reduce eligibility for any group of individuals eligible for Medicaid on the basis of a disability, pregnancy, or status as a child. (On February 20, 2013, Louis Bourgoin and others filed suit in the United States District Court for the District of Maine against the U.S. Department of Health & Human Services seeking to set aside the agency's approval of Maine SPA#12–010A.)
However, CMS determined that Maine was not permitted an exception from the MOE for the eligibility rule changes proposed by SPA #12–010. The changes proposed by SPA #12–010 applied to individuals who are exempted from the non-application provisions of the MOE requirement, specifically, adults whose incomes are below 133 percent of the FPL and children.
In its letter of disapproval, CMS responded to Maine's claim that
I am scheduling a hearing on your request for reconsideration to be held on May 23, 2013, at the CMS Boston Regional Office, JFK Federal Building, 15 N. Sudbury Street, Room 2050, Boston, Massachusetts 02203–0003 to reconsider CMS' decision to disapprove Maine SPA #12–010.
If this date is not acceptable, I would be glad to set another date that is mutually agreeable to the parties. The hearing will be governed by the procedures prescribed by federal regulations at 42 CFR Part 430.
I am designating Mr. Benjamin 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.
Sincerely,
Section 1116 of the Social Security Act (42 U.S.C. 1316; 42 CFR 430.18)
Notice of intent to provide expansion and capacity building funding to the incumbent Senior Medicare Patrol (SMP) grantees under limited competition.
The Administration for Community Living is announcing the availability of expansion funds for the support of the Senior Medicare Patrol (SMP) Program. This additional funding opportunity will be used to expand the reach of the SMP program with the explicit purpose of expanding current program capacity to recruit, train, and support the SMP volunteer network. In addition, this funding opportunity will increase targeted collaborative efforts with the Centers for Medicare and Medicaid Services, Office of Inspector General and other law enforcement entities in identified high fraud states.
HIPAA of 1996 (Pub. L. 104–191).
The deadline date for comments on this program announcement is May 13, 2013. Other important dates:
• The application due date May 27, 2013.
• The anticipated start date is September 30, 2013.
During the past several years, the Department of Health and Human Services has increased efforts to fight Medicare and Medicaid fraud. The Administration for Community Living (ACL), Administration on Aging (AoA), through the SMP program, has worked in partnership with the Centers for Medicare and Medicaid Services (CMS), the Office of Inspector General (OIG), and the Department of Justice to expand strategies to eliminate waste, fraud, and abuse in these Federal programs. This additional funding opportunity will be used to expand the reach of the SMP program with the explicit purpose of expanding efforts to target collaborative efforts with CMS, OIG and other law enforcement entities in high fraud states and to expand current capacity to recruit, train, and support the SMP volunteer network.
It is necessary to limit competition for this program to the current SMP grantees to expand their implementation efforts. In order for the outcomes expected to be produced within the allotted timeframe of the program, the infrastructure for achieving these results must already be in place. This infrastructure includes:
• A proven SMP volunteer management, training, and recruiting program;
• Expertise in capturing data in the SMP management, tracking, and reporting system (SMART FACTS);
• Established partnership relationships between the SMP program and state and local fraud control partners, including CMS, OIG, Attorney General, and State Insurance Commissioners offices;
• Developed and tested SMP program public awareness materials, brochures, PSAs, and other resources to use in outreach and educational efforts;
• Expertise and experience in reaching targeted populations with the SMP message, among others.
The current SMP projects are uniquely qualified to address the requirements contained in this funding opportunity. Their established infrastructure and expertise will enable them to successfully meet the challenging and time-sensitive requirements of this program. It is essential that the infrastructure, foundation of expertise, and proven experience is in place to assure the grant objectives are achieved.
A.
B.
C.
Incumbent Senior Medicare Patrol (SMP) grantees.
A. SF 424—Application for Federal Assistance.
B. SF 424A—Budget Information.
C. Separate Budget Narrative/Justification.
D. SF 424B—Assurances. Note: Be sure to complete this form according to
E. Lobbying Certification.
F. Program narrative no more than twenty pages.
G. Work Plan.
H. The application should be submitted through grants.gov using the funding opportunity # HSS–2013–ACL–AoA–SP–0049.
Three field reviewers external to the Office of Elder Rights will be assigned to review and score each application.
For further information or comments regarding this program expansion supplement, contact Rebecca Kinney, U.S. Department of Health and Human Services, Administration for Community Living, Administration on Aging, Office of Elder Rights, One Massachusetts Avenue NW., Washington, DC 20001; telephone (202) 357–3520; fax (202) 357–3560; email
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of a guidance for industry entitled “Self-Selection Studies for Nonprescription Drug Products.” This guidance is intended to provide recommendations to industry involved in developing and conducting self-selection studies to support an application for nonprescription drug products. A self-selection study assesses the ability of consumers to apply drug labeling information to their personal health situation to make correct decisions about whether or not it is appropriate for them to use a drug product. This guidance finalizes the draft guidance issued on September 19, 2011.
Submit either electronic or written comments on Agency guidances at any time.
Submit written requests for single copies of this guidance to the Division of Drug Information, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 2201, Silver Spring, MD 20993–0002. Send one self-addressed adhesive label to assist that office in processing your requests. See the
Submit electronic comments on the guidance to
Barbara R. Cohen, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 22, Rm. 5437, Silver Spring, MD 20993–0002, 301–796–2060.
FDA is announcing the availability of a guidance for industry entitled “Self-Selection Studies for Nonprescription Drug Products.” A self-selection study assesses the ability of consumers to apply drug labeling information to their personal health situation to make correct decisions about whether or not it is appropriate for them to use a drug product. The guidance provides recommendations to industry involved in developing and conducting self-selection studies to support an application for nonprescription drug products.
The guidance includes recommendations regarding study design, study conduct, and final reporting of self-selection studies. The guidance should not be considered a substitute for an FDA review of specific protocols. This guidance finalizes the draft guidance issued on September 19, 2011 (76 FR 58018). FDA has reviewed the docket comments submitted in response to the draft guidance and the guidance was revised based on that review. The guidance also incorporates advice obtained from the Nonprescription Drugs Advisory Committee at a meeting on September 25, 2006, at which the committee considered issues related to analysis and interpretation of consumer studies conducted to support marketing of nonprescription drug products.
This guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the Agency's current thinking on self-selection studies for nonprescription drug products. It does not create or confer any rights for or on any person and does not operate to bind FDA or the public. An alternative approach may be used if such approach satisfies the requirements of the applicable statutes and regulations.
This guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520). The collections of information in 21 CFR parts 312 and 314 have been approved under OMB control numbers 0910–0014 and 0910–0001, respectively.
Interested persons may submit either electronic comments regarding this document to
Persons with access to the Internet may obtain the document at either
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing the availability of the guidance entitled “Medical Device Classification Product Codes.” This document describes how device product codes are used in a variety of FDA program areas to regulate and track medical devices regulated by the Center for Devices and Radiological Health (CDRH) and the Center for Biologics Evaluation and Research (CBER).
Submit either electronic or written comments on this guidance at any time. General comments on Agency guidance documents are welcome at any time.
Submit written requests for single copies of the guidance document entitled “Medical Device Classification Product Codes” to the Division of Small Manufacturers, International, and Consumer Assistance, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 4613, Silver Spring, MD 20993–0002 or the Office of Communication, Outreach and Development (HFM–40), 1401 Rockville Pike, suite 200N, Rockville, MD 20852. Send one self-addressed adhesive label to assist that office in processing your request, or fax your request to CDRH at 301–847–8149. See the
Submit electronic comments on the guidance to
Since the May 28, 1976, Medical Device Amendments were passed, the Classification Regulation Panels (parts 862 through 892 (21 CFR parts 862 through 892)) have been the basis for CDRH's Classification Product Code structure and organization. These 16 Panels have largely been the driving force for CDRH's internal organizational structure as well. These Panels were established with the 1976 Medical Device Amendments, and rulemaking is required in order to add to or modify the Panels. However, rulemaking has resulted in very few additions or modifications to the Panels and subgroups since 1976.
In order to respond to the evolution of device technology, classification product codes were created to assist in accurate identification and tracking of current medical devices and to allow for tracking and easy reference of predicate device types. Classification product codes are a method of classifying medical devices. CDRH and a subset of CBER-regulated medical device product codes consist of a three-letter combination that associates a device's type with a product classification designated for the application. Classification product codes and information associated with these devices, such as names and attributes, are assigned by CDRH to support their regulation.
The purpose of this guidance document is to educate regulated industry and FDA Staff on how, when, and why to use classification product codes for medical devices regulated by CDRH and CBER. This document describes how classification product codes are used in a variety of FDA program areas to regulate and track medical devices. This document is limited to medical devices as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)) and does not discuss classification products codes used to regulate nonmedical electronic radiation-emitting products.
The scope of the guidance document includes devices described in the existing classification under parts 862 through 892. It also describes how classification product codes are used for CBER regulated devices, which currently do not fall within this existing classification. This guidance may be applicable to future devices. It also covers unclassified devices and devices not yet classified.
In the
This guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the Agency's current thinking on medical device classification product codes. It does not create or confer any rights for or on any person and does not operate to bind FDA or the public. An alternative approach may be used if such approach satisfies the requirements of the applicable statute and regulations.
Persons interested in obtaining a copy of the guidance may do so by using the Internet. A search capability for all CDRH guidance documents is available at
This guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520). The collections of information in 21 CFR part 803, subpart A through E, have been approved under OMB control number 0910–0437; the collections of information in 21 CFR part 807, subpart E, have been approved under OMB control number 0910–0120; and the
Interested persons may submit either electronic comments regarding this document to
Food and Drug Administration, HHS.
Notice of Availability.
The Food and Drug Administration (FDA) is announcing the selection of disease areas to be addressed during the first 3 years of Patient-Focused Drug Development. This 5-year initiative is being conducted to fulfill FDA's performance commitments made as part of the fifth authorization of the Prescription Drug User Fee Act (PDUFA V). It provides a more systematic approach for the Agency to obtain patients' input on specific disease areas, including their perspectives on their condition, its impact on daily life, and available therapies. FDA selected these disease areas based on a set of selection criteria, the perspectives of the reviewing divisions at FDA, and the public input received on a preliminary set of disease areas published in the
The general schedule of fiscal years (FY) 2013–2015 meetings concerning Patient-Focused Drug Development, information on how stakeholders can prepare for them, and information on how stakeholders may leverage Patient-Focused Drug Development to generate input on disease areas that are not addressed through the PDUFA V commitments can be found at the Web site for Patient-Focused Drug Development:
Graham Thompson, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, rm. 1199, Silver Spring, MD 20993, 301–796–5003, FAX: 301–847–8443, Email:
On July 9, 2012, the President signed into law the Food and Drug Administration Safety and Innovation Act (FDASIA) (Pub. L. 112–144). Title I of FDASIA reauthorizes the Prescription Drug User Fee Act (PDUFA), which provides FDA with the necessary user fee resources to maintain an efficient review process for human drug and biologic products. The reauthorization of PDUFA includes performance goals and procedures that represent FDA's commitments during FY 2013–2017. These commitments are referred to in section 101 of FDASIA and are available on the FDA Web site at
Section X of these commitments relates to enhancing benefit-risk assessment in regulatory decision-making. A key part of regulatory decision-making is establishing the context in which the particular decision is made. For purposes of drug marketing approval, this includes an understanding of the severity of the treated condition and the adequacy of the available therapies. Patients who live with a disease have a direct stake in the outcome of FDA's decisions and are in a unique position to contribute to the understanding of their disease.
FDA has committed to obtain the patient perspective on 20 disease areas during the course of PDUFA V. For each disease area, the Agency will conduct a public meeting to discuss the disease and its impact on patients' daily lives, the types of treatment benefit that matter most to patients, and patients' perspectives on the adequacy of available therapies. These meetings will include participation of FDA review divisions, the relevant patient community, and other interested stakeholders.
On September 24, 2012, FDA published a
Almost 4,500 comments addressing over 90 disease areas were submitted by patients, patient advocates and advocacy groups, caregivers, healthcare providers, professional societies, scientific and academic experts, pharmaceutical companies, and others. The majority of comments were submitted by individual patients. The comments generally focused on one or more of the following: Nominations of support for individual disease areas or groups of disease areas, general suggestions for Patient-Focused Drug Development, and topics outside the scope of the program. Many comments discussed the impact of the disease on daily life and the symptoms that were most concerning to patients. Others addressed lack of treatment options or the nature of specific treatments. Over half of the comments received concerned lung cancer, narcolepsy, and interstitial lung disease. Other disease areas also received a significant number of comments, including migraine, pulmonary fibrosis, amyloidosis, myalgic encephalomyelitis/chronic fatigue syndrome, amyotrophic lateral sclerosis, chronic obstructive pulmonary disease, lysosomal storage disorders, peripheral neuropathy, dystonia, and fibromyalgia. Comments were received for numerous other disease areas not listed in this notice. Individual comments may be viewed at
Input from the public was particularly helpful for FDA in better understanding the aspects of diseases that are not formally measured in clinical trials as
• Disease areas that are chronic, symptomatic, or affect functioning and activities of daily living;
• disease areas for which aspects of the disease are not formally captured in clinical trials; and
• disease areas for which there are currently no therapies or very few therapies, or the available therapies do not directly affect how a patient feels or functions.
FDA's selection also reflects the Agency's desire to include a diverse set of disease areas that represent the wide range of diseases the Agency encounters in its regulatory decision-making. These criteria, also published in the September 24, 2012,
• Disease areas that reflect a range of severity, from diseases that are life-threatening to those that are mild and symptomatic;
• disease areas that have a severe impact on identifiable subpopulations, such as children or the elderly; and
• disease areas that represent a broad range in terms of size of the affected population, including common conditions experienced by large numbers of patients and rare diseases that affect much smaller patient populations.
Patient-Focused Drug Development was conceived as a mechanism to learn more from patients where their perspectives could be helpful to drug development and FDA's review of applications for new drugs in certain disease areas. For FDA's review divisions, this kind of input is most helpful when the impact of a disease on patients is not well understood or endpoints for studying drugs for a disease are not clearly defined or established. The potential to fill these information gaps by hearing from patients was also a key consideration in identifying the initial 12 disease areas.
FDA has selected the following diseases to be addressed in FY 2013–2015:
• Alpha-1 antitrypsin deficiency;
• breast cancer;
• chronic Chagas disease;
• female sexual dysfunction;
• fibromyalgia;
• hemophilia A, hemophilia B, von Willebrand disease, and other heritable bleeding disorders;
• HIV;
• idiopathic pulmonary fibrosis;
• irritable bowel syndrome, gastroparesis, and gastroesophageal reflux disease with persistent regurgitation symptoms on proton-pump inhibitors;
• lung cancer;
• myalgic encephalomyelitis/chronic fatigue syndrome;
• narcolepsy;
• neurological manifestations of inborn errors of metabolism;
• Parkinson's disease and Huntington's disease;
• pulmonary arterial hypertension; and
• sickle cell disease.
A schedule of the meetings planned for each year can be found at the FDA Patient-Focused Drug Development Web site described in the following section of this notice.
FDA will initiate a second public process to determine the list of disease areas for FY 2016–2017. The Agency recognizes that there are many more disease areas than can be addressed in the planned FDA meetings under PDUFA V, and FDA will seek other opportunities to gather public input on disease areas not addressed through this PDUFA V commitment. FDA also encourages stakeholders to identify and organize patient-focused collaborations to generate public input on other disease areas with regard to the types of questions addressed through this PDUFA commitment, using the process established through Patient-Focused Drug Development as a model. More information on other opportunities for gathering patient input can be found on the Patient-Focused Drug Development Web site.
FDA has a Web site on Patient-Focused Drug Development:
National Institutes of Health, HHS.
Notice.
The inventions listed below are owned by an agency of the U.S. Government and are available for licensing in the U.S. in accordance with 35 U.S.C. 207 to achieve expeditious commercialization of results of federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing.
Licensing information and copies of the U.S. patent applications listed below may be obtained by writing to the indicated licensing contact at the Office of Technology Transfer, National Institutes of Health, 6011 Executive Boulevard, Suite 325, Rockville, Maryland 20852–3804; telephone: 301–496–7057; fax: 301–402–0220. A signed Confidential Disclosure Agreement will be required to receive copies of the patent applications.
• The vectors will be extremely useful for experiments in which both
• The vectors can also be used for screening cancer cell lines and in tumor models for reporter gene activity.
• The vectors can be useful in drug development.
• The bioluminescent marker allows for effective visualization of deep (non-surface) tumors in mice.
• The fluorescence label permits efficient sorting of tumor cells from normal (non-labeled) cells after tumors are excised from the mice.
• The vectors allow
• The vectors sustain long-term expression.
• Early-stage
• Pre-clinical
•
•
• US Application No. 61/435,989 filed 25 Jan 2011
• PCT Application No. PCT/US2012/022511 filed 25 Jan 2011
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable materials, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Office of the Assistant Secretary for Housing, HUD.
Notice.
The proposed information collection requirement described below will be submitted to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act. The Department is soliciting public comments on the subject proposal.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: Reports Liaison Officer, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410, Room 9120 or the number for the Federal Information Relay Service (1–800–877–8339).
Theodore K. Toon, Director, Office of Multifamily Housing Development, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410, telephone (202) 708–1142 (this is not a toll free number) for copies of the proposed forms and other available information.
The Department is submitting the proposed information collection to OMB for review, as required by the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35, as amended).
This Notice is soliciting comments from members of the public and affected agencies concerning the proposed collection of information to: (1) Evaluate whether the proposed collection is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Enhance the quality, utility, and clarity of the information to be collected; and (4) Minimize the burden of the collection of information on those who are to respond; including the use of appropriate automated collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
This Notice also lists the following information:
The Paperwork Reduction Act of 1995, 44 U.S.C., Chapter 35, as amended.
Office of the Assistant Secretary for Housing, HUD.
Notice.
The proposed information collection requirement described below will be submitted to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act. The Department is soliciting public comments on the subject proposal.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: Reports Liaison Officer, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410, Room 9120 or the number for the Federal Relay information Service, 1–800–877–8330.
Theodore K. Toon, Director, Office of Multifamily Housing Development, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410, telephone (202) 402–8386 (this is not a toll free number) for copies of the proposed forms and other available information.
The Department is submitting the proposed information collection to OMB for review, as required by the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35, as amended).
This Notice is soliciting comments from members of the public and affected agencies concerning the proposed collection of information to: (1) Evaluate whether the proposed collection is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Enhance the quality, utility, and clarity of the information to be collected; and (4) Minimize the burden of the collection of information on those who are to respond; including the use of appropriate automated collection techniques or other forms of information technology, e.g., permitting electronic submission of responses. This Notice also lists the following information:
The Paperwork Reduction Act of 1995, 44 U.S.C., Chapter 35, as amended.
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, Department of Housing and Urban Development (HUD).
Notice.
In compliance with Section 202(c) (5) of the National Housing Act, this notice advises of the cause and description of administrative actions taken by HUD's Mortgagee Review Board against HUD-approved mortgagees.
Nancy A. Murray, Secretary to the Mortgagee Review Board, 451 Seventh Street SW., Room B–133/3150, Washington, DC 20410–8000; telephone number 202–708–2224 (this is not a toll-free number). Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Information Service at 800–877–8339.
Section 202(c)(5) of the National Housing Act (12 U.S.C. 1708(c)(5)) requires that HUD “publish a description of and the cause for administrative action against a HUD-approved mortgagee” by the Department's Mortgagee Review Board (“Board”). In compliance with the requirements of Section 202(c)(5), this notice advises of actions that have been taken by the Board in its meetings from January 1, 2012 to September 30, 2012.
Office of the Assistant Secretary for Public and Indian Housing, HUD.
Notice.
This notice makes final an interim notice that advised public housing agencies (PHAs), as well as members of the public, that HUD intended to award 5 points for the occupancy sub-indicator of the Capital Fund indicator to all PHAs for the Capital Fund Indicator under the PHAS interim rule published February 23, 2011. The award of 5 points is awarded as a temporary measure to address the transition to the scoring system implemented by the PHAS interim rule, especially as relates to the Capital Fund sub-indicator that assesses occupancy rate. The 5 points for this occupancy sub-indicator is awarded for fiscal years ending March 31, 2011, June 30, 2011, September 30, 2011, and December 31, 2011. This notice follows an interim notice for comment published on June 11, 2012.
Claudia J. Yarus, Real Estate Assessment Center (REAC), Office of Public and Indian Housing, Department of Housing and Urban Development, 550 12th Street SW., Suite 100, Washington, DC 20410, telephone 202–475–8830 (this is not a toll-free number). Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Relay Service at 800–877–8339. Additional information is available from the REAC Internet site at
On June 11, 2012, HUD published for public comment an interim notice that advised that for PHA's with fiscal years ending March 31, 2011, June 30, 2011, September 30, 2011 and December 31, 2011, HUD was awarding all PHAs 5 points for the occupancy rate sub-indicator under the Capital Fund Program Indicator. The score already assigned for occupancy rate sub-indicator of the Capital Fund score was made advisory only as of the effective date of the interim notice, and remains advisory for a period of one year from the date of publication of this notice.
This notice makes final the June 11, 2012 interim notice without change.
The public comment period for the interim notice closed on July 11, 2012. By the close of the comment period, HUD received 22 public comments. Comments were submitted by housing authorities, a consortium, and public housing trade associations.
A summary of the significant issues raised in the comments, and HUD's responses, follows.
The percentage difference between the MASS occupancy sub-indicator and the Capital Fund occupancy sub-indicator is due to the exclusion of all HUD approved vacant units from the MASS occupancy calculation. The higher percentage required for full points under the MASS sub-indicator reflects that HUD approved vacant units (under 24 CFR 990.145) are not considered in the formula used to determine this occupancy percentage. Since those same HUD approved vacant units are considered in the formula used to calculate the Capital Fund occupancy percentage, the percentage required for full points under Capital Fund is lower.
With the award of five (5) points to all PHAs for the Capital Fund occupancy sub-indicator for FY 2011, as provided in this notice, for this assessment cycle a PHA cannot “fail” one occupancy sub-indicator and still be designated a high performer or “pass” the other occupancy sub-indicator. Furthermore, even were it not for this adjustment, as the two occupancy sub-indicators are intended for different purposes, it would not be incongruous for PHAs to receive differing scores.
Insofar as a commenter claims that the standard is unfair, this Notice addresses that issue by providing 5 additional points and thus extending the time during which PHAs can prepare to address the new standard.
Although HUD's diverse housing programs provide necessary low-income housing, the public housing program serves a different population than the multifamily program and both of these programs serve different needs than conventional multifamily real estate firms. With the need for low-income housing and the long waiting lists, the occupancy percentages in the PHAS rule are consistent with the Department's goals of utilization and housing more low-income families.
A commenter stated that HUD has a system that recognizes that some units are vacant for legitimate reasons. These include having to perform modernization work on properties that, in some cases, are now approaching the 75 year old mark. Often, vacating these units for renovation is more cost-effective and better for the residents. In situations where PHAs have HUD approval for this work, they should not be penalized for taking these steps to improve their properties and the lives of their residents. The Capital Fund occupancy sub-indicator, however, does exactly that, by measuring occupancy rates regardless of any reason why a unit might be vacant. This method is inherently flawed, with “perverse consequences,” and fails to measure PHA management performance accurately. Occupancy should only measured once, and only after HUD-approved vacancies have been excluded.
One commenter stated that modernization cannot be efficient if a PHA has to wait until a contract is signed before moving tenants to do the modernization. A commenter stated that renovating dwelling units that are located in close proximity, then moving residents permanently into the newly renovated units, and placing their previous dwelling units on the next annual Capital Fund Program (CFP) renovation program is the most efficient way to manage the program and the least disrupting to the lives of residents. It is not logical to rent the renovated dwelling units and wait for more dwelling units to become vacant, which would be scattered throughout the development, to begin the next CFP renovation program.
A commenter stated that it is counter-intuitive that HUD would approve modernization initiatives and then penalize the PHA for doing exactly what was approved by HUD. Two commenters cited their specific experience with having units approved to be offline for rehabilitation and being penalized under the Capital Fund indicator, even though they were following HUD's requirements. One of these commenters stated that the PHAS snapshot taken on the last day of the fiscal year does not capture all units leased at the end of the month.
HUD is concerned about the time that dwelling units are in modernization status. The scoring for the Capital Fund occupancy sub-indicator allows up to 4 percent of the PHA's dwelling units to be vacant at any one time for non-dwelling uses and modernization in order for the PHA to receive the full 5 points and up to 7 percent of the units to receive partial points. To achieve a higher occupancy rate that results in a corresponding higher score under this sub-indicator, PHAs are encouraged to continue ongoing proactive capital projects, strategize and stage their modernization projects minimizing the number of units that are off-line as well as the time, and to consider performing modernization while units are occupied since not all modernization work requires the family to vacate. With the Capital Fund occupancy measure being based on the data the PHA enters in the Public and Indian Housing Information Center (PIC) as of the last day of the PHA's fiscal year, HUD believes that PHAs can effectively plan their modernization projects early in the fiscal year in preparation for the occupancy percentage calculation at the end of the PHA's fiscal year.
HUD can legally approve the use of units for a number of purposes other than occupancy, but it is the decision of the PHA how to best serve the families in its community and minimize the number of units that are not occupied by tenants. With respect to HUD's approval of units under modernization, this approval is granted under the Operating Fund, not for the Capital Fund or occupancy purposes. However, because Operating Funds can be used to make certain improvements and repairs, for example, to turn a unit over for occupancy, this approval and the
The methodology for counting units for a Uniform Physical Condition Standards (UPCS) inspection has no impact on a PHA's occupancy percentage or score under PHAS. Units are counted under the UPCS inspection protocol, including units vacant for modernization, for the purpose of determining the inspection sample size. The calculation of a PHA's Capital Fund occupancy percentage, determined based on the data the PHA has entered in PIC, is based on units occupied in PIC at the FYE of that agency. Unit count issues experienced during a PASS inspection may indicate the PHA has data errors in PIC that need to be corrected or the PASS protocol counts the units differently to serve the inspection process. In instances when there are PIC errors, it is incumbent on the PHA to get these errors corrected as, in addition to affecting their PHAS Capital Fund indicator score, it can also affect the PHA's funding under Capital Fund and Operating Fund.
A commenter stated that this occupancy sub-indicator is presumably to measure whether PHAs are adequately using Capital Funds to improve units for occupancy. However, there are many factors outside of the use of Capital Funds that determine successful occupancy rates, including tenant driven factors, property management, and local housing markets.
As stated in HUD responses above, HUD does not believe that it is redundant to have two occupancy sub-indicators since each one measures something different. The emphasis on occupancy in the PHAS rule is consistent with HUD's goals that include increasing the number of families housed through its low-income rental housing programs.
HUD disagrees that the Capital Fund occupancy sub-indicator discourages renovation and complicates PHAS. The Capital Fund provides money for PHAs to modernize units for occupancy by low income families and considering occupancy provides a good measure of how well those funds are being used for capital expenditures. All PHAs continue to request and receive Capital Funds and all PHAs obligate these funds timely in order to rehabilitate units and return those units to commerce for occupancy by income eligible families. As such, the Capital Fund occupancy sub-indicator is a valuable measure of how the program funds authorized for improving and modernizing units are being used to house families.
The management occupancy sub-indicator standard is unrealistic and unrepresentative, in that a 98 percent occupancy level in order to be given an `A' is too high, given that HUD accepts a 3 percent vacancy rate as normal because of routine turnovers. Point deductions occur too rapidly, with a 95 percent occupancy rate causing the property to lose half the possible points. 95 percent should never be a failing grade. Since 95 percent is the standard in multi-family, it is not fair essentially to fail a public housing property for having an occupancy rate that is acceptable in the multifamily program;
When HUD does a financial pro forma, it is based on 95 percent occupancy, and rents are set a high enough level to make sure that the development is financially viable at this 95 percent rate. Thus a 95 percent occupancy rate is the norm in the multifamily program. If owners can achieve a higher rate, they are able to earn additional money. Under the management occupancy sub-indicator, however, an public housing property with a 95 percent occupancy rate will only be awarded 8 out of 16 possible points, a 50 percent score or the equivalent of failing;
The order of the waiting list, the need to have current screening and verifications, the fact that the PHA doesn't always get proper notice from families that are vacating, the fact that some applicants cannot move until their current lease ends, the fact that applicants move and do not tell the PHA their new address, and family situations, can all lead to slower turnover. This commenter stated that turnover also depends on the condition of the unit and how long maintenance will take;
To receive maximum points on occupancy under the management indicator, a small PHA might have to keep all but 2 units occupied at all times. Being a small PHA, manpower prevents immediate preparation if more than two apartments are vacant at the same time and it is especially hard to increase manpower, whether by more employees or contractors, when Operating Subsidy cuts require frugality;
For HUD Section 8 New Construction, 94 percent occupancy is considered excellent. Tax Credit developments have an even lower occupancy standard than HUD Section 8 New Construction. The scoring system for occupancy levels needs to be re-evaluated and made more realistic. Each year, 20–30 percent of units turn over for a variety of reasons. Routine turnovers are entirely out of the PHA's control; even where there is no problem getting an apartment ready, getting it filled can be a problem, for instance, with a tenant who decides not to take a unit, or has a criminal record, for example, which delays filling the unit;
Due to frequent turnover, which is common in the rental industry, it is not unusual to have several apartments vacate within a short time of each other. There is always some time needed to prepare the apartment for the next renter and to have the new renter sign their lease. Since this indicator is worth 16 points it is very critical that PHAs have a realistic opportunity to gain the maximum points;
An occupancy rate of equal to or greater than 97 percent is an excellent achievement and should be graded as such. Also, operating subsidy full payment is based on 97 percent occupancy. Point deductions should begin at equal to or less than 96 percent, with 96 percent being a standard rate with minimal points deducted;
The accounts payable sub-indicator should be eliminated as unnecessary, not relevant to evaluating whether properties are fully occupied, in good physical condition and in sound financial health, and a sign of micromanagement. One commenter described specific issues where late court judgments caused problems with the account payable indicator score. Another commenter stated that as long as the PHA is well-managed, in sound financial health, and occupied, the exact arrangements a PHA has with its vendors to pay its bills is not an appropriate subject for HUD review and scoring. An agency's performance on this subindicator only muddies the scoring of its performance on the key indicators of physical status, occupancy
Because of the way billing cycles work, there will always be some accounts payable. The question should be whether the PHA has the ability to pay off the accounts payable;
The physical indicator scoring system needs to be revised as it deducts points for some deficiencies disproportionately to their importance, and the scoring system should have an easily understandable point value for each deficiency based on a logical standard;
The physical inspection system continues to have numerous flaws including deducting points that are disproportionate to the value of the deficiency, failing to take into account differences in the size of properties and buildings consistently, including irrelevant and redundant deficiencies, and utilizing a complicated scoring system that lacks transparency. Deficiencies whose severity is minor can still be worth a lot of points, because they have high weights and criticality values. Instead of this system, HUD should develop one in which each deficiency is assigned an individual point value based upon a logical standard. The Department should also undertake a review to determine which deficiencies are not necessary and which could be consolidated. The scoring standard should account for proportionality. Unrealistic point deductions and unessential deficiencies should be eliminated.
PHAS in its entirely should be advisory as PHAs need more time to adjust and plan accordingly and the current schedule is unfair. Since it is clear that HUD recognizes the deficiencies in the interim rule, including inadequate training and timing, HUD should make all scores advisory for FY 2011 and 2012. The time allotted by HUD to agencies to meet the new PHAS standards was 24 work days for agencies with a fiscal year ending March 31st and 89 work days for agencies with a fiscal year ending June 30th. PHAs should be allowed one full year to prepare for the entire PHAS;
The entire PHAS protocol needs to be revised and simplified. The accounts payable indicator is unnecessary. The financial indicators do not measure what is most important, and the inspection protocol now well over a decade old is cumbersome, expensive to administer and adds little value to management of property. PHAS can be improved and can be supported with fewer resources. The Department should work more closely with local housing agencies and industry groups to arrive at a better system that will be more useful and beneficial to housing agencies, residents, HUD and the public. The number of deficiencies should be reduced and similar ones consolidated;
The presence of brand new, more stringent indicators in the Financial, Management Operations, and Capital Fund subsystems (including the occupancy subindicator within the Capital Fund), in conjunction with the lack of time and training made available to housing authorities to learn about the changes in the system, are all cause for making scores issued under the interim rule advisory. Imposing these new standard puts PHAs' reputations at risk;
Having standards apply retroactively is not fair, and the Department in this notice recognizes that fact. This same logic applies to PHAS generally. Numerous other changes, in addition to the Capital Fund occupancy sub-indicator were made, and agencies had no more time to adjust to these changes than they did to the Capital Fund occupancy sub-indicator. This is particularly true with respect to the management indicator;
The scoring system is arbitrary and frustrating to work with and does not give a fair assessment of the condition of the property as it is intended to do. The system is complex and unwieldy, and can lead to excessive deductions for minor issues;
Health and safety deductions are “devastating” because they are worth too many points even if only a small item;
REAC inspectors should not nit-pick minor issues. REAC physical inspectors need to be aware of the cost to a PHA for findings of very little significance. Common sense should be used for the overall evaluation of a property. Major defects and safety issues should be written up—however some inspectors are not giving the property the overall scoring it should receive;
For physical inspections, the REAC inspector should accept all documentation provided by the PHA and then grade according to that. For example, if a PHA has documentation that it does not own a fence that runs along its property line then the inspector should not grade the fence instead of the inspector grading it and then the PHA having to appeal it. This is a waste of everyone's time;
PHAS should emphasize the units, since that is where residents actually live, but the units are only worth 35 percent of the overall score;
There should be ongoing collaboration with the Department in continuing to remedy the major issues in the interim rule;
Since HUD is asking PHAs to act more like private asset managers, the PHAs are asking that HUD do the same with respect to PHAs.
Fish and Wildlife Service, Interior.
Notice of receipt of applications for permit.
We, the U.S. Fish and Wildlife Service, invite the public to comment on the following applications to conduct certain activities with endangered species. With some exceptions, the Endangered Species Act (ESA) prohibits activities with listed species unless Federal authorization is acquired that allows such activities.
We must receive comments or requests for documents on or before May 13, 2013.
Brenda Tapia, Division of Management Authority, U.S. Fish and Wildlife Service, 4401 North Fairfax Drive, Room 212, Arlington, VA 22203; fax (703) 358–2280; or email
Brenda Tapia, (703) 358–2104 (telephone); (703) 358–2280 (fax);
Send your request for copies of applications or comments and materials concerning any of the applications to the contact listed under
Please make your requests or comments as specific as possible. Please confine your comments to issues for which we seek comments in this notice, and explain the basis for your comments. Include sufficient information with your comments to allow us to authenticate any scientific or commercial data you include.
The comments and recommendations that will be most useful and likely to influence agency decisions are: (1) Those supported by quantitative information or studies; and (2) Those that include citations to, and analyses of, the applicable laws and regulations. We will not consider or include in our administrative record comments we receive after the close of the comment period (see
Comments, including names and street addresses of respondents, will be available for public review at the street address listed under
To help us carry out our conservation responsibilities for affected species, and in consideration of section 10(a)(1)(A) of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531
The applicant requests a permit to re-export a biological sample from a deceased captive-born Somali wild ass (
The applicant requests a permit to import biological samples from wild-born captive held gorillas (
The applicant requests a permit to import biological samples collected from wild Andean condors (
The applicant requests a captive-bred wildlife registration under 50 CFR 17.21(g) for the barasingha (
The applicant requests a permit authorizing interstate and foreign commerce, export, and cull of excess barasingha (
The applicant requests renewal of their captive-bred wildlife registration under 50 CFR 17.21(g) for the following families, genera, and species, to enhance their propagation or survival. This notification covers activities to be conducted by the applicant over a 5-year period.
The applicant requests a permit to import a sport-hunted trophy of one male bontebok (
Branch of Permits, Division of Management Authority.
Bureau of Land Management, Interior.
Notice of Public Meeting Cancellation and Public Meeting Change of Location.
In accordance with the Federal Land Policy and Management Act (FLPMA) and the Federal Advisory Committee Act of 1972 (FACA), notice is hereby given that the Dominguez-Escalante National Conservation Area Advisory Council meeting scheduled for May 1, 2013, at the Delta County Courthouse, Room 234, 501 Palmer Street, Delta, CO, has been cancelled. The location of a subsequent meeting scheduled for May 29, 2013, has been changed from the Mesa County Courthouse Annex, Multi-Purpose Room, 544 Rood Avenue, Grand Junction, CO, to the Bill Heddles Recreation Center, 530 Gunnison River Drive, Delta, CO. Notice of both
The cancelled meeting was scheduled for May 1, 2013, from 3 p.m. to 6 p.m. The other meeting that was moved from Grand Junction to Delta, Colorado, is scheduled for May 29, 2013, from 3 p.m. to 6 p.m.
Shannon Borders, Southwest District Public Affairs Specialist, BLM Southwest District Office, 2465 South Townsend Ave., Montrose, CO, 81401. Phone: (970) 240–5399. Email:
The 10-member council advises the Secretary of the Interior, through the BLM, on a variety of planning and management issues associated with the resource management planning process for the Dominguez-Escalante National Conservation Area and Dominguez Canyon Wilderness. Future meetings will be announced through a separate
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has determined not to review an initial determination (“ID”) (Order No. 21) of the presiding administrative law judge (“ALJ”) terminating the investigation based on a consent order stipulation.
Clint Gerdine, Esq., Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, telephone (202) 708–2310. Copies of non-confidential documents filed in connection with this investigation are or will be available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, telephone (202) 205–2000. General information concerning the Commission may also be obtained by accessing its Internet server at
The Commission instituted this investigation on September 21, 2012, based on a complaint filed on behalf of BriarTek IP, Inc. of Alexandria, Virginia. 77 FR 58579–80. The complaint alleges violations of section 337 of the Tariff Act of 1930, as amended, 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 two-way global satellite communication devices, system and components thereof by reason of infringement of certain claims of U.S. Patent No. 7,991,380. The complaint further alleged the existence of a domestic industry. The Commission's notice of investigation named as respondents Yellowbrick Tracking, Ltd. (“Yellowbrick”) of Essex, United Kingdom; DeLorme Publishing Company, Inc.; and DeLorme InReach LLC (collectively, “DeLorme”), both of Yarmouth, Maine.
On December 7, 2012, the Commission determined not to review the ALJ's ID (Order No. 7) terminating Yellowbrick from the investigation based on a settlement agreement. On March 15, 2013, the Commission determined not to review the ALJ's ID (Order No. 17) granting-in-part complainant's motion for summary determination of importation of the accused InReach 1.0 and InReach 1.5 products, and the accused main boards for the InReach 1.5 product with respect to DeLorme.
On March 7, 2013, DeLorme moved to terminate the investigation based on a consent order stipulation. The Commission investigative attorney filed a response in support of the motion and complainant opposed the motion.
The ALJ issued the subject ID on March 15, 2013, granting DeLorme's motion for termination of the investigation. He found that the motion for termination by consent order stipulation satisfied Commission rule 210.21(c)(3). He further found, pursuant to Commission rule 210.50(b)(2), that termination of this investigation by consent order stipulation is in the public interest. No party petitioned for review of the ID.
The Commission has determined not to review the subject ID, and has terminated the investigation.
The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in sections 210.21 and 210.42(h) of the Commission's Rules of Practice and Procedure (19 CFR 210.21, 210.42(h)).
By order of the Commission.
In accordance with Departmental Policy, 28 CFR 50.7, notice is hereby given that a proposed Consent Decree in
This proposed Consent Decree concerns a complaint filed by the United States against Russ Huseby, pursuant to Sections 309(b) and 309(d) of the Clean Water Act (“CWA”), 33 U.S.C. 1319(b) and 1319(d), to obtain injunctive relief from and impose civil penalties against the Defendant for violating the Clean Water Act by discharging pollutants without a permit into waters of the United States. The proposed Consent Decree resolves these allegations by requiring the Defendant to restore the impacted areas and to pay a civil penalty.
The Department of Justice will accept written comments relating to this proposed Consent Decree for thirty (30) days from the date of publication of this
The proposed Consent Decree may be examined at the Clerk's Office, United States District Court for the District of Minnesota, 200 United States Courthouse, 300 South Fourth Street, Minneapolis, MN 55415. In addition, the proposed Consent Decree may be examined electronically at
Employment and Training Administration (ETA), Labor.
Notice.
The Department of Labor (Department), as part of its continuing effort to reduce paperwork and respondent burden, conducts a preclearance consultation program to provide the public and Federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 [44 U.S.C. 3506(c)(2)(A)]. This program helps ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed.
Currently, ETA is soliciting comments concerning the collection of data for a proposed management information system for Youthful Offender Grants.
Written comments must be submitted to the office listed in the addresses section below on or before June 10, 2013.
Submit written comments to Richard Morris, Division of Youth Services, Reintegration of Ex-Offenders, Room N–4511, Employment and Training Administration, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210. Telephone number: 202–693–3603 (this is not a toll-free number). Individuals with hearing or speech impairments may access the telephone number above via TTY by calling the toll-free Federal Information Relay Service at 1–877–889–5627 (TTY/TDD). Fax: 202–693–2764. Email:
Each year, the Department of Labor/Employment and Training Administration is appropriated funds for youthful offender demonstration projects. The Department of Labor uses these funds for a variety of multi-site demonstrations aimed at developing model programs for serving young offenders. The Department expects over the next few years to award 28 new Youthful Offender grants in various sets of demonstrations each year for two years of operation and up to one year of follow-up services and post-placement data collection. In any given year this will result in 28 grants in their first year of operation, 28 grants in their second year of operation, and 28 grants providing follow-up services and tracking post-placement outcomes, for a total of 84 grants collecting data each year.
This data collection request is to permit the Department of Labor to implement a management information system for these various sets of grantees. ETA will be collecting data from these grantees on participant characteristics, services provided, and participant outcomes. This request establishes a reporting and recordkeeping system for a minimum level of information collection that is necessary to comply with Equal Opportunity requirements, to hold Youthful Offender grantees appropriately accountable for the Federal funds they receive, including performance measures, and to allow the Department to fulfill its oversight and management responsibilities.
The Department is particularly interested in comments which:
• evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• enhance the quality, utility, and clarity of the information to be collected; and
• minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submissions of responses.
Comments submitted in response to this comment request will be summarized and/or included in the request for OMB approval of the ICR; they will also become a matter of public record.
Office of Management and Budget, Executive Office of the President.
Notice.
By virtue of the authority vested in the President by Section 2(a) of Pub. B. 87–603 (76 Stat. 593; 42 U.S.C. 2652), and delegated to the Director of the Office of Management and Budget (OMB) by the President through Executive Order No. 11541 of July 1, 1970, the rates referenced below are hereby established. These rates are for use in connection with the recovery from tortiously liable third persons for the cost of inpatient medical services furnished by military treatment facilities through the Department of Defense (DoD). The rates have been established in accordance with the requirements of OMB Circular A–25, requiring reimbursement of the full cost of all services provided. The
National Aeronautics and Space Administration.
Notice of Meeting—Correction.
This is an amended version of NASA's earlier
Monday, April 22, 2013, 9:00 a.m.–4:30 p.m., Local Time.
NASA Headquarters. 300 E Street SW., Room 8E40, Washington, DC 20546.
Ms. Charlene Williams, Office of the Chief Financial Officer, National Aeronautics and Space Administration Headquarters, Washington, DC 20546. Phone: 202–358–2183.
The agenda for the meeting includes briefings on the following topics:
• Finance Update
• Strategy, Performance, Budget Update
• Conference Cost Reporting Requirements
• FY2013 Financial Statement Audit—Unfunded Environmental Liability Estimation
• Internal Control Assurances
• Administrative Session
The meeting will be open to the public up to the seating capacity of the room. It is imperative that the meeting be held on this date to accommodate the scheduling priorities of the key participants. Attendees will be requested to sign a register and comply with NASA Security requirements, including presentation of a valid picture ID to Security before access to NASA Headquarters. Foreign nationals attending this meeting will be required to provide no less than 10 working days prior to the meeting: full name, gender; date/place of birth; citizenship; visa information (number, type, expiration date); passport information (number, country, expiration date); employer/affiliation information (name of institution, address, country, telephone); title/position of attendee; and home address to Ms. Charlene Williams at fax number 202–358–4336. U.S. Citizens and Permanent Residents (green card holders) are requested to submit their name and affiliation 3 working days prior to the meeting to Ms. Charlene Williams via email at
The National Science Board's Committee on Education and Human Resources, pursuant to NSF regulations (45 CFR part 614), the National Science Foundation Act, as amended (42 U.S.C. 1862n–5), and the Government in the Sunshine Act (5 U.S.C. 552b), hereby gives notice in regard to the scheduling of a teleconference for the transaction of National Science Board business and other matters specified, as follows:
Tuesday, April 16, 2013, from 2:00–3:00 p.m. EDT.
(1) Chairman's opening remarks; (2) discussion of a possible role for CEH in enhancing retention of undergraduates in STEM education; and (3) update on the NSTC's committee on STEM education (CoSTEM) activities and their implications for NSF.
Open.
This meeting will be held by teleconference at the National Science Board Office, National Science Foundation, 4201Wilson Blvd., Arlington, VA 22230. A public listening room will be available for this teleconference meeting. All visitors must contact the Board Office (call 703–292–7000 or send an email message to
Please refer to the National Science Board Web site
On January 7, 2013, about 1021 eastern standard time, smoke was discovered by cleaning personnel in the aft cabin of a Japan Airlines (JAL) Boeing 787–8, JA829J, which was parked at a gate at General Edward Lawrence Logan International Airport (BOS), Boston, Massachusetts. About the same time, a maintenance manager in the cockpit observed that the auxiliary power unit (APU)—the sole source of airplane power at the time—had automatically shut down. Shortly afterward, a mechanic opened the aft electronic equipment bay and found heavy smoke and fire coming from the front of the APU battery case. No passengers or crewmembers were aboard the airplane at the time, and none of the maintenance or cleaning personnel aboard the airplane was injured. Aircraft rescue and firefighting personnel responded, and one firefighter received minor injuries. The airplane had arrived from Narita International Airport, Narita, Japan, as a regularly scheduled passenger flight operated as JAL flight 008 and conducted under the provisions of 14 Code of Federal Regulations Part 129.
The investigative hearing is being held to discuss the Boeing 787 battery and battery charger system. Areas that will be discussed include the selection and certification requirements, the battery system design, development, verification and validation processes and the FAA finding of compliance. The goals of this hearing will be to gather additional information on the selection of the lithium ion (Li-ion) battery technology and how this new technology was evaluated, the role of the prime contractor and subcontractors, development of the battery system safety assessment, certification process structure and findings of compliance for the Boeing 787 Li-ion battery system.
Parties to the hearing include the Federal Aviation Administration, The Boeing Company, Thales Avionics and GS Yuasa.
1. Opening Statement by the Chairman of the Board of Inquiry.
2. Introduction of the Board of Inquiry and Technical Panel.
3. Introduction of the Parties to the Hearing.
4. Introduction of Exhibits by Hearing Officer.
5. Overview of the incident and the investigation by Investigator-In-Charge.
6. Calling of Witnesses by Hearing Officer.
7. Closing Statement by the Chairman of the Board of Inquiry.
Additional information can be found on the web at:
The accident docket is DCA13IA037.
The Investigative Hearing will be held in the NTSB Board Room and Conference Center, located at 429 L'Enfant Plaza E., SW., Washington, DC, Tuesday, April 23 and Wednesday, April 24th, 2013 at 9:00 a.m. The public can view the hearing in person or by live webcast at
Individuals requesting specific accommodations should contact Ms. Rochelle Hall at (202) 314–6305 or by email at
NTSB Media Contact: Mr. Eric Weiss
NTSB Investigative Hearing Officer: Mr. David Helson
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning an additional International Reply Service Competitive Contract 3 Negotiated Service Agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
Stephen L. Sharfman, General Counsel, at 202–789–6820.
On April 4, 2013, the Postal Service filed a notice pursuant to 39 CFR 3015.5 announcing that it has entered into an additional International Business Reply Service (IBRS) Competitive Contract 3 negotiated service agreement (Agreement).
The Postal Service filed the following material in conjunction with its Notice, along with public (redacted) versions of supporting financial information:
• Attachment 1—a redacted copy of the Agreement;
• Attachment 2—the certified statement required by 39 CFR 3015.5(c)(2);
• Attachment 3—a copy of Governors' Decision No. 08–24; and
• Attachment 4—an application for non-public treatment of materials filed under seal.
The Commission establishes Docket No. CP2013–59 for consideration of matters raised by the Postal Service's Notice. Interested persons may submit comments on whether the Agreement is consistent with the requirements of 39 CFR part 3020 subpart B, 39 CFR 3015.5, and the policies of 39 U.S.C. 3632, 3633, and 3642. Comments are due no later than April 12, 2013. The public portions of this filing can be accessed via the Commission's Web site,
The Commission appoints Curtis E. Kidd to serve as Public Representative in the captioned proceeding.
1. The Commission establishes Docket No. CP2013–59 for consideration of the matters raised by the Postal Service's Notice.
2. Comments by interested persons in this proceeding are due no later than April 12, 2013.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Curtis E. Kidd to serve as an officer of the Commission (Public Representative) to represent the interests of the general public in this docket.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning an additional International Reply Service Competitive Contract 3 Negotiated Service Agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
Stephen L. Sharfman, General Counsel, at 202–789–6820.
On April 4, 2013, the Postal Service filed a notice pursuant to 39 CFR 3015.5 announcing that it has entered into an additional International Business Reply Service (IBRS) Competitive Contract 3 negotiated service agreement (Agreement).
The Postal Service filed the following material in conjunction with its Notice:
• Attachment 1—a copy of the Agreement;
• Attachment 2—the certified statement required by 39 CFR 3015.5(c)(2);
• Attachment 3—a copy of Governors' Decision No. 08–24; and
• Attachment 4—an application for non-public treatment of materials filed under seal.
Attachments 1 through 3 were filed in redacted (public) and unredacted (sealed) versions.
The Postal Service states that there are differences between the terms of the two agreements, but characterizes them as minor, and asserts that they do not affect the fundamental service being offered or the fundamental structure of the Agreement.
The Commission establishes Docket No. CP2013–58 for consideration of matters raised by the Postal Service's
The Commission appoints Lawrence Fenster to serve as Public Representative in the captioned proceeding.
1. The Commission establishes Docket No. CP2013–58 for consideration of the matters raised by the Postal Service's Notice.
2. Comments by interested persons in this proceeding are due no later than April 12, 2013.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Lawrence Fenster to serve as an officer of the Commission (Public Representative) to represent the interests of the general public in this docket.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Integrity Bancshares, Inc. (“Integrity”) because Integrity has not filed any reports since its Form 10–Q for the period ended September 30, 2007, filed November 13, 2007.
The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of Integrity.
By the Commission.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”)
CHX proposes to amend Article 20, Rule 2 and to adopt Article 20, Rule 2A to implement the Limit Up-Limit Down requirements as detailed in the Regulation NMS Plan to Address Extraordinary Market Volatility (the “Limit Up-Limit Down Plan,” “LULD Plan,” or the “Plan”),which was submitted to and approved, on a one-year pilot basis, by the Securities and Exchange Commission (the “Commission”) pursuant to Rule 608 of Regulation NMS under the Act. The Exchange also proposes to amend Article 1, Rule 2; Article 20, Rule 4; and Article 20, Rule 8 to comport the CHX Only Price Sliding Processes with the proposed Limit Up-Limit Down Price Sliding (“LULD Price Sliding”) functionality and amend Article 16, Rule 8 and Article 20, Rule 10 to update various citations affected by this proposed rule change. The text of this proposed rule change is available on the Exchange's Web site at (
In its filing with the Commission, the CHX included statements concerning the purpose of and basis for the proposed rule changes and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The CHX has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements.
The Exchange proposes to amend Article 20, Rule 2 and adopt Article 20, Rule 2A (“Limit Up-Limit Down Plan and Trading Pauses in Individual Securities Due to Extraordinary Market Volatility”) to implement the Limit Up-Limit Down Plan,
Since May 6, 2010, when the markets experienced excessive volatility in an abbreviated time period (
On April 5, 2011, the Participants filed the Limit Up-Limit Down Plan,
Trading in a NMS Stock immediately enters a Limit State if the NBO (NBB) equals but does not cross the Lower (Upper) Price Band.
For example, assume the Lower Price Band for an NMS Stock is $9.50 and the Upper Price Band is $10.50, such NMS stock would be in a Straddle State if the NBB were below $9.50 and therefore not executable and the NBO were above $9.50 (including a NBO that could be above $10.50). If an NMS Stock is in a Straddle State and trading in that stock deviates from normal trading characteristics, the Primary Listing Exchange may declare a trading pause for that NMS Stock.
Pursuant to the Plan, the Exchange is required to establish, maintain, and enforce written policies and procedures that are reasonably designed to comply with the Limit Up-Limit Down and Trading Pause requirements specified in the Plan. As such, the Exchange proposes that the following rules be operative April 8, 2013.
Proposed paragraph (a)(1)(A) states that “Plan” means the Plan to Address Extraordinary Market Volatility Submitted to the Securities and Exchange Commission Pursuant to Rule 608 of Regulation NMS under the Securities Exchange Act of 1934, Exhibit A to Securities Exchange Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012), as it may be amended from time to time. Also, proposed paragraph (a)(1)(B) states that all capitalized terms not otherwise defined in this Rule shall have the meanings set forth in the Plan or Exchange rules, as applicable. Proposed paragraph (a)(2) states that the Exchange is a Participant in, and subject to the applicable requirements of, the Plan, which establishes procedures to address extraordinary volatility in NMS Stocks. Proposed paragraph (a)(3) states that member organizations shall comply with the applicable provisions of the Plan. The Exchange believes that this requirement will help ensure the compliance by its members with the provisions of the Plan as required pursuant to Section II(B) of the Plan.
Proposed paragraph (a)(4) outlines how the Exchange will comply with the Plan's requirement that the Exchange establish, maintain and enforce written policies and procedures that are reasonably designed to prevent (1) trades at prices that are below the Lower Price Band or above the Upper Price Band for an NMS Stock
Specifically, proposed subparagraph (A) states that the Matching System shall not execute any orders at prices that are below the Lower Price Band or above the Upper Price Band, unless
Proposed paragraph (b)(1) outlines the Exchange's proposed Limit Up-Limit Down Price Sliding (“LULD Price Sliding”), the purpose of which is to provide CHX Participants a price sliding functionality for eligible incoming and resting limit orders to follow movements in the Price Bands, so as to promote liquidity by reducing the number of automatic cancellations. Specifically, proposed paragraph (b)(1) states that all fully-displayable incoming and resting limit orders shall be eligible for LULD Price Sliding and that an order sender may not opt-out of the proposed LULD Price Sliding for eligible orders. That is, the order sender may not instruct the Matching System to cancel orders that are eligible for the proposed LULD Price Sliding if the functionality is triggered.
Thereunder, proposed subparagraph (A) states that an eligible incoming buy (sell) order that would be displayed at a price above (below) the Upper (Lower) Price Band shall be price slid to the Upper (Lower) Price Band, subject to proposed paragraph (b)(2). As discussed below, proposed paragraph (b)(2) outlines the interplay between LULD Price Sliding and the Exchange's other price sliding functionality, the CHX Only Price Sliding Processes, detailed under Article 1, Rule 2(y).
Proposed subparagraph (B) states that an eligible resting buy (sell) order that, at the time of entry, was displayed at a price at or below (above) the Upper (Lower) Price Band, but, due to movements in the Price Band, would now be displayed at a price above (below) the Upper (Lower) Price Band, shall be price slid to the Upper (Lower) Price Band, subject to proposed paragraph (b)(2). In addition, proposed subparagraph (B) clarifies that an ineligible resting buy (sell) order that, at the time of entry, was posted at a price at or below (above) the Upper (Lower) Price Band, but, due to movements in the Price Band, would now be posted at a price above (below) the Upper (Lower) Price Band, shall be cancelled.
Proposed subparagraph (C) states that an eligible price slid buy (sell) order shall be continuously price slid to follow bi-directional movements to the Upper (Lower) Price Band, so that the buy (sell) order is always displayed at the Upper (Lower) Price Band, subject to proposed paragraph (b)(2). However, a price slid order that could be displayed at a more aggressive price will never be price slid through its original limit price. Given that Price Bands may move quickly and frequently, the Exchange submits that a continuous LULD Price Sliding process is essential to avoiding
Examples 1–3 address scenarios where the Upper (Lower) Price Band is below (above) the NBO. If the NBO (NBB) is at or below (above) the Upper (Lower) Price Band, the applicability of any price sliding to any eligible incoming or resting orders would depend on their limit prices and whether or not such orders are also eligible for the CHX Only Price Sliding Processes.
Thus, proposed paragraph (b)(2) details the interplay between LULD Price Sliding and the CHX Only Price Sliding Processes, which is comprised of NMS Price Sliding and Short Sale Price Sliding. Specifically, proposed paragraph (b)(2) begins by stating that any order eligible for the CHX Only Price Sliding Processes shall be eligible for LULD Price Sliding. This is because Article 1, Rule 2(y) provides that all fully-displayable limit orders marked “CHX Only” are eligible for the CHX Only Price Sliding Processes, whereas proposed paragraph (b)(1) states that all fully-displayable limit orders are eligible for LULD Price Sliding. Thus, an order eligible for LULD Price Sliding shall only be eligible for CHX Only Price Sliding if it is marked “CHX Only.”
Thereunder, proposed subparagraph (A) describes how orders that are dually eligible for LULD Price Sliding and the CHX Only Price Sliding Processes will be price slid, under certain market and order pricing conditions. Specifically, proposed subparagraph (A)(i) states that if a dually eligible order would be displayed at a price in violation of any combination of Rule 610(d) of Regulation NMS, Rule 201 of Regulation SHO or the Plan, the order shall be price slid to the most aggressive permissible prices, in compliance with Regulation NMS, Regulation SHO, and the Plan. Proposed subparagraph (A)(ii) states that if a dually eligible price slid resting order could be executable and/or displayed at a more aggressive price, the order shall be price slid to, and displayed at, the most aggressive permissible prices, in compliance with Regulation NMS, Regulation SHO, and the Plan. The value of the “most aggressive permissible prices” will depend on the pricing of the NBBO and the Price Bands, as shown below.
Proposed subparagraph (B) outlines what would happen to an order that is eligible for LULD Price Sliding, but not eligible for the CHX Only Price Sliding Processes (
Proposed subparagraph (B)(ii) states that an order that is eligible for LULD Price Sliding only shall be cancelled if the price sliding of the resting order pursuant to LULD Price Sliding would
Proposed paragraph (b)(3) addresses the issue of order execution priority for orders that have been price slid pursuant to LULD Price Sliding. Specifically, proposed paragraph (b)(3) states that eligible orders subject to LULD Price Sliding will retain their time priority versus other orders based upon the time those orders were initially received by the Matching System. This language mirrors current CHX Article 1, Rule 2(y)(4), which establishes an identical requirement for orders subject to the CHX Only Price Sliding Processes.
The term “Working Price Priority” best describes the current order execution priority scheme currently utilized by the CHX Only Price Sliding Processes, which the Exchange now proposes to apply to orders subject to LULD Price Sliding. As such, for ease of reference, the Exchange proposes to replace the term “ranked price” with the more accurate term “working price” in CHX Article 20, Rule 8(a)(7). In amending Rule 8(a)(7), the Exchange does not propose to substantively modify the order execution scheme currently utilized by the CHX Only Price Sliding Processes.
Proposed paragraph (c) outlines the phase-in of the Plan
Proposed paragraphs (c)(3) states that a Trading Pause shall be commenced by the Exchange pursuant to the Plan.
Proposed paragraph (c)(4) states after a Trading Pause, the Exchange shall attempt to reopen trading in the NMS Stock subject to the Trading Pause, pursuant to the Plan and to procedures adopted by the Exchange and communicated by notice to its Participants.
The Exchange proposed to amend Article 1, Rule 2(y), which defines the “CHX Only” order type and the corresponding CHX Only Price Sliding Processes, to modify the CHX Only order type only to the extent necessary to comport it with the Plan and the Exchange's proposed LULD Price Sliding. As such, the Exchange proposes to make the amendments to Article 1, Rule 2(y) operative April 8, 2013, to coincide with the operative date for the Plan.
In 2011, the Exchange introduced the CHX Only order type, amended in 2013,
Currently, for those orders subject to the CHX Only Price Sliding Processes, the Matching System will reprice, re-rank and/or re-display certain CHX Only orders multiple times depending on changes to the NBBO (the repricing of CHX Only sell short orders subject to Rule 201 of Regulation SHO is dependent solely on declines to the NBB), so long as the order can be ranked and displayed in an increment consistent with the provisions of Rule 610(d) of Regulation NMS and Rule 201 of Regulation SHO, until the order is executed, cancelled or the original limit price is reached. Also, the CHX Only Price Sliding Processes are based on Protected Quotations
The Exchange now proposes to make the following amendments and/or additions to Rule 2(y). First, the Exchange proposes to add an additional sentence above paragraph (y)(1) that provides that CHX Only orders shall also be eligible for LULD Price Sliding, pursuant to proposed Article 20, Rule 2A(b)(2). As discussed above, pursuant to proposed Article 20, Rule 2A(b)(2), all limit orders marked CHX Only are eligible for LULD Price Sliding precisely because limit orders marked CHX Only will always be fully-displayable.
The Exchange proposes to amend paragraph (y)(1) to comport NMS Price Sliding with the Plan. Specifically, the Exchange proposes to add an additional sentence to proposed paragraph (y)(1)(A) that provides that if the NBB (NBO) is priced below (above) the Lower (Upper) Price Band, an incoming CHX Only sell (buy) order that, at the time of entry, would be displayed at a price below (above) the Lower (Upper) Price Band, shall be ranked and displayed at the Lower (Upper) Price Band, pursuant to proposed Article 20, Rule 2A(b)(2)(A)(i).
The Exchange also proposes to add similar language to paragraph (y)(1)(B). Specifically, the Exchange proposes to add an additional sentence to
The Exchange further proposes to amend paragraph (y)(2) to comport Short Sale Price Sliding with the Plan. Specifically, the Exchange proposes to amend subparagraph (A) to provide that a CHX Only sell short order that, at the time of entry, could not be executed or displayed in compliance with Rule 201 of Regulation SHO will be repriced and displayed by the Matching System at the
The Exchange also proposes to amend paragraph (y)(2)(D) to provide that when a short sale price test restriction under Rule 201 of Regulation SHO is in effect, the Matching System may execute a CHX Only sell short order subject to Short Sale Price Sliding at a price below the Permitted Price if, at the time of initial display of the short sale order, the order was at a price above the then current NBB;
The Exchange proposes to amend Rule 4(b)(18), to comport the definition of “Post Only” with the Plan. Specifically, Rule 4(b)(18) defines “Post Only” as an order as one that is to be posted on the Exchange and not routed away to another trading center. Furthermore, a Post Only order will be immediately cancelled under two circumstances. First, a Post Only order that would remove liquidity from the CHX book will be immediately cancelled. Second, a Post Only order that, at the time of order entry, would lock or cross a Protected Quotation of an external market will be immediately cancelled; provided, however, that if the Post Only order is marked “CHX Only” and is eligible for the CHX Only Price Sliding Processes, pursuant to Article 1, Rule 2(y), the Post Only order that would lock or cross a Protected Quotation of an external market shall be subject to the CHX Only Price Sliding Processes and shall not be immediately cancelled.
In light of the Plan and LULD Price Sliding, the Exchange proposes to amend Rule 4(b)(18)(B) to provide that a Post Only order will be immediately cancelled when, at the time of order entry, the Post Only order would lock or cross a Protected Quotation of an external market; provided, however, that if the Post Only order is marked “CHX Only” and is eligible for the CHX Only Price Sliding Processes, pursuant to Article 1, Rule 2(y), the Post Only order that would lock or cross a Protected Quotation of an external market shall be subject to the CHX Only Price Sliding Processes
In light of this proposed rule change, current Article 20, Rule 2(e) will no longer exist. As discussed above, current Article 20, Rule 2(e) has been modified and incorporated into proposed Article 20, Rule 2A as proposed Rule 2A(c)(1). Thus, the Exchange proposes to update all citations to the current Article 20, Rule 2(e) in the CHX rules, which are specifically found under Article 16, Rule 8 and Article 20, Rule 10.
With respect to Article 16, Rule 8(a), the Exchange proposes to amend paragraphs (a)(2)(D) and (E) to update citations of current Rule 2 to both proposed Rule 2 and proposed Rule 2A; current Rule 2(e)(i) to proposed Rule 2A(c)(1)(A); current Rule 2(e)(ii) to proposed Rule 2A(c)(1)(B); and current Rule 2(e)(iii) to proposed Rule 2A(c)(1)(C).
With respect to Article 20, Rule 10, the Exchange proposes to amend paragraph (c)(1)–(3) to delete all citations to Article 20, Rule 2(e) and to replace them with references to “certain specified securities,” which are described in paragraph (c)(4). In turn, the Exchange proposes to amend paragraph (c)(4) to delete all citations to Article 20, Rule 2(e) and to replace them with the term “Subject Securities,” which the Exchange proposes to define as any securities included in the “S&P 500® Index, the Russell 1000® Index, as well as a pilot list of Exchange Traded Products.”
The proposed rule change is consistent with Rule 608(c) of Regulation NMS,
Moreover, the proposed rule changes are consistent with Section 6(b) of the Act
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Specifically, the Exchange believes that the proposed change will result in the uniform implementation of the Limit Up-Limit Down Plan,
No written comments were either solicited or received.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b–4(f)(6)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On March 7, 2013, Chicago Board Options Exchange, Incorporated (“CBOE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
On May 6, 2010, the U.S. equity markets experienced a severe disruption that, among other things, resulted in the prices of a large number of individual securities suddenly declining by significant amounts in a very short time period before suddenly reversing to prices consistent with their pre-decline levels.
To replace the single-stock circuit breaker pilot program, the equity exchanges filed a National Market System Plan
The Plan sets forth requirements that are designed to prevent trades in individual NMS stocks from occurring outside of the specified price bands. The price bands consist of a lower price band and an upper price band for each NMS stock. When one side of the market for an individual security is outside the applicable price band,
The Primary Listing Exchange may also declare a trading pause when the stock is in a Straddle State,
On May 31, 2012, the Commission approved the Plan as a one-year pilot, which shall be implemented in two phases.
In light of and in connection with the Plan, the Exchange proposes to amend its rules to address certain option order types, order handling procedures, obvious error and market-maker quoting obligations.
The Exchange proposes to add to Exchange Rule 6.3A to codify the changes occurring throughout its rulebook in connection with the Plan. The Exchange proposes to re-name Rule 6.3A, which is currently titled “Equity Market Trading Halt”, as “Equity Market Plan to Address Extraordinary Market Volatility”. The Exchange also plans to add new rule text that will define the Plan as it applies to the Exchange, and will describe the location of the other rule changes associated with the Plan. The proposed changes to Rule 6.3A will essentially serve as a roadmap for the Exchange's universal changes due to the implementation of the Plan.
The Exchange proposes to modify Exchange Rules 6.2B, 6.14A, 6.3A, 6.53 and 6.53C to address how certain Exchange order types will be handled when the underlying security of such orders is in a limit up-limit down state. The proposed rule change will address how market orders,
The Exchange stated that, although it has determined to continue options trading when a stock is in a limit up-limit down state, there will not be a reliable price for the underlying security to serve as a benchmark for the price of the option. Without a reliable underlying stock price, the Exchange stated that there is an enhanced risk of errors and improper executions. The Exchange also stated that adding a level of certainty for TPHs by specifying the treatment of such orders will encourage participation on the Exchange while the underlying security is in limit up-limit down states. Accordingly, the Exchange believes these order handling changes will best protect market participants after the implementation of the Plan by not allowing execution at unreasonable prices due to the shift in the stock prices.
The Exchange also proposes to modify its opening procedures under Exchange Rule 6.2B, “Hybrid Opening System” (“HOSS”). The Exchange proposes to
Next, the Exchange proposes to modify Exchange Rule 6.14A, “Hybrid Agency Liaison (“HAL”). This functionality provides automated order handling in designated classes trading on the Hybrid System for qualifying electronic orders that are not automatically executed by the Hybrid System.
The Exchange proposes to amend Rule 6.14A to modify the functioning of HAL with respect to market orders when the underlying security of the option is in a limit up-limit down state. Under the proposal, if an underlying security enters a limit up-limit down state while a market order is being exposed through HAL, the auction will end early,
The Exchange also proposes to modify the treatment of complex orders on the Hybrid System and the Complex Order Auction (“COA”) process. Generally, on a class-by-class basis, the Exchange may activate COA, which is a process by which eligible complex orders
The Exchange proposes to add to the COA rule that if, during COA of a market order, the underlying security of an option enters a limit up-limit down state, the COA will end upon the entering of that state and the remaining portion of the order, if a market order, will cancel. The Exchange believes this change will best protect investors because, once the underlying enters a limit up-limit down state, pricing in the options markets may change, resulting in executions at unexpected prices.
The Exchange proposes to eliminate all market maker obligations for options in which the underlying security is in a limit up-limit down state. Currently, Exchange Rules 8.7, 8.13, 8.15A, 8.85, and 8.93 impose certain obligations on Market-Makers,
The Exchange proposes to eliminate all market maker quoting obligations
Although the Exchange is proposing to relieve market makers of their quoting
In connection with the implementation of the Plan, the Exchange proposes to adopt Interpretation and Policies .06 to Rule 6.25 to exclude transactions in options that overlay a security during a Limit State or Straddle State from the obvious error pricing provision in Rule 6.25(a)(1) for a one year pilot basis from the date of adoption of the proposed rule change. Additionally, the Exchange proposes to specify that electronic transactions in options that overlay an NMS stock that occur during a Limit State or Straddle State may be reviewed on an Exchange motion pursuant to Rule 6.25(b)(3). The Exchange also proposes to provide the Commission with data and analysis during the duration of the pilot as requested.
Under Rule 6.25, an Obvious Price Error occurs when the execution price of an electronic transaction is above or below the theoretical price for the series by a specified amount. Pursuant to Rule 6.25(a)(1)(i), the theoretical price of an option series is currently defined, for series traded on at least one other options exchange, as the last national best bid price with respect to an erroneous sell transaction, and the last national best offer price with respect to an erroneous buy transaction, just prior to the trade. In certain circumstances, Trading Officials have the discretion to determine the theoretical price pursuant to Rule 6.25(a)(1)(iv).
The Exchange believes that neither method is appropriate during a Limit State or Straddle State. In Amendment No. 1, the Exchange noted that during a Limit State or Straddle State, options prices may deviate substantially from those available prior to or following the state. The Exchange believes this provision would give rise to much uncertainty for market participants as there is no bright line definition of what the theoretical value should be for an option when the underlying NMS stock has an unexecutable bid or offer or both. The Exchange noted that determining theoretical value in such a situation would be often times be very subjective rather than an objective determination and would give rise to additional uncertainty and confusion for investors. Similarly, the Exchange believes the application of the current rule would be impracticable given the lack of a reliable national best bid or offer in the options market during Limit States and Straddle States, and would produce undesirable effects.
Ultimately, the Exchange believes that adding certainty to the execution of limit orders in these situations should encourage market participants to continue to provide liquidity to the Exchange, thus promoting a fair and orderly market. On balance, the Exchange believes that removing the potential inequity of nullifying or adjusting executions occurring during Limit States or Straddle States outweighs any potential benefits from applying these provisions during such unusual market conditions.
Therefore, the Exchange proposes to adopt Interpretation and Policy .06 to Rule 6.25 to provide that transactions executed during a Limit State or Straddle State are not subject to the obvious pricing error provision in Rule 6.25(a)(1). In addition, amended Rule 6.25 will include a qualification that nothing in the proposed rule change will prevent transactions in options that overlay a security in a Limit State or Straddle State from being reviewed on an Exchange motion pursuant to Rule 6.25(b)(3). According to the Exchange, this safeguard will provide the flexibility to act when necessary and appropriate, while also providing market participants with certainty that trades they effect with quotes and/or orders having limit prices will stand irrespective of subsequent moves in the underlying security. The right to review on Exchange motion electronic transactions that occur during a Limit State or Straddle State under this provision, according to the Exchange, would enable the Exchange to account for unforeseen circumstances that result in obvious or catastrophic errors for which a nullification or adjustment may be necessary in order to preserve the interest of maintaining a fair and orderly market and for the protection of investors. The Exchange also proposes to provide the Commission with data and analysis during the duration of the pilot as requested.
After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and rules and regulations thereunder applicable to a national securities exchange.
Exchange Rule 6.3A lists changes to Exchange order types, order handling, obvious error, and market-maker quoting obligations that the Exchange is making in connection with the implementation of the Plan. The Exchange believes that the proposed changes to Rule 6.3A will describe to TPHs and other market participants where to find the changes associated
As detailed above, the Exchange proposes to add language to clarify that: (a) market orders, with certain exceptions, will be returned during limit up-limit down states, (b) market-on-close orders will not be elected if the underlying security is in a limit up-limit down state, (c) stop orders will not be triggered while the underlying security is in a limit up-limit down state, and (d) stock-option orders will only execute if the calculated stock price is within the permissible bands, unless such order is routed for manual handling. In addition, during a limit up-limit down state, if a message is sent to replace a limit order with a market order, the resting limit order will be cancelled and the replaced market order will also be cancelled.
The Commission finds that the Exchange's proposed method of handling such orders is consistent with Section 6(b)(5) of the Act. When the underlying stock enters a limit up-limit down state, the lack of a reliable price in that market could affect the options markets in various ways, including wider spreads and less liquidity. This could potentially mean that market orders, which contain no restrictions on the price at which they may execute, could receive executions at unintended prices if executed during the limit up-limit down state. As such, the proposed changes to reject market orders and market-on-close orders if the underlying is in a limit up-limit down state, to not trigger stop orders if the underlying is in a limit up-limit down state, and to cancel market orders that replace limit orders when the underlying is in a limit up-limit down state, are reasonably designed to prevent such orders from being executed at potentially unexpected prices.
At the same time, the proposed exceptions to the treatment of these orders—accepting market orders that are submitted to initiate an Automated Price Improvement Mechanism, or which are routed for manual handling—are designed to take into account that market orders submitted in these ways may not be at the same risk as other market orders for executions at unexpected prices. Specifically, market orders submitted through the Automated Price Improvement Mechanism are submitted as pairs, and are effectively stopped because they must execute at a price at or better than the contra order. With respect to market orders routed for manual handling, such orders are physically handled by a broker on the Exchange floor who must affirmatively agree to an execution price, as opposed to simply executing that order against electronic prices. Similarly, the Exchange's proposal to route a stock-option order for manual handling when the underlying is in a limit up-limit down state allows such orders to be physically handled by a broker on the Exchange floor who must affirmatively agree to an execution price.
The Exchange proposes to add an Interpretation and Policy .07 to Rule 6.2B which states that if the underlying security for a class of options enters into a limit up-limit down state when the class moves to opening rotation, any market orders entered that trading day will be cancelled. However, market orders that are considered limit orders pursuant to Rule 6.13(b)(iv) and entered the previous trading day will remain in the Book and can essentially act as limit orders at the minimum increment.
The Commission finds that these changes are consistent with the Act in that they are reasonably designed to counter potential price dislocations that may occur if the underlying enters a limit up-limit down state during the opening by preventing market orders, which contain no restrictions on the price at which they may execute, from being executed at potentially unintended prices. At the same time, this proposal allows market orders that are essentially limit orders to continue to participate in the opening process without a similar risk of an execution at an unintended price.
The Exchange also proposes that, if an underlying security enters a limit up-limit down state while a market order is being exposed through HAL, the auction will end early, and any unexecuted portion of the market order would be cancelled. The Commission believes that this provision will provide certainty to options market participants on how market orders submitted to HAL will be handled during limit up-limit down states. In addition, the Commission finds that this provision is consistent with the Act in that it is reasonably designed to counter potential price dislocations that may occur if the underlying enters a limit up-limit down state while the HAL functionality is underway by preventing market orders, which contain no restrictions on the price at which they may execute, from being executed at potentially unintended prices.
The Exchange proposes to amend the COA rule so that, if during a COA of a market order, the underlying security of an option enters a limit up-limit down state, the COA will end and the remaining portion of the order, if a market order, will cancel. As with the proposed change to HAL, the Commission believes that this provision is consistent with the Act in that it will provide certainty to options market participants on how market orders submitted to COA will be handled during limit up-limit down states. In addition, the Commission finds that this provision is reasonably designed to counter potential price dislocations that may occur if the underlying enters a limit up-limit down state while a COA is underway by preventing market orders, which contain no restrictions on the price at which they may execute, from being executed at potentially unintended prices.
The Commission finds that the proposal to suspend a market maker's obligations when the underlying security is in a limit up-limit down state is consistent with the Act. During a limit up-limit down state, there may not be a reliable price for the underlying security to serve as a benchmark for market makers to price options. In addition, the absence of an executable bid or offer for the underlying security will make it more difficult for market makers to hedge the purchase or sale of an option. Given these significant changes to the normal operating conditions of market makers, the Commission finds that the Exchange's decision to suspend a market maker's obligations in these limited circumstances is consistent with the Act. The Commission notes, however, that the Plan was approved on a pilot basis and its Participants will monitor how it is functioning in the equity markets during the pilot period. To this end, the Commission expects that, upon implementation of the Plan, the Exchange will continue monitoring the quoting requirements that are being amended in this proposed rule change and determine if any necessary adjustments are required to ensure that they remain consistent with the Act.
The Commission also finds that the proposal to maintain participation entitlements for market makers in all series in their assigned classes in which they are quoting, including in series for which the underlying security is in a limit up-limit down state and for which they are not required to provide continuous electronic quotes under the Exchange Rules, is consistent with the
The Commission finds that the Exchange's proposal to suspend certain aspects of Rule 6.25 during a Limit State or Straddle State is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. Specifically, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,
In Amendment No. 1, the Exchange notes its belief that suspending certain aspects of Rule 6.25 during a Limit State or Straddle State will ensure that limit orders that are filled during a Limit or Straddle State will have certainty of execution in a manner that promotes just and equitable principles of trade and removes impediments to, and perfects the mechanism of, a free and open market and a national market system. The Exchange believes the application of the current rule would be impracticable given what it perceives will be the lack of a reliable NBBO in the options market during Limit States and Straddle States, and that the resulting actions (
The Exchange, however, has proposed this rule change based on its expectations about the quality of the options market during Limit States and Straddle States. The Exchange states, for example, that it believes that application of the obvious and catastrophic error rules would be impracticable given the potential for lack of a reliable NBBO in the options market during Limit States and Straddle States. Given the Exchange's recognition of the potential for unreliable NBBOs in the options markets during Limit States and Straddle States, the Commission is concerned about the extent to which investors may rely to their detriment on the quality of quotations and price discovery in the options markets during these periods. This concern is heightened by the Exchange's proposal to exclude electronic trades that occur during a Limit State or Straddle State from the obvious pricing error provisions of Rule 6.25(a)(1) and the nullification or adjustment provisions of Rule 6.25. The Commission urges investors and market professionals to exercise caution when considering trading options under these circumstances. Broker-dealers also should be mindful of their obligations to customers that may or may not be aware of specific options market conditions or the underlying stock market conditions when placing their orders.
While the Commission remains concerned about the quality of the options market during the Limit States and Straddle States, and the potential impact on investors of executing in this market without the protections of the obvious or catastrophic error rules that are being suspended during the Limit and Straddle States, it believes that certain aspects of the proposal could help mitigate those concerns.
First, despite the removal of obvious and catastrophic error protection during Limit States and Straddle States, the Exchange states that there are additional measures in place designed to protect investors. For example, the Exchange states in Amendment No. 1 that by rejecting market orders and not electing stop orders, only those orders with a limit price will be executed during a Limit State or Straddle State. Additionally, the Exchange notes the existence of SEC Rule 15c3–5 requiring broker-dealers to have controls and procedures in place that are reasonably designed to prevent the entry of erroneous orders. Therefore, on balance, the Exchange believes that removing the potential inequity of nullifying or adjusting executions occurring during Limit States or Straddle States outweighs any potential benefits from applying certain provisions during such unusual market conditions.
The Exchange also believes that the aspect of the proposed rule change that will continue to allow the Exchange to review on its own motion electronic trades that occur during a Limit State or a Straddle State is consistent with the Act because it would provide flexibility for the Exchange to act when necessary and appropriate to nullify or adjust a transaction and will enable the Exchange to account for unforeseen circumstances that result in obvious errors for which a nullification or adjustment may be necessary in order to preserve the interest of maintaining a fair and orderly market and for the protection of investors. The Exchange represents that it will administer this provision in a manner that is consistent with the principles of the Act. In addition, the Exchange has represented that it will create and maintain records relating to the use of the authority to act on its own motion during a Limit State or Straddle State.
Finally, the Exchange has proposed that the changes be implemented on a one year pilot basis. The Commission believes that it is important to implement the proposal as a pilot. The one year pilot period will allow the Exchange time to assess the impact of the Plan on the options marketplace and allow the Commission to further evaluate the effect of the proposal prior to any proposal or determination to make the changes permanent. To this end, the Exchange has committed to: (1) Evaluate the options market quality during Limit States and Straddle States; (2) assess the character of incoming order flow and transactions during Limit States and Straddle States; and (3) review any complaints from members and their customers concerning executions during Limit States and Straddle States. Additionally, the Exchange has agreed to provide the Commission with data requested to evaluate the impact of the elimination of
In addition, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 11A of the Securities Exchange Act of 1934 (“Act”),
Pursuant to Rule 608(b)(3)(ii) under the Act,
On March 11, 2013, the Participants filed for immediate effectiveness the Sixteenth Charges Amendment to the Second Restatement of the CTA Plan and the Eighth Charges Amendment to the Restated CQ Plan.
The Fee Change Amendments stated that the Participants anticipated implementing the proposed fee changes in 2013, without specifying a date. In the notice that the Participants sent to the industry, they specified April 1, 2013, as the date the Fee Change Amendments would be implemented.
Subsequently, due to the technical needs of data recipients to make systems changes to accommodate the revised fee, the Participants decided to extend the effective date for implementation of the combined Network B $24.00 device fee to July 1, 2013, and therefore submitted the Amendments. The effective date for the changes to the Network A device fees and the other changes set forth in the Fee Change Amendments remains April 1, 2013. The Amendments do not change the language of the CTA Plan or of its fee schedule.
Not applicable.
Because the Amendments constitute “Ministerial Amendments” under clause (1) of Section IV(b) of the CTA Plan and clause (1) of Section IV(c) of the CQ Plan, the Chairman of CTA and the CQ Plan's Operating Committee may submit the Amendments to the Commission on behalf of the Participants in the CTA Plan and the CQ Plan. Because the Participants designate the Amendments as concerned solely with the administration of the Plans, the Amendments are effective upon filing with the Commission.
The proposed amendments do not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Participants do not believe that the Amendments introduce terms that are unreasonably discriminatory for the purposes of Section 11A(c)(1)(D) of the Act.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed Amendments to the CTA Plan are consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–CTA/CQ–2013–02 and should be submitted on or before May 2, 2013.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On February 7, 2013, NYSE Arca, Inc. (“NYSE Arca” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
NYSE Euronext intends to merge NYSE Arca Holdings with and into NYSE Group, effective following approval of the proposed rule changes.
The Exchange has submitted its proposal to (i) delete in its entirety the Second Amended and Restated Certificate of NYSE Arca Holdings (the “NYSE Arca Holdings Certificate”), (ii) delete in its entirety the Amended and Restated Bylaws of NYSE Arca Holdings (“NYSE Arca Holdings Bylaws”); (iii) amend the rules of NYSE Arca, Inc. (“NYSE Arca”); (iv) amend the Bylaws of NYSE Arca (“NYSE Arca Bylaws”); and (v) file the resolution (the “Resolution”) of the Board of Directors of NYSE Arca (the “NYSE Arca Board”) in connection with the Merger.
Section 19(b) of the Act and Rule 19b–4 thereunder require a self-regulatory organization (“SRO”) to file proposed rule changes with the Commission. Although NYSE Arca Holdings is not an SRO, the NYSE Arca Holdings Certificate and NYSE Arca Holdings Bylaws, along with other corporate documents, are rules of the Exchange
The proposed rule changes reflect the elimination of NYSE Arca Holdings from the Exchange's ownership structure and delete duplicative or obsolete text. For example, the Exchange proposes to replace references to NYSE Arca Holdings in Sections 2.01 and 3.13 of the NYSE Arca Bylaws with references to NYSE Group.
The Exchange proposes to amend Section 3.02(f) of the NYSE Arca Bylaws to provide that, except as otherwise provided in the NYSE Arca Bylaws or rules, the Holding Member shall nominate directors for election at the Holding Member's annual meeting.
The Commission finds that the proposed rule changes are consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities
The proposal would accommodate the merger of NYSE Arca Holdings, an intermediate holding company, into and with NYSE Group, thereby eliminating NYSE Arca Holdings from the ownership structure of the Exchange. The Commission notes that the proposed rule changes would otherwise have no substantive impact on other rules of the Exchange, including those concerning the nomination and selection of fair representation directors that currently apply to the Exchange. The Exchange would continue as an indirect wholly-owned subsidiary of NYSE Euronext. In addition, the Commission notes that the NYSE Arca Board made certain findings set forth in the Resolution that the proposed rule changes to NYSE Arca's Bylaws are consistent with the restrictions on amending NYSE Arca's Bylaws.
In light of these representations and findings, the Commission believes that the proposed rule changes are consistent with the Act and will not impair the ability of the Commission or the Exchange to discharge their respective responsibilities under the Act.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange proposes to amend the fee schedule applicable to Members
The text of the proposed rule change is available at the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to modify its fee schedule effective April 1, 2013, in order to amend the rebates that it provides for removing liquidity and to amend the fees that it charges for adding liquidity, as described in further detail below.
The Exchange currently offers a tiered pricing structure for executions that remove liquidity. Under the tiered pricing structure, a Member must add a daily average of at least 50,000 shares of liquidity on BYX Exchange in order to receive a rebate to remove liquidity. For Members that meet this requirement, the Exchange provides three different rebates, as described below.
The Exchange currently provides a rebate of $0.0004 per share to remove liquidity for Members that have an average daily volume (“ADV”) on the Exchange of at least 0.5% of the total consolidated volume (“TCV”), a rebate of $0.0003 per share to remove liquidity for Members that have an ADV on the Exchange of at least 0.25% but less than 0.5% of TCV, and a rebate of $0.0002 per share to remove liquidity for Members that add the requisite number of shares of liquidity on BYX Exchange but do not qualify for a rebate based on TCV as set forth above. As with its other current tiered pricing, the daily average in order to receive the liquidity removal rebate is calculated based on a Member's activity in the month for which the rebates would apply. For Members that do not reach a tier to receive the liquidity removal rebate, the Exchange does not currently provide rebate. The Exchange does not, however, charge such Members, but rather, provides such executions free of charge. The Exchange does not propose modifying the existing rebate structure for Members that do not achieve one of the three enhanced rebate tiers.
The Exchange does not propose to change the requirement that a Member add a daily average of at least 50,000 shares of liquidity on BYX Exchange in order to receive a rebate to remove liquidity. The Exchange proposes to
Consistent with the current fee structure, the fee structure for executions that remove liquidity from the Exchange described above will not apply to executions that remove liquidity in securities priced under $1.00 per share. The fee for such executions will remain at 0.10% of the total dollar value of the execution. Similarly, as is currently the case for adding liquidity to the Exchange, there will be no liquidity rebate for adding liquidity in securities priced under $1.00 per share.
The Exchange currently maintains a tiered pricing structure for adding displayed liquidity in securities priced $1.00 and above that allows Members to add liquidity at a reduced fee if they reach certain volume thresholds. The tiered pricing structure allows Members that qualify for reduced fees to add liquidity at a further reduced fee to the extent such liquidity sets the national best bid or offer (the “NBBO Setter Program”). The Exchange charges Members that maintain ADV on the Exchange of at least 0.5% of the total TCV during the month a liquidity adding fee of $0.00025 per share on orders that set the NBBO and $0.0003 per share on orders that do not set the NBBO. The Exchange charges Members that maintain ADV on the Exchange of at least 0.25% but less than 0.5% of the total TCV during the month a liquidity adding fee of $0.00035 per share on orders that set the NBBO and $0.0004 per share for orders that do not set the NBBO. The Exchange charges a liquidity adding fee of $0.0005 per share to Members that do not qualify for a reduced fee based on their volume on the Exchange.
The Exchange proposes to increase its fees to add displayed liquidity for all Members by $0.0002 per share. Specifically, the Exchange proposes to charge Members that maintain ADV on the Exchange of at least 0.5% of the total TCV during the month a liquidity adding fee of $0.00045 per share on orders that set the NBBO and $0.0005 per share on orders that do not set the NBBO. The Exchange proposes to charge Members that maintain ADV on the Exchange of at least 0.25% but less than 0.5% of the total TCV during the month a liquidity adding fee of $0.00055 per share on orders that set the NBBO and $0.0006 per share for orders that do not set the NBBO. The Exchange proposes to charge Members that do not qualify for a reduced fee based on their volume on the Exchange a liquidity adding fee of $0.0007 per share.
The Exchange notes that it does not propose to modify its existing definitions of “ADV” or “TCV” in connection with the changes described above. The Exchange notes that the definition of ADV used in conjunction with TCV for the NBBO Setter Program and the tiered pricing structures for executions that add and remove liquidity includes both a Member's liquidity adding and removing activity. However, as today, the 50,000 shares added requirement necessary to achieve tiered pricing to remove liquidity only includes added volume.
The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act.
The changes to Exchange execution fees and rebates proposed by this filing are intended to attract order flow to the Exchange by continuing to offer competitive pricing while also allowing the Exchange to continue to offer incentives to providing aggressively priced displayed liquidity. While Members that add liquidity to the Exchange will be paying higher fees due to the proposal, the increased revenue received by the Exchange will be used to continue to fund programs that the Exchange believes will attract additional liquidity to the Exchange.
With respect to the proposed changes to the tiered pricing structure for removing liquidity from the Exchange, the Exchange believes that its proposal is reasonable because it will continue to be available to Members that achieve a relatively low threshold of added liquidity, and thus who contribute to the depth of liquidity generally available on the Exchange. By providing higher potential rebates to all qualifying Members, the Exchange is further incentivizing Members to participate in the growth of the Exchange. The increased rebates also provide additional incentive to Members that do not qualify for the tier to increase their participation on the Exchange in order to qualify. Volume-based tiers such as the liquidity removal tiers maintained by the Exchange have been widely adopted in the equities markets, and are equitable and not unfairly discriminatory because they are open to all members on an equal basis and provide rebates that are reasonably related to the value to an exchange's market quality associated with higher levels of market activity, such as higher levels of liquidity provision and introduction of higher volumes of orders into the price and volume discovery process. Accordingly, the Exchange believes that the proposal is equitably allocated and not unfairly discriminatory because it is consistent with the overall goals of enhancing market quality.
With respect to the increases to the fees charged to add displayed liquidity, the Exchange believes that the proposed fees are reasonable as such fees are still comparable to other market centers that charge to add displayed liquidity and represent only a slight increase from the current fee levels. The Exchange notes that at least one market center charges a higher fee to add displayed liquidity.
The Exchange believes that any additional revenue it receives based on the increases to fees set forth above will allow the Exchange to devote additional capital to its operations and to continue to offer competitive pricing, which, in turn, will benefit Members of the Exchange. Further, the Exchange again notes that the tiered fee structure whereby Members meeting certain volume thresholds will receive reduced fees on their added liquidity executions is equitable and not unfairly discriminatory because it will be open
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. Because the market for order execution is extremely competitive, Members may choose to preference other market centers ahead of the Exchange if they believe that they can receive better fees or rebates elsewhere. Further, because certain of the proposed changes are intended to provide incentives to Members that will result in increased activity on the Exchange, such changes are necessarily competitive. The Exchange also believes that its pricing for displayed orders is appropriately competitive vis-à-vis the Exchange's competitors. Further, the Exchange believes that continuing to incentivize the entry of aggressively priced, displayed liquidity fosters intra-market competition to the benefit of all market participants that enter orders to the Exchange. However, the Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. The Exchange does not believe that any of the changes represent a significant departure from previous pricing offered by the Exchange or pricing offered by the Exchange's competitors.
No written comments were solicited or received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On March 5, 2013, NASDAQ OMX BX, Inc. (“BX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1)
On May 6, 2010, the U.S. equity markets experienced a severe disruption that, among other things, resulted in the prices of a large number of individual securities suddenly declining by significant amounts in a very short time period before suddenly reversing to prices consistent with their pre-decline levels.
To replace the single-stock circuit breaker pilot program, the equity exchanges filed a National Market System Plan
The Plan sets forth requirements that are designed to prevent trades in individual NMS stocks from occurring outside of the specified price bands. The price bands consist of a lower price band and an upper price band for each NMS stock. When one side of the market for an individual security is outside the applicable price band, i.e., the National Best Bid is below the Lower Price Band, or the National Best Offer is above the Upper Price band, the Processors
The Primary Listing Exchange may also declare a trading pause when the stock is in a Straddle State, i.e., the National Best Bid (Offer) is below (above) the Lower (Upper) Price Band and the NMS Stock is not in a Limit State. In order to declare a trading pause in this scenario, the Primary Listing Exchange must determine that trading in that stock deviates from normal trading characteristics such that declaring a trading pause would support the Plan's goal to address extraordinary market volatility.
On May 31, 2012, the Commission approved the Plan as a one-year pilot, which shall be implemented in two phases.
In light of and in connection with the Limit Up-Limit Down Plan, BX is adopting Chapter V, Section 3(d)(iii) to provide that the Exchange shall exclude the amount of time an NMS stock underlying a BX option is in a Limit State or Straddle State from the total amount of time in the trading day when calculating the percentage of the trading day that Options Market Makers are required to quote.
Currently, under Chapter VII, Sections 5 and 6, BX requires Market Makers, on a daily basis, to make markets consistent with the applicable quoting requirements specified in Sections 5 and 6, on a continuous basis in at least 60% of the series in options in which the Market Maker is registered. To satisfy this requirement with respect to quoting a series, a Market Maker must quote such series 90% of the trading day (as a percentage of the total number of minutes in such trading day) or such higher percentage as BX may announce in advance. The Exchange's proposal would suspend a Market Maker's continuous quoting obligation for the duration that an underlying NMS stock is in a Limit State or a Straddle State. As a result, when calculating the duration necessary for a Market Maker to meet its obligations that it post valid quotes at least 90% of the time the classes are open for trading, that time will not include the duration that the underlying is in a Limit State or Straddle State.
After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and rules and regulations thereunder applicable to a national securities exchange.
The Commission finds that the proposal to suspend a Market Maker's obligations when the underlying security is in a limit up-limit down state is consistent with the Act. During a limit up-limit down state, there may not be a reliable price for the underlying security to serve as a benchmark for market makers to price options. In addition, the absence of an executable bid or offer for the underlying security will make it more difficult for market makers to hedge the purchase or sale of an option. Given these significant changes to the normal operating conditions of market makers, the Commission finds that the Exchange's decision to suspend a Market Maker's obligations in these limited circumstances is consistent with the Act.
The Commission notes, however, that the Plan was approved on a pilot basis and its Participants will monitor how it is functioning in the equity markets during the pilot period. To this end, the Commission expects that, upon implementation of the Plan, the Exchange will continue monitoring the quoting requirements that are being amended in this proposed rule change and determine if any necessary adjustments are required to ensure that they remain consistent with the Act.
The Commission also notes that the Exchange did not propose to waive its bid-ask spread requirements for Market Makers when the underlying is in a Limit or Straddle State. The Commission believes that retaining this requirement should help ensure the quality of the quotes that are entered and preserves one of the obligations of being a Market Maker.
In addition, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
NASDAQ proposes to adopt NASDAQ Rule 4120(c)(7)(D) concerning the extension of the Display Only Period conducted prior to the IPO Halt Cross under NASDAQ Rule 4753. The Exchange has designated the proposed changes herein as immediately effective.
The text of the proposed rule change is below. Proposed new language is underlined; proposed deletions are in brackets.
(a)–(b) No change.
(c) Procedure for Initiating a Trading Halt
(1)–(6) No change.
(7)
(A) A trading halt or pause initiated under Rule 4120(a)(1), (4), (5), (6), (9), (10), (11) or Rule 4120(b) shall be terminated when Nasdaq releases the security for trading. Prior to terminating the halt, there will be a 5-minute Display Only Period during which market participants may enter quotations and orders in that security in Nasdaq systems. At the conclusion of the 5-minute Display Only Period, the security shall be released for trading unless Nasdaq extends the Display Only Period for an additional 1-minute period pursuant to subparagraph (C) below. At the conclusion of the Display Only Period, trading shall immediately resume pursuant to Rule 4753.
(B) A trading halt initiated under Rule 4120(a)(7) shall be terminated when Nasdaq releases the security for trading. Prior to terminating the halt, there will be a 15-minute Display Only Period during which market participants may enter quotes and orders in that security in Nasdaq systems. In addition, beginning at 7 a.m., market participants may enter Market Hours Day Orders in a security that is the subject of an Initial Public Offering on Nasdaq and designate such orders to be held until the beginning of the Display Only Period, at which time they will be entered into the system. At the conclusion of the 15-minute Display Only Period, the security shall be released for trading unless Nasdaq extends the Display Only Period for up to six additional 5-minute Display Only Periods pursuant to subparagraph (C)
(C) If at the end of a Display Only Period, Nasdaq detects an order imbalance in the security, Nasdaq will extend the Display Only Period as permitted under subparagraphs (A) and (B) above. Order imbalances shall be established when (i) the Current Reference Prices, as defined in Rule 4753(a)(2)(A), disseminated 15 seconds and immediately prior to the end of the Display Only Period differ by more than the greater of 5 percent or 50 cents, or (ii) all buy or sell market orders will not be executed in the cross.
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to adopt Rule 4120(c)(7)(D) to describe an additional basis for extending the Display Only Period as permitted by Rule 4120(c)(7)(B), and is making a conforming change to Rule 4120(c)(7)(B). Rule 4120(c)(7)(B) governs the orderly launch of trading of a company's securities approved for listing on NASDAQ in an initial public offering (“IPO”). Rule 4120(c)(7)(B), provides a fifteen-minute “Display Only Period” prior to terminating the halt imposed on an IPO security before it opens for trading for the first time on NASDAQ pursuant to the IPO Halt Cross of Rule 4753. Under Rule 4120(c)(7)(B), at the conclusion of the fifteen-minute Display Only Period NASDAQ may extend the period for up to six additional five-minute Display Only Periods, pursuant to the basis described under Rule 4120(c)(7)(C). Rule 4120(c)(7)(C) allows an extension when NASDAQ detects an order imbalance in the security.
In May 2007, nearly a year after the launch of the IPO Halt Cross, NASDAQ determined to change its internal procedures to consider requests by underwriting firms involved in an IPO to extend the Display Only Period by five minutes, up to a maximum of six five-minute extensions. NASDAQ made the change based on its experience with operating the IPO process and in an effort to ensure the orderly operation of the IPO process. NASDAQ found that underwriters possess valuable information about the pending IPO given their unique position in the market, including the state of IPO orders resting on the underwriter's book, and believed that it is in the best interest of the markets to extend the 15-minute Display Only Period upon the request of a market maker. Accordingly, pursuant NASDAQ's internal procedures it relies on the underwriter's reasonable judgment as to whether a five-minute extension of the Display Only Period will improve the price discovery process of the IPO Halt Cross, and thereby help to ensure a fair and orderly launch of trading in the IPO security.
NASDAQ is amending its rules to memorialize the underwriter-requested extension process under Rule 4120(c)(7)(D). NASDAQ developed criteria for determining whether to grant an underwriter-requested extension of the Display Only Period, and applies such criteria consistently in every IPO wherein an underwriter makes an extension request. NASDAQ may change such criteria from time to time in the interest of improving the IPO process for market participants.
NASDAQ notes that other markets also recognize the importance of allowing underwriters to extend the IPO auctions of their markets. For example, BATS Exchange, Inc. permits an extension to its IPO Auction Quote-Only period upon the request of an underwriter, with no limit on the number or length of extensions. Affording underwriters the ability to request an extension is consistent with NASDAQ's goal of promoting a fair and orderly market and NASDAQ believes that it is appropriate to include its long-standing procedure in its rules. Doing so will provide market participants with a better understanding the operation of the Display Only Period of the IPO process. Accordingly, NASDAQ is proposing to adopt new Rule 4120(c)(7)(D) to reflect that it may consider the request of an underwriter of an IPO to extend the Display Only Period by five minutes, up to a maximum six five-minute extensions.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. The Exchange believes that the proposal is irrelevant to competition because it is not driven by, nor impactful to, competition.
No written comments were either solicited or received.
Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act
A proposed rule change filed under Rule 19b–4(f)(6)
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On March 8, 2013 the International Securities Exchange, LLC (the “Exchange” or “ISE”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1)
On May 6, 2010, the U.S. equity markets experienced a severe disruption that, among other things, resulted in the prices of a large number of individual securities suddenly declining by significant amounts in a very short time period before suddenly reversing to prices consistent with their pre-decline levels.
To replace the single-stock circuit breaker pilot program, the equity exchanges filed a National Market System Plan
The Plan sets forth requirements that are designed to prevent trades in individual NMS stocks from occurring outside of the specified price bands. The price bands consist of a lower price band and an upper price band for each NMS stock. When one side of the market for an individual security is outside the applicable price band, i.e., the National Best Bid is below the Lower Price Band, or the National Best Offer is above the Upper Price band, the Processors
The Primary Listing Exchange may also declare a trading pause when the stock is in a Straddle State, i.e., the National Best Bid (Offer) is below (above) the Lower (Upper) Price Band and the NMS Stock is not in a Limit State. In order to declare a trading pause in this scenario, the Primary Listing Exchange must determine that trading in that stock deviates from normal trading characteristics such that declaring a trading pause would support the Plan's goal to address extraordinary market volatility.
On May 31, 2012, the Commission approved the Plan as a one-year pilot, which shall be implemented in two phases.
In light of the Plan, the Exchange has proposed to suspend the maximum quotation spread requirement for market maker quotes contained in Rule 803(b)(5) and the continuous market maker quotation requirements contained in Rule 804(e) when the security underlying an option class is in a Limit State or Straddle State. Concerning the calculation of a market maker's quoting obligation, the Exchange will not consider the time periods associated with Limit and Straddle States when evaluating whether a market maker complied with the continuous quotation requirements contained in Rule 804(e).
The Exchange represented that market makers should be exempted from their continuous quoting obligations during Limit and Straddle states because during such periods, market makers could not be certain whether they could buy or sell an underlying security, or if they could, at what price or quantity. The Exchange's corresponding proposal to suspend the maximum quotation spread requirement during Limit or Straddle States is intended to encourage market makers to choose to provide liquidity during such states. According to the Exchange, allowing options market makers the flexibility to choose whether to enter quotes and to do so without spread restrictions is necessary to encourage market makers to provide liquidity in options classes overlying
Additionally, the Exchange notes that all other requirements relating to market maker quotes will remain applicable to market makers that choose to enter quotes during a Limit or Straddle State. For instance, the Exchange represents that market makers would still be subject to the obligation to maintain fair and orderly markets in their appointed classes, and they would still be prohibited from making bids or offers or entering into transactions that are inconsistent with such course of dealings.
In connection with the implementation of the Plan, the Exchange proposes to adopt new Rule 703A(d) to exclude transaction that occur during a Limit State or Straddle State from the obvious error or catastrophic error review, nullification, and adjustment procedures pursuant to Rule 720 for a one year pilot ending April 8, 2014.
Rule 720 provides a process by which a transaction may be busted or adjusted when the execution price of a transaction deviates from the option's theoretical price by a certain amount. Under Rule 720(a)(3)(i), the theoretical price is the national best bid price for the option with respect to a sell order and the national best offer for the option with respect to a buy order, just prior to the trade in question. In certain circumstances, Exchange officials have the discretion to determine the theoretical price pursuant to Rule 720(a)(3)(ii).
The Exchange believes that neither method is appropriate during a Limit State or Straddle State. According to the Exchange, during a Limit State or Straddle State, options prices may deviate substantially from those available prior to or following the state. The Exchange believes this provision would give rise to much uncertainty for market participants as there is no bright line definition of what the theoretical price should be for an option when the underlying NMS stock has an unexecutable bid or offer or both. Because the approach under Rule 720(a)(3)(i) by definition depends on a reliable NBBO, the Exchange does not believe that approach is appropriate during a Limit State or Straddle State.
With respect to Rule 720(a)(3)(ii) affording discretion to designated personnel in the Exchange's market control center to determine the theoretical price, the Exchange notes that does not believe it would be reasonable for ISE personnel to derive theoretical prices to be applied to transactions executed during such unusual market conditions, given that options market makers and other industry professionals will have difficulty pricing options during Limit States and Straddle States.
Ultimately, the Exchange believes the application of the current rule would be impracticable given the lack of a reliable national best bid or offer in the options market during Limit States and Straddle States, and would produce undesirable effects. The Exchange believes that adding certainty to the execution of orders in these situations should encourage market participants to continue to provide liquidity to the Exchange, thus promoting fair and orderly markets. On balance, the Exchange believes that removing the potential inequity of nullifying or adjusting executions occurring during Limit States or Straddle States outweighs any potential benefits from applying these provisions during such unusual market conditions. In further support of its proposed rule change, in Amendment No. 2, the Exchange noted that Rule 1901 (Order Protection) would continue to apply during Limit States and Straddle States. According to the Exchange, the application of Rule 1901 would mean that only orders identified as Intermarket Sweep Orders will trade through protected bids and offers during Limit and Straddle States, and as a result, the only trades that would potentially have been reviewed under Rule 720 during Limit and Straddle States are those involving Intermarket Sweep Orders.
Therefore, the Exchange proposes to adopt 703A(d) to provide that transactions executed during a Limit State or Straddle State are not subject to the provisions of Rule 720.
After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and rules and regulations thereunder applicable to a national securities exchange.
The Commission finds that the proposal to suspend a market maker's obligations when the underlying security is in a limit up-limit down state is consistent with the Act. During a limit up-limit down state, there may not be a reliable price for the underlying security to serve as a benchmark for market makers to price options. In addition, the absence of an executable bid or offer for the underlying security will make it more difficult for market makers to hedge the purchase or sale of an option. Given these significant changes to the normal operating conditions of market makers, the Commission finds that the Exchange's decision to suspend a market maker's obligations in these limited circumstances is consistent with the Act.
The Commission notes, however, that the Plan was approved on a pilot basis and its Participants will monitor how it is functioning in the equity markets during the pilot period. To this end, the Commission expects that, upon implementation of the Plan, the Exchange will continue monitoring the quoting requirements that are being amended in this proposed rule change and determine if any necessary adjustments are required to ensure that they remain consistent with the Act.
In addition, the Commission finds that the Exchange's proposed rule change to exclude transactions that occur during a Limit State or Straddle State from the obvious error or catastrophic error review, nullification, and adjustment procedures pursuant to Rule 720 is consistent with the requirements of the Act and the rules and regulations thereunder applicable to
In the filing, the Exchange notes its belief that excluding transactions executed during a Limit State or Straddle State from the provisions of Rule 720 will ensure that limit orders that are filled during a Limit or Straddle State will have certainty of execution in a manner that promotes just and equitable principles of trade and removes impediments to, and perfects the mechanism of, a free and open market and a national market system. The Exchange believes the application of the current rule would be impracticable given what it perceives will be the lack of a reliable NBBO in the options market during Limit States and Straddle States, and that the resulting actions (
The Exchange, however, has proposed this rule change based on its expectations about the quality of the options market during Limit States and Straddle States. The Exchange states, for example, that it believes that application of the obvious and catastrophic error rules would be impracticable given the potential for lack of a reliable NBBO in the options market during Limit States and Straddle States. Given the Exchange's recognition of the potential for unreliable NBBOs in the options markets during Limit States and Straddle States, the Commission is concerned about the extent to which investors may rely to their detriment on the quality of quotations and price discovery in the options markets during these periods. This concern is heightened by the Exchange's proposal to exclude transactions that occur during a Limit State or Straddle State from the obvious error or catastrophic error review procedures pursuant to Rule 720. The Commission urges investors and market professionals to exercise caution when considering trading options under these circumstances. Broker-dealers also should be mindful of their obligations to customers that may or may not be aware of specific options market conditions or the underlying stock market conditions when placing their orders.
While the Commission remains concerned about the quality of the options market during the Limit and Straddle States, and the potential impact on investors of executing in this market without the protections of the obvious or catastrophic error rules that are being suspended during the Limit and Straddle States, it believes that certain aspects of the proposal could help mitigate those concerns.
First, despite the removal of obvious and catastrophic error protection during Limit States and Straddle States, the Exchange states that there are additional measures in place designed to protect investors. For example, the Exchange states that by rejecting market orders and cancelling pending market orders, only those orders with a limit price will be executed during a Limit State or Straddle State. The Exchange also notes that, pursuant to ISE Rule 705(d), the Exchange may compensate Members for losses resulting directly from the malfunction of the Exchange's systems, and that this protection is independent from ISE Rule 720. Additionally, the Exchange notes the existence of SEC Rule 15c3–5 requiring broker-dealers to have controls and procedures in place that are reasonably designed to prevent the entry of erroneous orders. Finally, with respect to limit orders that will be executable during Limit States and Straddle States, the Exchange states that it applies price checks to limit orders that are priced sufficiently far through the NBBO. Therefore, on balance, the Exchange believes that removing the potential inequity of nullifying or adjusting executions occurring during Limit States or Straddle States outweighs any potential benefits from applying Rule 720 during such unusual market conditions.
The Exchange also noted that during the pilot period it will evaluate whether adopting a provision that permits the Exchange to review trades on its own motion trades during Limit and Straddle states is necessary and appropriate.
Finally, the Exchange has proposed that the changes be implemented on a one year pilot basis. The Commission believes that it is important to implement the proposal as a pilot. The one year pilot period will allow the Exchange time to assess the impact of the Plan on the options marketplace and allow the Commission to further evaluate the effect of the proposal prior to any proposal or determination to make the changes permanent. To this end, in Amendment No. 2, the Exchange has committed to: (1) evaluate the options market quality during Limit States and Straddle States; (2) assess the character of incoming order flow and transactions during Limit States and Straddle States; and (3) review any complaints from members and their customers concerning executions during Limit States and Straddle States. Additionally, the Exchange has agreed to provide the Commission with data requested to evaluate the impact of the elimination of the obvious error rule, including data relevant to assessing the various analyses noted above. On April 4, 2013, the Exchange submitted a letter stating that it would provide specific data to the Commission and the public and certain analysis to the Commission to evaluate the impact of Limit States and Straddle States on liquidity and market quality in the options markets.
In addition, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange is filing a proposal to amend the MIAX Options Fee Schedule (the “Fee Schedule”) to add a new category of MIAX participant, an Administrative Information Subscriber, as defined below, and to establish testing and AIS Port Fees for such new participants who wish to receive administrative information (described more fully below) via connectivity with the MIAX System. The Exchange also proposes technical amendments to the Fee Schedule as described below.
While changes to the Fee Schedule pursuant to this proposal are effective upon filing, the Exchange has designated these changes to be operative on April 1, 2013.
The text of the proposed rule change is provided in
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to amend the MIAX Options Fee Schedule (the “Fee Schedule”) to add a new category of MIAX participant, an Administrative Information Subscriber (“AIS”), as defined below, and to establish testing and AIS Port Fees for such new participants who wish to receive administrative information (described more fully below) via connectivity with the MIAX System.
Concurrently with the instant proposal, the Exchange filed a proposed rule change to establish fees for distributors of the MIAX Top of Market data product (“ToM”).
In addition to MIAX's best bid and offer, with aggregate size and last sale information, distributors that subscribe to ToM also receive: opening imbalance condition information; opening routing information; Expanded Quote Range
In order to accommodate those who wish to receive the administrative information but who do not wish to subscribe to the ToM product or register as a MIAX Market Maker, the Exchange will make the administrative information available to any participant via connectivity with an AIS Port, as described below.
An AIS is a market participant that connects with the MIAX System for purposes of receiving the administrative information described above. Thus, an AIS that elects not to receive the top of market data through a subscription to ToM or act as a MIAX Market Maker will be able receive [sic] the administrative information via connectivity to the MIAX System through an AIS Port.
An AIS, whether a MIAX Member or non-Member, will be assessed a one-time Application Programming Interface (“API”) Testing and Certification fee of $1,000.00. An API makes it possible for Member or non-Member software to communicate with Exchange software applications, and is subject to Member testing with, and certification by, the Exchange. The fee represents costs incurred by the Exchange as it works with each Member while testing and certifying that the Member's software systems communicate properly with MIAX.
The Exchange proposes a lower API Testing and Certification Fee for an AIS than that which is already in place for other participants such as Third Party Vendors and Market Makers who are subscribers of MIAX's market and other data feeds. The higher fee charged to such participants reflects the greater amount of time spent by MIAX employees testing and certifying them due to the additional testing complexity of those feeds or configurations. Also, because third party vendors are redistributing data and reselling services to other market participants, the number and types of scenarios that need to be tested are more numerous and complex than those tested and certified for an AIS. Therefore, the Exchange believes that the proposed $1,000 API Testing and Certification Fee for an AIS is reasonable and not unfairly discriminatory.
MIAX will assess a monthly Network Connectivity Fee of $1,000.00 for a one Gigabit connection, and $5,000.00 for a ten Gigabit connection to an AIS, whether such AIS is a MIAX Member or non-Member. Respecting Members, the Exchange charges the same monthly Network Connectivity Fee to all individual firms, which would include an AIS. Respecting non-Members, the Exchange charges Service Bureaus
MIAX proposes to assess a lower fee to an AIS than to non-Member Service Bureaus and Extranet Providers to reflect the fact that Service Bureaus and Extranet Providers serve as conduits to MIAX Members that do not have their own proprietary systems or do not directly connect to MIAX. The Service Bureaus and Extranet Providers recover the cost of the MIAX Network Connectivity fee from their customers, resulting in a lower overall fee to an AIS.
The Member Network Connectivity fee will be pro-rated for a new AIS Member or non-Member connecting to the MIAX System based on the number of trading days on which the AIS received administrative information by way of connectivity with MIAX, divided by the total number of trading days in such month, multiplied by the monthly rate.
The Exchange will assess monthly AIS Port Fees for the use of AIS Ports, which provide an AIS with the connectivity necessary to receive the administrative information from the MIAX System.
The Exchange will assess monthly AIS Port fees based upon the number of Exchange matching engines
The Exchange will assess a monthly AIS Port fee of $1,000.00 to an AIS for the first matching engine on which an AIS has the two ports, $250.00 each for the second through fifth matching engines on which the AIS has the two ports, and $125.00 each for the sixth matching engine and any additional matching engines on which the AIS has the two ports.
The Exchange proposes to assess lower AIS Port Fees than it assesses for Market Maker MEI Port Fees because Market Makers will use the MEI connectivity to submit quotes, whereas an AIS will not. The higher charge for MEI Port Fees reflects the greater amount of Exchange infrastructure that will be used by Market Makers in submitting quotes as compared to the infrastructure needed by an AIS (who will not submit quotes), and the greater amount of time spent by MIAX employees engaged in support, maintenance, quality control and other services on behalf of Market Makers.
The Exchange also proposes a technical amendment to the Fee Schedule by deleting obsolete provisions stating that monthly FIX, MEI, fees and MIAX Member Participant Identifier (“MPID”) fees will be in effect beginning January 1, 2013, and stating that Clearing Trade Drop Port Fees will be Effective February 1, 2013. The Exchange also proposes to delete language from the Fee Schedule that states that MEI Port fees will be capped at $1,000 per month per Market Maker until the first full calendar month during which the Exchange lists and trades options overlying at least 100
The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act
An AIS may access the same administrative information as any other participant that connects with the MIAX System. Currently, MIAX assesses monthly MEI Port Fees on Market Makers as set forth in the Fee Schedule. An MEI Port provides a Marker Maker with necessary connectivity to submit quotes. The Exchange believes that the proposed testing, connectivity and AIS Port fees to AIS' is reasonable and not unfairly discriminatory because an AIS will still require connectivity in order to receive the administrative information, necessitating Exchange expense for servers, configuration, testing, power, maintenance, and quality control, among other things, that is incurred for anyone connecting to the MIAX System.
The Exchange further believes that the proposed lower monthly AIS Port Fees are equitable and not unfairly discriminatory because of the reduced Exchange expense for servers, configuration, testing, power, maintenance, and quality control that is required for an AIS connecting to an AIS Port vis-à-vis Market Makers connecting with the MIAX System through the MEI Port.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. On the contrary, because an AIS will only receive administrative information via the AIS Port, and will not submit competing quotes with MIAX Market Makers or other market participants, the Exchange believes that the proposed rule change will have no effect on competition in the markets.
Written comments were neither solicited nor received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”)
NASDAQ is proposing changes to amend NASDAQ Rule 7018 to establish fees and rebates in connection with NASDAQ's Retail Price Improvement (“RPI”) Program. NASDAQ proposes to implement the proposed rule change on March 28, 2013, contemporaneously with the launch of the RPI Program.
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of this proposal is to amend NASDAQ Rule 7018 to establish fees and rebates for execution of orders under NASDAQ's recently approved RPI Program.
NASDAQ proposes to offer a rebate of $0.0025 per share executed to RMOs with respect to Retail Orders that execute against RPI Orders or other orders providing price improvement with respect to the NBBO. For Type 2 Retail Orders that execute against non-price improving orders on the NASDAQ book, NASDAQ will charge the fee otherwise applicable to execution of orders that access liquidity (generally, $0.0030 per share executed). Similarly, when Type 2 Retail Orders are routed and execute at another trading venue, NASDAQ will charge the fee otherwise applicable to execution of routed orders. For RPI orders that provide liquidity, NASDAQ will charge a fee of $0.0020 per share executed. Other orders that provide liquidity to Retail Orders will receive the credit or pay the fee otherwise applicable to orders that provide liquidity.
NASDAQ believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
The proposed fees with respect to the RPI program are reflective of NASDAQ's ongoing efforts to use pricing incentive programs to attract orders of retail customers to NASDAQ and improve market quality. The goal of this program and similar pricing incentives is to provide meaningful incentives for members that represent the orders of retail customers to increase their participation on NASDAQ. The proposed credit of $0.0025 per share executed with respect to Retail Orders that access liquidity offering price improvement is reasonable because it will result in a significant reduction of fees with respect to such orders, thereby reducing the costs of members that represent retail customers and that take advantage of the program, and potentially also reducing costs to the customers themselves. The change is consistent with an equitable allocation of fees because NASDAQ believes that it is reasonable to use fee reductions as a means to encourage greater retail participation in NASDAQ. Because retail orders are likely to reflect long-term investment intentions, they promote price discovery and dampen volatility. Accordingly, their presence in the NASDAQ market has the potential to benefit all market participants. For this reason, NASDAQ believes that it is equitable to provide significant financial incentives to encourage greater retail participation in the market. NASDAQ further believes that the proposed program is not unreasonably discriminatory because it is offered to firms representing retail customers without regard to the firm's trading volumes, and is therefore complementary to existing programs, such as the Routable Order Program (the “ROP”) that already aim to encourage greater retail participation but that have minimum volume requirements associated with them. The proposed fees and credits with respect to Type 2 Retail Orders that execute outside of the RPI program by accessing non-price improving liquidity or by routing to other trading venues are reasonable, equitably allocated, and not unreasonably discriminatory because they do not reflect a change from the fees and credits currently in effect with respect to orders that access liquidity on NASDAQ or route.
The proposed fee with respect to a Retail Price Improvement Order that provides liquidity is reasonable because, as previously recognized by the Commission, it reflects the fact that markets often seek to distinguish between orders of individual retail investors and orders of professional traders.
Finally, NASDAQ notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive. In such an environment, NASDAQ must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. NASDAQ believes that the proposed rule change reflects this competitive environment because it is designed to allow NASDAQ to compete with other exchanges and that offer similar price improvement programs for retail orders.
NASDAQ does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. In this instance, the introduction of the RPI program is designed to allow NASDAQ to compete more effectively with the New York Stock Exchange (“NYSE”) and the BATS–Y Exchange, both of which offer similar programs designed to attract retail order flow. NASDAQ has structured its fees in a manner similar to these exchanges, but as a new “entrant” in the field of those exchanges offering such programs, NASDAQ has set the levels of its credits and fees somewhat differently in an effort to distinguish itself from its competitors. Specifically, NASDAQ will offer a higher credit to Retail Orders than NYSE, and will offer the credit with respect to all securities priced above $1 that it trades. In contrast, the BATS–Y Exchange offers a higher credit with respect to only certain securities. NASDAQ will, however, offset these higher credits for retail orders by charging a higher fee to liquidity providers than is the case with its competitors (with the exception of 10 designated securities with respect to which the BATS–Y Exchange currently charges a higher fee). NASDAQ believes that the proposed higher credits with respect to Retail Orders will enhance competition by drawing additional retail order flow to NASDAQ and possibly encouraging other trading venues to make competitive pricing changes. On the other hand, with respect to the proposed fees for Retail Price Improvement Orders, because the market for order execution is extremely competitive, members that provide liquidity may readily opt to forego participation in the NASDAQ program if they believe that alternatives offer them better value. For these reasons and the reasons discussed in connection with the statutory basis for the proposed rule change, NASDAQ does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets.
No written comments were either solicited or received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange proposes amend its fees and rebates applicable to Members
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements.
The Exchange proposes to add an additional tier, the Growth Tier, to Footnote 1 of its fee schedule. Such tier would provide Members a rebate of $0.0025 per share for liquidity added on EDGX if on a daily basis, measured monthly, they post 5,000,000 shares or more of average daily volume (“ADV”) to EDGX.
Secondly, the Exchange currently provides a rebate of $0.0032 per share for Retail Orders, as defined in Footnote 4 of the Exchange's fee schedule, that add liquidity to EDGX. The Exchange currently offers a Retail Order Tier whereby Members are provided a rebate of $0.0034 per share if they add an ADV of Retail Orders (Flag ZA) that is 0.25% or more of the Total Consolidated Volume (“TCV”) on a daily basis, measured monthly. The Exchange proposes to lower the criteria to satisfy this tier to “an average daily volume of Retail Orders that is
The Exchange proposes to implement these amendments to its fee schedule on April 1, 2013.
The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,
The Exchange believes that the addition of the Growth Tier represents an equitable allocation of reasonable dues, fees, and other charges because it incentivizes Members to add liquidity to the EDGX Book.
The Exchange also believes that the proposed rebate of $0.0025 per share for the Growth Tier and volume thresholds that require Members to add an ADV of 5,000,000 shares or more also represents an equitable allocation of reasonable dues, fees, and other charges since higher (lower) rebates are directly correlated with more (less) stringent criteria. As explained in detail below, the proposed Growth Tier rebate of $0.0025 per share will have the least stringent criteria associated with it, and Members will receive $0.0003 less per share than the next best tiered rebates of $0.0028 per share (the Super Tier and an un-named tier in Footnote 1 of the Exchange's fee schedule in which a Member must post 0.065% of the TCV in ADV more than their February 2011 ADV added to EDGX).
In order to qualify for the next best tier after the Growth Tier, the Super Tier (rebate of $0.0028), a Member must post double the number of shares (i.e., 10,000,000 shares or more of ADV to EDGX) than that required to qualify for the Growth Tier.
In addition, the Exchange believes that the proposed rebate is reasonable in that it is in line with the BATS Exchange, Inc.'s (“BZX Exchange”) default rebate of $0.0025 per share for adding displayed liquidity to the BZX Exchange order book for members that do not satisfy a volume tier.
The Exchange believes that reducing the percentage of TCV required to achieve the Retail Order Tier from 0.25% to 0.10% for Members' Retail Orders that add liquidity (Flag ZA) is reasonable, equitable and not unfairly discriminatory because it would
The potential for increased volume from Retail Orders would increase potential revenue to the Exchange, and allow the Exchange to spread its administrative and infrastructure costs over a greater number of shares, leading to lower per share costs. These lower per share costs in turn would allow the Exchange to pass on the savings to Members in the form of lower fees. The increased liquidity benefits all investors by deepening EDGX's liquidity pool, offering additional flexibility for all investors to enjoy cost savings, supporting the quality of price discovery, promoting market transparency and improving investor protection. Volume-based rebates such as the one proposed herein have been widely adopted in the cash equities markets, and are equitable because they are open to all Members on an equal basis and provide discounts that are reasonably related to the value to an exchange's market quality associated with higher levels of market activity, such as higher levels of liquidity provision and introduction of higher volumes of orders into the price and volume discovery processes.
The Exchange believes that reducing the percentage of TCV required to achieve the Retail Order Tier from 0.25% to 0.10% for Members' Retail Orders that add liquidity (Flag ZA) is reasonable, equitable and not unfairly discriminatory because this percentage continues to be within a range that the Exchange believes would incentivize Members to submit Retail Orders to the Exchange in order to qualify for the applicable rebate of $0.0034 per share. The Exchange notes that certain other existing pricing tiers within its fee schedule make rebates available to Members that are also based on the Member's level of activity as a percentage of TCV. These existing percentage thresholds, depending on other related factors and the level of the corresponding rebates, are both higher and lower than the 0.10% proposed herein.
The Exchange notes that a significant percentage of the orders of individual investors are executed over-the-counter.
The Exchange also notes that the Retail Order Tier is reasonable in that NYSE Arca, Inc. (“NYSE Arca”) offers a comparable Retail Order Tier (with an analogous Retail Order definition) that provides a rebate of $0.0033 per share for its Retail Orders that provide liquidity on NYSE Arca in Tapes A, B and C securities for ETP Holders that execute an ADV of Retail Orders that is 0.20% or more of the TCV.
The Exchange also notes that it operates in a highly-competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive. The proposed rule change reflects a competitive pricing structure designed to incent market participants to direct their order flow to the Exchange. The Exchange believes that the proposed rates are equitable and non-discriminatory in that they apply uniformly to all Members. The Exchange believes the fees and credits remain competitive with those charged by other venues and therefore continue to be reasonable and equitably allocated to Members.
These proposed rule changes do not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe these changes represent a significant departure from previous pricing offered by the Exchange or pricing offered by the Exchange's competitors. Additionally, Members may opt to disfavor EDGX's pricing if they believe that alternatives offer them better value. Accordingly, EDGX does not believe that the proposed changes will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets.
Regarding the Retail Order Tier, the Exchange believes that its proposal to amend the criteria to achieve the tier will increase competition for Retail Orders because the proposed Retail Order Tier is comparable in price and criteria to Nasdaq's retail order tier. The Exchange believes its proposal will not burden intramarket competition given that the Exchange's rates apply uniformly to all Members.
Regarding the Exchange's proposed Growth Tier, the Exchange believes its proposal will not burden competition but rather increase competition with the Exchange's competitors that offer similar tiers and rebates. The Exchange believes its proposal will not burden
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from Members or other interested parties.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to establish non-display usage fees for NYSE Arca Integrated Feed, NYSE ArcaBook, NYSE Arca Trades, and NYSE Arca BBO, all of which will be operative on April 1, 2013, and a redistribution fee for NYSE ArcaBook, which will be operative on July 1, 2013. The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to establish non-display usage fees for NYSE Arca Integrated Feed, NYSE ArcaBook, NYSE Arca Trades, and NYSE Arca BBO, all of which will be operative on April 1, 2013, and a redistribution fee for NYSE ArcaBook, which will be operative on July 1, 2013. The subsections below describe (1) The background on the current fees for these real-time products; (2) the rationale for creating a new non-display usage fee structure; (3) the proposed fees for non-display use, which will include internal non-display use and managed non-display use; (4) the proposed redistribution fee for NYSE ArcaBook; and (5) examples comparing the current and proposed fees.
The current monthly fees for NYSE Arca Integrated Feed,
While the majority of subscribers pay the subscriber fee for each display or non-display device that has access to NYSE Arca BBO and NYSE Arca Trades as set forth above, a small number of vendors and subscribers are eligible for, and have elected, the NYSE Arca Unit-of-Count Policy that was first introduced by the Exchange's affiliate, New York Stock Exchange LLC (“NYSE”), 2009
i. Vendors.
• “Vendors” are market data vendors, broker-dealers, private network providers, and other entities that control Subscribers' access to a market data product through Subscriber Entitlement Controls (as described below).
ii. Subscribers.
• “Subscribers” are unique individual persons or devices (which include both display and non-display devices) to which a Vendor provides a market data product. Any individual or device that receives the market data product from a Vendor is a Subscriber, whether the individual or device works for or belongs to the Vendor, or works for or belongs to an entity other than the Vendor.
• Only a Vendor may control Subscriber access to the market data product.
• Subscribers may not redistribute the market data product in any manner.
iii. Subscriber Entitlements.
• A Subscriber Entitlement is a Vendor's permitting a Subscriber to receive access to the market data product through an Exchange-approved Subscriber Entitlement Control.
• A Vendor may not provide access to a market data product to a Subscriber except through a unique Subscriber Entitlement.
• The Exchange will require each Vendor to provide a unique Subscriber Entitlement to each unique Subscriber.
• At prescribed intervals (normally monthly), the Exchange will require each Vendor to report each unique Subscriber Entitlement.
iv. Subscriber Entitlement Controls.
• A Subscriber Entitlement Control is the Vendor's process of permitting Subscribers' access to a market data product.
• Prior to using any Subscriber Entitlement Control or changing a previously approved Subscriber Entitlement Control, a Vendor must provide the Exchange with a demonstration and a detailed written description of the control or change and the Exchange must have approved it in writing.
• The Exchange will approve a Subscriber Entitlement Control if it allows only authorized, unique end-users or devices to access the market data product or monitors access to the market data product by each unique end-user or device.
• Vendors must design Subscriber Entitlement Controls to produce an audit report and make each audit report available to the Exchange upon request. The audit report must identify:
• Each entitlement update to the Subscriber Entitlement Control;
• The status of the Subscriber Entitlement Control; and
• Any other changes to the Subscriber Entitlement Control over a given period.
• Only the Vendor may have access to Subscriber Entitlement Controls.
Vendors must count every Subscriber Entitlement, whether it be an individual person or a device. Thus, the Vendor's count would include every person and device that accesses the data regardless of the purpose for which the individual or device uses the data.
Vendors must report all Subscriber Entitlements in accordance with the following:
i. In connection with a Vendor's external distribution of the market data product, the Vendor should count as one Subscriber Entitlement each unique Subscriber that the Vendor has entitled to have access to the market data product. However, where a device is dedicated specifically to a single individual, the Vendor should count only the individual and need not count the device.
ii. In connection with a Vendor's internal distribution of a market data product, the Vendor should count as one Subscriber Entitlement each unique individual (but not devices) that the Vendor has entitled to have access to such market data.
iii. The Vendor should identify and report each unique Subscriber. If a Subscriber uses the same unique Subscriber Entitlement to gain access to multiple market data services, the Vendor should count that as one Subscriber Entitlement.
However, if a unique Subscriber uses multiple Subscriber Entitlements to gain access to one or more market data services (e.g., a single Subscriber has multiple passwords and user identifications), the Vendor should report all of those Subscriber Entitlements.
iv. Vendors should report each unique individual person who receives access through multiple devices as one Subscriber Entitlement so long as each device is dedicated specifically to that individual.
v. The Vendor should include in the count as one Subscriber Entitlement devices serving no entitled individuals. However, if the Vendor entitles one or more individuals
As noted in the original NYSE Arca Unit-of-Count Policy proposal, “technology has made it increasingly difficult to define `device' and to control who has access to devices, [and] the markets have struggled to make device counts uniform among their customers.”
Applications that can be used in non-display devices provide added value in their capability to manipulate and spread the data they consume. Such applications have the ability to perform calculations on the live data stream and manufacture new data out of it. Data can be processed much faster by a non-display device than it can be by a human being processing information that he or she views on a data terminal. Non-display devices also can dispense data to multiple computer applications as compared with the restriction of data to one display terminal.
While the non-display data has become increasingly valuable to data recipients who can use it to generate substantial profits, it has become increasing difficult for them and the Exchange to accurately count non-display devices. The number and type of non-display devices, as well as their complexity and interconnectedness, have grown in recent years, creating administrative challenges for vendors, data recipients, and the Exchange to accurately count such devices and audit such counts. Unlike a display device, such as a Bloomberg terminal, it is not possible to simply walk through a trading floor or areas of a data recipient's premises to identify non-display devices. During an audit, an auditor must review a firm's entitlement report to determine usage. While display use is generally associated with an individual end user and/or unique user ID, a non-display use is more difficult to account for because the entitlement report may show a server name or Internet protocol (“IP”) address or it may not. The auditor must review each IP or server and further inquire about downstream use and quantity of servers with access to data; this type of counting is very labor-intensive and prone to inaccuracies.
For these reasons, the Exchange determined that its current fee structure, which is based on counting non-display devices, is no longer appropriate in light of market and technology developments and does not reflect the value of the non-display data and its many profit-generating uses for subscribers. As such, the Exchange, in conjunction with its domestic and foreign affiliate exchanges, undertook a review of its market data policies with a goal of bringing greater consistency and clarity to its fee structure; easing administration for itself, vendors, and subscribers; and setting fees at a level that better reflects the current value of the data provided. As a result of this review, the Exchange has determined to implement a new fee structure for display and non-display use of certain market data products. Initially, the Exchange will implement the new non-display use fee structure for NYSE Arca Integrated Feed, NYSE ArcaBook, NYSE Arca BBO, and NYSE Arca Trades, operative on April 1, 2013. The Exchange anticipates implementing a new display use fee structure later this year; until such time, existing fees for display use will apply.
The Exchange proposes to establish new monthly fees for non-display usage, which for purposes of the proposed fee structure will mean accessing, processing or consuming an NYSE Arca data product delivered via direct and/or Redistributor
There will be two types of fees, which are described below. The first type of fee is for internal non-display use. The second type of fee is for managed non-display services. The current NYSE Arca Unit-of-Count Policy will no longer apply to any non-display usage for NYSE Arca BBO and NYSE Arca Trades.
The proposed internal non-display use fees will apply to NYSE Arca Integrated Feed, NYSE ArcaBook, NYSE Arca BBO, and NYSE Arca Trades. Internal non-display use occurs when a data recipient either manages its own non-display infrastructure and controls the access to and permissioning of the market data product on its non-display applications or when the data recipient's non-display applications are hosted by a third party that has not been approved to provide the managed non-display services as described below.
The fee structure will have three categories, which recognize the different uses for the market data. Category 1 Fees apply where a data recipient's non-display use of real time market data is for the purpose of principal trading.
The fees for internal non-display use per data recipient organization for each category will be as follows:
Subscribers to NYSE Arca Integrated Feed, which includes access to NYSE ArcaBook, NYSE Arca BBO, NYSE Arca Trades, and order imbalance information, are not required to subscribe to these individual services as part of the non-display activity for these products. Subscribers who are not currently subscribing to NYSE Arca Integrated Feed
For internal non-display use, there will be no reporting requirements regarding non-display device counts, thus doing away with the administrative burdens described above. Data recipients will be required to declare the market data products used within their non-display trading applications by executing an NYSE Euronext Non-Display Usage Declaration.
The Exchange also proposes to establish fees for managed non-display services for NYSE Arca Integrated Feed, NYSE ArcaBook, and NYSE Arca Trades. Under the managed non-display service, a data recipient's non-display applications must be hosted by a Redistributor approved by the Exchange, and this Redistributor must manage and control the access to NYSE Arca Integrated Feed, NYSE ArcaBook, and/or NYSE Arca Trades for these applications and may not allow for further internal distribution or external redistribution of these market data products. The Redistributor of the managed non-display services and the data recipient must be approved under the current NYSE Arca Unit-of-Count Policy described above,
The fees for managed non-display services per data recipient organization will be as follows:
Data recipients will not be liable for managed non-display fees for those market data products for which they pay the internal non-display fee.
Upon request, a Redistributor offering managed non-display services must provide the Exchange with a list of data recipients that are receiving NYSE Arca Integrated Feed, NYSE ArcaBook, or NYSE Arca Trades through the Redistributor's managed non-display service. Data recipients of the managed non-display service have no additional reporting requirements, thus easing the administrative burdens described above.
The Exchange proposes to establish a monthly redistribution fee of $1,500 for NYSE ArcaBook that will be operative on July 1, 2013. The Exchange believes that it is reasonable to charge this redistribution fee because vendors receive value from redistributing the data in their business products for their customers.
Broker-Dealer A obtains NYSE Arca Trades directly from the Exchange for internal use and does not fall under the NYSE Arca Unit-of-Count Policy. Broker-Dealer A trades both on a principal and agency basis and has (i) 80 individual persons who use 100 display devices and (ii) 50 non-display devices.
• Under the current fee schedule, Broker-Dealer A pays the Exchange the $750 access fee plus $10 for each of the 100 display devices (although 80 individual persons use them, the number of devices is counted), or $1,000, and $10 for each of the 50 non-display devices, or $500, for a total of $2,250 per month.
• Under the proposed fee schedule, Broker-Dealer A would pay the Exchange the $750 access fee plus $10 for each of the 100 display devices, or $1,000, and Category 1 and Category 2 fees for internal non-display use, or $2,000, for a total of $3,750 per month. No redistribution fee would be charged.
Broker-Dealer B, which only trades as principal, obtains NYSE Arca Trades from Vendor X. Broker-Dealer B and Vendor X are both approved for the NYSE Arca Unit-of-Count Policy. Broker-Dealer B has (i) 10 individual persons who use 12 display devices and (ii) 5 non-display devices.
• Today, Vendor X pays the $750 access fee and Broker-Dealer B pays $150 ($10 for the 10 individual persons (under the NYSE Arca Unit-of-Count Policy, the larger number of display devices is not counted), or $100, plus $10 for each of the 5 non-display devices, or $50).
• Under the proposed fee schedule, Broker-Dealer B would pay $100 as it does today for its individual persons using display devices, and $400 for managed non-display use, for a total of $500 per month in fees. Vendor X would pay the $750 access fee and, as of May 1, 2013, the redistribution fee of $750 for a total of $1,500.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
As described in detail in the section “Rationale for New Non-Display Usage Fee Structure” above, which is incorporated by reference herein, technology has made it increasingly difficult to define “device” and to control who has access to devices. Significant change has characterized the industry in recent years, stemming in large measure from changes in regulation and technological advances, which has led to the rise in automated and algorithmic trading, which have the potential to generate substantial profits. Indeed, data used in a single non-display device running a single trading algorithm can generate large profits. Market data technology and usage has evolved to the point where it is no longer practical, nor fair and equitable, to simply count non-display devices. The administrative costs and difficulties of establishing reliable counts and conducting an effective audit of non-display devices have become too burdensome, impractical, and non-economic for the Exchange, vendors, and data recipients. Rather, the Exchange believes that its proposed flat fee structure for non-display use is reasonable, equitable, and not unfairly discriminatory in light of these developments.
Other exchanges also have established differentiated fees based on non-display usage, including a flat or enterprise fee. For example, NASDAQ professional subscribers pay monthly fees for non-display usage based upon direct access to NASDAQ Level 2, NASDAQ TotalView, or NASDAQ OpenView, which range from $300 per month for customers with one to 10 subscribers to $75,000 for customers with 250 or more subscribers.
The Exchange also believes that it is reasonable, equitable, and not unfairly discriminatory to charge relatively lower fees for managed non-display services because the Exchange expects that they will generally be used by a small number of Redistributors and data recipients that are currently eligible for the NYSE Arca Unit-of-Count Policy. These data recipients are constrained by whatever applications are available via Redistributors operating in the Exchange's co-location center and other hosted facilities. In comparison, a data recipient that elects internal non-display use is free to use the data in any manner it chooses and create new uses in an unlimited number of non-display devices. The lack of constraint in this regard will make the non-display usage of the data more valuable to such an internal use data recipient.
The proposed redistribution fee for NYSE ArcaBook also is reasonable because it is comparable to other redistribution fees that are currently charged by the Exchange and other exchanges.
The Exchange has not raised the market data fees for NYSE Arca Integrated Feed and NYSE Arca BBO since the fees were adopted in 2011 and 2010, respectively.
The Exchange also notes that products described herein are entirely optional. Firms are not required to purchase NYSE Arca Integrated Feed, NYSE ArcaBook, NYSE Arca BBO, or NYSE Arca Trades. Firms have a wide variety of alternative market data products from which to choose.
The decision of the United States Court of Appeals for the District of Columbia Circuit in
In fact, the legislative history indicates that the Congress intended that the market system “evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed” and that the SEC wield its regulatory power “in those situations where competition may not be sufficient,” such as in the creation of a “consolidated transactional reporting system.”
As explained below in the Exchange's Statement on Burden on Competition, the Exchange believes that there is substantial evidence of competition in the marketplace for data and that the Commission can rely upon such evidence in concluding that the fees established in this filing are the product of competition and therefore satisfy the relevant statutory standards.
As the
For these reasons, the Exchange believes that the proposed fees are reasonable, equitable, and not unfairly discriminatory.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. An exchange's ability to price its proprietary data feed products is constrained by actual competition for the sale of proprietary market data products, the joint product nature of exchange platforms, and the existence of alternatives to the Exchange's proprietary last sale data.
Competitive markets for listings, order flow, executions, and transaction reports provide pricing discipline for the inputs of proprietary data products and therefore constrain markets from overpricing proprietary market data. The U.S. Department of Justice also has acknowledged the aggressive competition among exchanges, including for the sale of proprietary market data itself. In announcing that the bid for NYSE Euronext by NASDAQ OMX Group Inc. and IntercontinentalExchange Inc. had been abandoned, Assistant Attorney General Christine Varney stated that exchanges “compete head to head to offer real-time equity data products. These data products include the best bid and offer of every exchange and information on each equity trade, including the last sale.”
It is common for broker-dealers to further exploit this recognized competitive constraint by sending their order flow and transaction reports to multiple markets, rather than providing them all to a single market. As a 2010 Commission Concept Release noted, the “current market structure can be described as dispersed and complex” with “trading volume * * * dispersed among many highly automated trading centers that compete for order flow in the same stocks” and “trading centers offer[ing] a wide range of services that are designed to attract different types of market participants with varying trading needs.”
In addition, in the case of products that are distributed through market data vendors, the market data vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Internet portals, such as Google, impose price discipline by providing only data that they believe will enable them to attract “eyeballs” that contribute to their advertising revenue. Similarly, vendors will not elect to make available the NYSE Arca products described herein unless their customers request them, and customers will not elect to purchase them unless they can be used for profit-generating purposes. All of these operate as constraints on pricing proprietary data products.
The costs of producing market data include not only the costs of the data distribution infrastructure, but also the costs of designing, maintaining, and operating the exchange's transaction execution platform and the cost of regulating the exchange to ensure its fair operation and maintain investor confidence. The total return that a trading platform earns reflects the revenues it receives from both products and the joint costs it incurs. Moreover, an exchange's broker-dealer customers view the costs of transaction executions and market data as a unified cost of doing business with the exchange.
Other market participants have noted that the liquidity provided by the order book, trade execution, core market data, and non-core market data are joint products of a joint platform and have common costs.
Analyzing the cost of market data product production and distribution in isolation from the cost of all of the inputs supporting the creation of market data and market data products will inevitably underestimate the cost of the data and data products. Thus, because it is impossible to obtain the data inputs to create market data products without a fast, technologically robust, and well-regulated execution system, system costs and regulatory costs affect the price of both obtaining the market data itself and creating and distributing market data products. It would be equally misleading, however, to attribute all of an exchange's costs to the market data portion of an exchange's joint products. Rather, all of an exchange's costs are incurred for the unified purposes of attracting order flow, executing and/or routing orders, and generating and selling data about market activity. The total return that an exchange earns reflects the revenues it receives from the joint products and the total costs of the joint products.
The level of competition and contestability in the market is evident in the numerous alternative venues that compete for order flow, including 12 equities self-regulatory organization (“SRO”) markets, as well as internalizing broker-dealers (“BDs”) and various forms of alternative trading systems (“ATSs”), including dark pools and electronic communication networks (“ECNs”). Competition among trading platforms can be expected to constrain the aggregate return that each platform earns from the sale of its joint products, but different platforms may choose from a range of possible, and equally reasonable, pricing strategies as the means of recovering total costs. For example, some platforms may choose to pay rebates to attract orders, charge relatively low prices for market data products (or provide market data products free of charge), and charge relatively high prices for accessing posted liquidity. Other platforms may choose a strategy of paying lower rebates (or no rebates) to attract orders, setting relatively high prices for market data products, and setting relatively low prices for accessing posted liquidity. In this environment, there is no economic basis for regulating maximum prices for one of the joint products in an industry in which suppliers face competitive constraints with regard to the joint offering.
The fact that proprietary data from ATSs, BDs, and vendors can bypass SROs is significant in two respects. First, non-SROs can compete directly with SROs for the production and sale of proprietary data products. Second, because a single order or transaction report can appear in an SRO proprietary product, a non-SRO proprietary product, or both, the amount of data available via proprietary products is greater in size than the actual number of orders and transaction reports that exist in the marketplace. Because market data users can thus find suitable substitutes for most proprietary market data products,
Those competitive pressures imposed by available alternatives are evident in the Exchange's proposed pricing. As noted above, the proposed non-display fees for NYSE Arca Integrated Feed, NYSE ArcaBook, NYSE Arca Trades, and NYSE Arca BBO are generally lower than the maximum non-display fees charged by other exchanges such as NASDAQ, Phlx, and BX for comparable products.
In addition to the competition and price discipline described above, the market for proprietary data products is also highly contestable because market entry is rapid and inexpensive. The history of electronic trading is replete with examples of entrants that swiftly grew into some of the largest electronic trading platforms and proprietary data producers: Archipelago, Bloomberg Tradebook, Island, RediBook, Attain, TrackECN, BATS, and Direct Edge. Today, BATS and Direct Edge provide certain market data at no charge on their Web sites in order to attract more order flow, and use revenue rebates from resulting additional executions to maintain low execution charges for their users.
Further, data products are valuable to certain end users only insofar as they provide information that end users expect will assist them or their customers. The Exchange believes the proposed non-display fees will benefit customers by providing them with a clearer way to determine their fee liability for non-display devices, and with respect to internal use, to obviate the need to count such devices. The Exchange further believes that only vendors that expect to derive a reasonable benefit from redistributing the market data products described herein will choose to become Redistributors and pay the attendant monthly fees.
In establishing the proposed fees, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish fair, reasonable, and not unreasonably discriminatory fees and an equitable allocation of fees among all users. The existence of numerous alternatives to the Exchange's products, including proprietary data from other sources, ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect these alternatives or choose not to purchase a specific proprietary data product if its cost to purchase is not justified by the returns any particular vendor or subscriber would achieve through the purchase.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On March 5, 2013, The NASDAQ Stock Market LLC (“NASDAQ” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1)
On May 6, 2010, the U.S. equity markets experienced a severe disruption that, among other things, resulted in the prices of a large number of individual securities suddenly declining by significant amounts in a very short time period before suddenly reversing to prices consistent with their pre-decline levels.
To replace the single-stock circuit breaker pilot program, the equity exchanges filed a National Market System Plan
The Plan sets forth requirements that are designed to prevent trades in individual NMS stocks from occurring outside of the specified price bands. The price bands consist of a lower price band and an upper price band for each NMS stock. When one side of the market for an individual security is outside the applicable price band, i.e., the National Best Bid is below the Lower Price Band, or the National Best Offer is above the Upper Price band, the Processors
The Primary Listing Exchange may also declare a trading pause when the stock is in a Straddle State, i.e., the National Best Bid (Offer) is below (above) the Lower (Upper) Price Band and the NMS Stock is not in a Limit State. In order to declare a trading pause in this scenario, the Primary Listing Exchange must determine that trading in that stock deviates from normal trading characteristics such that declaring a trading pause would support the Plan's goal to address extraordinary market volatility.
On May 31, 2012, the Commission approved the Plan as a one-year pilot, which shall be implemented in two phases.
In light of and in connection with the Limit Up-Limit Down Plan, the Exchange is adopting Chapter V, Section 3(d)(iii) to provide that the Exchange shall exclude the amount of time an NMS stock underlying a NOM option is in a Limit State or Straddle State from the total amount of time in the trading day when calculating the percentage of the trading day Options Market Makers are required to quote.
Currently, under Chapter VII, Sections 5 and 6, NASDAQ requires Market Makers, on a daily basis, to make markets consistent with the applicable quoting requirements specified in Sections 5 and 6, on a continuous basis in at least 60% of the series in options in which the Market Maker is registered. To satisfy this requirement with respect to quoting a series, a Market Maker must quote such series 90% of the trading day (as a percentage of the total number of minutes in such trading day) or such higher percentage as NASDAQ may announce in advance. The Exchange's proposal would suspend a Market Maker's continuous quoting obligation for the duration that an underlying NMS stock is in a Limit State or a Straddle State. As a result, when calculating the duration necessary for a Market Maker to meet its obligations that it post valid quotes at least 90% of the time the classes are open for trading, that time will not include the duration that the underlying is in a Limit State or Straddle State.
After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and rules and regulations thereunder applicable to a national securities exchange.
The Commission finds that the proposal to suspend a Market Maker's obligations when the underlying security is in a limit up-limit down state is consistent with the Act. During a limit up-limit down state, there may not be a reliable price for the underlying security to serve as a benchmark for market makers to price options. In addition, the absence of an executable bid or offer for the underlying security will make it more difficult for market makers to hedge the purchase or sale of an option. Given these significant changes to the normal operating conditions of market makers, the Commission finds that the Exchange's decision to suspend a Market Maker's obligations in these limited circumstances is consistent with the Act.
The Commission notes, however, that the Plan was approved on a pilot basis and its Participants will monitor how it is functioning in the equity markets during the pilot period. To this end, the Commission expects that, upon implementation of the Plan, the Exchange will continue monitoring the quoting requirements that are being amended in this proposed rule change and determine if any necessary adjustments are required to ensure that they remain consistent with the Act.
The Commission also notes that the Exchange did not propose to waive its bid-ask spread requirements for Market Makers when the underlying is in a Limit or Straddle State. The Commission believes that retaining this requirement should help ensure the quality of the quotes that are entered and preserves one of the obligations of being a Market Maker.
In addition, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange is filing a proposal to amend the MIAX Options Fee Schedule (the “Fee Schedule”) to establish fees applicable to Distributors (described below) of the Top of MIAX (“ToM”) market data product, a direct data feed that features the Exchange's best bid and offer, with aggregate size and last sale information on the MIAX system. While changes to the Fee Schedule pursuant to this proposal are effective upon filing, the Exchange has designated these changes to be operative on April 1, 2013.
The text of the proposed rule change is provided in
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to establish fees for Distributors of ToM. ToM provides Distributors with a direct data feed that includes the Exchange's best bid and offer, with aggregate size, and last sale information, based on displayable order and quoting interest on the Exchange. The ToM data feed includes data that is identical to the data sent to the processor for the Options Price Regulatory Authority (“OPRA”). The ToM and OPRA data leave the MIAX system at the same time, as required under Section 5.2(c)(iii)(B) of the Limited Liability Company Agreement of the Options Price Reporting Authority LLC (the “OPRA Plan”), which prohibits the dissemination of proprietary information on any more timely basis than the same information is furnished to the OPRA System for inclusion in OPRA's consolidated dissemination of options information.
The Exchange proposes to charge monthly fees to Distributors of the ToM market data product. The Fee Schedule will reflect that a “Distributor” of TOM data is any entity that receives a feed of ToM data either directly from MIAX or indirectly through another entity and then distributes it either internally (within that entity) or externally (outside that entity), and that all Distributors would be required to execute a MIAX Distributor Agreement. The monthly Distributor Fee charged will depend on whether the Distributor is an “Internal Distributor” or an “External Distributor,” as defined below.
An Internal Distributor is an organization that subscribes to the Exchange for the use of ToM, and is permitted by agreement with the Exchange to provide ToM data to internal users (
An External Distributor is an organization that subscribes to the Exchange for the use of ToM, and is permitted by agreement with the Exchange to provide ToM data to both internal users and to external users (
Market Data Fees for ToM will be reduced for new Distributors for the first month during which they subscribe to ToM, based on the number of trading days that have been held during such month as of the date on which they subscribe. Such new Distributors will be assessed a pro-rata percentage of the fees described above, which is the percentage of the number of trading days remaining in the affected calendar month as of the date on which they begin to receive the ToM feed divided by the total number of trading days in the affected calendar month.
In addition to MIAX's best bid and offer, with aggregate size and last sale information, Distributors that subscribe to ToM will also receive: opening imbalance condition information; opening routing information; Expanded Quote Range
This additional information (the “administrative information”) is included in the ToM feed as secondary information. The administrative information is also currently available to MIAX Market Makers via connectivity with the MIAX Express Interface (“MEI”),
MIAX believes that its proposal to amend its Fee Schedule is consistent with the provisions of Section 6 of the Act,
In adopting Regulation NMS, the Commission granted self-regulatory organizations and broker-dealers increased authority and flexibility to offer new and unique market data to the public. It was believed that this authority would expand the amount of data available to consumers, and also spur innovation and competition for the provision of market data:
[E]fficiency is promoted when broker-dealers who do not need the data beyond the prices, sizes, market center identifications of the NBBO and consolidated last sale information are not required to receive (and pay for) such data when broker-dealers may choose to receive (and pay for) additional market data based on their own internal analysis of the need for such data.
By removing “unnecessary regulatory restrictions” on the ability of exchanges to sell their own data, Regulation NMS advanced the goals of the Act and the principles reflected in its legislative history. If the free market should determine whether proprietary data is sold to broker-dealers at all, it follows that the price at which such data is sold should be set by the market as well.
In July, 2010, Congress adopted H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), which amended Section 19 of the Act. Among other things, Section 916 of the Dodd-Frank Act amended paragraph (A) of Section 19(b)(3) of the Act by inserting the phrase “on any person, whether or not the person is a member of the self-regulatory organization” after “due, fee or other charge imposed by the self-regulatory organization.” As a result, all SRO rule proposals establishing or changing dues, fees or other charges are immediately effective upon filing regardless of whether such dues, fees or other charges are imposed on members of the SRO, non-members, or both. Section 916 further amended paragraph (C) of Section 19(b)(3) of the Act to read, in pertinent part, “At any time within the 60-day period beginning on the date of filing of such a proposed rule change in accordance with the provisions of paragraph (1) [of Section 19(b)], the Commission summarily may temporarily suspend the change in the rules of the self-regulatory organization made thereby, if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this title. If the Commission
The Exchange believes that these amendments to Section 19 of the Act reflect Congress's intent to allow the Commission to rely upon the forces of competition to ensure that fees for market data are reasonable and equitably allocated. Although Section 19(b) had formerly authorized immediate effectiveness for a “due, fee or other charge imposed by the self-regulatory organization,” the Commission adopted a policy and subsequently a rule stating that fees for data and other products available to persons that are not members of the self-regulatory organization must be approved by the Commission after first being published for comment. At the time, the Commission supported the adoption of the policy and the rule by pointing out that unlike members, whose representation in self-regulatory organization governance was mandated by the Act, non-members should be given the opportunity to comment on fees before being required to pay them, and that the Commission should specifically approve all such fees. MIAX believes that the amendment to Section 19 reflects Congress's conclusion that the evolution of self-regulatory organization governance and competitive market structure have rendered the Commission's prior policy on non-member fees obsolete. Specifically, many exchanges have evolved from member-owned, not-for-profit corporations into for-profit, investor-owned corporations (or subsidiaries of investor-owned corporations). Accordingly, exchanges no longer have narrow incentives to manage their affairs for the exclusive benefit of their members, but rather have incentives to maximize the appeal of their products to all customers, whether members or non-members, so as to broaden distribution and grow revenues. Moreover, the Exchange believes that the change also reflects an endorsement of the Commission's determinations that reliance on competitive markets is an appropriate means to ensure equitable and reasonable prices. Simply put, the change reflects a presumption that all fee changes should be permitted to take effect immediately, since the level of all fees are constrained by competitive forces. The Exchange therefore believes that the fees for ToM are properly assessed on non-member Distributors.
The decision of the United States Court of Appeals for the District of Columbia Circuit in
In fact, the legislative history indicates that the Congress intended that the market system “evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed” and that the SEC wield its regulatory power “in those situations where competition may not be sufficient,” such as in the creation of a “consolidated transactional reporting system.”
The court's conclusions about Congressional intent are therefore reinforced by the Dodd-Frank Act amendments, which create a presumption that exchange fees, including market data fees, may take effect immediately, without prior Commission approval, and that the Commission should take action to suspend a fee change and institute a proceeding to determine whether the fee change should be approved or disapproved only where the Commission has concerns that the change may not be consistent with the Act.
MIAX believes that the proposed fee is fair and equitable in accordance with Section 6(b)(4) of the Act, and not unreasonably discriminatory in accordance with Section 6(b)(5) of the Act. As described above, the proposed fee is based on pricing that exists in the fee schedules of other exchanges.
Moreover, the decision as to whether or not to subscribe to ToM is entirely optional to all parties. Potential subscribers are not required to purchase the ToM market data feed, and MIAX is not required to make the ToM market data feed available. Subscribers can discontinue their use at any time and for any reason, including due to their assessment of the reasonableness of fees charged. The allocation of fees among Subscribers is fair and reasonable because, if the market deems the proposed fees to be unfair or inequitable, firms can diminish or discontinue their use of this data.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Notwithstanding its determination that the Commission may rely upon competition to establish fair and equitably allocated fees for market data, the
There is intense competition between trading platforms that provide transaction execution and routing services and proprietary data products. Transaction execution and proprietary data products are complementary in that market data is both an input and a byproduct of the execution service. In fact, market data and trade execution are a representative example of joint products with joint costs. The decision whether and on which platform to post an order will depend on the attributes of the platform where the order can be posted, including the execution fees, data quality and price and distribution of its data products. Without the prospect of a taking order seeing and reacting to a posted order on a particular platform, the posting of the order would accomplish little.
Without trade executions, exchange data products cannot exist. Data products are valuable to many end subscribers only insofar as they provide information that end subscribers expect will assist them or their customers in making trading decisions. The costs of producing market data include not only the costs of the data distribution infrastructure, but also the costs of designing, maintaining, and operating the exchange's transaction execution platform and the cost of regulating the exchange to ensure its fair operation and maintain investor confidence. The total return that a trading platform earns reflects the revenues it receives from both products and the joint costs it incurs. Moreover, an exchange's customers view the costs of transaction executions and of data as a unified cost of doing business with the exchange. A broker-dealer will direct orders to a particular exchange only if the expected revenues from executing trades on the exchange exceed net transaction execution costs and the cost of data that the broker-dealer chooses to buy to support its trading decisions (or those of its customers). The choice of data products is, in turn, a product of the value of the products in making profitable trading decisions. If the cost of the product exceeds its expected
Moreover, as a broker-dealer chooses to direct fewer orders to a particular exchange, the value of the product to the broker-dealer decreases, for two reasons. First, the product will contain less information, because executions of the broker-dealer's orders will not be reflected in it. Second, and perhaps more important, the product will be less valuable to that broker-dealer because it does not provide information about the venue to which it is directing its orders. Data from the competing venue to which the broker-dealer is directing orders will become correspondingly more valuable.
Thus, a super-competitive increase in the fees charged for either transactions or data has the potential to impair revenues from both products. “No one disputes that competition for order flow is `fierce'.”
Analyzing the cost of market data distribution in isolation from the cost of all of the inputs supporting the creation of market data will inevitably underestimate the cost of the data. Thus, because it is impossible to create data without a fast, technologically robust, and well-regulated execution system, system costs and regulatory costs affect the price of market data. It would be equally misleading, however, to attribute all of the exchange's costs to the market data portion of an exchange's joint product. Rather, all of the exchange's costs are incurred for the unified purposes of attracting order flow, executing and/or routing orders, and generating and selling data about market activity. The total return that an exchange earns reflects the revenues it receives from the joint products and the total costs of the joint products.
Competition among trading platforms can be expected to constrain the aggregate return each platform earns from the sale of its joint products, but different platforms may choose from a range of possible, and equally reasonable, pricing strategies as the means of recovering total costs. For example, some platforms may choose to pay rebates to attract orders, charge relatively low prices for market information (or provide information free of charge) and charge relatively high prices for accessing posted liquidity. Other platforms may choose a strategy of paying lower rebates (or no rebates) to attract orders, setting relatively high prices for market information, and setting relatively low prices for accessing posted liquidity. In this environment, there is no economic basis for regulating maximum prices for one of the joint products in an industry in which suppliers face competitive constraints with regard to the joint offering. This would be akin to strictly regulating the price that an automobile manufacturer can charge for car sound systems despite the existence of a highly competitive market for cars and the availability of aftermarket alternatives to the manufacturer-supplied system.
The market for market data products is competitive and inherently contestable because there is fierce competition for the inputs necessary to the creation of proprietary data and strict pricing discipline for the proprietary products themselves. Numerous exchanges compete with each other for listings, trades, and market data itself, providing virtually limitless opportunities for entrepreneurs who wish to produce and distribute their own market data. This proprietary data is produced by each individual exchange, as well as other entities, in a vigorously competitive market.
Broker-dealers currently have numerous alternative venues for their order flow, including eleven existing options markets. Each SRO market competes to produce transaction reports via trade executions. Competitive markets for order flow, executions, and transaction reports provide pricing discipline for the inputs of proprietary data products. The large number of SROs that currently produce proprietary data or are currently capable of producing it provides further pricing discipline for proprietary data products. Each SRO is currently permitted to produce proprietary data products, and many in addition to MIAX currently do, including NASDAQ, CBOE, ISE, NYSE Amex, and NYSEArca. Additionally, order routers and market data vendors can facilitate single or multiple broker-dealers' production of proprietary data products. The potential sources of proprietary products are virtually limitless.
Market data vendors provide another form of price discipline for proprietary data products because they control the primary means of access to end subscribers. Vendors impose price restraints based upon their business models. For example, vendors such as Bloomberg and Thomson Reuters that assess a surcharge on data they sell may refuse to offer proprietary products that end subscribers will not purchase in sufficient numbers. Internet portals, such as Google, impose a discipline by providing only data that will enable them to attract “eyeballs” that contribute to their advertising revenue. Retail broker-dealers, such as Schwab and Fidelity, offer their customers proprietary data only if it promotes trading and generates sufficient commission revenue. Although the business models may differ, these vendors' pricing discipline is the same: They can simply refuse to purchase any proprietary data product that fails to provide sufficient value. MIAX and other producers of proprietary data products must understand and respond to these varying business models and pricing disciplines in order to market proprietary data products successfully.
In addition to the competition and price discipline described above, the market for proprietary data products is also highly contestable because market entry is rapid, inexpensive, and profitable. The history of electronic trading is replete with examples of entrants that swiftly grew into some of the largest electronic trading platforms and proprietary data producers: Archipelago, BATS Trading and Direct Edge. Regulation NMS, by deregulating the market for proprietary data, has increased the contestability of that market. While broker-dealers have previously published their proprietary data individually, Regulation NMS encourages market data vendors and broker-dealers to produce proprietary products cooperatively in a manner never before possible. Multiple market data vendors already have the capability to aggregate data and disseminate it on a profitable scale, including Bloomberg, and Thomson Reuters.
The Court in
The intensity of competition for proprietary information is significant and MIAX believes that this proposal itself clearly evidences such competition. MIAX is offering ToM in order to keep pace with changes in the industry and evolving customer needs. It is entirely optional and is geared towards attracting new Member Applicants and customers. MIAX competitors continue to create new market data products and innovative pricing in this space. MIAX expects to see firms challenge its pricing on the basis of MIAX's explicit fees being higher than the zero-priced fees from other competitors such as BATS. In all cases, MIAX expects firms to make decisions on how much and what types of data to consume on the basis of the total cost of interacting with MIAX or other exchanges. Of course, the explicit data fees are only one factor in a total platform analysis. Some competitors have lower transactions fees and higher data fees, and others are vice versa. The market for this proprietary information is highly competitive and continually evolves as products develop and change.
The Exchange notes that the ToM market data and fees will compete with similar products offered by other markets such as NASDAQ OMX PHLX, LLC (“PHLX”) and the International Stock Exchange LLC (“ISE”). For example, PHLX and ISE offer market data products that are similar to ToM: data feeds that show the top of the market entitled Top of PHLX Options (“TOPO”) and the ISE TOP Quote Feed.
Written comments were neither solicited nor received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to implement a one-year pilot program for issuers of certain exchange-traded products (“ETPs”) listed on the Exchange. The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
This Amendment No. 1 to SR–NYSEArca–2013–34 replaces and supercedes SR–NYSEArca–2013–34 in its entirety.
The Exchange proposes to create a one-year pilot program for issuers of certain ETPs listed on the Exchange. The pilot program would be called the NYSE Arca ETP Incentive Program (“Incentive Program”). As described in more detail below, the Incentive Program is designed to enhance the market quality for ETPs by incentivizing Market Makers
Under the current Fee Schedule for listings, an issuer of an ETP is required to pay a Listing Fee that ranges from $5,000 to $45,000.
A qualified Market Maker may request an assignment as an LMM for an ETP, and the request is subject to approval by the Exchange.
An LMM is currently subject to the obligations for Market Makers that are set forth in NYSE Arca Equities Rule 7.23 and the minimum performance standards that are referenced in NYSE Arca Equities Rule 7.24. Under NYSE Arca Equities Rule 7.24, the minimum performance standards include (i) Percent of time at the National Best Bid (the “NBB”) or National Best Offer (the “NBO”) (collectively, the “NBBO”), (ii) percent of executions better than the NBBO, (iii) average displayed size, (iv) average quoted spread, and (v) in the event that the security is a derivative security, the ability to transact in underlying markets. An LMM's minimum performance standards are described in an official NYSE Arca policy, titled
The risks for LMMs that exceed those of other market participants include risks associated with managing position inventory as well as risks associated with maintaining quotes. Inventory risks may be higher for certain ETPs with low volume and low shares outstanding because there are fewer opportunities to turn over positions in such ETPs and there is an accumulation of costs from carrying those positions as well as positions in the underlying securities used for hedging.
To incentivize firms to take on the LMM designation and foster liquidity provision and stability in the market, the Exchange currently provides LMMs with an opportunity to receive incrementally higher transaction credits and incur incrementally lower transaction fees (“LMM Rates”) compared to standard liquidity maker-taker rates (“Standard Rates”).
The Exchange believes that the assignment of an LMM, which is held to higher standards as compared to Market Makers and other market participants, is a critical component of the promotion of a consistent, fair and orderly market in ETPs on the Exchange. However, market participants may be forgoing LMM assignments in ETPs—instead choosing to trade ETPs as Market Makers or ETP Holders with lower or no obligations or minimum performance standards—because the incentives to serve as an LMM in low-volume ETPs are insufficient to outweigh the obligations, minimum performance standards, and other risks described above. To illustrate how this change has transpired, the following table highlights the increasing proportion of new NYSE Arca ETPs that are listed without an LMM present:
The Exchange is concerned that this trend will continue or worsen if there is no mechanism to appropriately remunerate capable Market Makers to take on the obligations and accountability that are part and parcel of the LMM assignment. The Exchange also is concerned that this would not be limited to future listings and that existing listings could also be subject to LMM withdrawals. Indeed, since January 2008, nearly 100% of all LMM withdrawal requests for ETPs already listed and trading were made for securities that exhibited low CADV in the period prior to the withdrawal requests being made. This behavior further signals a connection between low CADV and low interest levels from firms seeking to act as LMMs. Likewise, it supports the assertion that there is less value relative to the risks of acting as the LMM for certain ETPs.
The Exchange believes that there is ample evidence, along with logical inference, to support the assertion that the presence of an obligated and accountable liquidity provider leads to superior market quality and thus benefits long-term investors. When there is an LMM assigned to a security listed on NYSE Arca, long-term investors trading on the Exchange in the secondary market likely experience enhanced market quality compared to similar securities for which there are no LMMs assigned. For instance, in the fourth quarter of 2012, there were 609 ETPs listed on NYSE Arca that traded less than 10,000 shares CADV. Of those ETPs, 567 had LMMs while 42 did not. The average spread for the ETPs with LMMs was 0.79% and the average quote size was 3,014 shares. The average spread for the ETPs without LMMs was 11.52% and the average quote size was 1,655 shares. During the same time period, there were 410 ETPs listed on NYSE Arca that traded between 10,000 shares and 100,000 shares CADV. Of those ETPs, 396 had LMMs while 14 did not. The average spread for the ETPs with LMMs was 0.23% and the average quote size was 6,643 shares. The average spread for ETPs without LMMs was 0.36% and the average quote size was 2,613 shares. Exhibits 1 and 2 illustrate that these observations were consistent over longer time periods and that there has been a greater variance in market quality for ETPs without LMMs.
To address these issues, the Exchange proposes to establish the Incentive Program as a one-year pilot to enhance the market quality for ETPs by incentivizing Market Makers to take LMM assignments in certain lower volume ETPs by offering an alternative fee structure for such LMMs funded from the Exchange's general revenues. Incentive Program costs would be offset by charging participating issuers non-refundable Optional Incentive Fees, which would be credited to the Exchange's general revenues. Participation would be entirely voluntary on the part of both LMMs and issuers. The Exchange proposes to add new NYSE Arca Equities Rule 8.800, which would set forth Incentive Program requirements, including performance standards specific to LMMs participating in the Incentive Program, as described in more detail below.
Proposed NYSE Arca Equities Rule 8.800(a) would describe the ETPs that would be eligible to participate in the Incentive Program. An ETP would be eligible to participate in the Incentive Program if:
(1) It is listed on the Exchange as of the commencement of the pilot period or becomes listed during the pilot period;
(2) the listing is under NYSE Arca Equities Rules 5.2(j)(3) (Investment Company Units), 5.2(j)(5) (Equity Gold Shares), 8.100 (Portfolio Depositary Receipts), 8.200 (Trust Issued Receipts), 8.201 (Commodity-Based Trust Shares), 8.202 (Currency Trust Shares), 8.203 (Commodity Index Trust Shares), 8.204 (Commodity Futures Trust Shares), 8.300 (Partnership Units), 8.600 (Managed Fund Shares), or 8.700 (Managed Trust Securities);
(3) with respect to an ETP that listed on the Exchange before the commencement of the Incentive Program, the ETP has a CADV of one million shares or less for at least the preceding three months and the issuer of such ETP has not suspended the issuance or redemption of new shares;
(4) it is compliant with continuing listing standards, if the ETP was added to the Incentive Program after listing on the Exchange.
Proposed NYSE Arca Equities Rule 8.800(b) would describe the issuer application and LMM assignment process. Specifically, under proposed NYSE Arca Equities Rule 8.800(b)(1), an issuer that wished to have an ETP participate in the Incentive Program and pay the Exchange an Optional Incentive Fee would be required to submit a written application in a form prescribed by the Exchange for each ETP. The issuer could apply to have its ETP participate at the time of listing or thereafter at the beginning of each quarter during the pilot period. An issuer could not have more than five ETPs that were listed on the Exchange prior to the pilot period participate in the Incentive Program.
Proposed NYSE Arca Equities Rule 8.800(b)(2) would set forth eligibility requirements for issuers. Specifically, in order for its ETP to be eligible to participate in the Incentive Program, an issuer must be current in all payments due to the Exchange.
Proposed NYSE Arca Equities Rule 8.800(b)(3) would provide that the Exchange would communicate the ETP(s) proposed for inclusion in the Incentive Program on a written solicitation that would be sent to all qualified LMMs
Proposed NYSE Arca Equities Rule 8.800(b)(4) would provide that after the Exchange provided the written solicitation to LMMs, no individual associated with an LMM could contact such issuer or the Exchange staff about that ETP until the assignment of the LMM is made, except as otherwise permitted in the rules.
Proposed NYSE Arca Equities Rule 8.800(b)(5) would describe the assignment of an LMM if more than one qualified LMM proposed to serve as such for a particular ETP.
Proposed NYSE Arca Equities Rules 8.800(b)(6) and (7) would describe required public notices relating to the Incentive Program. Under proposed NYSE Arca Equities Rule 8.800(b)(6), the Exchange would provide notification on a dedicated page on its Web site regarding (i) The ETPs participating in the Incentive Program, (ii) the date a particular ETP began participating in the Incentive Program, (iii) the date a particular ETP ceased participating in the Incentive Program, (iv) the LMM assigned to each ETP participating in the Incentive Program, and (v) the amount of the Optional Incentive Fee for each ETP. This page would also include a fair and balanced description of the Incentive Program, including (i) A description of the Incentive Program's operation as a pilot, including the effective date thereof, (ii) the potential benefits that may be realized by an ETP's participation in the Incentive Program, (iii) the potential risks that may be attendant with an ETP's participation in the Incentive Program, (iv) the potential impact resulting from an ETP's entry into and exit from the Incentive Program, and (v) how interested parties can request additional information regarding the Incentive Program and/or the ETPs participating therein.
Under proposed NYSE Arca Equities Rule 8.800(b)(7), an issuer of an ETP that is approved to participate in the Incentive Program would be required to issue a press release to the public when an ETP commences or ceases participation in the Incentive Program. The press release would be in a form and manner prescribed by the Exchange, and if practicable, would be issued at least two days before the ETP commences or ceases participation in the Incentive Program.
Proposed NYSE Arca Equities Rule 8.800(c) would describe the proposed Incentive Program LMM performance standards that would apply to an LMM for each Incentive Program security it is assigned.
Under proposed NYSE Arca Equities Rule 8.800(c)(2), an LMM would be subject to a “market wide” requirement. Specifically, an LMM would be required to maintain quotes or orders at the NBBO or better (the “Inside”) during the month during Core Trading Hours in accordance with certain maximum width and minimum depth thresholds, which would be provided in
Under proposed NYSE Arca Equities Rule 8.800(c)(3), an LMM would also be subject to an NYSE Arca-specific requirement, which could be satisfied in one of two ways. First, an LMM could choose to satisfy the “Time-at-the-Inside Requirement” under proposed NYSE Arca Equities Rule 8.800(c)(3)(A), pursuant to which an LMM would be required to maintain quotes or orders on NYSE Arca at the NBBO or better at least 15% of the time when quotes may be entered during Core Trading Hours each trading day, as averaged over the course of a month.
Finally, under proposed NYSE Arca Equities Rule 8.800(c)(4), for at least 90% of the time when quotes may be entered during Core Trading Hours each trading day, as averaged over the course of a month, an LMM would be required to maintain (A) at least 2,500 shares of attributable, displayed posted buy liquidity on the Exchange that is priced no more than 2% away from the NBB for the particular ETP; and (B) at least 2,500 shares of attributable, displayed posted offer liquidity on the Exchange that is priced no more than 2% away from the NBO for the particular ETP.
Proposed NYSE Arca Equities Rule 8.800(d) would describe the payment to an LMM by the Exchange (“LMM Payment”). Under this provision, the Exchange would credit an LMM for the LMM Payment, which would be determined by the Exchange and set forth in the Trading Fee Schedule. An LMM participating in the Incentive Program would not be entitled to an LMM Payment unless and until it meets or exceeds the proposed Incentive Program LMM performance standards for an assigned ETP, as determined by the Exchange. In this regard, the Exchange proposes to amend its Trading Fee Schedule to provide that at the end of each quarter the Exchange would credit an LMM an “LMM Payment” for each month during such quarter that the LMM meets or exceeds its proposed Incentive Program LMM performance standards for an assigned ETP. If an LMM does not meet or exceed its proposed Incentive Program LMM performance standards for an assigned ETP for a particular month, or the ETP is withdrawn from the Incentive Program pursuant to paragraph (e) of NYSE Arca Equities Rule 8.800, then the LMM Payment would be zero for such month. The amount of the LMM Payment for a particular month would not exceed
Proposed NYSE Arca Equities Rule 8.800(e) would describe the circumstances for withdrawal from the Incentive Program. First, if an ETP no longer met continuing listing standards, suspended the creation and/or redemption of shares, or liquidated, it would be automatically withdrawn from the Incentive Program as of the ETP suspension date.
Second, NYSE Arca, in its discretion, could allow an issuer to withdraw an ETP from the Incentive Program before the end of the pilot period if the assigned LMM was unable to meet its proposed Incentive Program LMM performance standards for any two of the three months of a quarter or for five months during the pilot period and no other qualified ETP Holder was able to take over the assignment.
Third, an LMM also could withdraw from all of its ETP assignments in the Incentive Program. Alternatively, NYSE Arca, in its discretion, could allow an LMM to withdraw from a particular ETP before the end of the pilot period if the Exchange determined that there were extraneous circumstances that prevented the LMM from meeting its proposed Incentive Program LMM performance standards for such ETP that did not affect its other ETP assignments in the Incentive Program. In either such event, the LMM's ETP(s) would be reallocated as described below.
Fourth, if an ETP maintained a CADV of one million shares or more for three consecutive months, it would be automatically withdrawn from the Incentive Program within one month thereafter. If after such automatic withdrawal the ETP failed to maintain a CADV of one million shares or more for three consecutive months, the issuer of the ETP could reapply for the Incentive Program one month thereafter. The Exchange believes that setting a one-million-share threshold would focus Incentive Program resources on particularly low volume ETPs and provide an objective measurement for evaluating the effectiveness of the Incentive Program.
Fifth, if the issuer was not current in all payments due to the Exchange for two consecutive quarters, its ETP would be automatically terminated from the Incentive Program.
Finally, proposed NYSE Arca Equities Rule 8.800(f) would describe the LMM reallocation process. If the LMM for a particular ETP did not meet or exceed its proposed Incentive Program LMM performance standards for any two of the three months of a quarter or for five months during the pilot period, or chose to withdraw from the Incentive Program, and at least one other qualified Market Maker had agreed to become the assigned LMM under the Incentive Program, then the ETP would be reallocated. If more than one qualified LMM proposed to serve as such, another
The Incentive Program would be offered to issuers from the date of implementation, which would occur no later than 90 days after Securities and Exchange Commission (“Commission”) approval of this filing, until one calendar year after implementation. As described above, each issuer could select ETPs to participate in the Incentive Program. During the pilot period, the Exchange would assess the Incentive Program and could expand the criteria for ETPs that are eligible to participate, for example, to permit issuers to include more than five ETPs that were listed on the Exchange before the pilot period commenced. At the end of the pilot period, the Exchange would determine whether to continue or discontinue the Incentive Program or make it permanent and submit a rule filing as necessary. If the Exchange determined to change the terms of the Incentive Program while it was ongoing, it would submit a rule filing to the Commission.
During the Incentive Program, the Exchange would provide the Commission with certain market quality reports each month, which would also be posted on the Exchange's Web site. Such reports would include the Exchange's analysis regarding the Incentive Program and whether it is achieving its goals, as well as market quality data such as, for all ETPs listed as of the date of implementation of the Incentive Program and listed during the pilot period (for comparative purposes), volume (CADV and NYSE Arca ADV), NBBO bid/ask spread differentials, LMM participation rates, NYSE Arca market share, LMM time spent at the inside, LMM time spent within $0.03 of the inside, percent of time NYSE Arca had the best price with the best size, LMM quoted spread, LMM quoted depth, and Rule 605 statistics (one-month delay) as agreed upon by the Exchange and the Commission staff. In connection with this proposal, the Exchange would provide other data and information related to the Incentive Program as may be periodically requested by the Commission. In addition, and as described further below, issuers could utilize ArcaVision to analyze and replicate data on their own.
The proposed LMM Payment is designed to encourage additional Market Makers to pursue LMM assignments and thereby support the provision of consistent liquidity in lower-volume ETPs listed on the Exchange. The Exchange believes that providing a quarterly LMM Payment would create a more equitable system of incentives for LMMs. The Exchange would administer all aspects of the LMM Payments, which, as noted above, would be paid by the Exchange to LMMs out of the Exchange's general revenues.
The Exchange believes that the Incentive Program would increase the supply of Market Makers seeking to take on LMM assignments, ultimately leading to improved market quality for long‐term investors in ETPs, which would lead to multiple benefits. It would help to ensure that a diversified pool of qualified LMM candidates exists in the present and future. It would also help to discover a competitive balance to set the fair Optional Incentive Fees within the proposed range of $10,000 to $40,000 per ETP annually, based on the risk/reward of receiving specific LMM assignments. Issuers would be able to monitor the performance of LMMs as well as registered Market Makers and other participants that opted into the “ArcaVision Market Maker Summary” reporting mechanism. Thus, issuers would be able to compare and contrast the performance of various Market Makers to ensure that they were optimizing benefits vis‐a‐vis cost.
The Exchange believes that the Incentive Program is designed to mitigate risks and concerns that Financial Industry Regulatory Authority (“FINRA”) Rule 5250 addresses. FINRA Rule 5250 prohibits a FINRA member or a person associated with a FINRA member from accepting any payment or other consideration, directly or indirectly, from an issuer of a security, or any affiliate or promoter thereof, for publishing a quotation, acting as market maker in a security, or submitting an application in connection therewith.
FINRA Rule 5250 is designed to preserve the integrity of the marketplace by ensuring that quotations accurately reflect a broker-dealer's interest in buying or selling a security and that the decision by a firm to make a market in a given security and the question of price should not be influenced by payments to members from issuers or promoters.
First, the derivative and open-ended nature of many of the ETPs eligible to participate in the Incentive Program would allow for transparent intrinsic intraday pricing. As such, the Exchange does not believe that such products would lend themselves to the type of market manipulation that FINRA Rule 5250 was designed to prevent. The transparent nature of many ETPs' portfolio composition as well as their accessibility and the elasticity of shares outstanding contribute to an arbitrage process that will lead to executions of orders of many ETPs priced at or near net asset values (“NAVs”). The typical unit size is 50,000 shares to 100,000 shares and each share represents fractional ownership of the portfolio, allowing low minimum investments to access the exposure of a large notional portfolio. ETP supply (i.e., shares outstanding) can be increased or decreased through the creation and redemption process. Clearing firms that are authorized participants will have the opportunity to deliver, or take delivery of, unit-sized amounts of the underlying securities. Proprietary traders engaging in arbitrage are able to calculate an estimated intraday NAV. Such traders understand what the intrinsic per-share price is, hedge themselves using the underlying securities or correlated equivalents, and manage their positions by either creating or redeeming units. If and when the quote is priced beyond
Second, the Incentive Program would have numerous structural safeguards that were designed to prevent any adverse effect on market integrity. First, the Incentive Program would be administered by the staff of the Exchange, which is a self-regulatory organization,
In light of the pricing mechanisms of ETPs and the structural safeguards of the Incentive Program, the Exchange believes that the payments under the Incentive Program are designed to mitigate the risks and concerns that FINRA Rule 5250 addresses. In this regard, the Exchange understands, based upon discussions with FINRA, that FINRA will file an immediately effective rule change with the Commission indicating that participation by LMMs and issuers in the Incentive Program would not violate Rule 5250.
Rule 102 of Regulation M prohibits an issuer from directly or indirectly attempting “to induce any person to bid for or purchase, a covered security during the applicable restricted period” unless an exemption is available.
First, the Exchange notes that the Commission and its staff have previously granted relief from Rule 102 to a number of ETPs (“Existing Relief”) in order to permit the ordinary operation of such ETPs.
Second, the Incentive Program requires, among other things, that an LMM make two-sided quotes and not just bids. It is not intended to raise ETP prices but rather to improve market quality. In light of the derivative nature of ETPs described above, the Exchange does not expect that LMMs would quote outside of the normal quoting ranges for these products as a result of the LMM Payment, but rather would quote within their normal ranges as determined by market factors. Indeed, the Incentive Program would not create any incentive for an LMM to quote outside such ranges.
Finally, the staff of the Exchange, which is a self-regulatory organization, would be interposed between the issuer and the LMM, administering a rules-based program with numerous structural safeguards described in the previous section. Specifically, both LMMs and issuers would be required to apply to participate in the program and to meet certain standards. The Exchange would collect the Optional Incentive Fees from issuers and credit them to the Exchange's general revenues. An LMM would be eligible to receive an LMM Payment, again from the Exchange's general revenues, only after it met the proposed Incentive Program LMM performance standards set and monitored by the Exchange. Application to, continuation in, and withdrawal from the Incentive Program would be governed by published Exchange rules and policies, and there would be extensive public notice regarding the Incentive Program and payments thereunder on both the Exchange's and the issuers' Web sites. Given these structural safeguards, the Exchange believes that payments under the Incentive Program are appropriate for exemptive relief from Rule 102.
In summary, the Exchange believes that exemptive relief from Rule 102 should be granted for the Incentive Program because, for example, (1) The Incentive Program would not create any incentive for an LMM to quote outside of the normal quoting ranges for the ETPs included therein; (2) the Incentive Program has numerous structural safeguards, such as the application process for issuers and LMMs, the interpositioning of the Exchange between issuers and LMMs, and significant public disclosure surrounding the Incentive Program, which in general is designed to help inform investors about the potential impact of the Incentive Program; and (3) the Incentive Program does not alter the basis on which Existing Relief is based and, furthermore, most ETPs that would be eligible to participate in the Incentive Program would have previously been granted relief from Rule 102.
The Exchange believes that its surveillance procedures would be adequate to properly monitor the trading of Incentive Program ETPs on the Exchange during all trading sessions and to detect and deter violations of Exchange rules and applicable federal securities laws. Trading of the ETPs through the Exchange would be subject to FINRA's surveillance procedures for derivative products including ETFs.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
The Exchange further believes that designating ETPs as the products eligible for inclusion in the Incentive Program is reasonable because it would incentivize Market Makers to undertake LMM assignments in ETPs with lower trading volume. As described earlier in the filing, there is ample data demonstrating that there are generally fewer financial benefits for such ETPs as compared to ETPs with higher CADVs and that market quality has been affected.
The Exchange believes that its implementation plan and the pilot period are reasonable in that they would permit the Commission, the Exchange, LMMs, and issuers to assess the impact of the Incentive Program before making it available to other securities. In particular, the Exchange believes that it is beneficial and not unfairly discriminatory to limit the ETPs participating so that the Exchange and issuers could measure the experience against nonparticipating ETPs and thereby conserve the commitment of resources to the Incentive Program. In particular, by setting an objective one-million-share CADV threshold, the Exchange and the Commission will have an opportunity to observe the impact, if any, on ETPs that exceed the threshold and “graduate” from the Incentive Program and compare them to other ETPs.
The Exchange believes that the proposed LMM minimum performance standards are reasonable, including aspects thereof that can be met by quotes or orders of other market participants on the Exchange or across all other markets trading the security, because such standards would contribute to reasonably ensuring that there is sufficient liquidity for the ETPs participating in the Incentive Program. In this regard, the role of the LMM is to reasonably ensure that sufficient liquidity exists for investors when such liquidity is not provided by other market participants, whether on the Exchange or across other markets trading the particular security, by submitting quotes and orders that contribute to the quality of the width and depth of liquidity for the ETP. Accordingly, when the quotes or orders of other market participants on the Exchange or across all other markets trading the security result in such sufficient liquidity, there is not a need for an LMM to quote according to the proposed LMM minimum performance standards, which are designed to reasonably ensure that such liquidity exists. However, when such liquidity is not otherwise present, the proposed LMM minimum performance standards would reasonably ensure that such liquidity exists and is available for investors.
With respect to the proposed fees, the Exchange believes that the proposed rule change is consistent with Sections 6(b)(4) and 6(b)(5) of the Act, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities and that it is not unfairly discriminatory. The Exchange believes that the proposed Optional Incentive Fees for ETPs are reasonable, given the additional costs to the Exchange of providing the LMM Payments, which are paid by the Exchange out of the Exchange's general revenues. The Exchange also believes that the proposed fees are reasonable because they would be used by the Exchange to offset the cost that the Exchange incurs to provide listing services for ETPs. These costs include, but are not limited to, ETP rulemaking initiatives, listing administration processes, issuer services, consultative legal services provided to ETP issuers in support of new product development, and administration of the proposed quarterly LMM Payment. As such, the Exchange believes that it is reasonable for it to retain an administration fee to recover the costs of administering the Incentive Program.
The Exchange believes that the Optional Incentive Fee is reasonable, equitably allocated, and not unreasonably discriminatory because it is entirely voluntary on an issuer's part to join the Incentive Program. The amount of the fee would be determined and paid by the issuer within the $10,000 to $40,000 band per ETP and credited to the Exchange's general revenues. Only issuers that voluntarily join the Incentive Program would be required to pay the fees. The Exchange believes that this is fairer than requiring all issuers to pay higher fees to fund the Incentive Program.
The Exchange believes that the LMM Payment and standard transaction fees and credits are equitable and not unfairly discriminatory in that any Market Maker could seek to participate in the Incentive Program as an LMM. Moreover, an LMM participating in the Incentive Program would not be entitled to an LMM Payment unless and until it
Finally, for the reasons stated above, the Exchange believes that the Incentive Program would be designed to mitigate risks and concerns that FINRA Rule 5250 addresses and that the Commission should provide exemptive relief from Rule 102 of Regulation M for the Incentive Program.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. To the contrary, the Exchange believes that the Incentive Program, which is entirely voluntary, would encourage competition among markets for issuers' listings and among Market Makers for LMM assignments. The Incentive Program is designed to improve the quality of market for lower-volume ETPs, thereby incentivizing them to list on the Exchange. The competition for listings among the exchanges is fierce. The Exchange notes that BATS Exchange, Inc. (“BATS”) has already implemented a program similar to the Exchange's proposed Incentive Program,
In addition, the Exchange believes that the Incentive Program will properly promote competition among Market Makers to seek assignment as the LMM for eligible ETPs. As described in detail above, the Exchange believes that market quality is significantly enhanced for ETPs with an LMM as compared to ETPs without an LMM. The Exchange believes that market quality would be even further enhanced as a result of the proposed Incentive Program LMM performance standards that the Exchange would impose on LMMs in the Incentive Program. The Exchange anticipates that the increased activity of these LMMs would attract other market participants to the Exchange, and could thereby lead to increased liquidity on the Exchange in such ETPs. For these reasons, the Exchange does not believe that the proposed rule change would impose any unnecessary or inappropriate burden on competition.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. The Commission previously received comments on SR–NYSEArca–2012–37, which proposed rule change was withdrawn by the Exchange,
Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
NASDAQ proposes to modify Chapter XV, entitled “Options Pricing,” at Section 2 governing pricing for NASDAQ members using the NASDAQ Options Market (“NOM”), NASDAQ's facility for executing and routing standardized equity and index options. Specifically, NOM proposes to amend certain Penny Pilot Options
While the changes proposed herein are effective upon filing, the Exchange has designated that the amendments be operative on April 1, 2013.
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
NASDAQ proposes to modify Chapter XV, entitled “Options Pricing,” at Section 2(1) governing the rebates and fees assessed for option orders entered into NOM. First, the Exchange proposes to amend the Customer,
The Exchange proposes to amend the Customer and Professional Rebates to Add Liquidity in Penny Pilot Options in order to continue to offer competitive Customer and Professional rebates to attract liquidity to the market. Currently, the Exchange has a seven tier Customer and Professional Rebate to Add Liquidity structure in Penny Pilot Options as follows:
Today, the Exchange determines if a Participant qualifies for a Customer or Professional Rebate to Add Liquidity in Penny Pilot Options for purposes of Tiers 1 through 4 by totaling Customer and Professional contracts per day in month. The Exchange proposes to modify the manner in which Participants qualify for Tiers 1 through 4 of the Customer and Professional Rebate to Add Liquidity in Penny Pilot Options by amending the metric from a fixed average daily volume number to a percentage of total industry customer equity and ETF options average daily volume (“ADV”) in Tiers 1 through 4.
The Exchange also proposes to amend the NOM Market Maker Rebate to Add Liquidity in Penny Pilot Options to incentivize NOM Market Makers to post liquidity on the Exchange. Currently, the Exchange has a four tier NOM Market Maker Rebate to Add Liquidity structure in Penny Pilot Options as follows:
Currently, the Tier 1 NOM Market Maker Penny Pilot rebate pays $0.25 per contract to Participants that add NOM Market Maker liquidity in Penny Pilot and Non-Penny Pilot Options of up to 39,999 contracts per day in a month. The Exchange proposes to amend the Tier 1 rebate to state that Participants that add NOM Market Maker liquidity in Penny Pilot Options of up to 39,999 contracts per day in a month qualify for the $0.25 per contract rebate. The Exchange would not include Non-Penny Pilot Options volume when calculating the rebate. Currently, the Tier 2 NOM Market Maker Penny Pilot rebate pays $0.30 per contract for Participants that add NOM Market Maker liquidity in Penny Pilot Options and Non-Penny Pilot Options of 40,000 to 89,999 contracts per day in a month. The Exchange proposes to amend the Tier 2 NOM Market Maker rebate to state that Participants that add NOM Market Maker liquidity in Penny Pilot Options of 40,000 to 109,999 contracts per day in a month qualify for the $0.30 per contract rebate. The Exchange would not include Non-Penny Pilot Options volume when calculating the rebate. The Exchange is proposing to amend the number of qualifying contracts in Tier 2 of the NOM Market Maker rebate from 40,000 to 89,999 contracts to 40,000 to 109,999 contracts. Today Participants that transact 90,000 or more Penny Pilot Options contracts qualify for the $0.32 per contract Tier 4 rebate, or in the case of certain symbols (BAC, GLD, IWM, QQQ, VXX and SPY)
The Exchange proposes to amend the Fees for Removing Liquidity in Penny Pilot Options. Today, Professionals, Firms, Non-NOM Market Makers, NOM Market Makers and Broker-Dealers are currently assessed a $0.47 per contract Fee for Removing Liquidity in a Penny
The Exchange proposes to amend the Customer Rebate to Add Liquidity in Non-Penny Pilot Options. Today, the Customer Rebate to Add Liquidity in Non-Penny Pilot Options, including NDX, is $0.80 per contract, unless a market participant adds Customer Liquidity in either or both Penny Pilot or Non-Penny Pilot Options (including NDX) of 115,000 contracts per day in a month, then the Customer Rebate to Add Liquidity in Non-Penny Pilot Options is $0.81 per contract.
The Exchange also proposes to renumber note 2 as note 1 because current note 1 is being deleted from Chapter XV, Section 2 along with note 3, as described herein. The Exchange also made other technical amendments for grammatical purposes to the Chapter XV, Section 2 pricing.
NASDAQ believes that the proposed rule changes are consistent with the provisions of Section 6 of the Act,
The Exchange's proposal to amend the Penny Pilot Rebates to Add Liquidity is reasonable because the Exchange will continue to offer competitive Customer and Professional rebates in order to attract liquidity to the market to the benefit of all market participants. The Exchange also believes that offering Customers, Professionals and NOM Market Makers the opportunity to earn higher rebates is reasonable because by incentivizing Participants to select the Exchange as a venue to post Customer and Professional liquidity will attract additional order flow to the benefit of all market participants and incentivizing NOM Market Makers to post liquidity will also benefit participants through increased order interaction.
The Exchange believes that the amendments to the Penny Pilot Options Rebates to Add Liquidity are equitable and not unfairly discriminatory for various reasons. The Exchange believes that continuing to pay Customers and Professionals tiered Rebates to Add Liquidity in Penny Pilot Options, as proposed herein, is equitable and not unfairly discriminatory as compared to other market participants. Pursuant to this proposal, the Exchange would pay the highest Tier 1 Rebates to Add Liquidity in Penny Pilot Options of $0.25 per contract to Customers, Professionals and NOM Market Makers for transacting one qualifying contract as compared to other market participants.
The Exchange's proposal to amend the Customer and Professional Rebates to Add Liquidity in Penny Pilot Options is reasonable because the Exchange is offering Participants meaningful incentives to increase their participation on NOM in terms of higher Penny Pilot Options Rebates to Add Liquidity. The Exchange's proposal to convert the qualification for Customer and Professional rebate Tiers 1 through 4 from a metric which calculates the fixed average daily volume to a percentage of total industry customer equity and ETF options ADV
The Exchange believes that the addition of new Tier 7 and the aforementioned amendments to the Customer and Professional Rebates to Add Liquidity in Penny Pilot Options are reasonable because these amendments should incentivize market participants to increase the amount of Customer and Professional orders that are transacted on NOM in order to obtain rebates. In addition, other exchanges employ similar incentive programs.
The Exchange's proposal to amend corresponding notes b and c is reasonable, equitable and not unfairly discriminatory because the amendments conform the notes to the amendments in the Customer and Professional rebate tiers and provide clarity to the rebates.
The Exchange's proposal to amend the NOM Market Maker Rebates to Add Liquidity in Penny Pilot Options is reasonable because it should incentivize NOM Market Makers to post liquidity on NOM. NOM Market Makers are valuable market participants that provide liquidity in the marketplace and incur costs unlike other market participants. The Exchange believes that encouraging NOM Market Makers to be more aggressive when posting liquidity benefits all market participants through increased liquidity. The Exchange believes that the NOM Market Maker rebate proposal is equitable and not unfairly discriminatory because it does not misalign the current rebate structure because NOM Market Makers will continue to earn higher rebates as compared to Firms, Non-NOM Market Makers and Broker-Dealers and will earn the same or lower rebates as compared to Customers and Professionals.
The Exchange believes offering NOM Market Makers the opportunity to receive higher rebates as compared to Firms, Non-NOM Market Makers and Broker-Dealers is equitable and not unfairly discriminatory because all NOM Market Makers may qualify for the NOM Market Maker rebate tiers and every NOM Market Maker is entitled to a rebate solely by adding one contract of NOM Market Maker liquidity on NOM. Also, as mentioned, the NOM Market Maker would receive the same rebate in Tier 1 as compared Customers and Professionals and a higher rebate in all other tiers as compared to a Firm, Non-NOM Market Maker or Broker-Dealer because of the obligations
The Exchange's proposal to increase the Professional, Firm, Non-NOM Market Maker and Broker-Dealer Fees for Removing Liquidity in Penny Pilot Options from $0.47 to $0.48 per contract is reasonable because the increase will afford the Exchange the opportunity to offer additional and increased rebates to Customers, Professionals and NOM Market Makers which should benefit all market participants through increased liquidity and order interaction. The Exchange believes that it is equitable and not unfairly discriminatory to increase Fees for Removing Liquidity in Penny Pilot Options for Professionals, Firms, Non-NOM Market Makers and Broker-Dealers because all market participants, other than Customers and NOM Market Makers will be assessed a uniform fee. As explained herein, Customers order flow brings unique benefits to the market through increased liquidity which benefits all market participants and NOM Market Makers add value through continuous quoting
The Exchange's proposal to eliminate the $0.01 per contract reduction for Professionals, Firms, Non-NOM Market Makers, NOM Market Makers and Broker-Dealers for transactions in which the same NOM Participant or a NOM Participant under Common Ownership is the buyer and the seller is reasonable because the Exchange does not believe it is necessary to continue to offer this incentive in order to remain competitive. Also, the Exchange prefers to reward market participants by offering additional rebates to incentivize Participants to send additional order flow to the Exchange and encourage NOM Market Makers to aggressively post liquidity on NOM. The Exchange believes that its proposal to eliminate the $0.01 per contract reduction for Professionals, Firms, Non-NOM Market Makers, NOM Market Makers and Broker-Dealers is equitable and not unfairly discriminatory because the Exchange would not offer such a reduction to any market participant.
The Exchange's proposal to amend the Customer Rebate to Add Liquidity in Non-Penny Pilot Options is reasonable because the Exchange proposes to eliminate the current Customer Rebate to Add Liquidity in Non-Penny Pilot Options, including NDX, of $0.80 or $0.81 per contract, depending on whether the Participant added Customer Liquidity in either or both Penny Pilot or Non-Penny Pilot Options (including NDX) of 115,000 contracts per day in a month, would be replaced with a flat rebate of $0.81 per contract regardless of volume. The Exchange believes that offering Customers the opportunity to receive a $0.81 per contract Rebate to Add Liquidity on each transaction in a Non-Penny Pilot Option where liquidity was added will incentivize Participants to post Customer liquidity in Non-Penny Pilot Options. The Exchange believes its proposal to amend the Customer Rebate to Add Liquidity in Non-Penny Pilot Options is equitable and not unfairly discriminatory because it will apply uniformly to all Customers. Today, no other market participant receives a Rebate to Add Liquidity in Non-Penny Pilot Options. The Exchange believes that it is equitable and not unfairly discriminatory to only pay Customers a rebate in Non-Penny Pilot Options because Customer order flow is unique and benefits all market participants through the increased liquidity that such order flow brings to the market.
The Exchange's proposal to renumber note 2 as note 1 because current note 1 is being deleted from Chapter XV, Section 2 along with note 3 is reasonable, equitable and not unfairly discriminatory because these amendments will add clarity to the pricing.
NASDAQ does not believe that the proposed rule changes will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended.
Customers have traditionally been paid the highest rebates offered by options exchanges. While the Exchange's proposal results in a Professional receiving the same or a higher rebate as compared to a NOM
The Exchange's proposal to pay the higher Customer Rebate to Add Liquidity in Non-Penny Pilot Options on each transaction continues to incentivize Participants to direct Customer Non-Penny Pilot Option order flow to NOM to the benefit of all other market participants. The Exchange believes that Customer order flow is unique and therefore only paying a Customer a Rebate to Add Liquidity in Non-Penny Pilot Options is consistent with rebates at other options exchanges.
For the reasons specified herein, the Exchange does not believe this proposal will result in any burden on competition. The Exchange operates in a highly competitive market comprised of eleven U.S. options exchanges in which sophisticated and knowledgeable market participants can readily send order flow to competing exchanges if they deem fee levels or rebate incentives at a particular exchange to be excessive or inadequate. The Exchange believes that the proposed rebate structure and tiers are competitive with rebates and tiers in place on other exchanges. The Exchange believes that this competitive marketplace impacts the rebates present on the Exchange today and substantially influences the proposals set forth above.
No written comments were either solicited or received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Department of State.
Notice of the CAFTA–DR Environmental Affairs Council Meeting and request for comments.
The Department of State and the Office of the United States Trade Representative are providing notice that the government parties to the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA–DR) intend to hold the seventh meeting of the Environmental Affairs Council (Council) established under Chapter 17 of that agreement in Santo Domingo, Dominican Republic on May 9, 2013 at a venue to be announced. All interested persons are invited to attend
During the meeting, each Council Member will present its country's progress in implementing Chapter 17 obligations and the impacts of environmental cooperation in their respective countries. The Council will also receive a presentation from the CAFTA–DR Secretariat for Environmental Matters (SEM). For the public session of the meeting, the Council will highlight issues from the above discussion elements with a particular focus on Chapter 17 obligations and environmental cooperation successes.
All interested persons are invited to attend a public session where they will have the opportunity to ask questions and discuss implementation of Chapter 17 and environmental cooperation with Council Members. In addition, the SEM will present on the public submission process established under Chapter 17. More information on the Council is included below under Supplementary Information.
The Department of State and Office of the United States Trade Representative invite written comments or suggestions regarding the meeting. In preparing comments, we encourage submitters to refer to Chapter 17 of the CAFTA–DR, the Final Environmental Review of the CAFTA–DR and the Agreement among the CAFTA–DR countries on Environmental Cooperation (ECA) (all documents available at
The Council will hold the meeting on May 9, 2013, in Santo Domingo. If you are interested in attending, please email Abby Lindsay at
Written comments or suggestions should be submitted to both: (1) Abby Lindsay, U.S. Department of State, Bureau of Oceans and International Environmental and Scientific Affairs, Office of Environmental Quality and Transboundary Issues by email to
Abby Lindsay, (202) 647–8772 or Sarah Stewart, (202) 395–3858.
Article 17.5 of the CAFTA–DR establishes an Environmental Affairs Council (the Council). Article 17.5 requires the Council to meet to oversee the implementation of, and review progress under, Chapter 17. Article 17.5 further requires, unless the governments otherwise agree, that each meeting of the Council include a session in which members of the Council have an opportunity to meet with the public to discuss matters relating to the implementation of Chapter 17.
In Article 17.9 of the CAFTA–DR, the governments recognize the importance of strengthening capacity to protect the environment and to promote sustainable development in concert with strengthening trade and investment relations and state their commitment to expanding their cooperative relationship on environmental matters. Article 17.9 also references the ECA, which sets out certain priority areas of cooperation on environmental activities that are also reflected in Annex 17.9 of the CAFTA–DR. These priority areas include, among other things: Reinforcing institutional and legal frameworks and the capacity to develop, implement, administer, and enforce environmental laws, regulations, standards and policies; conserving and managing shared, migratory and endangered species in international trade and management of protected areas; promoting best practices leading to sustainable management of the environment; and facilitating technology development and transfer and training to promote clean production technologies. The public is advised to refer to the State Department Web site at
Federal Aviation Administration (FAA), DOT.
Notice of public meeting.
This notice announces a public meeting of the FAA's Aviation Rulemaking Advisory Committee (ARAC) Transportation Airplane and Engine (TAE) Subcommittee to discuss transport airplane and engine issues.
The meeting is scheduled for Tuesday, May 7, 2013, starting at 9:00 a.m. Pacific Daylight Time. Arrange for oral presentations by April 30, 2013.
FAA—Northwest Mountain Region, conference room 130, 1601 Lind Ave. SW., Renton, WA 98057.
Ralen Gao, Office of Rulemaking, ARM–209, FAA, 800 Independence Avenue SW., Washington, DC 20591, Telephone (202) 267–3168, Fax (202) 267–5075, or email at
Pursuant to Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92–463; 5 U.S.C. app. III), notice is given of an ARAC meeting to be held May 7, 2013.
The agenda for the meeting is as follows:
Attendance is open to the public, but will be limited to the availability of meeting room space. Please confirm your attendance with the person listed
For persons participating by telephone, please contact the person listed in the
The public must make arrangements by April 30, 2013, to present oral statements at the meeting. Written statements may be presented to the ARAC at any time by providing 25 copies to the person listed in the
If you need assistance or require a reasonable accommodation for the meeting or meeting documents, please contact the person listed in the
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number involved and must be received on or before May 1, 2013.
You may send comments identified by Docket Number FAA–2013–0257 using any of the following methods:
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Theresa White, ANM–113, Standardization Branch, Transport Airplane Directorate, Federal Aviation Administration, 1601 Lind Avenue SW., Renton, WA 98057; email:
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before May 1, 2013.
You may send comments identified by Docket Number FAA–2013–0278 using any of the following methods:
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Keira Jones (202) 267–4024, or Tyneka Thomas (202) 267–7626, Office of Rulemaking, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number involved and must be received on or before May 1, 2013.
You may send comments identified by Docket Number FAA–2012–1348 using any of the following methods:
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Tyneka Thomas ARM–105, (202) 267–7626, FAA, Office of Rulemaking, 800 Independence Ave. SW., Washington, DC 20591. This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of Title 14, Code of Federal Regulations (14 CFR). The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of the FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number involved and must be received on or before May 1, 2013.
You may send comments identified by docket number FAA–2013–0232 using any of the following methods:
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Mark Forseth, ANM–113, (425) 227–2796, Federal Aviation Administration, 1601 Lind Avenue SW., Renton, WA 98057–3356, or Andrea Copeland, ARM–208, Office of Rulemaking, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; email
This notice is published pursuant to 14 CFR 11.85.
Federal Highway Administration, DOT.
Notice.
The Federal Highway Administration (FHWA), in cooperation with the Regional Transportation Commission of Washoe County (RTC) and the Nevada Department of Transportation (NDOT), is extending the review and comment period of the DEIS for the Pyramid Way and McCarran Boulevard Intersection Improvement project for an additional 15 days; therefore, comments on the DEIS may now be submitted no later than April 30, 2013. A Notice of Availability was previously published in the
Comments on the DEIS can be mailed to the following address: Steve Cooke, P.E., Environmental Services Division Chief, 1263 S. Stewart St., Carson City, Nevada 89712 or via email to:
The DEIS can be accessed through NDOT's Web site at:
Steve Cooke, Environmental Services Division Chief, NDOT, 775–888–7013 or Abdelmoez Abdalla, Environmental Program Manager, FHWA, 775–687–1231.
Federal Highway Administration (FHWA), United States Department of Transportation (USDOT).
Notice of Intent.
The FHWA is issuing this notice to advise the public that an Environmental Impact Statement (EIS) will be prepared for the proposed transportation project (State Route 20) located in Cherokee and Forsyth Counties, Georgia.
Chetna P. Dixon, Environmental Coordinator, Federal Highway Administration Georgia Division, 61 Forsyth Street, Suite 17T100; Atlanta, Georgia 30303. Phone 404–562–3630 or Karyn Matthews, Project Manager, Georgia Department of Transportation, 600 West Peachtree Street, 25th Floor, Atlanta, Georgia, 30308, Telephone: (404) 631–1584, Email:
The FHWA, in cooperation with the Georgia Department of Transportation (GDOT), will prepare an EIS for proposed transportation improvements in the vicinity of State Route (SR) 20. The proposed project termini extend for approximately 24 miles beginning between Interstate 575 (I–575) and State Route 400 (SR 400) in Cherokee and Forsyth Counties, Georgia. Current known issues along the corridor include congestion, limited mobility, and safety issues. An EIS will be prepared in accordance with the National Environmental Policy Act (NEPA: 42 U.S.C. 4321 et seq.) of 1969, and the regulations implementing NEPA set forth in 40 CFR PARTS 1500–1508 and 23 CFR part 771, as well as the provisions of Safe Accountable Flexible Efficient Transportation Equity Act: A Legacy for Users (SAFETEA–LU) and Moving Ahead for Progress in the 21st Century (MAP–21).
Public involvement is a critical component of NEPA project development and will occur throughout the development of the EIS. Opportunities for public involvement will be provided during the scoping process. Agency and public scoping meetings will be held in the spring of 2013 to receive oral and written comments on environmental concerns that should be included in the EIS. The dates, times and locations of the public scoping meetings will be published in general circulation newspapers for the project area. Comments regarding the scope of the analysis should be received in writing 30 days after the date of the last scoping meeting. A Public and Agency Coordination Plan will be provided in accordance with 23 U.S. Code Section 139 (23 U.S.C. 139), to facilitate document the lead agencies, structure interaction with the public and other agencies of how the coordination will be accomplished. The Public and Agency Coordination Plans will promote early and continuous involvement among stakeholders, agencies and the public. Letters describing the proposed action and soliciting comments will be sent to appropriate Federal, State and local agencies, and Tribal governments. A project Web site (
Federal Motor Carrier Safety Administration (FMCSA) DOT.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, FMCSA announces its plan to submit the Information Collection Request (ICR) described below to the Office of Management and Budget (OMB) for its review and approval, and invites public comment. This ICR will enable FMCSA to document the burden associated with the marking regulations codified in 49 CFR 390.21, “Marking of Self-Propelled CMVs and Intermodal Equipment.” These regulations require marking of vehicles and intermodal equipment by motor carriers, freight forwarders and intermodal equipment providers (IEPs) engaging in interstate transportation.
Notice and request for comments.
We must receive your comments on or before June 10, 2013.
You may submit comments identified by Federal Docket Management System (FDMS) Docket Number FMCSA–2013–0051 using any of the following methods:
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Thomas Kelly, Chief, Compliance Division, Office of Enforcement and Compliance, U.S. Department of Transportation, Federal Motor Carrier Safety Administration, 1200 New Jersey Avenue SE., Washington, DC, 20590–0001. Telephone: 202–366–1812; Email:
Vehicle marking requirements are intended to ensure that FMCSA, the National Transportation Safety Board (NTSB), and State safety officials are able to identify motor carriers and correctly assign responsibility for regulatory violations during inspections, investigations, compliance reviews, and
In accordance with Part 211 of Title 49 Code of Federal Regulations (CFR), this document provides the public notice that by a document dated February 21, 2013, the Old Augusta Railroad (OAR) has petitioned the Federal Railroad Administration (FRA) for a waiver of compliance from certain provisions of the Federal hours of service laws contained at 49 U.S.C. 21103(a)(4). FRA assigned the petition Docket Number FRA–2013–0019.
In its petition, OAR seeks relief from 49 U.S.C. 21103(a)(4), which, in part, requires a train employee to receive 48 hours off-duty after initiating an on-duty period for 6 consecutive days. Specifically, OAR seeks a waiver to allow a train employee to initiate an on-duty period each day for 7 consecutive days followed by 1 day off duty and an 8th day assignment with 2 days off duty. In support of its request, OAR submitted documents demonstrating its employees' support for the requested waiver and a description of its employees' work schedules. According to OAR, train employees have set start times and set off-duty days, and do not lay over at away-from-home terminals. Additionally, OAR claims that it operates one switching job per day, serving only one industry in a 12-hour cycle. The typical duty tour is from 5 a.m. to 5 p.m., 7 days per week, with an occasional switching move outside of the regular shift. Two crews share the 7-day-per-week schedule. OAR also states that before the Rail Safety Improvement Act of 2008, its employees worked 7 days on, 7 days off, subject to an infrequent call. OAR asserts that its employees worked this type of schedule for 18 years without any safety problems, and that it was awarded the American Short Line and Regional Railroad Association Jake Award each year during those 18 years.
A copy of the petition, as well as any written communications concerning the petition, is available for review online at
Interested parties are invited to participate in these proceedings by submitting written views, data, or comments. FRA does not anticipate scheduling a public hearing in connection with these proceedings since the facts do not appear to warrant a hearing. If any interested party desires an opportunity for oral comment, they should notify FRA, in writing, before the end of the comment period and specify the basis for their request.
All communications concerning these proceedings should identify the appropriate docket number and may be submitted by any of the following methods:
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Communications received by May 28, 2013 will be considered by FRA before final action is taken. Comments received after that date will be considered as far as is practicable.
Anyone is able to search the electronic form of any written communications and comments received into any of our dockets by the name of the individual submitting the comment (or signing the document, if submitted on behalf of an association, business, labor union, etc.). See
In accordance with Part 211 of Title 49 Code of Federal Regulations (CFR), this document provides the public notice that R. J. Corman Railroad Company (RJCC) has petitioned the Federal Railroad Administration (FRA) for a waiver of compliance from certain
RJCC is a railroad company based in Nicholasville, KY, that primarily operates freight railroads in five states. RJCC operates one steam locomotive, RJCC 2008, several times a year in the spring and fall on its Central Kentucky Line. RJCC 2008 is a 2–10–2 steam locomotive that was built in China in 1986. The boiler and the running gear were rebuilt in China and received a 1472 service-day inspection, pursuant to 49 CFR 230.17, prior to entering service in the United States on March 14, 2008. Since then, RJCC 2008 has operated 37 days in service and has undergone four annual inspections. RJCC plans to operate RJCC–2008 for 4 or 5 service days in 2013.
RJCC requests relief from 49 CFR 230.16(a)(2) with respect to flexible staybolt and cap inspection and 49 CFR 230.41,
A copy of the petition, as well as any written communications concerning the petition, is available for review online at
Interested parties are invited to participate in these proceedings by submitting written views, data, or comments. FRA does not anticipate scheduling a public hearing in connection with these proceedings since the facts do not appear to warrant a hearing. If any interested party desires an opportunity for oral comment, they should notify FRA, in writing, before the end of the comment period and specify the basis for their request.
All communications concerning these proceedings should identify the appropriate docket number and may be submitted by any of the following methods:
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Communications received by May 28, 2013 will be considered by FRA before final action is taken. Comments received after that date will be considered as far as practicable.
Anyone is able to search the electronic form of any written communications and comments received into any of our dockets by the name of the individual submitting the comment (or signing the document, if submitted on behalf of an association, business, labor union, etc.). See
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104–13 (44 U.S.C. 3506(c)(2)(A). Currently the Bureau of the Public Debt within the Department of the Treasury is soliciting comments concerning the Request to Reissue United States Savings Bonds.
Written comments should be received on or before June 13, 2013 to be assured of consideration.
Direct all written comments to Bureau of the Public Debt, Bruce A. Sharp, 200 Third Street A4–A, Parkersburg, WV 26106–1328, or
Requests for additional information or copies should be directed to Bruce A. Sharp, Bureau of the Public Debt, 200 Third Street A4–A, Parkersburg, WV 26106–1328, (304) 480–8150.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104–13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships.
Written comments should be received on or before June 10, 2013 to be assured of consideration.
Direct all written comments to Yvette Lawrence, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the form and instructions should be directed to Martha R. Brinson, at (202) 622–3869, or at Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224, or through the Internet, at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104–13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning, Adjustments Following Sales of Partnership Interests.
Written comments should be received on or before June 10, 2013 to be assured of consideration.
Direct all written comments to Yvette Lawrence, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of regulations should be directed to Martha R. Brinson, at Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224, or at (202) 622–3869, or through the Internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104–13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning, IRS Adoption Taxpayer Identification Numbers.
Written comments should be received on or before June 10, 2013 to be assured of consideration.
Direct all written comments to Yvette Lawrence, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the regulation should be directed to, Martha R. Brinson at (202) 622–3869, or at Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224, or through the Internet, at
The burden for the collection of information is reflected in the burden for Form W–7A.
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104–13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Publication 1345, Handbook for Authorized IRS e-file Providers.
Written comments should be received on or before June 10, 2013 to be assured of consideration.
Direct all written comments to Yvette Lawrence, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Request for Comments: Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. All comments will become a matter of public record. Comments are invited 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.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104–13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Imported Substances; Rules for Filing a Petition.
Written comments should be received on or before June 10, 2013 to be assured of consideration.
Direct all written comments to Yvette Lawrence, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the information collection should be directed to Martha R. Brinson, at (202) 622–3869, or at Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224, or through the internet, at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service, Department of Treasury.
Request for Applications.
The Internal Revenue Service (IRS) requests applications of
The Internal Revenue Service Advisory Council (IRSAC) provides an organized public forum for IRS officials and representatives of the public to discuss relevant tax administration issues. The council advises the IRS on issues that have a substantive effect on federal tax administration. As an advisory body designed to focus on broad policy matters, the IRSAC reviews existing tax policy and/or recommends policies with respect to emerging tax administration issues. The IRSAC suggests operational improvements, offers constructive observations regarding current or proposed IRS policies, programs, and procedures, and advises the IRS with respect to issues having substantive effect on federal tax administration.
Written applications will be accepted from May 1, 2013 through June 14, 2013.
Applications should be sent to National Public Liaison, CL:NPL:P, Room 7559 IR, 1111 Constitution Avenue NW., Washington, DC 20224, Attn: Lorenza Wilds; or by email:
Ms. Lorenza Wilds, 202–622–6440 (not a toll-free number).
IRSAC was authorized under the Federal Advisory Committee Act, Public Law 92–463, the first Advisory Group to the Commissioner of Internal Revenue—or the Commissioner's Advisory Group (“CAG”)—was established in 1953 as a “national policy and/or issue advisory committee.” Renamed in 1998, the Internal Revenue Service Advisory Council (IRSAC) reflects the agency-wide scope of its focus as an advisory body to the entire agency. The IRSAC's primary purpose is to provide an organized public forum for senior IRS executives and representatives of the public to discuss relevant tax administration issues.
Conveying the public's perception of IRS activities, the IRSAC is comprised of individuals who bring substantial, disparate experience and diverse backgrounds on the Council's activities. Membership is balanced to include representation from the taxpaying public, the tax professional community, small and large businesses, international, wage and investment taxpayers and the knowledge of Circular 230.
IRSAC members are nominated by the Commissioner of the Internal Revenue Service with the concurrence of the Secretary of the Treasury to serve a three year term. There are four subcommittees of IRSAC, the (Small Business/Self Employed (SB/SE); Large Business and International (LB&I); Wage & Investment (W&I); and the Office of Professional Responsibility (OPR).
Members are not paid for their services. However, travel expenses for working sessions, public meetings and orientation sessions, such as airfare, per diem, and transportation to and from airports, train stations, etc., are reimbursed within prescribed federal travel limitations.
An acknowledgment of receipt will be sent to all applicants. In accordance with the Department of Treasury Directive 21–03, a clearance process including, annual tax checks, and a practitioner check with the Office of Professional Responsibility will be conducted. In addition, all applicants deemed “best qualified” will have to undergo a Federal Bureau of Investigation (FBI) fingerprint check. Federally-registered lobbyists cannot be members of the IRSAC.
Equal opportunity practices will be followed for all appointments to the IRSAC in accordance with the Department of Treasury and IRS policies. The IRS has special interest in assuring that women and men, members of all races and national origins, and individuals with disabilities are adequately represented on advisory committees: and therefore, extends particular encouragement to nominations from such appropriately qualified candidates.
Office of Acquisition and Logistics, Department of Veterans Affairs.
Notice.
The Office of Acquisition and Logistics (OA&L), Department of Veterans Affairs (VA), is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before June 10, 2013.
Submit written comments on the collection of information through Federal Docket Management System (FDMS) at
Sylvester Rainey at (202) 632–5339 or Fax at (202) 343–1434.
Under the PRA of 1995 (Pub. L. 104–13; 44 U.S.C. 3501–3521), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each
With respect to the following collection of information, OA&L invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of OA&L's functions, including whether the information will have practical utility; (2) the accuracy of OA&L's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
By direction of the Secretary:
Veterans Health Administration, Department of Veterans Affairs.
Notice.
The Veterans Health Administration (VHA) is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before June 10, 2013
Submit written comments on the collection of information through Federal Docket Management System (FDMS) at
Cynthia Harvey-Pryor at (202) 461–5870.
Under the PRA of 1995 (Pub. L. 104–13; 44 U.S.C. 3501–3521), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to Section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VHA invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of VHA's functions, including whether the information will have practical utility; (2) the accuracy of VHA's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
By direction of the Secretary:
Office of Acquisition and Logistics, Department of Veterans Affairs.
Notice.
The Office of Acquisition and Logistics (OA&L), Department of Veterans Affairs (VA), is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the
Written comments and recommendations on the proposed collection of information should be received on or before June 10, 2013.
Submit written comments on the collection of information through Federal Docket Management System (FDMS) at
Sylvester Rainey at (202) 632–5339 or Fax at (202) 343–1434.
Under the PRA of 1995 (Pub. L. 104–13; 44 U.S.C. 3501–3521), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to Section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, OA&L invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of OA&L's functions, including whether the information will have practical utility; (2) the accuracy of OA&L's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
By direction of the Secretary.
Department of Veterans Affairs.
Notice.
As required by the Veterans' Compensation Cost-of-Living Adjustment Act of 2012, Public Law 112–198, the Department of Veterans Affairs (VA) is hereby giving notice of adjustments in certain benefit rates. These adjustments affect the compensation and dependency and indemnity compensation (DIC) programs.
These adjustments became effective on December 1, 2012, the date provided by Public Law 112–198.
Sarah Hill, Program Analyst, Compensation Services (212B), Veterans Benefits Administration, Department of Veterans Affairs, 810 Vermont Avenue, NW, Washington, DC 20420, (202) 461–1468.
Section 2 of Public Law 112–198 provides for an increase in each of the rates in sections 1114, 1115(1), 1162, 1311, 1313, and 1314 of title 38, United States Code. VA is required to increase these benefit rates by the same percentage as increases in the benefit amounts payable under title II of the Social Security Act. In computing increased rates in the cited title 38 sections, fractions of a dollar are rounded down to the nearest dollar. The increased rates are required to be published in the
The Social Security Administration has announced that there will be a 1.7 percent cost-of-living increase in Social Security benefits for 2013. Therefore, applying the same percentage, the following rates for VA compensation and DIC programs became effective on December 1, 2012:
(1) If the veteran served as sergeant major of the Army, senior enlisted advisor of the Navy, chief master sergeant of the Air Force, sergeant major of the Marine Corps, or master chief petty officer of the Coast Guard, the surviving spouse's monthly rate is $1,494.
(2) If the veteran served as Chairman or Vice Chairman of the Joint Chiefs of Staff, Chief of Staff of the Army, Chief of Naval Operations, Chief of Staff of the Air Force, Commandant of the Marine Corps, or Commandant of the Coast Guard, the surviving spouse's monthly rate is $2,784.
Department of Veterans Affairs.
Notice of Computer Match Program.
Pursuant to 5 U.S.C. 552a, the Privacy Act of 1974, as amended, and the Office of Management and Budget (OMB) Guidelines on the Conduct of Matching Programs, notice is hereby given that the Department of Veterans Affairs (VA) intends to conduct a computer matching program with the Social Security Administration (SSA). Data from the proposed match will be used to verify the earned income of nonservice-connected veterans, and those veterans who are zero percent service-connected (noncompensable), whose eligibility for VA medical care is based on their inability to defray the cost of medical care. These veterans supply household income information that includes their spouses and dependents at the time of application for VA health care benefits.
Written comments may be submitted through
Tony A. Guagliardo, Director, Health Eligibility Center, (404) 848–5300 (this is not a toll free number).
The Department of Veterans Affairs has statutory authorization under 38 U.S.C. 5317, 38 U.S.C. 5106, 26 U.S.C. 6103(l)(7)(D)(viii) and 5 U.S.C. 552a to establish matching agreements and request and use income information from other agencies for purposes of verification of income for determining eligibility for benefits. 38 U.S.C. 1710(a)(2)(G), 1710(a)(3), and 1710(b) identify those veterans whose basic eligibility for medical care benefits is dependent upon their financial status. Eligibility for nonservice-connected and zero percent noncompensable service-connected veterans is determined based on the veteran's inability to defray the expenses for necessary care as defined in 38 U.S.C. 1722. This determination can affect their responsibility to participate in the cost of their care through copayments and their assignment to an enrollment priority group. The goal of this match is to obtain SSA earned income information data needed for the income verification process. The VA records involved in the match are “Enrollment and Eligibility Records—VA” (147VA16). The SSA records are from the Earnings Recording and Self-Employment Income System, SSA/OEEAS 09–60–0059 and Master Files of Social Security Number Holders and SSN Applications, SSA/OEEAS, 60–0058, (referred to as “the Numident”). A copy of this notice has been sent to both Houses of Congress and OMB.
This matching agreement expires 18 months after its effective date. This match will not continue past the legislative authorized date to obtain this information.
Department of Veterans Affairs.
Notice of Computer Matching Program.
The Department of Veterans Affairs (VA) provides notice that it intends to conduct a recurring computer-matching program matching Office of Personnel Management (OPM) records with VA pension and dependency and indemnity compensation (DIC) records. The purpose of this match is to identify beneficiaries who are receiving VA benefits and payment under the Civil Service Retirement Act or Federal Employees' Retirement System Act, and to adjust or terminate benefits, if appropriate.
The match will start no sooner than 30 days after publication of this notice in the
Written comments may be submitted through
Sharon Nicely, Pension Analyst, Pension and Fiduciary Service (21P), Department of Veterans Affairs, 810 Vermont Ave. NW., Washington, DC 20420, (202) 632–8863.
VA plans to match records of applicants and beneficiaries, including veterans and survivors, and their eligible dependent(s) who have applied for or who are receiving needs-based VA benefits with retirement annuity payment information maintained by OPM. VA will use this information to verify income information submitted by beneficiaries in VA's needs-based benefits programs and adjust VA benefit payments as prescribed by law. The proposed matching program will enable VA to ensure accurate reporting of income.
The legal authority to conduct this match is 38 U.S.C. 5106, which requires any Federal department or agency to provide VA such information as VA requests for the purposes of determining eligibility for benefits or verifying other information with respect to payment of benefits.
VA records involved in the match are in “Compensation, Pension, Education, and Vocational Rehabilitation Records—VA (58 VA 21/22/28),” a system of records that was first published at 41 FR 9294 (March 3, 1976), amended and republished in its entirety at 74 FR 29275 (June 19, 2009), and last amended at 75 FR 22187 (April 27, 2010). The routine use is number 39 regarding computer matches. The OPM records involved in the match are from the OPM Civil Service Retirement Pay File identified as OPM/Central-1, Civil Service Retirement and Insurance Records, published at 73 FR 15013 (March 20, 2008). The routine use is “I.”
In accordance with the Privacy Act, 5 U.S.C. 552a(o)(2) and (r), copies of the agreement are being sent to both Houses of Congress and to the Office of Management and Budget. This notice is provided in accordance with the provisions of the Privacy Act of 1974 as amended by Public Law 100–503.
(a) The General Schedule (5 U.S.C. 5332(a)) at Schedule 1;
(b) The Foreign Service Schedule (22 U.S.C. 3963) at Schedule 2; and
(c) The schedules for the Veterans Health Administration of the Department of Veterans Affairs (38 U.S.C. 7306, 7404; section 301(a) of Public Law 102–40) at Schedule 3.
(a) The Executive Schedule (5 U.S.C. 5312–5318) at Schedule 5;
(b) The Vice President (3 U.S.C. 104) and the Congress (2 U.S.C. 31) at Schedule 6; and
(c) Justices and judges (28 U.S.C. 5, 44(d), 135, 252, and 461(a), and section 140 of Public Law 97–92) at Schedule 7.
(b) The Director of the Office of Personnel Management shall take such actions as may be necessary to implement these payments and to publish appropriate notice of such payments in the
Department of Defense (DoD).
Interim final rule.
This rule implements policy, assigns responsibilities, and provides guidance and procedures for the SAPR Program; establishes the processes and procedures for the Sexual Assault Forensic Examination (SAFE) Kit; establishes the multidisciplinary Case Management Group (CMG) and provides guidance on how to handle sexual assault; establishes SAPR minimum program standards, SAPR training requirements, and SAPR requirements for the DoD Annual Report on Sexual Assault in the Military. The Department of Defense Sexual Assault Prevention and Response (SAPR) program continues to evolve, and the Department is committed to incorporating best practices and Congressional requirements to ensure that sexual assault victims receive the services they need. As part of this commitment and in addition to the Interim Final Rule, the Department is exploring the feasibility and advisability of extending the Restricted Reporting option to DoD civilians and contractors serving overseas.
This rule is effective April 11, 2013. Comments must be received by June 10, 2013.
You may submit comments, identified by docket number and/or Regulatory Information Number (RIN) number and title, by any of the following methods:
•
•
Diana Rangoussis, Senior Policy Advisor, DoD Sexual Assault Prevention and Response Office (SAPRO), (571) 372–2648.
This rule is being published as an interim final rule to:
(a) Incorporate all applicable Congressional mandates and all applicable recommendations from the Inspector General of the Department of Defense (IG, DoD), Government Accountability Office (GAO), and Defense Task Force on Sexual Assault in the Military Services (DTFSAMS), to include the Defense Sexual Assault Incident Database (DSAID);
(b) Incorporate the NDAA requirement for expedited transfers of military service members who file Unrestricted Reports of sexual assault;
(c) Incorporate the NDAA requirement for document retention in cases of Restricted and Unrestricted Reports of sexual assault;
(d) Incorporate the NDAA requirement for a DoD-wide certification program with a national accreditor to ensure all sexual assault victims are offered the assistance of a certified sexual assault response coordinator (SARC) or SAPR victim advocate (VA);
(e) Incorporate the NDAA requirement for updated SAPR training standards for Service members, and in addition containing specific standards for: accessions, annual, professional military education and leadership development training, pre- and post-deployment, pre-command, General and Field Officers and SES, military recruiters, civilians who supervise military, and responders (to include legal assistance attorneys) training;
(f) Training on the new military rule of evidence (MRE) 514 that established the victim advocate privilege in UCMJ cases;
(g) Establish the SAFE Helpline is established as the sole DoD hotline for crisis intervention. DoD sexual assault advocate certification program is mandated pursuant to the mandate in NDAA FY 12;
(h) Establishes requirements for a sexual assault victim safety assessment and the execution of a high-risk team to monitor cases where the sexual assault victim's life and safety may be in jeopardy.
This rule:
(1) Incorporates all applicable Congressional mandates from 10 U.S.C. 113; 10 U.S.C. chapter 47; and Public Laws 106–65, 108–375, 109–163, 109–364, 110–417, 111–84, 111–383 and 112–81; and all applicable recommendations from the IG, DoD; GAO; DoD Task Force on Care for Victims of Sexual Assault; and DTFSAMS;
(2) Establishes the creation, implementation, maintenance, and function of DSAID, an integrated database that will meet Congressional reporting requirements, support Service SAPR program management, and inform DoD SAPRO oversight activities;
(3) Increases the scope of applicability of this part by expanding the categories of persons covered by this part to include:
(i) National Guard (NG) and Reserve Component members who are sexually assaulted when performing active service, as defined in 10 U.S.C. 101(d)(3), and inactive duty training. If reporting a sexual assault that occurred prior to or while not performing active service or inactive training, NG and Reserve Component members will be eligible to receive limited SAPR support services from a Sexual Assault Response Coordinator (SARC) and a SAPR Victim Advocate (VA) and are eligible to file a Restricted Report.
(ii) Military dependents 18 years of age and older who are eligible for treatment in the military healthcare system (MHS), at installations in the continental United States (CONUS) and outside the continental United States (OCONUS), and who were victims of sexual assault perpetrated by someone other than a spouse or intimate partner.
(iii) Adult military dependents may file unrestricted or restricted reports of sexual assault.
(iv) The Family Advocacy Program (FAP), consistent with DoDD 6400.1
(4) The following non-military individuals who are victims of sexual assault are only eligible for limited emergency care medical services at a military treatment facility, unless that individual is otherwise eligible as a Service member or TRICARE (
(i) DoD civilian employees and their family dependents 18 years of age and older when they are stationed or performing duties OCONUS and eligible for treatment in the MHS at military installations or facilities OCONUS. These DoD civilian employees and their family dependents 18 years of age and older only have the Unrestricted Reporting option.
(ii) U.S. citizen DoD contractor personnel when they are authorized to accompany the Armed Forces in a contingency operation OCONUS and their U.S. citizen employees. DoD contractor personnel only have the Unrestricted Reporting option. Additional medical services may be provided to contractors covered under this part in accordance with DoDI 3020.41
(5) Service members who are on active duty but were victims of sexual assault prior to enlistment or commissioning are eligible to receive SAPR services under either reporting option. The DoD shall provide support to an active duty Service member regardless of when or where the sexual assault took place.
10 U.S.C. 113; 10 U.S.C. chapter 47 (also known and hereafter referred to as “The Uniform Code of Military Justice”); and Public Laws 106–65, 108–375, 109–163, 109–364, 110–417, 111–84, 111–383 and 112–81.
This rule:
(1) Codifies the Expedited Transfer policy which provides sexual assault victims who report their assaults the opportunity to transfer from their installation.
(2) Codifies the Document Retention policy which requires the retention of certain sexual assault records in reported cases for 50 years, and requires the retention for at least 5 years in cases of restricted reports (no command or law enforcement notice). But at the request of a member of the Armed Forces who files a Restricted Report on an incident of sexual assault, the Department of Defense Form (DD Form) 2910 and DD Form 2911 filed in connection with the Restricted Report be retained for 50 years.
(3) Details for the Congressional reporting requirements for the annual sexual assault in the military services report and the Military Service Academies report are set out.
(4) Provides detailed procedures for the DSAID database.
(5) Establishes the SAFE Helpline as the sole DoD hotline for crisis intervention.
(6) Establishes the DoD sexual assault advocate certification program, pursuant to the mandate in NDAA FY 12.
(7) Revises training requirements for all levels of training and all military personnel. Specific training standards will be codified for first responders to include SARCs, SAPR VAs, medical personnel, commanders, investigators, chaplains, prosecutors, and even legal assistance attorneys.
(8) Mandates training on the new Victim Advocate Privilege found in Military Rule of Evidence 514.
(9) Requires the execution of a high-risk team to monitor cases where the sexual assault victim's life and safety may be in jeopardy.
The preliminary estimate of the anticipated cost associated with this rule for the current fiscal year is approximately $15 million. Additionally, each of the Military Services establishes its own SAPR budget for the programmatic costs arising from the implementation of the training, prevention, reporting, response, and oversight requirements established by this rule.
The anticipated benefits associated with this rule include:
(1) A complete SAPR Policy consisting of this part and 32 CFR part 103, to include comprehensive SAPR procedures to implement the DoD policy on prevention and response to sexual assaults involving members of the U.S. Armed Forces.
(2) Guidance and procedures with which the DoD may establish a culture free of sexual assault, through an environment of prevention, education and training, response capability, victim support, reporting procedures, and appropriate accountability that enhances the safety and well being of all persons covered by this part and 32 CFR part 103.
(3) A focus on the victim and on doing what is necessary and appropriate to support victim recovery, and also, if a Service member, to support that Service member to be fully mission capable and engaged.
(4) A requirement that medical care and SAPR services are gender-responsive, culturally competent, and recovery-oriented.
(5) Command sexual assault awareness and prevention programs and DoD law enforcement and criminal justice procedures that enable persons to be held appropriately accountable for their actions, shall be supported by all commanders.
(6) Standardized SAPR requirements, terminology, guidelines, protocols, and guidelines for training materials shall focus on awareness, prevention, and response at all levels, as appropriate.
(7) A 24 hour, 7 day per week sexual assault response capability for all locations, including deployed areas, shall be established for persons covered in this part. An immediate, trained sexual assault response capability shall be available for each report of sexual assault in all locations, including in deployed locations.
(8) Sexual Assault Response Coordinators (SARC), SAPR Victim Advocates (VA), and other responders will assist sexual assault victims regardless of Service affiliation.
(9) Service member and adult military dependent victims of sexual assault shall receive timely access to comprehensive medical and psychological treatment, including emergency care treatment and services, as described in this part and 32 CFR part 103.
(10) Sexual assault victims shall be given priority, and treated as emergency cases. Emergency care shall consist of emergency medical care and the offer of a SAFE. The victim shall be advised that even if a SAFE is declined the victim shall be encouraged (but not mandated) to receive medical care, psychological care, and victim advocacy.
(11) Enlistment or commissioning of persons in the Military Services shall be prohibited and no waivers are allowed when the person has a qualifying conviction for a crime of sexual assault or is required to be registered as a sex offender.
(12) Two separate document retention schedules for records of Service members who report that they are victims of sexual assault, based on whether the Service member filed a Restricted or Unrestricted Report as defined 32 CFR part 103. The record retention system for Restricted Reports shall protect the Service member's desire for confidentiality. Restricted Report cases direct that DD Forms 2910 and DD Form 2911 be retained for at least 5 years, but at the request of a
Unrestricted Report cases direct that DD Forms 2910 and 2911 be retained for 50 years.
(13) Expedited reporting of threats and expedited transfer policies for victims making Unrestricted Reports and who request a transfer.
(14) Military Service members who file Unrestricted and Restricted Reports of sexual assault shall be protected from reprisal, or threat of reprisal, for filing a report.
(15) Expanding the applicability of SAPR services to military dependents 18 years and older who have been sexually assaulted and giving the option of both reporting options: Unrestricted or Restricted Reporting.
(16) Service members who are on active duty but were victims of sexual assault prior to enlistment or commissioning are eligible to receive SAPR services under either reporting option. The DoD shall provide support to an active duty Military Service member regardless of when or where the sexual assault took place.
(17) A requirement to establish a DoD-wide certification program with a national accreditor to ensure all sexual assault victims are offered the assistance of a SARC or SAPR VA who has obtained this certification.
(18) Training standards for legal assistance attorneys.
(19) Training standards to train the Executive Order 13593, “2011 Amendments to the Manual for Courts-martial, United States,” which established a new military rule of evidence (MRE) 514 that established the victim advocate privilege in UCMJ cases.
(20) Implementing training standards that cover general SAPR training for Service members, and contain specific standards for: accessions, annual, professional military education and leadership development training, pre- and post-deployment, pre-command, General and Field Officers and SES, military recruiters, civilians who supervise military, and responder trainings.
It has been determined that this rule does not:
(a) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a section of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities;
(b) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency; or
(c) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof. However, it has been determined that this rule does raise novel legal or policy issues arising out of legal mandates, and the principles set forth in this Executive Order. This rule establishes the legal mandate from the National Defense Authorization Act to require all SARC and SAPR VAs that provide a response to be certified. Training standards for Executive Order 13593, “2011 Amendments to the Manual for Courts-martial, United States,” which establishes a new military rule of evidence that established the victim advocate privilege in UCMJ cases.
It has been certified that this rule does not contain a Federal mandate that may result in the expenditure by State, local and tribal governments, in aggregate, or by the private sector, of $100 million or more in any one year.
It has been certified that this rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if promulgated, have a significant economic impact on a substantial number of small entities. This rule provides guidance and procedures for the DoD SAPR Program only.
Section 105.15 of this interim final rule contains information collection requirements. DoD has submitted the following proposal to the Office of Management and Budget (OMB) under the provisions of the Paperwork Reduction Act (44 U.S.C. Chapter 35), which has been assigned OMB Control Number 0704–0482. The System of Records Notice for the rule is located at
It has been certified that this rule does not have federalism implications, as set forth in Executive Order 13132. This rule does not have substantial direct effects on:
(a) The States;
(b) The relationship between the National Government and the States; or
(c) The distribution of power and responsibilities among the various levels of Government.
Military personnel, crime, health, reporting and recordkeeping requirements.
Accordingly, 32 CFR part 105 is added to read as follows:
10 U.S.C. 113; 10 U.S.C. chapter 47; and Public Laws 106–65, 108–375, 109–163, 109–364, 110–417, 111–84, 111–383, and 112–81.
This part, in accordance with the authority in DoDD 5124.02
(a) Establishes policy and implements 32 CFR part 103, assigns responsibilities, and provides guidance and procedures for the SAPR Program (see 32 CFR 103.3), can be found at
(b) Establishes the processes and procedures for the Sexual Assault
(c) Establishes the multidisciplinary Case Management Group (CMG) (see § 105.3) and provides guidance on how to handle sexual assault;
(d) Establishes Sexual Assault Prevention and Response (SAPR) minimum program standards, SAPR training requirements, and SAPR requirements for the DoD Annual Report on Sexual Assault in the Military consistent with the DoD Task Force Report on Care for Victims of Sexual Assault
(e) Incorporates DTM 11–063, “Expedited Transfer of Military Service Members Who File Unrestricted Reports of Sexual Assault,” December 16, 2011, can be found at
(f) Implements DoD policy and assigns responsibilities for the SAPR Program on prevention, response, and oversight to sexual assault according to the policies and guidance in:
(1) DoDD 5124.02, “Under Secretary of Defense for Personnel and Readiness (USD(P&R)),” June 23, 2008, can be found at
(2) 32 CFR part 103;
(3) Under Secretary of Defense for Personnel and Readiness, “Task Force Report on Care for Victims of Sexual Assault,” April 2004, can be found at
(4) Sections 101(d)(3), 113, 504, 4331, chapter 47, and chapter 80 of title 10, U.S.C.;
(5) Public Law 106–65, “National Defense Authorization Act for Fiscal Year 2000,” October 5, 1999;
(6) Public Law 108–375, “Ronald Reagan National Defense Authorization Act for Fiscal Year 2005,” October 28, 2004;
(7) Public Law 109–163, “National Defense Authorization Act for Fiscal Year 2006,” January 6, 2006;
(8) Public Law 109–364, “John Warner National Defense Authorization Act for Fiscal Year 2007,” October 17, 2006;
(9) Sections 561, 562, and 563 of Public Law 110–417, “Duncan Hunter National Defense Authorization Act for Fiscal Year 2009,” October 14, 2008;
(10) Public Law 111–84, “National Defense Authorization Act for Fiscal Year 2010,” October 28, 2009;
(11) Public Law 111–383, “Ike Skelton National Defense Authorization Act for Fiscal Year 2011,” January 7, 2011;
(12) Section 585 and 586 of Public Law 112–81, “National Defense Authorization Act for Fiscal Year 2012,” December 16, 2011;
(13) DTM 11–063, “Expedited Transfer of Military Service Members Who File Unrestricted Reports of Sexual Assault,” December 16, 2011 (hereby cancelled), can be found at
(14) DTM 11–062, “Document Retention in Cases of Restricted and Unrestricted Reports of Sexual Assault,” December 16, 2011, can be found at
(15) DoDD 6400.1, “Family Advocacy Program (FAP),” August 23, 2004, can be found at
(16) DoDI 6400.06, “Domestic Abuse Involving DoD Military and Certain Affiliated Personnel,” August 21, 2007, as amended, can be found at
(17) DoDI 3020.41, “Operational Contract Support (OCS),” December 20, 2011, can be found at
(18) U.S. Department of Defense, “Manual for Courts-Martial, United States”;
(19) DoDI 5505.18, “Investigation of Adult Sexual Assault in the Department of Defense,” January 25, 2013, can be found at
(20) DoDI 5545.02, “DoD Policy for Congressional Authorization and Appropriations Reporting Requirements,” December 19, 2008, can be found at
(21) DTM 12–004, “DoD Internal Information Collections,” April 24, 2012, can be found at
(21) DoD 8910.1–M, “Department of Defense Procedures for Management of Information Requirements,” June 30, 1998, can be found at
(23) U.S. Department of Justice, Office on Violence Against Women, “A National Protocol for Sexual Assault Medical Forensic Examinations, Adults/Adolescents,” current version, can be found at
(24) DoDI 1030.2, “Victim and Witness Assistance Procedures,” June 4, 2004, can be found at
(25) DoDD 7050.06, “Military Whistleblower Protection,” July 23, 2007, can be found at
(26) Section 102 of title 32, U.S.C.;
(27) Section 8(c) of Public Law 100–504, “The Inspector General Act of 1978,” as amended;
(28) DoD 6025.18–R, “DoD Health Information Privacy Regulation,” January 24, 2003, can be found at
(29) Executive Order 13593, “2011 Amendments to the Manual for Courts-Martial, United States,” December 13, 2011, can be found at
(30) DoDD 5400.11, “DoD Privacy Program,” May 8, 2007, can be found at
(31) Public Law 104–191, “Health Insurance Portability and Accountability Act of 1996,” August 21, 1996;
(32) Section 552a of title 5, U.S.C.;
(33) DoDD 1030.01, “Victim and Witness Assistance,” April 13, 2004, can be found at
(34) DoDI 1241.2, “Reserve Component Incapacitation System Management,” May 30, 2001, can be found at
(35) Section 1561a of Public Law 107–311, “Armed Forces Domestic Security Act,” December 2, 2002;
(36) Secretary of Defense Memorandum, “Withholding Initial Disposition Authority Under the Uniform Code of Military Justice in Certain Sexual Assault Cases,” April 20, 2012, can be found at
(37) Under Secretary of Defense for Personnel and Readiness Memorandum, “Legal Assistance for Victims of Crime,” October 17, 2011, can be found at
(38) DoD 4165.66–M, “Base Redevelopment and Realignment
This part applies to:
(a) Office of the Secretary of Defense (OSD), the Military Departments, the Office of the Chairman of the Joint Chiefs of Staff and the Joint Staff, the Combatant Commands, the IG, DoD, the Defense Agencies, the DoD Field Activities, and all other organizational entities within the DoD (hereafter referred to collectively as the “DoDComponents”).
(b) NG and Reserve Component members who are sexually assaulted when performing active service, as defined in section 101(d)(3) of title 10, U.S.C., and inactive duty training. If reporting a sexual assault that occurred prior to or while not performing active service or inactive training, NG and Reserve Component members will be eligible to receive limited SAPR support services from a SARC and a SAPR VA and are eligible to file a Restricted or Unrestricted Report.
(c) Military dependents 18 years of age and older who are eligible for treatment in the MHS, at installations CONUS and OCONUS, and who were victims of sexual assault perpetrated by someone other than a spouse or intimate partner.
(1) Adult military dependents may file unrestricted or restricted reports of sexual assault.
(2) The FAP, consistent with DoDD 6400.1 and DoDI 6400.06, covers adult military dependent sexual assault victims who are assaulted by a spouse or intimate partner and military dependent sexual assault victims who are 17 years of age and younger. The installation SARC and the installation family advocacy program (FAP) and domestic violence intervention and prevention staff shall direct coordination when a sexual assault occurs within a domestic relationship or involves child abuse.
(d) The following non-military individuals who are victims of sexual assault are only eligible for limited emergency care medical services at a military treatment facility, unless that individual is otherwise eligible as a Service member or TRICARE (
(1) DoD civilian employees and their family dependents 18 years of age and older when they are stationed or performing duties OCONUS and eligible for treatment in the MHS at military installations or facilities OCONUS. These DoD civilian employees and their family dependents 18 years of age and older only have the Unrestricted Reporting option.
(2) U.S. citizen DoD contractor personnel when they are authorized to accompany the Armed Forces in a contingency operation OCONUS and their U.S. citizen employees. DoD contractor personnel only have the Unrestricted Reporting option. Additional medical services may be provided to contractors covered under this part in accordance with DoDI 3020.41 as applicable.
(e) Service members who are on active duty but were victims of sexual assault prior to enlistment or commissioning are eligible to receive SAPR services (see § 105.3) under either reporting option. The DoD shall provide support to an active duty Service member regardless of when or where the sexual assault took place.
Unless otherwise noted, these terms and their definitions are for the purpose of this part. Refer to 32 CFR 103.3 for terms not defined in this part.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(1) Air Force: Air Force Personnel Center.
(2) Army: Human Resources Command for inter-installation transfers and the installation personnel center for intra-installation transfers.
(3) Navy: Bureau of Naval Personnel.
(4) U.S. Marine Corps: the order writing section of Headquarters Marine Corps.
(5) Air and Army NG: the National Guard Bureau (NGB) or the Joint Forces Headquarters-State for the State involved.
(m)
(n)
(o)
(p)
(q)
(r)
(s)
(t) Healthcare provider. Those individuals who are employed or assigned as healthcare professionals, or are credentialed to provide healthcare services at a MTF, or who provide such care at a deployed location or otherwise in an official capacity. This also includes military personnel, DoD civilian employees, and DoD contractors who provide healthcare at an occupational health clinic for DoD civilian employees or DoD contractor personnel. Healthcare providers may include, but are not limited to:
(1) Licensed physicians practicing in the MHS with clinical privileges in obstetrics and gynecology, emergency medicine, family practice, internal medicine, pediatrics, urology, general medical officer, undersea medical officer, flight surgeon, or those having clinical privileges to perform pelvic examinations.
(2) Licensed advanced practice registered nurses practicing in the MHS with clinical privileges in adult health, family health, midwifery, women's health, or those having clinical privileges to perform pelvic examinations.
(3) Licensed physician assistants practicing in the MHS with clinical privileges in adult, family, women's health, or those having clinical privileges to perform pelvic examinations.
(4) Licensed registered nurses practicing in the MHS who meet the requirements for performing a SAFE as determined by the local privileging authority. This additional capability shall be noted as a competency, not as a credential or privilege.
(5) A psychologist, social worker or psychotherapist licensed and privileged to provide mental health are or other counseling services in a DoD or DoD-sponsored facility.
(u)
(v)
(w)
(x)
(y)
(z)
(aa)
(bb)
(cc)
(dd)
(ee)
(ff)
(gg)
(hh)
(ii)
(jj)
(kk)
(ll)
(mm)
(nn)
(oo)
(pp)
(qq)
(rr)
(ss)
(tt)
(uu)
(vv)
(ww)
(xx)
(yy)
(zz)
(aaa)
(bbb)
It is DoD policy, in accordance with 32 CFR part 103, that:
(a) This part and 32 CFR part 103 establish and implement the DoD SAPR program.
(b) The DoD goal is a culture free of sexual assault, through an environment of prevention, education and training, response capability (see § 105.3), victim support, reporting procedures, and appropriate accountability that enhances the safety and well being of all persons covered by this part and 32 CFR part 103.
(c) The SAPR Program shall:
(1) Focus on the victim and on doing what is necessary and appropriate to support victim recovery, and also, if a Service member, to support that Service member to be fully mission capable and engaged.
(2) Require that medical care and SAPR services are gender-responsive, culturally-competent, and recovery-oriented as defined in 32 CFR 103.3.
(3) Not provide policy for legal processes within the responsibility of the Judge Advocates General (JAG) of the Military Departments provided in the UCMJ, the Manual for Courts-Martial, or for criminal investigative matters assigned to the IG, DoD.
(d) Command sexual assault awareness and prevention programs and DoD law enforcement (see § 105.3) and criminal justice procedures that enable persons to be held appropriately accountable for their actions shall be supported by all commanders.
(e) Standardized SAPR requirements, terminology, guidelines, protocols, and guidelines for training materials shall focus on awareness, prevention, and response at all levels, as appropriate.
(f) SARC and SAPR VA shall be used as standard terms as defined in and in accordance with 32 CFR part 103 throughout the Military Departments to facilitate communications and transparency regarding SAPR response capability.
(g) The SARC shall serve as the single point of contact for coordinating care to ensure that sexual assault victims receive appropriate and responsive care. All SARCs shall be authorized to perform VA duties in accordance with service regulations, and will be acting in the performance of those duties.
(h) All SARCs shall have direct and unimpeded contact and access to the installation commander (see § 105.3) for the purpose of this part and 32 CFR part 103.
(1) If an installation has multiple SARCs on the installation, a Lead SARC shall be designated by the Service.
(2) For SARCs that operate within deployable commands that are not attached to an installation, they shall have access to the senior commander for the deployable command.
(i) A 24 hour, 7 day per week sexual assault response capability for all locations, including deployed areas, shall be established for persons covered in this part. An immediate, trained
(j) SARCs, SAPR VAs, and other responders (see § 105.3) will assist sexual assault victims regardless of Service affiliation.
(k) Service member and adult military dependent victims of sexual assault shall receive timely access to comprehensive medical and psychological treatment, including emergency care treatment and services, as described in this part and 32 CFR part 103.
(l) Sexual assault victims shall be given priority, and treated as emergency cases. Emergency care (see § 105.3) shall consist of emergency medical care and the offer of a SAFE. The victim shall be advised that even if a SAFE is declined the victim shall be encouraged (but not mandated) to receive medical care, psychological care, and victim advocacy.
(m) The prohibition of enlistment or commissioning of persons in the Military Services when the person has a qualifying conviction (see § 105.3) for a crime of sexual assault or is required to be registered as a sex offender.
(n) Improper disclosure of confidential communications under Restricted Reporting or improper release of medical information are prohibited and may result in disciplinary action pursuant to the UCMJ or other adverse personnel or administrative actions. Even proper release of Restricted Reporting information should be limited to those with an official need to know, or as authorized by law.
(o) Information regarding Unrestricted Reports should only be released to personnel with an official need to know, or as authorized by law.
(p) The DoD will have two separate document retention schedules for records of Service members who report that they are victims of sexual assault, based on whether the Service member filed a Restricted or Unrestricted Report as defined in 32 CFR part 103. The record retention system for Restricted Reports shall protect the Service member's desire for confidentiality. Restricted Report cases direct that Department of Defense Forms (DD Form) 2910 and 2911 be retained for at least 5 years, but at the request of a member of the Armed Forces who files a Restricted Report on an incident of sexual assault, the DD Forms 2910 and 2911 filed in connection with the Restricted Report be retained for 50 years. Unrestricted Report cases direct that DD Forms 2910 and 2911 be retained for 50 years.
(1) Document Retention for Unrestricted Reports: The SARC will enter the Unrestricted Report DD Form 2910, “Victim Reporting Preference Statement,” in DSAID (see 32 CFR 103.3) or the DSAID-interface Military Service data system as an electronic record, where it will be retained for 50 years from the date the victim signed the DD Form 2910. DD Form 2910 is located at the DoD Forms Management Program Web site at
(2) Document Retention for Restricted Reports;
(i) The SAFE Kit, which includes the DD Form 2911 or civilian forensic examination report, if available, will be retained for 5 years in a location designated by the Military Service concerned. The 5-year time frame will start from the date the victim signs the DD Form 2910.
(ii) The SARC will retain a hard copy of the Restricted Report DD Form 2910 for 5 years, consistent with DoD guidance for the storage of personally identifiable information (PII). The 5-year time frame for the DD Form 2910 will start from the date the victim signs the DD Form 2910. However, at the request of a member of the Armed Forces who files a Restricted Report on an incident of sexual assault, the DD Forms 2910 and 2911 filed in connection with the Restricted Report be retained for 50 years.
(q) Any threat to the life or safety of a Military Service member shall be immediately reported to command and DoD law enforcement authorities (see § 105.3) and a request to transfer the victim under these circumstances will be handled in accordance with established Service regulations. DoD recognizes that circumstances may also exist that warrant the transfer of a Service member who makes an Unrestricted Report of sexual assault but may not otherwise meet established criteria for effecting the immediate transfer of Service members. Those Service members may request a transfer pursuant to the procedures in this part.
(r) Service members who file an Unrestricted Report of sexual assault shall be informed by the SARC at the time of making the report, or as soon as practicable, of the option to request a temporary or permanent expedited transfer from their assigned command or installation, or to a different location within their assigned command or installation, in accordance with the procedures for commanders in § 105.9 of this part.
(s) Service members who file Unrestricted and Restricted Reports of sexual assault shall be protected from reprisal, or threat of reprisal, for filing a report.
(a)
(1) Oversee the DoD SAPRO (see 32 CFR 103.3) in accordance with 32 CFR part 103.
(2) Direct DoD Component implementation of this part in compliance with 32 CFR part 103.
(3) Direct that Director, SAPRO, be informed of and consulted on any changes in DoD policy or the UCMJ relating to sexual assault.
(4) With the Director, SAPRO, update the Deputy Secretary of Defense on SAPR policies and programs on a semi-annual schedule.
(5) Direct the creation, implementation, and maintenance of DSAID.
(6) Oversee DoD SAPRO in developing DoD requirements for SAPR education, training, and awareness for DoD personnel consistent with this part.
(7) Appoint a general or flag officer (G/FO) or Senior Executive Service (SES) equivalent in the DoD as the Director, SAPRO.
(8) In addition to the Director, SAPRO, assign a military officer from each of the Military Services in the grade of O–4 or above to SAPRO for a minimum tour length of at least 18 months. Of these four officers assigned to the SAPRO, at least one officer shall be in the grade of O–6 or above. See Public Law 112–81.
(9) Establish a DoD-wide certification program (see § 105.3) with a national accreditor to ensure all sexual assault victims are offered the assistance of a SARC or SAPR VA who has obtained this certification.
(b)
(c)
(1) Establish DoD sexual assault healthcare policies, clinical practice guidelines, related procedures, and standards governing the DoD healthcare programs for victims of sexual assault.
(2) Oversee the requirements and procedures in § 105.11 of this part.
(3) Establish guidance to:
(i) Give priority to sexual assault patients at MTFs as emergency cases.
(ii) Require standardized, timely, accessible, and comprehensive medical care at MTFs for eligible persons who are sexually assaulted.
(iii) Require that medical care is consistent with established community standards for the healthcare of sexual assault victims and the collection of forensic evidence from victims, in accordance with the U.S. Department of Justice Protocol, instructions for victim and suspect exams found in the SAFE Kit, and DD Form 2911.
(A) Minimum standards of healthcare intervention that correspond to clinical standards set in the community shall include those established in the U.S. Department of Justice Protocol. However, clinical guidance shall not be solely limited to this resource.
(B) Healthcare providers providing care to sexual assault victims in theaters of operation are required to have access to the current version of the U.S. Department of Justice Protocol.
(iv) Include deliberate planning to strategically position healthcare providers skilled in SAFE at predetermined echelons of care, for personnel with the responsibility of assigning medical assets.
(4) Establish guidance for medical personnel that requires a SARC or SAPR VA to be called in for every incident of sexual assault for which treatment is sought at the MTFs, regardless of the reporting option.
(5) Establish guidance in drafting memorandums of understanding (MOUs) or memorandums of agreement (MOAs) with local civilian medical facilities to provide DoD-reimbursable healthcare (to include psychological care) and forensic examinations for Service members and TRICARE eligible sexual assault victims. As part of the MOU or MOA, Victims shall be asked whether they would like the SARC to be notified and, if notified, a SARC or SAPR VA shall respond. Local private or public sector providers shall have processes and procedures in place to assess that local community standards meet or exceed the recommendations for conducting forensic exams of adult sexual assault victims set forth in the U.S. Department of Justice Protocol as a condition of the MOUs or MOAs.
(6) Establish guidelines and procedures for the Surgeon Generals of the Military Departments to require that an adequate supply of resources, to include personnel, supplies, and SAFE Kits, is maintained in all locations where SAFEs may be conducted by DoD, including deployed locations. Maintaining an adequate supply of SAFE Kits is a shared responsibility of the ASD(HA) and Secretaries of the Military Departments.
(7) Establish minimum standards of initial and refresher SAPR training required for all personnel assigned to MTFs. Specialized responder training is required for personnel providing direct care to victims of sexual assault. Minimum standards shall include trauma-informed care (see § 105.3) and medical and mental health care that is gender-responsive, culturally-competent, and recovery-oriented.
(d)
(1) Provide legal advice and assistance on proposed policies, DoD issuances, proposed exceptions to policy, and review of all legislative proposals affecting mission and responsibilities of the SAPRO.
(2) Inform the USD(P&R) of any sexual assault related changes to the UCMJ.
(e)
(1) Establish guidance and provide oversight for the investigations of sexual assault in the DoD to meet the SAPR policy and training requirements of this part.
(2) Inform the USD(P&R) of any changes relating to sexual assault investigation policy or guidance.
(3) DoD IG shall collaborate with SAPRO in the development of investigative policy in support of sexual assault prevention and response.
(f)
(1) Establish SAPR policy and procedures to implement this part.
(2) Coordinate all Military Service SAPR policy changes (Department of the Navy-level for the Navy and Marine Corps) with the USD(P&R).
(3) Establish and publicize policies and procedures regarding the availability of a SARC.
(i) Require that sexual assault victims receive appropriate and responsive care and that the SARC serves as the single point of contact for coordinating care for victims.
(ii) Direct that the SARC or a SAPR VA be immediately called in every incident of sexual assault on a military installation. There will be situations where a sexual assault victim receives medical care and a SAFE outside of a military installation through a MOU or MOA with a local private or public sector entity. In these cases, the MOU or MOA will require that victims shall be asked whether they would like the SARC to be notified as part of the MOU or MOA, and, if yes, a SARC or VA shall be notified and shall respond.
(iii) When a victim has a temporary change of station or PCS or is deployed, direct that SARCs immediately request victim consent in writing to transfer case management documents, which should be documented on the DD Form 2910. Upon receipt of victim consent, SARCs shall expeditiously transfer case management documents to ensure continuity of care and SAPR services. All Federal, DoD, and Service privacy regulations must be strictly adhered to. However, when the SARC has a temporary change of station or PCS or is deployed, no victim consent is required to transfer the case to the next SARC. Every effort must be made to inform the victim of the case transfer. If the SARC has already closed the case and terminated victim contact, no other action is needed.
(iv) Upon the full implementation of the DoD Sexual Assault Advocate Certification Program (D–SAACP), sexual assault victims shall be offered the assistance of a SARC and/or SAPR VA who has been credentialed by the D–SAACP and has passed a National Agency Check (NAC) background check.
(v) Issue guidance to ensure that equivalent standards are met for SAPR where SARCs are not installation-based but instead work within operational and/or deployable organizations.
(4) Establish guidance to meet the SAPR training requirements for legal, MCIO, DoD law enforcement, responders and other Service members in § 105.14 of this part.
(5) Upon request, submit a copy of SAPR training programs or SAPR training elements to USD(P&R) through SAPRO for evaluation of consistency and compliance with DoD SAPR training standards in this part. The Military Departments will correct USD(P&R) identified DoD SAPR policy and training standards discrepancies.
(6) Establish and publicize policies and procedures for reporting a sexual assault.
(i) Require first responders (see § 105.3) to be identified upon their assignment and trained, and require that their response times be continually monitored by their commanders to ensure timely response to reports of sexual assault.
(ii) Ensure established response time is based on local conditions but will reflect that sexual assault victims shall be treated as emergency cases. (See § 105.14 of this part for training requirements.)
(7) Establish policy that ensures commanders are accountable for implementing and executing the SAPR
(8) Establish standards and periodic training for healthcare personnel and healthcare providers regarding the Unrestricted and Restricted Reporting options of sexual assault in accordance with § 105.14 of this part. Enforce eligibility standards of licensed healthcare providers to perform SAFEs.
(9) Establish guidance to direct that all Unrestricted Reports of violations (to include attempts) of sexual assault and non-consensual sodomy, as defined in title 10, U.S.C., against adults are immediately reported to the MCIO, regardless of the severity of the potential punishment authorized by the UCMJ.
(i) Commander(s) of the Service member(s) who is a subject of a sexual assault allegation shall provide in writing all disposition data, to include any administrative or judicial action taken, stemming from the sexual assault investigation to the MCIO.
(ii) Once the investigation is completed, MCIOs shall submit case disposition data that satisfies the reporting requirements for DSAID identified in § 105.15 and the annual reporting requirements in § 105.16 of this part. MCIOs shall submit case disposition data even when the sexual assault case is referred to other DoD law enforcement.
(iii) A unit commander who receives an Unrestricted Report of an incident of sexual assault shall immediately refer the matter to the appropriate MCIO. A unit commander shall not conduct internal command directed investigations on sexual assault (i.e., no referrals to appointed command investigators or inquiry officers) or delay immediately contacting the MCIOs while attempting to assess the credibility of the report.
(10) Establish SAPR policy that encourages commanders to be responsive to a victim's desire to discuss his or her case with the installation commander tasked by the Military Service with oversight responsibility for the SAPR program in accordance with 32 CFR part 103.
(11) Establish standards for command assessment of organizational SAPR climate, including periodic follow-up assessments. Adhere to USD(P&R) SAPR guidance and effectiveness of SAPR training, awareness, prevention, and response policies and programs.
(12) As a shared responsibility with ASD(HA), direct installation commanders to maintain an adequate supply of SAFE Kits in all locations where SAFEs are conducted, including deployed locations. Direct that Military Service SAPR personnel, to include medical personnel, are appropriately trained on protocols for the use of the SAFE Kit and comply with prescribed chain of custody procedures described in their Military Service-specific MCIO procedures.
(13) Establish procedures that require, upon seeking assistance from a SARC, SAPR VA, MCIO, the VWAP, or trial counsel, that each Service member who reports that she or he has been a victim of a sexual assault be informed of and given the opportunity to:
(i) Consult with legal assistance counsel, and in cases where the victim may have been involved in collateral misconduct (see § 105.3), to consult with defense counsel.
(A) When the alleged perpetrator is the commander or in the victim's chain of command, inform such victims shall be informed of the opportunity to go outside the chain of command to report the offense to other commanding officers (CO) or an Inspector General. Victims shall be informed that they can also seek assistance from the DoD Safe Helpline (see § 105.3).
(B) The victim shall be informed that legal assistance is optional and may be declined, in whole or in part, at any time.
(C) Commanders shall require that information and services concerning the investigation and prosecution be provided to victims in accordance with VWAP procedures in DoDI 1030.2.
(ii) Have a SARC or SAPR VA present when law enforcement or defense counsel interviews the victim.
(14) Establish procedures to ensure that in the case of a general or special court-martial involving a sexual assault as defined in 32 CFR part 103, a copy of the prepared record of the proceedings of the court-martial (not to include sealed materials, unless otherwise approved by the presiding military judge or appellate court) shall be given to the victim of the offense if the victim testified during the proceedings. The record of the proceedings (prepared in accordance with Service regulations) shall be provided without charge and as soon as the record is authenticated. The victim shall be notified of the opportunity to receive the record of the proceedings in accordance with Public Law 112–81.
(15) The commanders shall also require that a completed DD Form 2701, “Initial Information for Victims and Witnesses of Crime,” be distributed to the victim by DoD law enforcement agents. (DD Form 2701 may be obtained via the Internet at
(16) Establish procedures to require commanders to protect the SARC and SAPR VA from coercion, retaliation, and reprisals, related to the execution of their duties and responsibilities.
(17) Establish procedures to protect victims of sexual assault from coercion, retaliation, and reprisal in accordance with DoDD 7050.06.
(18) Establish Military Service-specific guidance to ensure collateral misconduct is addressed in a manner that is consistent and appropriate to the circumstances, and at a time that encourages continued victim cooperation.
(19) Establish expedited transfer procedures of victims of sexual assault in accordance with §§ 105.4(r) and 105.9 of this part.
(20) Appoint a representative to the SAPR IPT in accordance with § 105.7 of this part, and provide chairs or co-chairs for WIPTs, when requested. Appoint a representative to SAPRO oversight teams upon request.
(21) Provide quarterly and annual reports of sexual assault involving Service members to Director, SAPRO, to be consolidated into the annual Secretary of Defense report to Congress in accordance with 32 CFR part 103 and sections 113 and 4331 of title 10, U.S.C. (See § 105.16 of this part for additional information about reporting requirements.)
(22) Provide budget program and obligation data, as requested by the DoD SAPRO.
(23) Require that reports of sexual assault be entered into DSAID through interface with a Military Service data system or by direct data entry by SARCs.
(i) Data systems that interface with DSAID shall be modified and maintained to accurately provide information to DSAID.
(ii) Only SARCs who have, at a minimum, a favorable NAC shall be permitted access to enter sexual assault reports into DSAID.
(24) Provide Director, SAPRO, a written description of any sexual assault related research projects contemporaneous with commencing the actual research. When requested, provide periodic updates on results and insights. Upon conclusion of such research, a summary of the findings will be provided to DoD SAPRO as soon as practicable.
(25) Establish procedures for supporting the DoD Safe Helpline in accordance with each Military Service-specific MOU or MOA between SAPRO and the Military Departments, to include but not limited to, providing and updating SARC contact information for the referral DoD Safe Helpline database, providing timely response to victim feedback, and publicizing the DoD Safe Helpline to SARCs and Service members.
(i) Utilize the DoD Safe Helpline as the sole DoD hotline to provide crisis intervention, facilitate victim reporting through connection to the nearest SARC, and other resources as warranted.
(ii) The DoD Safe Helpline does not replace local base and installation SARC or SAPR VA contact information.
(26) Establish procedures to implement SAPR training in accordance with § 105.14 of this part, to include both prevention and response.
(27) Require that reports of sexual assaults are provided to the Commanders of the Combatant Commands for their respective area of responsibility on a quarterly basis, or as requested.
(28) For CMGs:
(i) Require the installation commander or the deputy installation commander chair the multi-disciplinary CMG (see § 105.13 of this part) on a monthly basis to review individual cases of Unrestricted Reporting of sexual assault, facilitate monthly victim updates, direct system coordination, accountability, and victim access to quality services. This responsibility may not be delegated.
(ii) Require that the installation SARC (in the case of multiple SARCs on an installation, then the Lead SARC) serve as the co-chair of the CMG. This responsibility may not be delegated.
(iii) If the installation is a joint base or if the installation has tenant commands, the commander of the tenant organization and their designated Lead SARC shall be invited to the CMG meetings. The commander of the tenant organization shall provide appropriate information to the host commander, to enable the host commander to provide the necessary supporting services.
(iv) The Secretaries of the Military Departments shall issue guidance to ensure that equivalent standards are met for case oversight by CMGs in situations where SARCs are not installation-based but instead work within operational and/or deployable organizations.
(29) Establish document retention procedures for Unrestricted and Restricted Reports of sexual assault in accordance with § 105.4(p) of this part.
(30) When drafting MOUs or MOAs with local civilian medical facilities to provide DoD-reimbursable healthcare (to include psychological care) and forensic examinations for Service members and TRICARE eligible sexual assault victims, require commanders to include the following provisions:
(i) Ask the victim whether he or she would like the SARC to be notified, and if yes, a SARC or SAPR VA shall respond.
(ii) Local private or public sector providers shall have processes and procedures in place to assess that local community standards meet or exceed those set forth in the U.S. Department of Justice Protocol as a condition of the MOUs or MOAs.
(31) Comply with collective bargaining obligations, if applicable.
(32) Provide SAPR training and education for civilian employees of the military departments in accordance with Section 585 of Public Law 112–81.
(g)
(h)
(i)
(1) Require that a SAPR capability provided by the Executive Agent (see § 105.3) is incorporated into operational planning guidance in accordance with 32 CFR part 103 and this part.
(2) Require the establishment of an MOU, MOA, or equivalent support agreement with the Executive Agent in accordance with 32 CFR part 103 and this part and requires at a minimum:
(i) Coordinated efforts and resources, regardless of the location of the sexual assault, to direct optimal and safe administration of Unrestricted and Restricted Reporting options with appropriate protection, medical care, counseling, and advocacy.
(A) Ensure a 24 hour per day, 7 day per week response capability. Require first responders to respond in a timely manner.
(B) Response times shall be based on local conditions; however, sexual assault victims shall be treated as emergency cases.
(ii) Notice to SARC of every incident of sexual assault on the military installation, so that a SARC or SAPR VA can respond and offer the victim SAPR services. In situations where a sexual assault victim receives medical care and a SAFE outside of a military installation through a MOU or MOA with a local private or public sector entities, as part of the MOU or MOA, victims shall be asked whether they would like the SARC to be notified, and if yes, the SARC or SAPR VA shall be notified and shall respond.
See § 105.7 through § 105.16 of this part.
(a)
(1) Assist the USD(P&R) in developing, administering, and monitoring the effectiveness of DoD SAPR policies and programs. Implement and monitor compliance with DoD sexual assault policy on prevention and response.
(2) With the USD(P&R), update the Deputy Secretary of Defense on SAPR policies and programs on a semi-annual schedule.
(3) Develop DoD programs to direct SAPR education, training, and awareness for DoD personnel consistent with this part and 32 CFR part 103.
(4) Coordinate the management of DoD SAPR Program and oversee the implementation in the Service SAPR Programs.
(5) Provide technical assistance to the Heads of the DoD Components in addressing matters concerning SAPR and facilitate the identification and resolution of issues and concerns common to the Military Services and joint commands.
(6) Develop strategic program guidance, joint planning objectives, standard terminology, and identify legislative changes needed to advance the SAPR program.
(7) Develop oversight metrics to measure compliance and effectiveness of SAPR training, sexual assault awareness, prevention, and response policies and programs; analyze data; and make recommendations regarding SAPR policies and programs to the
(8) Establish reporting categories and monitor specific goals included in the annual SAPR assessments of each Military Service and its respective Military Service Academy, as required by 32 CFR part 103, sections 113 and 4331 of title 10, U.S.C., and in accordance with § 105.16 of this part.
(9) Acquire quarterly, annual, and installation-based SAPR data from the Military Services and assemble annual congressional reports involving persons covered by this part and 32 CFR part 103. Consult with and rely on the Secretaries of the Military Departments in questions concerning disposition results of sexual assault cases in their respective Military Department.
(10) Prepare the annual fiscal year (FY) reports submitted by the Secretary of Defense to the Congress on the sexual assaults involving Service members and a report on the members of the Military Service Academies to Congress submitted by the Secretary of Defense.
(11) Publicize SAPR outreach, awareness, prevention, response, and oversight initiatives and programs.
(12) Oversee the development, implementation, maintenance, and function of the DSAID to meet congressional reporting requirements, support Military Service SAPR program management, and conduct DoD SAPRO oversight activities.
(13) Establish, oversee, publicize and maintain the DoD Safe Helpline and facilitate victim reporting through its connection to the nearest SARC, and other resources as warranted.
(14) Establish and oversee the D–SAACP to ensure all sexual assault victims are offered the assistance of a credentialed SARC or SAPR VA.
(15) Annually review the Military Services resourcing and funding of the U.S. Army Criminal Investigation Laboratory (USACIL) in the area of sexual assault.
(i) Assist the Department of the Army in identifying the funding and resources needed to operate USACIL, to facilitate forensic evidence being processed within 60 working days from day of receipt in accordance with section 113 of title 10, U.S.C.
(ii) Encourage the Military Services that use USACIL to contribute to the operation of USACIL by ensuring that USACIL is funded and resourced appropriately to complete forensic evidence processing within 60 working days.
(16) Chair the SAPR IPT.
(b)
(i) Director, SAPRO. The Director shall serve as the chair.
(ii) Deputy Assistant Secretaries for Manpower and Reserve Affairs of the Departments of the Army and the Air Force.
(iii) A senior representative of the Department of the Navy SAPRO.
(iv) A G/FO or DoD SES civilian from: the Joint Staff, Manpower and Personnel (J–1); the Office of the Assistant Secretary of Defense for Reserve Affairs; the NGB; the Office of the GC, DoD; and the Office of the ASD(HA). Other DoD Components representatives shall be invited to specific SAPR IPT meetings when their expertise is needed to inform and resolve issues being addressed. A senior representative from the Coast Guard shall be an invited guest.
(v) Consistent with Section 8(c) of Public Law 100–504, the IG DoD shall be authorized to send one or more observers to attend all SAPR IPT meetings in order to monitor and evaluate program performance.
(2)
(i) Through the chair, advise the USD(P&R) and the Secretary of Defense on SAPR IPT meeting recommendations on policies for sexual assault issues involving persons covered by this part.
(ii) Serve as the implementation and oversight arm of the DoD SAPR Program. Coordinate policy and review the DoD's SAPR policies and programs consistent with this part and 32 CFR part 103, as necessary. Monitor the progress of program elements.
(iii) Meet every other month. Ad hoc meetings may be scheduled as necessary at the discretion of the chair. Members are selected and meetings scheduled according to the SAPR IPT Charter.
(iv) Discuss and analyze broad SAPR issues that may generate targeted topics for WIPTs. WIPTs shall focus on one select issue, be governed by a charter with enumerated goals for which the details will be laid out in individual work plans (see § 105.3), and be subject to a definitive timeline for the accomplishment of the stated goals. Issues that cannot be resolved by the SAPR IPT or that require higher level decision making shall be sent to the USD(P&R) for resolution.
(3)
(i) Advise the USD(P&R) and the Secretary of Defense on SAPR IPT recommendations on policies for sexual assault issues involving persons covered by this part.
(ii) Represent the USD(P&R) in SAPR matters consistent with this part and 32 CFR part 103.
(iii) Oversee discussions in the SAPR IPT that generate topics for WIPTs. Provide final approval for topics, charters, and timelines for WIPTs.
(a)
(1)
(2)
(i) Only the SARC, SAPR VA, and healthcare personnel are designated as authorized to accept a Restricted Report. Healthcare personnel, to include psychotherapist and other personnel listed in Military Rules of Evidence (MRE) 513 pursuant to the Manual for Courts-Martial, United States, who received a Restricted Report shall immediately call a SARC or SAPR VA to assure that a victim is offered SAPR services and so that a DD Form 2910 can be completed.
(ii) A SAFE and the information contained in its accompanying Kit are provided the same confidentiality as is afforded victim statements under the Restricted Reporting option. See § 105.12 of this part.
(iii) In the course of otherwise privileged communications with a chaplain or legal assistance attorney, a victim may indicate that he or she wishes to file a Restricted Report. If this occurs, a chaplain and legal assistance attorney shall facilitate contact with a SARC or SAPR VA to ensure that a victim is offered SAPR services and so that a DD Form 2910 can be completed. A chaplain or legal assistance attorney cannot accept a Restricted Report.
(iv) A victim has a privilege to refuse to disclose and to prevent any other person from disclosing a confidential communication between a victim and a victim advocate, in a case arising under the UCMJ, if such communication is made for the purpose of facilitating advice or supportive assistance to the victim.
(v) A sexual assault victim certified under the personnel reliability program (PRP) is eligible for both the Restricted and Unrestricted reporting options. If electing Restricted Reporting, the victim is required to advise the competent medical authority of any factors that could have an adverse impact on the victim's performance, reliability, or safety while performing PRP duties. If necessary, the competent medical authority will inform the certifying official that the person in question should be temporarily suspended from PRP status, without revealing that the person is a victim of sexual assault, thus preserving the Restricted Report.
(3)
(i) Details regarding the incident will be limited to only those personnel who have an official need to know. The victim's decision to decline to participate in an investigation or prosecution should be honored by all personnel charged with the investigation and prosecution of sexual assault cases, including, but not limited to, commanders, DoD law enforcement officials, and personnel in the victim's chain of command. If at any time the victim who originally chose the Unrestricted Reporting option declines to participate in an investigation or prosecution, that decision should be honored in accordance with this subparagraph. However, the victim cannot change from an Unrestricted to a Restricted Report. The victim should be informed by the SARC or SAPR VA that the investigation may continue regardless of whether the victim participates.
(ii) The victim's decision not to participate in an investigation or prosecution will not affect access to SARC and SAPR VA services or medical and psychological care. These services shall be made available to all eligible sexual assault victims.
(iii) If a victim approaches a SARC and SAPR VA and begins to make a report, but then changes his or her mind and leaves without signing the DD Form 2910 (where the reporting option is selected), the SARC or SAPR VA is not under any obligation or duty to inform investigators or commanders about this report and will not produce the report or disclose the communications surrounding the report. If commanders or law enforcement ask about the report, disclosures can only be made in accordance with exceptions to MRE 514 privilege.
(4)
(5)
(i) A victim's communication with another person (e.g., roommate, friend, family member) does not, in and of itself, prevent the victim from later electing to make a Restricted Report. Restricted Reporting is confidential, not anonymous reporting. However, if the person to whom the victim confided the information (e.g., roommate, friend, family member) is in the victim's officer and non-commissioned officer chain of command or DoD law enforcement, there can be no Restricted Report.
(ii) Communications between the victim and a person other than the SARC, SAPR VA, or healthcare personnel are not confidential and do not receive the protections of Restricted Reporting.
(6)
(i) If there is an ongoing independent investigation, the sexual assault victim will no longer have the option of Restricted Reporting when:
(A) DoD law enforcement informs the SARC of the investigation, and
(B) The victim has not already elected Restricted Reporting.
(ii) The timing of filing a Restricted Report is crucial. The victim must take advantage of the Restricted Reporting option before the SARC is informed of the investigation. The SARC then shall
(7)
(b)
(c)
(1)
(2)
(d)
(2)
(i) Even if the victim chooses not to pursue an investigation, Restricted Reporting gives the installation commander a clearer picture of the reported sexual assaults within the command. The installation commander can then use the information to enhance preventive measures, to enhance the education and training of the command's personnel, and to scrutinize more closely the organization's climate and culture for contributing factors.
(ii) Neither the installation commander nor DoD law enforcement may use the information from a Restricted Report for investigative purposes or in a manner that is likely to discover, disclose, or reveal the identities of the victims unless an exception applies as provided in paragraph (e) of this section. Improper disclosure of Restricted Reporting information may result in discipline pursuant to the UCMJ or other adverse personnel or administrative actions.
(e)
(i) The SARC shall disclose the otherwise protected confidential information only after consultation with the SJA of the installation commander, supporting judge advocate or other legal advisor concerned, who shall advise the SARC whether an exception to Restricted Reporting applies. In addition, the SJA, supporting judge advocate or other legal advisor concerned will analyze the impact of MRE 514 on the communications.
(ii) When there is uncertainty or disagreement on whether an exception to Restricted Reporting applies, the matter shall be brought to the attention of the installation commander for decision without identifying the victim (using non-PII information). Improper disclosure of confidential communications under Restricted Reporting, improper release of medical information, and other violations of this guidance are prohibited and may result in discipline pursuant to the UCMJ or State statute, loss of privileges, loss of certification or credentialing, or other adverse personnel or administrative actions.
(2) The following exceptions to the prohibition against disclosures of Restricted Reporting authorize a disclosure of a Restricted Report only if one or more of the following conditions apply:
(i) Authorized by the victim in writing.
(ii) Necessary to prevent or mitigate a serious and imminent threat to the health or safety of the victim or another person; for example, multiple reports involving the same alleged suspect (repeat offender) could meet this criteria. See similar safety and security exceptions in MRE 514 (Executive Order 13593).
(iii) Required for fitness for duty or disability determinations. This disclosure is limited to only the information necessary to process duty or disability determinations for Service members.
(iv) Required for the supervision of coordination of direct victim treatment or services. The SARC, SAPR VA, or healthcare personnel can disclose specifically requested information to those individuals with an official need to know, or as required by law or regulation.
(v) Ordered by a military official (e.g., a duly authorized trial counsel subpoena in a UCMJ case), Federal or State judge, or as required by a Federal or State statute or applicable U.S. international agreement. The SARC, SAPR VA, and healthcare personnel will consult with the installation commander's servicing legal office, in the same manner as other recipients of privileged information, to determine if the exception criteria apply and whether a duty to disclose the otherwise protected information is present. Until those determinations are made, only non-PII shall be disclosed.
(3) Healthcare personnel may also convey to the victim's unit commander any possible adverse duty impact related to the victim's medical condition and prognosis in accordance with DoD Directive 5400.11–R.
(4) The SARC or SAPR VA shall inform the victim when a disclosure in accordance with the exceptions in this section is made.
(5) If a SARC, SAPR VA, or healthcare personnel make an unauthorized disclosure of a confidential communication, that person is subject to disciplinary action. Unauthorized disclosure has no impact on the status of the Restricted Report. All Restricted Reporting information is still confidential and protected. However, unauthorized or inadvertent disclosures made to a commander or law enforcement shall result in notification to the MCIO.
(f)
(a)
(b)
(c)
(1) Encourage the use of the commander's sexual assault response protocols for Unrestricted Reports as the baseline for commander's response to the victim, an offender, and proper response of a sexual assault within a unit. The Commander's Sexual Assault Response Protocols for Unrestricted Reports of Sexual Assault are located in the SAPR Policy Toolkit, on
(2) Meet with the SARC within 30 days of taking command for one-on-one SAPR training. The training shall include a trends brief for unit and area of responsibility and the confidentiality requirements in Restricted Reporting. The commander must contact the judge advocate for training on the MRE 514 privilege.
(3) Require the SARC to:
(i) Be notified of every incident of sexual assault involving Service members or persons covered in this part, in or outside of the military installation when reported to DoD personnel. When notified, the SARC or SAPR VA shall respond to offer the victim SAPR services. All SARCs shall be authorized to perform VA duties in accordance with service regulations, and will be acting in the performance of those duties.
(A) In Restricted Reports, the SARC shall be notified by the healthcare personnel or the SAPR VA.
(B) In Unrestricted Reports, the SARC shall be notified by the DoD responders (see § 105.3).
(ii) Provide the installation commander with information regarding an Unrestricted Report within 24 hours of an Unrestricted Report of sexual assault.
(iii) Provide the installation commander with non-PII, as defined in § 105.3, within 24 hours of a Restricted Report of sexual assault. This notification may be extended to 48 hours after the report of the incident if there are extenuating circumstances in the deployed environment. Command and installation demographics shall be taken into account when determining the information to be provided.
(iv) Be supervised and evaluated by the installation commander or deputy installation commander in the performance of SAPR procedures in accordance with § 105.10 of this part.
(v) Receive SARC training to follow procedures in accordance with § 105.10 of this part. Upon implementation of the D–SAACP, standardized criteria for the selection and training of SARCs and SAPR VAs shall comply with specific Military Service guidelines and
(vi) Follow established procedures to store the DD Form 2910 pursuant to Military Service regulations regarding the storage of documents with PII. (Copies may be obtained via the Internet at
(4) Evaluate medical personnel per Military Service regulation in the performance of SAPR procedures as described in § 105.11 of this part.
(5) Require adequate supplies of SAFE Kits be maintained by the active component. The supplies shall be routinely evaluated to guarantee adequate numbers to meet the need of sexual assault victims.
(6) Require DoD law enforcement and healthcare personnel to comply with prescribed chain of custody procedures described in their Military Service-specific MCIO procedures. Modified procedures applicable in cases of Restricted Reports of sexual assault are explained in § 105.12 of this part.
(7) Require that a CMG is conducted on a monthly basis in accordance with § 105.13 of this part.
(i) Chair or attend the CMG, as appropriate. Direct the required CMG members to attend.
(ii) Commanders shall provide victims of a sexual assault who filed an Unrestricted Reports monthly updates regarding the current status of any ongoing investigative, medical, legal, or command proceedings regarding the sexual assault until the final disposition (see § 105.3) of the reported assault, and to the extent permitted pursuant to DoDI 1030.2, Public Law 104–191,
(8) Ensure that resolution of Unrestricted Report sexual assault cases shall be expedited.
(i) A unit commander who receives an Unrestricted Report of a sexual assault shall immediately refer the matter to the appropriate MCIO, to include any offense identified by title 10, U.S.C. A unit commander shall not conduct internal command directed investigations on sexual assault (i.e., no referrals to appointed command investigators or inquiry officers) or delay immediately contacting the MCIOs while attempting to assess the credibility of the report.
(ii) The final disposition of a sexual assault shall immediately be reported by the commander to the assigned MCIO. Dispositions on cases referred by MCIOs to other DoD law enforcement agencies shall be immediately reported to the MCIOs upon their final disposition. MCIOs shall request dispositions on referred cases from civilian law enforcement agencies and, if received, those dispositions shall be immediately reported by the MCIO in DSAID in order to meet the congressional annual reporting requirements. When requested by MCIOs and other DoD law enforcement, commanders shall provide final disposition of sexual assault cases. Final case disposition is required to be inputted into DSAID.
(iii) If the MCIO has been notified of the disposition in a civilian sexual assault case, the MCIO shall notify the commander of this disposition immediately.
(9) Appoint a point of contact to serve as a formal liaison between the installation SARC and the installation FAP and domestic violence intervention and prevention staff (or civilian domestic resource if FAP is not available for a Reserve Component victim) to direct coordination when a sexual assault occurs within a domestic relationship or involves child abuse.
(10) Ensure appropriate training of all military responders be directed and documented in accordance with training standards in § 105.14 of this part. Direct and document appropriate training of all military responders who attend the CMG.
(11) Identify and maintain a liaison with civilian sexual assault victim resources. Where necessary, it is strongly recommended that an MOU or MOAs with the appropriate local authorities and civilian service organizations be established to maximize cooperation, reciprocal reporting of sexual assault information, and consultation regarding jurisdiction for the prosecution of Service members involved in sexual assault, as appropriate.
(12) Require that each Service member who reports a sexual assault, pursuant to the respective Military Service regulations, be given the opportunity to consult with legal assistance counsel, and in cases where the victim may have been involved in collateral misconduct, to consult with defense counsel. Victims shall be referred to VWAP. Information concerning the prosecution shall be provided to victims in accordance with VWAP procedures in DoDD 7050.06. The Service member victim shall be informed of this opportunity to consult with legal assistance counsel as soon as the victim seeks assistance from a SARC, SAPR VA, or any DoD law enforcement agent or judge advocate.
(13) Direct that DoD law enforcement agents and VWAP personnel provide victims of sexual assault who elect an Unrestricted Report the information outlined in DoDD 1030.01
(14) Require that MCIOs utilize the investigation descriptions found in § 105.3 in this part.
(15) Establish procedures to ensure that in the case of a general or special court-martial involving a sexual assault as defined in 32 CFR part 103, a copy of the prepared record of the proceedings of the court-martial (not to include sealed materials, unless otherwise approved by the presiding military judge or appellate court) shall be given to the victim of the offense if the victim testified during the proceedings. The record of the proceedings (prepared in accordance with Service regulations shall be provided without charge and as soon as the record is authenticated. The victim shall be notified of the opportunity to receive the record of the proceedings in accordance with Public Law 112–81.
(16) Protect sexual assault victims from coercion, discrimination, or reprisals. Commanders shall protect SARCs and SAPR VAs from coercion, discrimination, or reprisals related to the execution of their SAPR duties and responsibilities.
(17) Require that sexual assault reports be entered into DSAID through interface with a Military Service data system, or by direct data entry by authorized personnel.
(18) Designate an official, usually the SARC, to generate an alpha-numeric
(19) Appoint a healthcare provider, as an official duty, in each MTF to be the resident point of contact concerning SAPR policy and sexual assault care.
(c)
(1) Enhance communications and the sharing of information regarding sexual assault prosecutions, as well as of the sexual assault care and forensic examinations that involve Service members and eligible TRICARE beneficiaries covered by this part.
(2) Collaborate with local community crisis counseling centers, as necessary, to augment or enhance their sexual assault programs.
(3) Provide liaison with private or public sector sexual assault councils, as appropriate.
(4) Provide information about medical and counseling services related to care for victims of sexual assault in the civilian community, when not otherwise available at the MTFs, in order that military victims may be offered the appropriate healthcare and civilian resources, where available and where covered by military healthcare benefits.
(5) Where appropriate or required by MOU or MOA, facilitate training for civilian service providers about SAPR policy and the roles and responsibilities of the SARC and SAPR VA.
(d)
(2) Medical entitlements remain dependent on a LOD determination as to whether or not the sexual assault incident occurred in an active duty or inactive duty training status. However, regardless of their duty status at the time that the sexual assault incident occurred, or at the time that they are seeking SAPR services (see § 105.3), Reserve Component members can elect either the Restricted or Unrestricted Reporting option (see 32 CFR 103.3) and have access to the SAPR services of a SARC and a SAPR VA.
(3) The following LOD procedures shall be followed by Reserve Component commanders.
(i) LOD determinations may be made without the victim being identified to DoD law enforcement or command, solely for the purpose of enabling the victim to access medical care and psychological counseling, and without identifying injuries from sexual assault as the cause.
(ii) When assessing LOD determinations for sexual assault victims, the commander of the Reserve command in each component and the directors of the Army and Air NGBs shall designate individuals within their respective organizations to process LODs for victims of sexual assault when performing active service, as defined in section 101(d)(3) of title 10, U.S.C., and inactive duty training.
(A) Designated individuals shall possess the maturity and experience to assist in a sensitive situation and, if dealing with a Restricted Report, to safeguard confidential communications. These individuals are specifically authorized to receive confidential communications as defined by § 105.3 of this part for the purpose of determining LOD status.
(B) The appropriate SARC will brief the designated individuals on Restricted Reporting policies, exceptions to Restricted Reporting, and the limitations of disclosure of confidential communications as specified in § 105.8(e) of this part. The SARC and these individuals may consult with their servicing legal office, in the same manner as other recipients of privileged information for assistance, exercising due care to protect confidential communications by disclosing only non-identifying information. Unauthorized disclosure may result in disciplinary action, in accordance with § 105.8(d)(1) and (2) of this part.
(iii) For LOD purposes, the victim's SARC may provide documentation that substantiates the victim's duty status as well as the filing of the Restricted Report to the designated official.
(iv) If medical or mental healthcare is required beyond initial treatment and follow-up, a licensed medical or mental health provider must recommend a continued treatment plan.
(v) When evaluating pay and entitlements, the modification of the LOD process for Restricted Reporting does not extend to pay and allowances or travel and transportation incident to the healthcare entitlement. However, at any time the Service member may request an unrestricted LOD to be completed in order to receive the full range of entitlements authorized pursuant to DoDI 1241.2.
(e)
(2) Service members who file an Unrestricted Report of sexual assault shall be informed by the SARC, SAPR VA, or the Service member's CO at the time of making the report, or as soon as practicable, of the option to request a temporary or permanent expedited transfer from their assigned command or installation, or to a different location within their assigned command or installation. The Service members shall initiate the transfer request and submit the request to their COs. The CO shall document the date and time the request is received.
(i) A presumption shall be established in favor of transferring a Service member (who initiated the transfer request) following a credible report (see § 105.3) of sexual assault. The CO, or the appropriate approving authority, shall make a credible report determination at the time the expedited request is made after considering the advice of the supporting judge advocate, or other legal advisor concerned, and the available evidence based on an MCIO's investigation's information (if available).
(ii) Expedited transfers of Service members who report that they are victims of sexual assault shall be limited to sexual assault offenses reported in the form of an Unrestricted Report.
(A) Sexual assault against adults is defined in 32 CFR part 103.3 and includes Article 120 and Article 125 of the Manual for Courts-Martial, United States. This part does not address victims covered under the FAP in DoDD 6400.1.
(B) If the Service member files a Restricted Report in accordance with 32 CFR part 103 and requests an expedited transfer, the Service member must affirmatively change his or her reporting option to Unrestricted Reporting on the DD Form 2910, in order to be eligible for an expedited transfer.
(iii) When the alleged perpetrator is the commander or otherwise in the victim's chain of command, the SARC shall inform such victims of the opportunity to go outside the chain of command to report the offense to MCIOs, other COs or an Inspector General. Victims shall be informed that they can also seek assistance from a legal assistance attorney or the DoD Safe Helpline.
(iv) The CO shall expeditiously process a transfer request from a command or installation, or to a
(v) The CO must approve or disapprove a Service member's request for a PCS, PCA, or unit transfer within 72 hours from receipt of the Service member's request. The decision to approve the request shall be immediately forwarded to the designated activity that processes PCS, PCA, or unit transfers (see § 105.3).
(vi) If the Service member's transfer request is disapproved by the CO, the Service member shall be given the opportunity to request review by the first G/FO in the chain of command of the member, or a SES equivalent (if applicable). The decision to approve or disapprove the request for transfer must be made within 72 hours of submission of the request for review. If a civilian SES equivalent reviewer approves the transfer, the Secretary of the Military Department concerned shall process and issue orders for the transfer.
(vii) Military Departments shall make every reasonable effort to minimize disruption to the normal career progression of a Service member who reports that he or she is a victim of a sexual assault.
(viii) Expedited transfer procedures require that a CO or the appropriate approving authority make a determination and provide his or her reasons and justification on the transfer of a Service member based on a credible report of sexual assault. A CO shall consider:
(A) The Service member's reasons for the request.
(B) Potential transfer of the alleged offender instead of the Service member requesting the transfer.
(C) Nature and circumstances of the offense.
(D) Whether a temporary transfer would meet the Service member's needs and the operational needs of the unit.
(E) Training status of the Service member requesting the transfer.
(F) Availability of positions within other units on the installation.
(G) Status of the investigation and potential impact on the investigation and future disposition of the offense, after consultation with the investigating MCIOs.
(H) Location of the alleged offender.
(I) Alleged offender's status (Service member or civilian).
(J) Other pertinent circumstances or facts.
(ix) Service members requesting the transfer shall be informed that they may have to return for the prosecution of the case, if the determination is made that prosecution is the appropriate command action.
(x) Commanders shall directly counsel the Service member to ensure that he or she is fully informed regarding:
(A) Reasonably foreseeable career impacts.
(B) The potential impact of the transfer or reassignment on the investigation and case disposition or the initiation of other adverse action against the alleged offender.
(C) The effect on bonus recoupment (if, for example, they cannot work in their Air Force Specialty or Military Occupational Specialty).
(D) Other possible consequences of granting the request.
(xi) Require that expedited transfer procedures for Reserve Component, Army NG, and Air NG members who make Unrestricted Reports of sexual assault be established by commanders within available resources and authorities. If requested by the Service member, the command should allow for separate training on different weekends or times from the alleged offender or with a different unit in the home drilling location to ensure undue burden is not placed on the Service member and his or her family by the transfer. Potential transfer of the alleged offender instead of the Service member should also be considered. At a minimum, the alleged offender's access to the Service member who made the Unrestricted Report shall be controlled, as appropriate.
(xii) Even in those court-martial cases in which the accused has been acquitted, the standard for approving an expedited transfer still remains whether a credible report has been filed. The commander shall consider all the facts and circumstances surrounding the case and the basis for the transfer request.
(f)
(1) Require the SARC or the SAPR VA to inform sexual assault victims protected by an MPO, in a timely manner, of the option to request transfer from the assigned command in accordance with section 567(c) of Public Law 111–84.
(2) Notify the appropriate civilian authorities of the issuance of an MPO and of the individuals involved in the order, in the event an MPO has been issued against a Service member and any individual involved in the MPO does not reside on a military installation at any time during the duration of the MPO pursuant to Public Law 110–417.
(i) An MPO issued by a military commander shall remain in effect until such time as the commander terminates the order or issues a replacement order.
(ii) The issuing commander shall notify the appropriate civilian authorities of any change made in a protective order, or its termination, covered by chapter 80 of title 10, U.S.C., and the termination of the protective order.
(iii) When an MPO has been issued against a Service member and any individual involved in the MPO does not reside on a military installation at any time during the duration of the MPO, notify the appropriate civilian authorities of the issuance of an MPO and of the individuals involved in the order. The appropriate civilian authorities shall include, at a minimum, the local civilian law enforcement agency or agencies with jurisdiction to respond to an emergency call from the residence of any individual involved in the order.
(3) Advise the person seeking the MPO that the MPO is not enforceable by civilian authorities off base and that victims desiring protection off base should seek a civilian protective order (CPO). Off base violations of the MPO should be reported to the issuing commander, DoD law enforcement, and the relevant MCIO for investigation.
(i) Pursuant to section 1561a of Public Law 107–311,
(ii) If the victim has informed the SARC of an existing CPO, a commander shall require the SARC to inform the CMG of the existence of the CPO and its requirements. After the CPO information is received at the CMG, DoD law enforcement agents shall be required to document CPOs for all Service members in their investigative case file, to include documentation for Reserve Component personnel in title 10 status.
(4) Note that MPOs in cases other than sexual assault matters may have separate requirements.
(5) Issuing commanders are required to fill out the DD Form 2873, “Military Protective Order (MPO),” and provide victims and alleged offenders with copies of the completed form. Verbal MPOs can be issued, but need to be subsequently documented with a DD Form 2873, as soon as possible.
(6) Require DoD law enforcement agents document MPOs for all Service members in their investigative case file, to include documentation for Reserve Component personnel in title 10 status. The appropriate DoD law enforcement agent representative to the CMG shall brief the CMG chair and co-chair on the existence of an MPO.
(7) If the commander's decision is to deny the MPO request, document the reasons for the denial. Denials of MPO requests go to the installation commander or equivalent command level (in consultation with a judge advocate) for the final decision.
(g)
(2) In accordance with Secretary of Defense Memorandum, the initial disposition authority is withheld from all commanders within the DoD who do not possess at least special court-martial convening authority and who are not in the grade of 0–6 (i.e., colonel or Navy captain) or higher, with respect to the alleged offenses of rape, sexual assault, forcible sodomy, and all attempts to commit such offenses, in violation of Articles 120, 125, and 80 of the Manual for Courts-Martial, United States. Commanders may defer taking action on a victim's alleged collateral misconduct arising from or that relates to the sexual assault incident until the initial disposition action for the sexual assault investigation is completed.
(3) Commanders and supervisors should take appropriate action for the victim's alleged collateral misconduct (if warranted), responding appropriately in order to encourage sexual assault reporting and continued cooperation, while avoiding those actions that may further traumatize the victim. Ultimately, victim cooperation should significantly enhance timely and effective investigations, as well as the appropriate disposition of sexual assaults.
(4) Subordinate commanders shall be advised that taking action on a victim's alleged collateral misconduct may be deferred until final disposition of the sexual assault case. The Military Departments shall establish procedures so that commanders and supervisors are not penalized for deferring collateral misconduct actions for the sexual assault victim until final disposition of the sexual assault case.
(5) Commanders shall have the authority to determine, in a timely manner, how to best manage the disposition of alleged misconduct, to include making the decision to defer disciplinary actions regarding a victim's alleged collateral misconduct until after the final disposition of the sexual assault case, where appropriate. For those sexual assault cases for which the victim's alleged collateral misconduct is deferred, Military Service reporting and processing requirements should take such deferrals into consideration and allow for the time deferred to be subtracted, when evaluating whether a commander took too long to resolve the collateral misconduct.
(h)
(1) Establishes a command climate of sexual assault prevention predicated on mutual respect and trust, recognizes and embraces diversity, and values the contributions of all its Service members.
(2) Emphasizes that sexual assault is a crime and violates the core values of being a professional in the Military Services and ultimately destroys unit cohesion and the trust that is essential for mission readiness and success.
(3) Emphasizes DoD and Military Service policies on sexual assault and the potential legal consequences for those who commit such crimes.
(4) Monitors the organization's SAPR climate and responds with appropriate action toward any negative trends that may emerge.
(5) Identifies and remedies environmental factors specific to the location that may facilitate the commission of sexual assaults (e.g., insufficient lighting).
(6) Emphasizes sexual assault prevention training for all assigned personnel.
(7) Establishes prevention training that focus on identifying the behavior of potential offenders.
(a)
(1) Serve as the single point of contact to coordinate sexual assault response when a sexual assault is reported. All SARCs shall be authorized to perform VA duties in accordance with Military Service regulations, and will be acting in the performance of those duties.
(2) Upon implementation of the D–SAACP, comply with DoD Sexual Assault Advocate Certification requirements.
(3) Be trained in and understand the confidentiality requirements of Restricted Reporting and MRE 514. Training must include exceptions to Restricted Reporting and MRE 514.
(4) Assist the installation commander in ensuring that victims of sexual assault receive appropriate responsive care and understand their available reporting options (Restricted and Unrestricted) and available SAPR services.
(5) Be authorized by this part to accept reports of sexual assault along with the SAPR VA and healthcare personnel.
(6) Report directly to the installation commander in accordance with 32 CFR part 103, to include providing regular updates to the installation commander and assist the commander to meet annual SAPR training requirements, including providing orientation briefings for newly assigned personnel and, as appropriate, providing community education publicizing available SAPR services.
(7) Provide a 24 hour, 7 day per week response capability to victims of sexual assault, to include deployed areas.
(i) SARCs shall respond (see § 105.3) to every Restricted and Unrestricted Report of sexual assault on a military installation and the response shall be in person, unless otherwise requested by the victim.
(ii) Based on the locality, the SARC may ask the SAPR VA to respond and speak to the victim.
(A) There will be situations where a sexual assault victim receives medical care and a SAFE outside of a military installation under a MOU or MOA with local private or public sector entities. In
(B) When contacted by the SARC or SAPR VA, a sexual assault victim can elect not to speak to the SARC or SAPR VA, or the sexual assault victim may ask to schedule an appointment at a later time to speak to the SARC or SAPR VA.
(iii) SARCs shall provide a response that recognizes the high prevalence of pre-existing trauma (prior to the present sexual assault incident).
(iv) SARCs shall provide a response that is gender-responsive, culturally-competent, and recovery-oriented.
(v) SARCs shall offer appropriate referrals to sexual assault victims and facilitate access to referrals. Provide referrals at the request of the victim.
(A) Encourage sexual assault victims to follow-up with the referrals and facilitate these referrals, as appropriate.
(B) In order to competently facilitate referrals, inquire whether the victim is a Reservist or an NG member to ensure that victims are referred to the appropriate geographic location.
(8) Explain to the victim that the services of the SARC and SAPR VA are optional and these services may be declined, in whole or in part, at any time. The victim may decline advocacy services, even if the SARC or SAPR VA holds a position of higher rank or authority than the victim. Explain to victims the option of requesting a different SAPR VA (subject to availability, depending on locality staffing) or continuing without SAPR VA services.
(i) Explain the available reporting options to the victim.
(A) Have the victim fill out the DD Form 2910 where the victim elects to make a Restricted or Unrestricted Report.
(B) Inform the victim that the DD Form 2910 will be uploaded to DSAID and maintained for 50 years in Unrestricted Reports and retained in hard copy for 5 years in Restricted Reports, for the purpose of providing the victim access to document their sexual assault victimization with the Department of Veterans Affairs for care and benefits. However, at the request of a member of the Armed Forces who files a Restricted Report on an incident of sexual assault, the DD Forms 2910 and 2911 filed in connection with the Restricted Report be retained for 50 years.
(C) The SARC or SAPR VA shall tell the victim of any local or State sexual assault reporting requirements that may limit the possibility of Restricted Reporting. At the same time, the victims shall be briefed of the protections and exceptions to MRE 514.
(ii) Give the victim a hard copy of the DD Form 2910 with the victim's signature.
(A) Advise the victim to keep the copy of the DD Form 2910 in their personal permanent records as this form may be used by the victim in other matters before other agencies (e.g., Department of Veterans Affairs) or for any other lawful purpose.
(B) Store the original DD Form 2910 pursuant to secure storage Military Service regulations and privacy laws. A SARC being reassigned shall be required to assure their supervisor of the secure transfer of stored DD Forms 2910 to the next SARC. In the event of transitioning SARCs, the departing SARC shall inform their supervisor of the secure storage location of the DD Forms 2910, and the SARC supervisor will ensure the safe transfer of the DD Forms 2910.
(iii) Explain SAFE confidentiality to victims and the confidentiality of the contents of the SAFE Kit.
(iv) Explain the implications of a victim confiding in another person resulting in a third-party report to command or DoD law enforcement (§ 105.8 of this part).
(v) Provide the installation commander with information regarding an Unrestricted Report within 24 hours of an Unrestricted Report of sexual assault. This notification may be extended to 48 hours after the Unrestricted Report of the incident if there are extenuating circumstances in the deployed environments.
(vi) Provide the installation commander with non-PII within 24 hours of a Restricted Report of sexual assault. This notification may be extended to 48 hours after the Restricted Report of the incident if there are extenuating circumstances in a deployed environment. Command and installation demographics shall be taken into account when determining the information to be provided.
(vii) Exercise oversight responsibility for SAPR VAs authorized to respond to sexual assaults when they are providing victim advocacy services.
(viii) Perform victim advocacy duties, as needed. DoD recognizes the SARC's authority to perform duties as SAPR VAs, even though the SARC may not be designated in writing as a SAPR VA pursuant to Military Service regulation.
(ix) Inform the victim that pursuant to their Military Service regulations, each Service member who reports having been sexually assaulted shall be given the opportunity to consult with legal assistance counsel, and in cases where the victim may have been involved in collateral misconduct, to consult with defense counsel.
(A) Inform the victim that information concerning the prosecution shall be provided to them in accordance with DoDI 1030.2.
(B) The Service member victim shall be informed of the opportunity to consult with legal assistance counsel as soon as the victim seeks assistance from a SARC or SAPR VA.
(x) Facilitate education of command personnel on sexual assault and victim advocacy services.
(xi) Facilitate briefings on victim advocacy services to Service members, military dependents, DoD civilian employees (OCONUS), DoD contractors (accompanying the Military Services in contingency operations OCONUS), and other command or installation personnel, as appropriate.
(xii) Facilitate Annual SAPR training.
(xiii) Facilitate the development and collaboration of SAPR public awareness campaigns for victims of sexual assault, including planning local events for Sexual Assault Awareness Month. Publicize the DoD Safe Helpline on all outreach materials.
(xiv) Coordinate medical and counseling services between military installations and deployed units related to care for victims of sexual assault.
(xv) Conduct an ongoing assessment of the consistency and effectiveness of the SAPR program within the assigned area of responsibility.
(xvi) Collaborate with other agencies and activities to improve SAPR responses to and support of victims of sexual assault.
(xvii) Maintain liaison with commanders, DoD law enforcement, and MCIOs, and civilian authorities, as appropriate, for the purpose of facilitating the following protocols and procedures to:
(A) Activate victim advocacy 24 hours a day, 7 days a week for all incidents of reported sexual assault occurring either on or off the installation involving Service members and other persons covered by this part.
(B) Collaborate on public safety, awareness, and prevention measures.
(C) Facilitate ongoing training of DoD and civilian law enforcement and criminal investigative personnel on the SAPR policy and program and the roles and responsibilities of the SARC and SAPR VAs.
(xviii) Consult with command legal representatives, healthcare personnel, and MCIOs, (or when feasible, civilian law enforcement), to assess the potential impact of State laws governing the
(xix) Collaborate with MTFs within their respective areas of responsibility to establish protocols and procedures to direct notification of the SARC and SAPR VA for all incidents of reported sexual assault, and facilitate ongoing training of healthcare personnel on the roles and responsibilities of the SARC and SAPR VAs.
(xx) Collaborate with local private or public sector entities that provide medical care Service members or TRICARE eligible beneficiaries who are for sexual assault victims and a SAFE outside of a military installation through an MOU or MOA.
(A) Establish protocols and procedures with these local private or public sector entities to facilitate direct notification of the SARC for all incidents of reported sexual assault and facilitate training of healthcare personnel of local private or public sector entities on the roles and responsibilities of SARCs and SAPR VAs, for Service members and persons covered by this policy.
(B) Provide off installation referrals to the sexual assault victims, as needed.
(xxi) When a victim has a temporary or PCS or is deployed, request victim consent to transfer case management documents and upon receipt of victim consent, expeditiously transfer case management documents to ensure continuity of care and SAPR services. If the SARC has already closed the case and terminated victim contact, no other action is needed.
(xxii) Document and track the services referred to and requested by the victim from the time of the initial report of a sexual assault through the final case disposition or until the victim no longer desires services.
(A) Enter information into DSAID or Military Service DSAID-interface within 48 hours of the report of sexual assault. In deployed locations that have internet connectivity issues, the time frame is extended to 96 hours.
(B) Maintain in DSAID, or the DSAID-interfaced Military Service data system, an account of the services referred to and requested by the victim for all reported sexual assault incidents, from medical treatment through counseling, and from the time of the initial report of a sexual assault through the final case disposition or until the victim no longer desires services.
(xxiii) Provide information to assist installation commanders to manage trends and characteristics of sexual assault crimes at the Military Service-level and mitigate the risk factors that may be present within the associated environment (e.g., the necessity for better lighting in the showers or latrines and in the surrounding area).
(xxiv) Participate in the CMG to review individual cases of Unrestricted Reports of sexual assault.
(A) The installation SARC, shall serve as the co-chair of the CMG. This responsibility is not delegable. If an installation has multiple SARCs on the installation, a Lead SARC shall be designated by the Service concerned, and shall serve as the co-chair.
(B) Other SARCs and SAPR VAs shall actively participate in each CMG meeting by presenting oral updates on their assigned sexual assault victim cases, providing recommendations and, if needed, seeking assistance from the chair or victim's commander.
(xxv) Familiarize the unit commanders and supervisors of SAPR VAs with the SAPR VA roles and responsibilities, using the DD Form 2909, “Victim Advocate Supervisor Statement of Understanding.” DD Form 2909 is available via the Internet at
(b)
(i) Upon implementation of the D–SAACP, comply with DoD Sexual Assault Advocate Certification requirements.
(ii) Be trained in and understand the confidentiality requirements of Restricted Reporting and MRE 514. Training must include exceptions to Restricted Reporting and MRE 514.
(iii) Facilitate care and provide referrals and non-clinical support to the adult victim of a sexual assault.
(A) Support will include providing information on available options and resources so the victim can make informed decisions about his or her case.
(B) The SAPR VA will be directly accountable to the SARC in adult sexual assault cases (not under the FAP jurisdiction) and shall provide victim advocacy for adult victims of sexual assault.
(iv) Acknowledge their understanding of their advocacy roles and responsibilities using DD Form 2909.
(2) At the Military Service's discretion, victim advocacy may be provided by a Service member or DoD civilian employee. Personnel responsible for providing victim advocacy shall:
(i) Be notified and immediately respond upon receipt of a report of sexual assault.
(ii) Provide coordination and encourage victim service referrals and ongoing, non-clinical support to the victim of a reported sexual assault and facilitate care in accordance with the Sexual Assault Response Protocols prescribed SAPR Policy Toolkit located on
(iii) Report directly to the SARC while carrying out sexual assault advocacy responsibilities.
This section provides guidance on medical management of victims of sexual assault to ensure standardized, timely, accessible, and comprehensive healthcare for victims of sexual assault, to include the ability to elect a SAFE Kit. This policy is applicable to all MHS personnel who provide or coordinate medical care for victims of sexual assault covered by this part.
(a)
(1) Require the recommendations for conducting forensic exams of adult sexual assault victims in the U.S. Department of Justice Protocol be used to establish minimum standards for healthcare intervention for victims of sexual assault. Training for military sexual assault medical examiners and healthcare providers shall be provided to maintain optimal readiness.
(2) Require that MTFs that provide SAFEs for Service members or TRICARE eligible beneficiaries through an MOU or MOA with private or public sector entities verify initially and periodically that those entities meet or exceed standards of the recommendations for conducting forensic exams of adult sexual victims in the U.S. Department of Justice Protocol. In addition, verify that as part of the MOU or MOA, victims are be asked whether they would like the SARC to be notified, and if notified, that a SARC or SAPR VA actually responds.
(3) Require that medical providers providing healthcare to victims of sexual assault in remote areas or while deployed have access to the current version of the U.S. Department of Justice Protocol for conducting forensic exams.
(4) Implement procedures to provide the victim information regarding the availability of a SAFE Kit, which the victim has the option of refusing. If performed in the MTF, the healthcare provider shall use a SAFE Kit and the
(5) Require that the SARC be notified of all incidents of sexual assault in accordance with sexual assault reporting procedures in § 105.8 of this part.
(i) Require processes be established to support coordination between healthcare personnel and the SARC.
(ii) If a victim initially seeks assistance at a medical facility, SARC notification must not delay emergency care treatment of a victim.
(6) Require that care provided to sexual assault victims shall be gender-responsive, culturally competent, and recovery-oriented. Healthcare providers giving medical care to sexual assault victims shall recognize the high prevalence of pre-existing trauma (prior to present sexual assault incident) and the concept of trauma-informed care.
(7) If the healthcare provider is not appropriately trained to conduct a SAFE Kit, require that he or she arrange for a properly trained DoD healthcare provider to do so, if available.
(i) In the absence of a properly trained DoD healthcare provider, the victim shall be offered the option to be transported to a non-DoD healthcare provider for the SAFE Kit, if the victim wants a forensic exam. Victims who are not beneficiaries of the MHS shall be advised that they can obtain a SAFE Kit through a local civilian healthcare provider.
(ii) When a SAFE Kit is performed at local civilian medical facilities, those facilities are bound by State and local laws, which may require reporting the sexual assault to civilian law enforcement.
(iii) If the victim requests to file a report of sexual assault, the healthcare personnel, to include psychotherapists and other personnel listed in MRE 513 (Executive Order 13593), shall immediately call a SARC or SAPR VA, to assure that a victim is offered SAPR services and so that a DD Form 2910 can be completed.
(8) Require that SAFE Kit evidence collection procedures are the same for a Restricted and an Unrestricted Report of sexual assault.
(i) Upon completion of the SAFE Kit and securing of the evidence, the healthcare provider will turn over the material to the appropriate Military Service-designated law enforcement agency or MCIO as determined by the selected reporting option.
(ii) Upon completion of the SAFE Kit, the sexual assault victim shall be provided with a hard copy of the completed DD Form 2911. Advise the victim to keep the copy of the DD Form 2911 in their personal permanent records as this form may be used by the victim in other matters before other agencies (e.g., Department of Veterans Affairs) or for any other lawful purpose.
(9) Publicize availability of medical treatment (to include behavioral health), and referral services for alleged offenders who are also active duty Service members.
(10) Require the healthcare provider in the course of, preparing a SAFE Kit for Restricted Reports of sexual assault:
(i) Contact the designated installation official, usually the SARC, who shall generate an alpha-numeric RRCN, unique to each incident. The RRCN shall be used in lieu of PII to label and identify evidence collected from a SAFE Kit (e.g., accompanying documentation, personal effects, and clothing). The SARC shall provide (or the SARC will designate the SAPR VA to provide) the healthcare provider with the RRCN to use in place of PII.
(ii) Upon completion of the SAFE Kit, package, seal, and completely label of the evidence container(s) with the RRCN and notify the Military Service designated law enforcement agency or MCIO.
(11) Require that healthcare personnel must maintain the confidentiality of a Restricted Report to include communications with the victim, the SAFE, and the contents of the SAFE Kit, unless an exception to Restricted reporting applies. Healthcare personnel who make an unauthorized disclosure of a confidential communication are subject to disciplinary action and that unauthorized disclosure has no impact on the status of the Restricted Report; all Restricted Reporting information remains confidential and protected. Improper disclosure of confidential communications under Restricted Reporting, improper release of medical information, and other violations of this guidance are prohibited and may result in discipline pursuant to the UCMJ or State statute, loss of privileges, or other adverse personnel or administrative actions.
(b)
(1) Implement processes or procedures giving victims of sexual assault priority as emergency cases.
(2) Provide sexual assault victims with priority treatment as emergency cases, regardless of evidence of physical injury, recognizing that every minute a patient spends waiting to be examined may cause loss of evidence and undue trauma. Priority treatment as emergency cases includes activities relating to access to healthcare, coding, and medical transfer or evacuation, and complete physical assessment, examination, and treatment of injuries, including immediate emergency interventions.
(c)
(1) Establish processes and procedures to coordinate timely access to emergency, follow-up, and specialty care that may be provided in the direct or civilian purchased care sectors for eligible beneficiaries of the Military Health System.
(2) Evaluate and implement, to the extent feasible, processes linking the medical management of the sexually assaulted patient to the primary care manager. To locate his or her primary care manager, a beneficiary may go to beneficiary web enrollment at
(d)
(1) Testing, prophylactic treatment options, and follow-up care for possible exposure to human immunodeficiency virus (HIV) and other sexually transmitted diseases or infections (STD/I).
(2) Assessment of the risk of pregnancy, options for emergency contraception, and any necessary follow-up care and referral services.
(3) Assessment of the need for behavioral health services and provisions for a referral, if necessary or requested by the victim.
(e)
(i) Identify a primary office to represent their Department in Military Service coordination of issues pertaining to medical management of victims of sexual assault.
(ii) Assign a healthcare provider at each MTF as the primary point of contact concerning DoD and Military Service SAPR policy and for updates in sexual assault care.
(2) The Combatant Commanders shall:
(i) Require that victims of sexual assault in deployed locations within their area of responsibility are transported to an appropriate evaluation site, evaluated, treated for injuries (if any), and offered SAPR VA assistance and a SAFE as quickly as possible.
(ii) Require that U.S. theater hospital facilities (Level 3, North Atlantic Treaty Organization role 3) (see § 105.3) have appropriate capability to provide experienced and trained SARC and SAPR VA services, SAFE providers, and those victims of sexual assault, regardless of reporting status, are medically evacuated to such facilities as soon as possible (within operational needs) of making a report, consistent with operational needs.
For the purposes of the SAPR Program, forensic evidence collection and document and evidence retention shall be completed in accordance with this section pursuant to 32 CFR part 103, taking into account the medical condition, needs, requests, and desires of each sexual assault victim covered by this part.
(a) Medical services offered to eligible victims of sexual assault include the ability to elect a SAFE Kit in addition to the general medical management related to sexual assault response, to include mental healthcare. The SAFE of a sexual assault victim should be conducted by a healthcare provider who has specialized education and clinical experience in the collection of forensic evidence and treatment of these victims. The forensic component includes gathering information in DD Form 2911 from the victim for the medical forensic history, an examination, documentation of biological and physical findings, collection of evidence from the victim, and follow-up as needed to document additional evidence.
(b) The process for collecting and preserving sexual assault evidence for the Restricted Reporting option is the same as the Unrestricted Reporting option, except that the Restricted Reporting option does not trigger the official investigative process, and any evidence collected has to be placed inside the SAFE Kit, which is marked with the RRCN in the location where the victim's name would have otherwise been written. The victim's SAFE and accompanying Kit is treated as a confidential communication under this reporting option. The healthcare provider shall encourage the victim to obtain referrals for additional medical, psychological, chaplain, victim advocacy, or other SAPR services, as needed. The victim shall be informed that the SARC will assist them in accessing SAPR services.
(c) In situations where installations do not have a SAFE capability, the installation commander will require that the eligible victim, who wishes to have a SAFE, be transported to a MTF or local off-base, non-military facility that has a SAFE capability. A local sexual assault nurse examiner or other healthcare providers who are trained and credentialed to perform a SAFE may also be contracted to report to the MTF to conduct the examination.
(d) The SARC or SAPR VA shall tell the victim of any local or State sexual assault reporting requirements that may limit the possibility of Restricted Reporting before proceeding with the SAFE.
(e) Upon completion of the SAFE in an Unrestricted Reporting case, the healthcare provider shall package, seal, and label the evidence container(s) with the victim's name and notify the Military Service designated law enforcement agency or MCIO.
(1) The DoD law enforcement or MCIO representative shall be trained and capable of collecting and preserving evidence to assume custody of the evidence using established chain of custody procedures, consistent with the guidelines published under the authority and oversight of the IG, DoD.
(2) MOUs and MOAs, with off-base, non-military facilities for the purposes of providing medical care to eligible victims of sexual assault covered under this part, shall include instructions for the notification of a SARC (regardless of whether a Restricted or Unrestricted Report of sexual assault is involved), and procedures of the receipt of evidence and disposition of evidence back to the DoD law enforcement agency or MCIO.
(f) Upon completion of the SAFE in a Restricted Reporting case, the healthcare provider shall package, seal, and label the evidence container(s) with the RRCN and store in accordance with Service regulations.
(1) The DoD law enforcement or MCIO representative shall be trained and capable of collecting and preserving evidence to assume custody of the evidence using established chain of custody procedures, consistent with the guidelines published under the authority and oversight of the IG, DoD. MOUs and MOAs, with off-base, non-military facilities for the purpose of to providing medical care to eligible victims of sexual assault covered under this part, shall include instructions for the notification of a SARC (regardless of whether a Restricted or Unrestricted Report of sexual assault is involved), procedures for the receipt of evidence, how to request an RRCN, instructions on where to write the RRCN on the SAFE Kit, and disposition of evidence back to the DoD law enforcement agency or MCIO.
(2) Any evidence and the SAFE Kit in Restricted Reporting cases (to include the DD Form 2911) shall be stored for 5 years from the date of the victim's Restricted Report of the sexual assault, thus allowing victims additional time to accommodate, for example, multiple deployments or deployments exceeding 12 months.
(i) The SARC will contact the victim at the 1-year mark of the report to inquire whether the victim wishes to change their reporting option to Unrestricted.
(A) If the victim does not change to Unrestricted Reporting, the SARC will explain to the victim that the SAFE Kit, DD Form 2911, and the DD Form 2910 will be retained for a total of 5 years from the time the victim signed the DD Form 2910 (electing the Restricted Report) and will then be destroyed. (However, at the request of a member of the Armed Forces who files a Restricted Report on an incident of sexual assault, the Department of Defense Forms 2910 and 2911 filed in connection with the Restricted Report be retained for 50 years.) The SARC will emphasize to the victim that his or her privacy will be respected and he or she will not be contacted again by the SARC. The SARC will stress it is the victim's responsibility from that point forward, if the victim wishes to change from a Restricted to an Unrestricted Report, to affirmatively contact a SARC before the 5-year retention period elapses.
(B) The victim will be advised again to keep a copy of the DD Form 2910 and the DD Form 2911 in his or her personal permanent records as these forms may be used by the victim in other matters with other agencies (e.g., Department of Veterans Affairs) or for any other lawful purpose.
(C) If the victim needs another copy of either of these forms, he or she can request it at this point and the SARC shall assist the victim in accessing the requested copies within 7 business days. The SARC will document this request in the DD Form 2910.
(ii) At least 30 days before the expiration of the 5-year storage period, the DoD law enforcement or MCIO shall notify the installation SARC that the storage period is about to expire and confirm with the SARC that the victim has not made a request to change to Unrestricted Reporting or made a request for any personal effects.
(A) If there has been no change, then at the expiration of the storage period in compliance with established procedures for the destruction of evidence, the designated activity, generally the DoD law enforcement agency or MCIO, may
(B) If, before the expiration of the 5-year storage period, a victim changes his or her reporting preference to the Unrestricted Reporting option, the SARC shall notify the respective MCIO, which shall then assume custody of the evidence maintained by the RRCN from the DoD law enforcement agency or MCIO, pursuant to established chain of custody procedures. MCIO established procedures for documenting, maintaining, and storing the evidence shall thereafter be followed.
(1) The DoD law enforcement agency or MCIO, which will receive forensic evidence from the healthcare provider if not already in custody, and label and store such evidence shall be designated.
(2) The designated DoD law enforcement agency or MCIO representative must be trained and capable of collecting and preserving evidence in Restricted Reports prior to assuming custody of the evidence using established chain of custody procedures.
(iii) Evidence will be stored by the DoD law enforcement agency or MCIO until the 5-year storage period for Restricted Reporting is reached or a victim changes to Unrestricted Reporting.
(a)
(2) The installation SARC shall serve as the co-chair of the CMG. This responsibility may not be delegated. Only a SARC who is a Service member or DoD civilian employee may co-chair the multi-disciplinary CMG.
(3) Required CMG members shall include: victim's commander; all SARCs assigned to the installation (mandatory attendance regardless of whether they have an assigned victim being discussed); victim's SAPR VA, MCIO and DoD law enforcement who are involved with and working on a specific case; victim's healthcare provider or mental health and counseling services provider; chaplain, legal representative, or SJA; installation personnel trained to do a safety assessment of current sexual assault victims; victim's VWAP representative (or civilian victim witness liaison, if available). MCIO, DoD law enforcement and the legal representative or SJA shall provide case dispositions. The CMG chair will ensure that the appropriate principal is available.
(4) If the installation is a joint base or if the installation has tenant commands, the commander of the tenant organization and the designated Lead SARC shall be invited to the CMG meetings. The commander of the tenant organization shall provide appropriate information to the host commander, to enable the host commander to provide the necessary supporting services.
(5) CMG members shall receive the mandatory SAPR training pursuant to § 105.14 of this part.
(6) Service Secretaries shall issue guidance to ensure that equivalent standards are met for case oversight by CMGs in situations where SARCs are not installation-based but instead work within operational and/or deployable organizations.
(b)
(2) The CMG chair shall:
(i) Ensure that commander(s) of the Service member(s) who is a subject of a sexual assault allegation, provide in writing all disposition data, to include any administrative or judicial action taken, stemming from the sexual assault investigation to the MCIO. Information provided by commanders is used to meet the Department's requirements for the submission of criminal history data to the Criminal Justice Information System, Federal Bureau of Investigation; and to record the disposition of offenders into DSAID.
(ii) Require that case dispositions are communicated to the sexual assault victim within 2 business days of the final disposition decision. The CMG chair will require that the appropriate paperwork (pursuant to Service regulation) is submitted for each case disposition within 24 hours, which shall be inputted into DSAID or a DSAID Service interface system by the designated officials.
(iii) Monitor and require immediate transfer of sexual assault victim information between SARCs and SAPR VAs, in the event of the SARC's or SAPR VA's change of duty station, to ensure continuity of SAPR services for victims.
(iv) Require that the SARCs and SAPR VAs actively participate in each CMG meeting by presenting oral updates (without disclosing protected communications and victim confidentiality), providing recommendations and, if needed, the SARC or the SAPR VA shall affirmatively seek assistance from the chair or victim's commander.
(v) Require an update of the status of each expedited transfer request and MPO.
(vi) If the victim has informed the SARC of an existing CPO, the chair shall require the SARC to inform the CMG of the existence of the CPO and its requirements.
(vii) After protective order documentation is presented at the CMG from the SARC or the SAPR VA, the DoD law enforcement agents at the CMG will document the information provided in their investigative case file, to include documentation for Reserve Component personnel in title 10 status.
(3) The CMG Co-chair shall:
(i) Confirm that all reported sexual assaults are entered into DSAID or a DSAID Service interface system within 48 hours of the report of sexual assault. In deployed locations that have internet connectivity issues, the time frame is extended to 96 hours.
(ii) Confirm that only the SARC is inputting information into DSAID or a DSAID Service interface system.
(iii) Keep minutes of the monthly meetings to include those in attendance and issues discussed. CMG participants are only authorized to share case information with those who have an official need to know.
(4) For each victim, the assigned SARC and SAPR VA will confirm at the CMG that the victim has been informed of their SAPR services to include counseling, medical, and legal resources without violating victim confidentiality.
(5) For each victim, each CMG member who is involved with and working on a specific case will provide an oral update without violating victim confidentiality or disclosing privileged communications.
(6) For each victim, the victim's commander will confirm at the CMG that the victim has received a monthly update from the victim's commander of her/his case within 72 hours of the last
(7) On a joint base or if the installation has tenant commands:
(i) The CMG membership will explore the feasibility of joint use of existing SAPR resources, to include rotating on-call status of SARCs and SAPR VAs. Evaluate the effectiveness of communication among SARCs, SAPR VAs, and first responders.
(ii) The CMG chair will request an analysis of data to determine trends and patterns of sexual assaults and share this information with the commanders on the joint base or the tenant commands. The CMG membership will be briefed on that trend data.
(8) There will be a safety assessment capability. The CMG chair will identify installation personnel who have been trained and are able to perform a safety assessment of each sexual assault victim.
(i) The CMG chair will require designated installation personnel, who have been trained and are able to perform a safety assessment of each sexual assault victim, to become part of the CMG and attend every monthly meeting.
(ii) The CMG chair will request a safety assessment by trained personnel of each sexual assault victim at each CMG meeting, to include a discussion of expedited military transfers or MPOs, if needed.
(iii) The CMG co-chair will confirm that the victims are advised that MPOs are not enforceable off-base by civilian law enforcement.
(iv) If applicable, the CMG chair will confirm that both the suspect and the victim have a hard copy of the MPO.
(v) Form a High-Risk Response Team if a victim is assessed to be in a high-risk situation. The CMG chair will immediately stand up a multi-disciplinary High-Risk Response Team to continually monitor the victim's safety, by assessing danger and developing a plan to manage the situation.
(A) The High-Risk Response Team shall be chaired by the victim's commander and, at a minimum, include the suspect's commander; the victim's SARC and SAPR VA; the MCIO, the judge advocate, and the VWAP assigned to the case, victim's healthcare provider or mental health and counseling services provider; and the personnel who conducted the safety assessment.
(B) The High-Risk Response Team shall make their first report to the installation commander, CMG chair, and CMG co-chair within 24 hours of being activated. A briefing schedule for the CMG chair and co-chair will be determined, but briefings shall occur at least once a week while the victim is on high-risk status.
(C) The High-Risk Response Team assessment of the victim shall include, but is not limited to evaluating:
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(a)
(2) Military and DoD civilian officials at each management level shall advocate a robust SAPR program and provide education and training that shall enable them to prevent and appropriately respond to incidents of sexual assault.
(3) Data shall be collected according to the annual reporting requirements in accordance with Public Law 111–383 and explained in § 105.16 of this part.
(b)
(i) The Secretaries and the Chief, NGB, shall develop dedicated SAPR training to ensure comprehensive knowledge of the training requirements.
(ii) The SAPR training, at a minimum, shall incorporate adult learning theory, which includes interaction and group participation.
(iii) Upon request, the Secretaries and the Chief, NGB, shall submit a copy of SAPR training programs or SAPR training elements to USD(P&R) through SAPRO for evaluation of consistency and compliance with DoD SAPR training standards in this part. The Military Departments will correct USD(P&R) identified DoD SAPR policy and training standards discrepancies.
(2) Commanders and managers responsible for training shall require that all personnel (i.e., all Service members, DoD civilian personnel who supervise Service members, and other personnel as directed by the USD(P&R)) are trained and that completion of training data is annotated. Commanders for accession training will ensure all new accessions are trained and that completion of training data is annotated.
(3) If responsible for facilitating the training of civilians supervising Service members, the unit commander or civilian director shall require all SAPR training requirements in this section are met. The unit commander or civilian equivalent shall be accountable for requiring data collection regarding the training.
(4) The required subject matter for the training shall be appropriate to the Service member's grade and commensurate with their level of responsibility, to include:
(i) Defining what constitutes sexual assault. Utilizing the term “sexual assault” as defined in 32 CFR part 103.
(ii) Explaining why sexual assaults are crimes.
(iii) Defining the meaning of “consent” as defined in 32 CFR part 103.
(iv) Explaining offender accountability and UCMJ violations.
(v) Explaining the distinction between sexual harassment and sexual assault and that both are unacceptable forms of
(vi) Explaining available reporting options (Restricted and Unrestricted), the advantages and limitations of each option, the effect of independent investigations on Restricted Reports (See § 105.8(a)(6) of this part) and explaining MRE 514.
(vii) Providing an awareness of the SAPR program (DoD and Service) and command personnel roles and responsibilities, including all available resources for victims on and off base.
(viii) Identifying prevention strategies and behaviors that may reduce sexual assault, including bystander intervention, risk reduction, and obtaining affirmative consent.
(ix) Discussing process change to ensure that all sexual assault response services are gender-responsive, culturally-competent, and recovery-oriented.
(x) Discussing expedited transfers and MPO procedures.
(xi) Providing information to victims when the alleged perpetrator is the commander or in the victim's chain of command, to go outside the chain of command to report the offense to other COs or an Inspector General. Victims shall be informed that they can also seek assistance from a legal assistance attorney or the DoD Safe Helpline.
(xii) Discussing of document retention for sexual assault documents (DD Forms 2910 and 2911), to include retention in investigative records. Explaining why it is recommended that sexual assault victims retain sexual assault records for potential use in the Department of Veterans Affairs benefits applications.
(c)
(1) Accessions training shall occur upon initial entry.
(i) Mirror the General Training Requirements in § 105.14(b).
(ii) Provide scenario-based, real-life situations to demonstrate the entire cycle of prevention, reporting, response, and accountability procedures to new accessions to clarify the nature of sexual assault in the military environment.
(2) Annual training shall occur once a year and is mandatory for all Service members regardless of rank or occupation or specialty.
(i) Mirror the General Training Requirements in § 105.14(b).
(ii) Explain the nature of sexual assault in the military environment using scenario-based, real-life situations to demonstrate the entire cycle of prevention, reporting, response, and accountability procedures.
(iii) Deliver to Service members in a joint environment from their respective Military Services and incorporate adult learning theory.
(3) Professional military education (PME) and leadership development training (LDT).
(i) For all trainees, PME and LDT shall mirror the General Training Requirements in § 105.14.
(ii) For senior noncommissioned officers and commissioned officers, PME and LDT shall occur during developmental courses throughout the military career and include:
(A) Explanation and analysis of the SAPR program.
(B) Explanation and analysis of the necessity of immediate responses after a sexual assault has occurred to counteract and mitigate the long-term effects of violence. Long-term responses after sexual assault has occurred will address the lasting consequences of violence.
(C) Explanation of rape myths (See SAPR Toolkit on
(D) Explanation of the commander's and senior enlisted Service member's role in the SAPR program.
(E) Review of all items found in the commander's protocols for Unrestricted Reports of sexual assault. (See SAPR Toolkit on
(F) Explanation of what constitutes reprisal according to § 105.3 and procedures for reporting allegations of reprisal in accordance with DoDD 7050.06.
(4) Pre-deployment training shall be provided.
(i) Mirror the General Training Requirements in § 105.14(b).
(ii) Explain risk reduction factors tailored to the deployment location.
(iii) Provide a brief history of the specific foreign countries or areas anticipated for deployment, and the area's customs, mores, religious practices, and status of forces agreement. Explain cultural customs, mores, and religious practices of coalition partners.
(iv) Identify the type of trained sexual assault responders who are available during the deployment (e.g., law enforcement personnel, legal personnel, SARC, SAPR VAs, healthcare personnel, chaplains).
(v) Upon implementation of the D–SAACP, and unless previously credentialed, include completion of certification for SARCs and VAs.
(5) Post-deployment reintegration training shall occur within 30 days of returning from deployment and:
(i) Commanders of re-deploying personnel will ensure training completion.
(ii) Explain available counseling and medical services, reporting options, and eligibility benefits for Service members and the Reserve Component.
(iii) Explain MRE 514. Explain that Reserve members not in active service at the time of the incident or at the time of the report can make a Restricted or Unrestricted report with the SARC or SAPR VA when on active duty and then be eligible to receive SAPR services.
(6) Pre-command training shall occur prior to filling a command position.
(i) Mirror the General Training Requirements in § 105.14(b).
(A) The personnel trained shall include all officers who are selected for command and the unit's senior enlisted Service member.
(B) The required subject matter for the training shall be appropriate to the level of responsibility and commensurate with level of command.
(ii) Explain rape myths, facts, and trends.
(iii) Provide awareness of the SAPR program and explain the commander's and senior enlisted Service member's role in executing their SAPR service program.
(iv) Review all items found in the commander's protocols for Unrestricted Reports of sexual assault. (See SAPR Toolkit on
(v) Explain what constitutes reprisal and procedures for addressing reprisal allegations.
(d)
(1) The Military Services' executive level management offices are responsible for tracking data collection regarding the training.
(2) The required subject matter for the training shall be appropriate to the level of responsibility and commensurate with level of command.
(3) Training guidance for other DoD components other than the Military Departments, will be provided in a separate issuance.
(e) Military Recruiters. Military recruiter training shall occur annually and mirror the General Training Requirements in § 105.14(b).
(f)
(g)
(1) All responder training shall:
(i) Be given in the form of initial and annual refresher training from their Military Service in accordance with § 105.5 of this part. Responder training is in addition to annual training.
(ii) Be developed for each responder functional area from each military service and shall:
(A) Explain the different sexual assault response policies and critical issues.
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(B) Explain the requirement that SARCs must respond in accordance with this part.
(C) Describe local policies and procedures with regards to local resources, referrals, procedures for military and civilians as well as collaboration and knowledge of resources and referrals that can be utilized at that specific geographic location.
(D) Explain the range of victim responses to sexual assault to include:
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(E) Explain deployment issues, including remote location assistance.
(F) Explain the possible outcomes of investigations of sexual assault.
(G) Explain the possible flow of a sexual assault investigation. (See flowchart in the SAPR Policy Toolkit, located at www.sapr.mil.)
(H) Be completed prior to deployment.
(I) Recommend, but not require, that SAPR training for responders include safety and self care.
(2) SARC training shall:
(i) Provide the responder training requirements in § 105.14(g)(1).
(ii) Be scenario-based and interactive. Provide for role play where a trainee SARC counsels a sexual assault victim and is critiqued by a credentialed SARC and/or an instructor.
(iii) Explain roles and responsibilities and command relationships.
(iv) Explain the different reporting options, to include the effects of independent investigations (see § 105.8 of this part). Explain the exceptions to Restricted Reporting, with special emphasis on suspending Restricted Reporting where it is necessary to prevent or mitigate a serious and imminent threat to the health or safety of the victim or another person.
(v) Provide training on entering reports of sexual assault into DSAID through interface with a Military Service data systems or by direct data entry. Provide training on potential discovery obligations regarding any notes entered in DSAID.
(vi) Provide training on document retention of Restricted and Unrestricted cases.
(vii) Provide training on expedited transfer and MPO procedures.
(viii) Provide instruction on all details of SAPR VA screening, including addressing:
(A) What to do if SAPR VA is a recent victim, or knows sexual assault victims.
(B) What to do if SAPR VA was accused of being an offender or knows someone who was accused.
(C) Identifying the SAPR VA's personal biases.
(D) The necessary case management skills.
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(ix) Explain the roles and responsibilities of the VWAP and DD Form 2701.
(x) Inform SARCs of the existence of the SAPRO Web site at
(3) SAPR VA training shall:
(i) Provide the responder training requirements in § 105.14(g)(1).
(ii) Be scenario-based and interactive. Provide for role play where a trainee SAPR VA counsels a sexual assault victim, and then that counseling session is critiqued by an instructor.
(iii) Explain the different reporting options, to include the effects of independent investigations (see § 105.8 of this part). Explain the exceptions to Restricted Reporting, with special emphasis on suspending Restricted Reporting where it is necessary to prevent or lessen a serious and imminent threat to the health or safety of the victim or another person.
(iv) Include:
(A) Necessary critical advocacy skills.
(B) Basic interpersonal and assessment skills.
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(C) Crisis intervention.
(D) Restricted and Unrestricted Reporting options as well as MRE 514.
(E) Roles and limitations, to include: command relationship, SAPR VA's rights and responsibilities, reporting to the SARC, and recognizing personal biases and issues.
(F) Preparing proper documentation for a report of sexual assault.
(G) Document retention in Restricted and Unrestricted cases.
(H) Expedited transfer and MPO procedures.
(I) Record keeping rules for protected disclosures relating to a sexual assault.
(J) A discussion of ethical issues when working with sexual assault victims as a VA.
(K) A discussion of individual versus system advocacy.
(L) A review of the military justice process and adverse administrative actions.
(M) Overview of criminal investigative process and military judicial requirements.
(N) A review of the issues in victimology.
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(O) An explanation of the roles and responsibilities of the VWAP and DD Form 2701.
(P) Safety and self care, to include vicarious trauma.
(4) Healthcare personnel training shall be in two distinct training categories:
(i) Training for Healthcare Personnel Assigned to an MTF. In addition to the responder training requirements in § 105.14(g)(1), MTF healthcare personnel shall be trained and remain proficient in medical treatment resources, in conducting a sexual assault patient interviews, and in conducting the SAFE Kit process. Healthcare personnel who received a Restricted Report shall immediately call a SARC or SAPR VA, so a DD Form 2910 can be completed.
(ii) Training for Healthcare Providers Performing SAFEs in MTFs (see 32 CFR 103.4). In addition to the responder training requirements in § 105.14(g)(1), healthcare providers performing SAFEs shall be trained and remain proficient in conducting SAFEs. Healthcare providers who may be called on to provide comprehensive medical treatment to a sexual assault victim, including performing SAFEs are: obstetricians and gynecologists and other licensed practitioners (preferably family physicians, emergency medicine physicians, and pediatricians); advanced practice nurses with specialties in midwifery, women's health, family health, and pediatrics; physician assistants trained in family practice or women's health; and registered nurses with documented education, training, and clinical practice in sexual assault examinations in accordance with the U.S. Department of Justice Protocol. Healthcare personnel who received a Restricted Report shall immediately call a SARC or SAPR VA so a DD Form 2910 can be completed.
(iv) Healthcare personnel and provider training shall:
(A) Explain how to conduct a sexual assault patient interview to obtain medical history and assault information.
(B) Explain how to conduct a SAFE in accordance with the U.S. Department of Justice Protocol and include explanations on:
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(C) Explain how to deal with emergency contraception and STD/I treatment.
(D) Discuss physical and mental health assessment.
(E) Explain how to deal with trauma, to include:
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(F) Explain medical record management.
(G) Explain legal process and expert witness testimony.
(5) DoD law enforcement (those elements of DoD components, to include MCIOs, authorized to investigate violations of the UCMJ) training shall:
(i) Include the Responder Training requirements in § 105.14(g)(1) for DoD law enforcement personnel who may respond to a sexual assault complaint.
(ii) Remain consistent with the guidelines published under the authority and oversight of the IG, DoD. In addition, DoD law enforcement training shall:
(A) Explain how to respond in accordance with the SAPR program.
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(B) Explain how to work with sexual assault victims, to include the effects of trauma on sexual assault victims. Ensure victims are informed of and accorded their rights, in accordance with DoDI 1030.2 and DoDD 1030.01 by contacting the VWAP.
(C) Take into consideration the victim's safety concerns and medical needs.
(D) Review IG policy and Military Service regulations regarding the legal transfer of the SAFE Kit and the retention of the DD Form 2911 or reports from civilian SAFEs in archived files.
(E) Discuss sex offender issues.
(6) Training for MCIO agents assigned to investigate sexual assaults shall:
(i) In accordance with Public Law 112–81, be detailed in IG policy.
(ii) Adhere to the responder training requirements in § 105.14(g)(1) for military and civilian criminal investigators assigned to MCIOs who may respond to a sexual assault complaint.
(iii) Remain consistent with the guidelines published under the authority and oversight of the IG, DoD. In addition, MCIO training shall:
(A) Include initial and annual refresher training on essential tasks specific to investigating sexual assault investigations that explain that these reports shall be included in sexual assault quarterly and annual reporting requirements found in § 105.16 of this part.
(B) Include IG policy and Military Service regulations regarding the legal transfer of the SAFE Kit and the retention of the DD Form 2911 or reports from civilian SAFEs in archived files.
(C) Explain how to work with victims of sexual assault.
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(D) Explain how to respond to a sexual assault in accordance with to 32 CFR part 103, this part, and the assigned Military Service regulations on:
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(E) Review of available research regarding false information and the factors influencing false reports and false information, to include possible victim harassment and intimidation.
(F) Explain unique issues with sex offenders to include identifying, investigating, and documenting predatory behaviors.
(G) Explain how to work with the SARC and SAPR VA to include SAPR VA and SARC roles, responsibilities, and limitations; victim services and support program; and MRE 514.
(7) Judge advocate training shall:
(i) Prior to performing judge advocate duties, adhere to the Responder Training requirements in § 105.14(g)(1) for judge advocates who are responsible for advising commanders on the investigation or disposition of, or who prosecute or defend, sexual assault cases.
(ii) Explain legal support services available to victims.
(A) Pursuant to the respective Military Service regulations, explain that each Service member who reports a sexual assault shall be given the opportunity to consult with legal assistance counsel, and in cases where the victim may have been involved in collateral misconduct, to consult with defense counsel.
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(B) Explain the sex offender registration program.
(iii) Explain issues encountered in the prosecution of sexual assaults.
(A) Typologies (characteristics) of victims and sex offenders in non-stranger sexual assaults.
(B) Addressing the consent defense.
(C) How to effectively prosecute alcohol and drug facilitated sexual assault.
(D) How to introduce forensic and scientific evidence (e.g., SAFE Kits, DNA, serology, toxicology).
(E) MRE issues and updates to regard sexual assault prosecution in accordance with MRE 412, 413, and 615 of the Manual for Courts-Martial, United States.
(F) How to advise victims, SAPR VAs, and VWAP about the military justice process, and MRE 514. Explain:
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(8) Legal Assistance Attorney training shall adhere to the requirements of annual training in § 105.14(c)(2). Attorneys shall receive training in order to have the capability to provide legal assistance to sexual assault victims in accordance with the USD(P&R) Memorandum. Legal assistance attorney training shall include:
(i) The VWAP, including the rights and benefits afforded the victim.
(A) The role of the VWAP and what privileges do or do not exist between the victim and the advocate or liaison.
(B) The nature of the communication made to the VWAP as opposed to those made to the legal assistance attorney.
(ii) The differences between the two types of reporting in sexual assault cases.
(iii) The military justice system, including the roles and responsibilities of the trial counsel, the defense counsel, and investigators. This may include the ability of the Government to compel cooperation and testimony.
(iv) The services available from appropriate agencies or offices for emotional and mental health counseling and other medical services.
(v) The availability of protections offered by military and civilian restraining orders.
(vi) Eligibility for and benefits potentially available as part of transitional compensation benefits found in section 1059 of title 10, U.S.C., and other State and Federal victims' compensation programs.
(vii) Traditional forms of legal assistance.
(9) Chaplains, chaplain assistants and religious personnel training shall:
(i) Adhere to the responder training requirements in § 105.14(g)(1).
(ii) Pre-deployment SAPR training shall focus on counseling services needed by sexual assault victims and offenders in contingency and remote areas.
(iii) Address:
(A) Privileged communications and the Restricted Reporting policy rules and limitations, including legal protections for chaplains and their confidential communications, assessing victim or offender safety issues (while maintaining chaplain's confidentiality), and MRE 514.
(B) How to support victims with discussion on sensitivity of chaplains in addressing and supporting sexual assault victims, identifying chaplain's own bias and ethical issues, trauma training with pastoral applications, and how to understand victims' rights as prescribed in DoDI 1030.2 and DoDD 1030.01.
(C) Other counseling and support topics.
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(2) Disclosure of data stored in DSAID will only be granted when disclosure is authorized or required by law or regulation.
(b)
(1) Contain information about sexual assaults reported to the DoD involving persons covered by this part, both via Unrestricted and Restricted Reporting options.
(2) Include adequate safeguards to shield PII from unauthorized disclosure. The system will not contain PII about victims who make a Restricted Report. Information about sexual assault victims and subjects will receive the maximum protection allowed under the law. DSAID will include stringent user access controls.
(3) Assist with annual and quarterly reporting requirements, identifying and managing trends, analyzing risk factors or problematic circumstances, and taking action or making plans to eliminate or to mitigate risks. DSAID shall store case information. Closed case information shall be available to DoD SAPRO for SAPR program oversight, study, research, and analysis purposes. DSAID will provide a set of core functions to satisfy the data collection and analysis requirements for the system in five basic areas: data warehousing, data query and reporting, SARC victim case management functions, subject investigative and legal case information, and SAPR program administration and management.
(4) Receive information from the Military Services' existing data systems or direct data entry by authorized Military Service personnel.
(c)
(2) Requests for information to the DoD Components must be responded to by the office(s) designated by the Component to respond to Freedom of Information Act and Privacy Act requests. Requests shall not be informally handled by the SARCs.
(a)
(1) The policies, procedures, and processes in place or implemented by the SAPR program during the report year in response to incidents of sexual assault.
(2) An assessment of the implementation of the policies and procedures on the prevention, response, and oversight of sexual assaults in the military to determine the effectiveness of SAPR policies and programs, including an assessment of how Service efforts executed DoD SAPR priorities.
(3) Any plans for the following year on the prevention of and response to sexual assault, specifically in the areas of advocacy, healthcare provider and medical response, mental health, counseling, investigative services, legal services, and chaplain response.
(4) Matrices for Restricted and Unrestricted Reports of the number of sexual assaults involving Service members, that includes case synopses, and disciplinary actions taken in substantiated cases and relevant information.
(5) Analyses of the matrices of the number of sexual assaults involving Service members.
(b)
(1) January 31 for investigations opened during the period of October 1–December 31.
(2) April 30 for investigations opened during the period of January 1–March 31.
(3) July 31 for investigations opened during the period of April 1–June 30.
(4) The final quarterly report (July 1–September 30) shall be included as part of the FY annual report.
(c)
(1) In odd-numbered APYs, superintendents will submit a report to their respective Military Department Secretaries assessing their respective MSA policies, training, and procedures on sexual harassment and violence involving cadets and midshipmen no later than October 15 of the following APY. DMDC will simultaneously conduct gender relations surveys of cadets and midshipmen to collect information relating to sexual assault and sexual harassment at the MSA to supplement these reports. DoD SAPRO will summarize and consolidate the results of each MSA's APY assessment, which will serve as the mandated DoD annual report to Congress.
(2) In even-numbered APYs, DoD SAPRO and the DoD Diversity Management and Equal Opportunity (DMEO) Office conduct MSA site visits and a data call to assess each MSA's policies; training, and procedures regarding sexual harassment and violence involving cadets and
(d)
Pursuant to the legislated requirements specified in Public Law 111–383, the following definitions are used by the Services for annual and quarterly reporting of the dispositions of subjects in sexual assault investigations conducted by the MCIOs. Services must adapt their investigative policies and procedures to comply with these definitions.
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(2)
(b)
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(ii)
(iii)
(iv)
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(i) Court-martial charges preferred (initiated) for a non-sexual assault offense.
(ii) Nonjudicial punishments (Article 15, UCMJ) for non-sexual assault offense.
(iii) Administrative discharges for non-sexual assault offense.
(iv) Other adverse administrative actions for non-sexual assault offense.
(c)
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(2)
(3)
(4)
(d)
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(2)
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(2)
(3)
(4)
(f)
(1)
(2)
(a) The DSAID and the DD Form 2910, referred to in this Instruction, have been assigned OMB control number 0704–0482.
(b) The annual report regarding sexual assaults involving Service members and improvement to sexual assault prevention and response programs referred to in §§ 105.5(f)(22); 105.7(a)(9), 105.7(a)(10), and 105.7(a)(12); 105.9(c)(8)(ii); and 105.16(a) and (d) of this part is submitted to Congress in accordance with section 1631(d) of Public Law 111–383 and is coordinated with the Assistant Secretary of Defense for Legislatives Affair in accordance with the procedures in DoDI 5545.02.
(c) The quarterly reports of sexual assaults involving Service members referred to in §§ 105.5, 105.7, 105.14, 105.15, and 105.16 of this part are prescribed by DoDD 5124.02 and have been assigned a DoD report control symbol in accordance with the procedures in DTM 12–004 and DoD 8910.1–M.
(d) The Service Academy sexual assault survey referred to in § 105.16(c) of this part has been assigned DoD report control symbol in accordance with the procedures in DTM 12–004 and DoD 8910.1–M.
Commodity Futures Trading Commission.
Final rule.
The Commodity Futures Trading Commission (Commission or CFTC) is adopting regulations to exempt swaps between certain affiliated entities within a corporate group from the clearing requirement under the Commodity Exchange Act (CEA or Act), enacted by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The regulations include specific conditions, as well as reporting requirements, that affiliated entities must satisfy in order to elect the inter-affiliate exemption from required clearing.
This final rule is effective June 10, 2013.
Sarah E. Josephson, Deputy Director, 202–418–5684,
On August 21, 2012, the Commission published a notice of proposed rulemaking proposing to exempt swaps between certain affiliated entities from the clearing requirement under section 2(h)(1)(A) of the CEA (NPRM).
Section 723(a)(3) of the Dodd-Frank Act amended the CEA to provide, under new section 2(h)(1)(A) of the CEA, that it shall be unlawful for any person to engage in a swap unless that person submits such swap for clearing to a derivatives clearing organization (DCO) that is registered under the CEA or a DCO that is exempt from registration under the CEA if the swap is required to be cleared.
The Clearing Requirement Determination adopting release provided a specific compliance schedule for market participants to bring their swaps into compliance with the clearing requirement.
The Commission received 13 comments during the 30-day public comment period following publication of the NPRM on August 21, 2012, and one additional comment after the comment period ended. The Commission considered each of these comments in formulating the final regulation, § 39.6(g) (finalized as § 50.52).
During the process of proposing and finalizing this rule, the Chairman and Commissioners, as well as Commission staff, participated in informational meetings with market participants, trade associations, public interest groups, and other interested parties. In addition, the Commission has consulted with other U.S. financial regulators including: (i) The SEC; (ii) the Board of Governors of the Federal Reserve System; (iii) the Office of the Comptroller of the Currency; and (iv) the Federal Deposit Insurance Corporation (FDIC). Staff from each of these agencies has had the opportunity to provide oral and/or written comments to this adopting release, and the final regulations incorporate elements of the comments provided.
The Commission is mindful of the benefits of harmonizing its regulatory framework with that of its counterparts in foreign countries. The Commission has therefore monitored global advisory, legislative, and regulatory proposals, and has consulted with foreign authorities in developing the final regulations.
Of the 14 comment letters received by the Commission in response to its NPRM, ten commenters expressed general support for the concept of an inter-affiliate exemption from the clearing requirement.
A number of commenters requested a broader exemption with few or no conditions. Cravath and DLA Piper requested that the Commission exempt swaps between affiliates from all clearing, margining, and reporting obligations. The Working Group, Cravath, CDEU, ISDA & SIFMA, DLA Piper, and EEI
ISDA & SIFMA commented that inter-affiliate swaps provide important benefits to corporate groups by enabling centralized management of market, liquidity, capital, and other risks, and allowing affiliated groups to realize associated hedging efficiencies and netting benefits. Imposing mandatory clearing on inter-affiliate swaps, according to ISDA & SIFMA, could compromise the ability of affiliated groups to realize these benefits.
Along the same lines, CDEU commented that non-financial entities typically enter into external swaps with swap dealers and other large banks that typically evaluate the risks of entering into swaps based on the overall creditworthiness of their counterparties. These financial entity counterparties, according to CDEU, have the opportunity to review financial statements, the creditworthiness of any guarantor, and a number of other credit-related items. After the credit review, according to CDEU, the counterparties may request credit risk mitigants such as corporate parent guarantees, collateral, and credit-based legal terms.
On the other hand, Americans for Financial Reform (AFR) commented that a wide-ranging exemption for inter-affiliate swaps could create systemic risk and threaten the U.S. financial system. AFR cited a number of reasons for its concern such as: the risk transfer between separate corporate entities; the possibility for financial contagion to be transferred from one part of a large financial institution to different groups within the institution; restrictions on access to affiliate assets across national boundaries; and reduction in volumes at DCOs that could hurt liquidity and risk management. AFR further noted that because the end-user exception is available for non-financial and small financial entities in connection with swaps that hedge or mitigate systemic risk, the inter-affiliate exemption is primarily available for large financial institutions and speculative trades by large commercial institutions with many affiliates.
Better Markets Inc. (Better Markets) also expressed concern that an inter-affiliate exemption could be contrary to Congressional intent, as expressed in the Dodd-Frank Act, if it is not a very narrow and strictly implemented exemption.
Two individual persons commented against the proposed exemption. Steve Wentz requested that the Commission not issue any exemptions because the exemptions “would just open the door to divert trades through that open door to avoid protective oversight.” Aaron D. Small commented that the “unregulated derivatives market has been a disaster for the U.S. and world economy and must be reined in.”
Having considered these comments, and the specific comments discussed below, the Commission is adopting the
As the Commission has previously stated,
One of the most significant examples of this risk was the accumulation of uncleared CDS entered into by an affiliate in the AIG corporate group providing default protection on more than $440 billion in bonds, leaving it with obligations that the AIG corporate family could not cover as a result of changed market conditions.
Recognizing the peril that the U.S. financial system faced during the financial crisis, Congress and the President came together to pass the Dodd-Frank Act in 2010. Title VII of the Dodd-Frank Act establishes a comprehensive new regulatory framework for swaps, and the requirement that certain swaps be cleared by DCOs is one of the cornerstones of that reform. The CEA, as amended by Title VII, now requires a swap to be cleared through a DCO if the Commission has determined that the swap, or group, category, type, or class of swaps, is required to be cleared, unless an exception to the clearing requirement applies. As noted above, the only exception to the clearing requirement provided by Congress was the end-user exception in section 2(h)(7) of the CEA.
The benefits of clearing derivatives have been recognized internationally, as well. In September 2009, leaders of the Group of 20 (G–20)—whose membership includes the United States, the European Union, and 18 other countries—agreed that: (1) OTC derivatives contracts should be reported to trade repositories; (2) all standardized OTC derivatives contracts should be cleared through central counterparties by the end of 2012; and (3) non-centrally cleared contracts should be subject to higher capital requirements.
The Commission believes that required clearing through a DCO is the best means of mitigating counterparty credit risk and providing an organized mechanism for collateralizing the risk exposures posed by swaps. By clearing a swap, each counterparty no longer needs to rely on the individual creditworthiness of the other counterparty for payment. Both original counterparties now look to the DCO that has cleared their swap to ensure that the payment obligations associated with the swap are fulfilled. The DCO manages the risk of failure of a counterparty through appropriate margining, a mutualized approach to default management among clearinghouse members, and other risk management mechanisms that have been developed over the more than 100 years that modern clearinghouses have been in operation. Clearing can avert the development of systemic risk by reducing the potential knock-on, or domino, effect resulting from counterparties with large outstanding exposures defaulting on their swap obligations and causing their counterparties—counterparties that would otherwise be financially sound if they had been paid—to default. Failure of those counterparties could lead to the failure of yet other counterparties, cascading through the economy and potentially causing systemic harm to the U.S. financial system. Required clearing reduces this risk by ensuring that uncollateralized risk does not accumulate in the financial system.
The Commission is not persuaded by comments suggesting that inter-affiliate swaps pose no risk to the financial system or that clearing would not mitigate those risks. Entities that are affiliated with each other are separate legal entities notwithstanding their affiliation. As separate legal entities, affiliates generally are not legally responsible for each other's contractual obligations. This legal reality becomes readily apparent when one or more affiliates become insolvent.
On the other hand, inter-affiliate swaps offer certain risk-mitigating, hedging, and netting benefits as described by several commenters including ISDA & SIFMA, The Working Group, CDEU, and EEI. Furthermore, because affiliates in a corporate family generally internalize the risks of inter-affiliate transactions in the affiliated group, as described in the NPRM, the corporate family could face serious reputational harm if affiliates default on their swaps. Consequently, the entities within an affiliated group are incentivized to fulfill their inter-affiliate swap obligations to each other, to support each other to prevent outward-facing failures, and to resolve any disagreements about the terms of inter-affiliate swaps more quickly and amicably. As noted by ISDA & SIFMA, when an affiliated business group is fiscally sound, the capital, liquidity, and risk allocation decisions and default remedies between group members may be centrally managed thereby reducing the likelihood of group entities facing default risk of other group entities, “so long as the group as a whole is solvent.”
While in many circumstances, these characteristics of inter-affiliate swaps may mitigate the risk of an affiliate defaulting on its obligations—particularly when the group as a whole is financially healthy—they do not constitute legally enforceable obligations pre-bankruptcy or in bankruptcy.
In providing an inter-affiliate exemption from required clearing, the Commission has considered the benefits that inter-affiliate swaps offer corporate groups against the risk of allowing an exemption from required clearing for swaps entered into by separate, but affiliated, legal entities. In considering the risks and benefits, the Commission was guided, in part, by comments pointing to the risk-mitigating characteristics of inter-affiliate swaps and the sound risk management practices of corporate groups that rely on inter-affiliate swaps. In crafting the rule, the Commission sought to codify these characteristics as eligibility criteria, or conditions, for the exemption from required clearing. The conditions imposed are designed to increase the likelihood that affiliates will take into consideration their mutual interests when entering into, and fulfilling, their inter-affiliate swap obligations. For example, the inter-affiliate exemption may be elected only if the affiliates are majority owned and their financial statements are consolidated, thereby increasing the likelihood that entities will be mutually obligated to meet the group's swap obligations. Additionally, the affiliates must be subject to a centralized risk management program, the swaps and the trading relationship between affiliates must be documented, and outward-facing swaps must be cleared or subject to an exemption or exception from clearing.
Despite the conditions to the exemption adopted in this final rule, the Commission reminds market participants that the conditions included in the final rule do not mitigate potential losses between inter-affiliates to the extent that clearing would, particularly if one or more affiliated entities become insolvent.
Section 4(c)(1) of the CEA grants the Commission the authority to exempt any transaction or class of transactions, including swaps, from certain provisions of the CEA, including the clearing requirement, in order to “promote responsible economic or financial innovation and fair competition.” Section 4(c)(2) of the Act further provides that the Commission may not grant exemptive relief unless it determines that: (1) The exemption is appropriate for the transaction and consistent with the public interest; (2) the exemption is consistent with the purposes of the CEA; (3) the transaction will be entered into solely between “appropriate persons”; and (4) the exemption will not have a material adverse effect on the ability of the Commission or any contract market to discharge its regulatory or self-regulatory responsibilities under the CEA.
In the NPRM, the Commission requested comment as to whether exempting inter-affiliate swaps from the clearing requirement under certain terms and conditions would be an appropriate exercise of its section 4(c) authority.
ISDA & SIFMA stated that the Commission's proposed exemption meets the requirements of section 4(c) of the CEA by promoting innovation and competition, and the exemption serves the public interest. ISDA & SIFMA noted that inter-affiliate swaps are integral to the strategies consolidated financial institutions rely upon to meet customer needs in an efficient, competitive, and sound manner. According to ISDA & SIFMA, inter-affiliate swaps maximize hedging efficiencies and allow customers to transact with a single client-facing entity in the customer's jurisdiction, which increases the scope of risk-reducing netting with individual customers as well as risk-reducing netting of offsetting positions within the financial group. This allows the institution to meet customer needs across jurisdictions and provide improved pricing or other risk management benefits to customers, thereby promoting financial innovation and competition. ISDA & SIFMA also commented that inter-affiliate swaps allocate and transfer risks among members of a corporate group rather than increasing risks.
CDEU also supported the Commission's use of its section 4(c) authority. CDEU stated that the inter-affiliate exemption would promote financial innovation, fair competition, and the public interest by preserving the ability of corporate entities to centrally hedge the risks of their affiliates. CDEU stated that without such an exemption firms that currently use a central hedging model will be disadvantaged as compared to direct competitors that do not use the same, efficient risk management model. CDEU also noted the additional costs that would be incurred from subjecting inter-affiliate swaps to clearing.
In the NPRM, the Commission requested comments on whether the inter-affiliate exemption would be in the public interest. In addition to responses noted above with regard to the public interest,
According to AFR, there are serious doubts about whether the inter-affiliate exemption is in the public interest. AFR stated that any hedging and netting benefits gained from corporate groups engaging in inter-affiliate swaps must be weighed against the benefits of full novation to a central counterparty in the form of a clearinghouse, which is a more comprehensive level of risk management. Given the experience of the 2008 financial crisis, AFR noted that any risk-reducing benefit of corporate group risk management practices assumes that the corporate group actually implements and adheres to sufficient risk management procedures. AFR is concerned about relying on such an assumption in light of the fact that there was a large-scale failure of proper risk management prior to and during the 2008 financial crisis.
Better Markets similarly commented that only a very narrow and strict inter-affiliate exemption could be in the public interest. Better Markets suggested ways in which the Commission should strengthen the proposed exemption to satisfy the public interest standard, including requiring a 100% majority ownership interest standard, requiring that both initial and variation margin be exchanged, and banning rehypothecation of posted collateral.
After considering the complete record in this matter, the Commission has determined that the requirements of section 4(c) of the Act have been met with respect to the exemptive relief described above. The Commission believes that the exemption, as modified in this release, is consistent with the public interest and with the purposes of the CEA. The Commission's determination is based, in large part, on the transactions that are covered under the exemption. Namely, as most commenters noted, inter-affiliate transactions provide an important risk management role within corporate groups. In addition, and as discussed in the NPRM, the Commission recognizes that swaps entered into between corporate affiliates, if properly risk-managed, may be beneficial to the entity as a whole. Accordingly, in promulgating this rule, the Commission concludes that an exemption subject to certain conditions is appropriate for the transactions at issue, promotes responsible financial innovation and fair competition, and is consistent with the public interest. As the Commission noted in the NPRM and as reiterated in AFR's comment, any benefits to the corporate entity have to be considered in light of the risks that uncleared swaps pose to corporate groups and market participants generally. For this reason, the Commission is adopting an inter-affiliate exemption that is narrowly tailored and subject to a number of important conditions, including that affiliates seeking eligibility for the exemption document and manage the risks associated with the swaps.
Further, the Commission finds that the exemption is only available to “appropriate persons.” Section 4(c)(3) of the CEA includes within the term “appropriate person” a number of specified categories of persons, including “such other persons that the Commission determines to be appropriate in light of their financial or other qualifications, or the applicability of appropriate regulatory protections.”
Finally, the Commission finds that this exemption will not have a material effect on the ability of the Commission to discharge its regulatory responsibilities. This exemption is limited in scope and, as described further below, the Commission will have access to information regarding the inter-affiliate swaps subject to this exemption because they will be reported to an SDR pursuant to the conditions of the exemption. In addition to the reporting conditions in the rule, the Commission retains its special call, anti-fraud, and anti-evasion authorities, which will enable it to adequately discharge its regulatory responsibilities under the CEA.
For the reasons described in this release, the Commission believes it is appropriate and consistent with the public interest to adopt such an exemption.
As proposed, § 39.6(g)(1) provides that counterparties to a swap may elect the inter-affiliate exemption to the clearing requirement if the financial statements of both counterparties are reported on a consolidated basis, and either one counterparty directly or indirectly holds a majority ownership interest in the other, or a third party directly or indirectly holds a majority ownership interest in both counterparties. The proposed rule further specified that a counterparty or third party directly or indirectly holds a majority ownership interest if it directly or indirectly holds a majority of the equity securities of an entity, or the right to receive upon dissolution, or the contribution of, a majority of the capital of a partnership.
Four commenters supported proposed § 39.6(g)(1), which set forth the requirements of an affiliate status. CDEU commented that the majority-ownership test strikes an appropriate balance between ensuring that the rule is not overly broad and providing companies with the flexibility to account for differences in corporate structures. EEI stated that majority ownership is sufficient to mitigate what EEI believes is “minimal” risk posed by uncleared inter-affiliate swaps. In addition, EEI noted that majority-owned affiliates will have strong incentives to internalize one another's risks because the failure of one affiliate impacts all affiliates within the corporate group. The Working Group generally supported the Commission's definition, but stated that inter-affiliate swaps should be unconditionally exempt from mandatory clearing when the affiliates are consolidated for accounting purposes.
Two commenters objected to proposed § 39.6(g)(1) and requested the Commission require 100% ownership of affiliates. AFR stated that the systemic impact of swaps is based on ownership, not on corporate control. AFR also stated that permitting such a low level of joint ownership would lead to evasion of the clearing requirement through the creation of joint ventures set up to enable swap trading between banks without the need to clear the swaps. Similarly, Better Markets agreed that only 100% owned affiliates should be eligible for the exemption because allowing the exemption for the majority owner permits that owner to disregard the views of its minority partners
Having considered these comments, the Commission is adopting proposed § 39.6(g)(1) (now § 50.52(a)) with the modifications discussed below. The Commission believes that the majority-owned standard is not overly broad and provides entities with flexibility to account for differences in corporate structure. In particular, requiring majority ownership serves to ensure that counterparty credit risk posed by inter-affiliate swaps is internalized by the corporate group.
In addition, as the NPRM noted, it is important for the inter-affiliate clearing exemption to be harmonized with foreign jurisdictions that have or are developing comparable clearing regimes consistent with the 2009 G–20 Leaders' Statement.
In response to the concerns of AFR and Better Markets regarding the need for the Commission to adopt a stricter requirement of 100% ownership, the Commission recognizes the potential for corporate entities to structure their affiliates in such a manner as to evade the clearing requirement. However, the Commission believes it has carefully crafted a narrow exemption based on the condition that the affiliate is majority-owned, along with the other conditions imposed under this exemption. In terms of the interests of minority shareholders, the Commission believes that the views of all shareholders should be taken into account when an entity decides whether to clear a swap, but ultimately, the decision is a matter for corporate and securities laws.
In addition to the majority-ownership requirement, proposed § 39.6(g)(1) provided that counterparties to a swap may elect the inter-affiliate exemption to the clearing requirement if the financial statements of both counterparties are reported on a consolidated basis. The Commission received several comments on this provision. The FSR requested that the
In an effort to clarify the consolidated financial reporting condition, the Commission is modifying the requirement that financial statements be reported on a consolidated basis in two ways. First, the Commission is clarifying which entities are subject to the consolidated reporting condition. Under revised § 50.52(a)(1)(i), if one of the two affiliate counterparties claiming the exemption holds a majority interest in the other affiliate counterparty (the “majority-interest holder”), then the financial statements of the majority-interest holder must be reported on a consolidated basis and such statements must include the financial results of the majority-owned counterparty. On the other hand, under revised § 50.52(a)(1)(ii), if a third party is the majority-interest holder of both affiliate counterparties claiming the exemption (the “third-party majority-interest holder”), then the financial statements of the third-party majority-interest holder must be reported on a consolidated basis and such statements must include the financial results of both affiliate counterparties to the swap. In essence, the rule requires that the financial statements of the majority-owner (whether a third party or not) are subject to consolidation under accounting standards and must include either the other affiliate counterparty's or both majority-owned affiliate counterparties' financial results. The Commission is using the term “financial results” to refer to the financial statements, reports, or other material of the majority-owned counterparty or counterparties that must be consolidated with the majority owner's financial statements.
The second modification to the proposed rule responds to FSR's request that the Commission clarify that alternative accounting standards are permitted. Accordingly, the consolidated financial statements of the majority-interest holder or the third-party majority-interest holder, as appropriate, may be prepared under either Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). The modification reflects the fact that entities claiming the exemption may be subject to different accounting standards.
The Commission is not modifying the rule to limit the exemption to an ownership threshold based on section 1504 of the Internal Revenue Code.
As proposed, § 39.6(g)(2)(ii) provided that eligible affiliate counterparties that elect the inter-affiliate exemption must enter into swaps with a swap trading relationship document that is in writing and includes all the terms governing the relationship between the affiliates. These terms include, but are not limited to, payment obligations, netting of payments, transfer of rights and obligations, governing law, valuation, and dispute resolution. This requirement will be satisfied if an eligible affiliate counterparty is an SD or MSP that complies with the swap trading relationship documentation requirements of § 23.504. Regulation 23.504 includes all the proposed terms under proposed § 39.6(g)(2)(ii) plus a number of other specific requirements. The NPRM stated that the burden on affiliates would not be onerous because all affiliates should be able to use a master agreement to document their swaps, however, in the NPRM the Commission did not require the use of such a master agreement.
The Commission received a number of comments both supporting and opposing the swap documentation requirement. Better Markets, MetLife, and Prudential all supported the proposed documentation requirement. Specifically, MetLife and Prudential did not believe that the documentation requirement would be any more “burdensome or costly” for them because they already document all of their swaps. Additionally, MetLife and Prudential commented that the proposed documentation method is “preferable” to any other method and represents industry best practice. Better Markets agreed with the conditions imposed on the exemption, including the documentation requirements, and stated that the conditions should not be weakened.
Cravath, EEI, CDEU, and DLA Piper opposed the proposed documentation requirement. Cravath stated that the costs associated with the imposition of documentation requirements outweigh any benefits to the financial system, and that the Commission should leave the determination as to the appropriate level of documentation to boards of directors and management of companies, to determine based on the “reasonable exercise of their fiduciary responsibilities.” DLA Piper commented that inter-affiliate swaps are typically documented by a simple intercompany agreement, trade ticket or accounting entry rather than ISDA Master Agreements, and that the documentation requirements would be burdensome.
CDEU expressed concern that proposed § 39.6(g)(2)(ii)(B) would require that full ISDA Master Agreements be used to document inter-affiliate swaps. CDEU explained that while many market participants use master agreements, some end users many not have full master agreements because inter-affiliate swaps are purely internal and do not increase systemic risk.
EEI recommended that the Commission eliminate the documentation requirement because the requirement is duplicative of corporate accounting records that affiliates maintain as a matter of prudent business practice. According to EEI, current accounting practices will address the Commission's tracking and proof-of-claim concerns related to inter-affiliate swaps. EEI commented that a documentation requirement imposes “an additional, costly layer of ministerial process and documentation that is unnecessary to achieve the Commission's stated objectives.”
ISDA & SIFMA stated that the documentation requirements were overly prescriptive and would impose unnecessary costs on affiliates. Specifically, ISDA & SIFMA identified the valuation and dispute resolution requirements as serving little purpose. ISDA & SIFMA recommended a more flexible approach that would require adequate documentation of “all transaction terms under applicable law.”
The Commission considered all of the comments relating to the proposed documentation requirement and is retaining the swap documentation requirement subject to certain modifications recommended by commenters. As discussed in the NPRM, the Commission is concerned that without adequate documentation entities will be unable to track and manage the risks arising from inter-affiliate swaps. Equally important, affiliates must be able to offer sufficient proof of claim in the event of insolvency. The Commission is adopting proposed § 39.6(g)(2)(ii)(A) (now § 50.52(b)(2)(i)), which essentially confirms the applicability of § 23.504 to swaps between affiliates where one of the affiliates is an SD or MSP. However, with regard to swaps between affiliates that are not SDs or MSPs, and in response to commenters' requests for a more flexible standard, the Commission is adopting ISDA & SIFMA's recommendation that the focus of the documentation requirement be on documenting all of an inter-affiliate transaction's terms. Accordingly, the Commission is modifying proposed § 39.6(g)(2)(ii)(B) (now § 50.52(b)(2)(ii)), to require that “the terms of the swap are documented in a swap trading relationship document that shall be in writing and shall include all terms governing the trading relationship between the eligible affiliate counterparties.”
Under this modification, the Commission is eliminating the non-exclusive list of terms, which included payment obligations, netting of payments, transfer of rights and obligations, governing law, valuation, and dispute resolution. The change responds to commenters' requests for a more flexible approach that reflects current market best practices. While, in most instances, the Commission anticipates that documentation between affiliates will include all of the previously enumerated terms, the more general rule formulation signals that market participants retain the ability to craft appropriate documentation for their affiliated entities. This modification also serves to address concerns that the intent of the proposed rule was to require formal master agreements, such as the ISDA Master Agreement. As explained above, the proposed rule was not intended to require affiliates to enter into formal master agreements. Rather, the Commission observed that parties that already use master agreements to document their inter-affiliate swaps would likely meet the requirements of the inter-affiliate exemption without additional costs.
This modification also responds, in part, to CDEU's request that the documentation “include all terms necessary for compliance with its centralized risk management program.” While the Commission is modifying the rule to delete the specific references to valuation and dispute resolution procedures, ensuring that affiliates entering into swaps have sound procedures in place to value their swaps and resolve any disputes is critical to risk management. Accordingly, as discussed further below, the Commission anticipates that affiliates will include rigorous valuation provisions and procedures for elevating and resolving disputes in their risk management programs.
In response to comments from Better Markets and AFR that the proposed regulations should be retained and not weakened, the Commission does not believe that eliminating the non-exclusive list of terms and replacing it with a simple requirement that all terms of the swap transaction and the relationship between the affiliates be documented will weaken the rule. Rather, eligible affiliates will have some discretion, but also have the obligation to ensure that their documentation contains an accurate and thorough written record of their swaps. The Commission clarifies, however, that book entries would not suffice for purposes of complying with the swap documentation condition because such entries do not contain sufficient information to adequately document the swap or the trading relationship between affiliates.
EEI requested that, if the Commission retains the documentation requirement, the Commission clarify that swap confirmations are not required because executing confirmations would impose substantial costs. In response to this request, the Commission clarifies that for swaps between affiliates where one or both of the affiliates is an SD or MSP, the confirmation rules under § 23.501 are incorporated into § 23.504.
Proposed § 39.6(g)(2)(iii) requires the swap to be subject to a centralized risk management program that is “reasonably designed to monitor and manage the risks associated with the swap.” If at least one of the eligible affiliate counterparties is an SD or MSP, the centralized risk management requirement is satisfied by complying with the requirements of § 23.600.
Five commenters generally supported proposed § 39.6(g)(2)(iii). AFR supported the proposed risk management program requirement and stated that dispensing with or weakening this condition, or any of the conditions, would heighten systemic risk and call into question the Commission's exemptive authority. Better Markets agreed that requiring a centralized risk management program was wholly appropriate and should be maintained as a requirement.
Prudential and MetLife confirmed that both companies currently have centralized risk management programs and consider them to be consistent with current practice in the industry. Prudential noted that it structured its risk management system to allow only one affiliate to enter into swaps with third parties, which permits Prudential to impose a single credit limit on its market-facing counterparty relationships. MetLife's enterprise-wide risk management system provides all affiliates trading derivatives with affiliate-specific sets of guidelines and limits that are also included in enterprise-wide guidance and limits.
Finally, CDEU expressed support for the centralized risk management program requirement, but requested that the Commission clarify that the level of risk management for inter-affiliate swaps not be interpreted as requiring the same level of risk management that end-users maintain for external third-party swaps. CDEU noted that most end users that use inter-affiliate swaps currently have robust centralized risk management programs in place to monitor all external swap risks and affiliates are required to follow group-wide risk polices. CDEU was supportive of the proposal so long as the requirement is interpreted reasonably and permits entities to “implement risk policies and procedures appropriate to the risks of a corporate group's inter-affiliate swaps.”
Four commenters objected to the proposed requirement, suggested alternatives, and/or requested clarification. FSR stated that the condition should be eliminated because integrated risk management systems “are generally not established across international boundaries” and are not consistent with general risk practices in large, multinational organizations. FSR suggested that the requirement be dropped in favor of each entity making “its own evaluations of the risk associated with an inter-affiliate position.”
Cravath stated that in many cases, for companies outside of the financial sector, the proposed rule will require a substantial change in the processes and procedures currently maintained by such companies, and the cost of complying with the risk management program requirements outweigh any benefits to the financial system. Cravath commented that rather than subject companies to a risk management rule, “[c]ompanies should have the flexibility to engage in prudent risk management for their corporate group in a manner consistent with the overall level of risks to their business.”
EEI suggested that the Commission eliminate the centralized risk management program requirement on the grounds that it would be duplicative for corporate groups that already have risk management programs in place. According to EEI, it is standard industry practice for both private and public companies to have a risk management program. EEI accordingly does not see a “need to impose a separate, discrete regulatory requirement to document with an SDR or the Commission the existence of a centralized risk management program.” If the Commission decides to retain the requirement, EEI requested that the Commission require a program be “reasonably designed to monitor and manage the risks associated with the swap” and provide the flexibility to design risk management programs that address the unique risks of an entity's business.
The Working Group requested that the Commission clarify whether non-SDs and non-MSPs would be subject to the same enterprise-level risk management program as required for SDs and MSPs under § 23.600. If the Commission intended to require the same level of risk management, The Working Group commented that there are “a number of commercially and legally valid reasons” why a centralized risk management program in accordance with § 23.600 would be inconsistent with current industry practice. The Working Group cited cost as a reason companies do not provide for centralized risk management on different continents, in addition to antitrust and other regulatory reasons. The Working Group requested that the Commission clarify that the rule requires only that both counterparties be subject to a “robust risk management program.”
In response to comments, the Commission observes a general consensus that market participants have risk management policies and procedures in place, at least with regard to affiliates located in the same jurisdiction. FSR and The Working Group questioned whether entities have centralized risk management programs for affiliates in different jurisdictions and whether such cross-border risk management systems are prohibitively costly. In response to these comments, the Commission points to comments stating that inter-affiliate swaps play a critical role in an entity's overall management of risk and provide netting benefits among affiliates. Consequently, it stands to reason that inter-affiliate swaps between affiliates in different jurisdictions are as much a part of an entity's overall risk management framework as swaps between affiliates located in the same jurisdiction. The Commission does not believe that it would be prudent business practice for affiliates to enter into inter-affiliate swaps without risk management systems integrated across international boundaries to the extent that the entity permits affiliates across jurisdictions to enter into swaps with one another.
In response to comments asking that the Commission clarify the level of risk management required for non-SDs and non-MSPs, the Commission confirms that the requirements of proposed § 39.6(g)(2)(iii) (now § 50.52(b)(3)) are intended to be flexible and do not require the same level of policies and procedures as required under § 23.600 for SDs and MSPs. Under the rule, a company is free to structure its centralized risk management program according to its unique needs, provided that the program reasonably monitors and manages the risks associated with its uncleared inter-affiliate swaps. In all likelihood, if a corporate group has a centralized risk management program in place that reasonably monitors and manages the risk associated with its inter-affiliate swaps as part of current industry practice, it is likely that the program would fulfill the requirements of proposed § 39.6(g)(2)(iii) (now § 50.52(b)(3)).
The Commission did not receive comments regarding the requirement that SD and MSP affiliates must comply with § 23.600.
Given that a number of commenters stated that it is common practice for market participants, including end users, to have risk management programs in place, the Commission is not persuaded by Cravath's comment that the rule will require a substantial change in the processes and procedures currently maintained by companies to manage risk. Accordingly, costs will be
Proposed § 39.6(g)(2)(iv) required that variation margin be collected for swaps between affiliates that are financial entities, in compliance with the proposed variation margin requirements in proposed § 39.6(g)(3).
Some commenters expressed support for the proposed variation margin requirement. Prudential commented that it did not take issue with the variation margin requirement, but noted that variation margin may not be appropriate or required in every circumstance.
Several commenters stated that the proposed variation margin requirement for swaps between affiliates that are financial entities is not necessary and should not be a condition of the inter-affiliate exemption to clearing.
FSR commented that affiliates should be required to post margin only in instances where their primary regulator imposes such a requirement for affiliate transactions.
CDEU commented that the Commission should not require variation margin, or initial margin, with respect to inter-affiliate swaps between end-user affiliates. According to CDEU, while margin requirements may serve as a risk-management tool for market-facing swaps, inter-affiliate swaps do not increase counterparty credit risk or contribute to interconnectedness among market participants. CDEU stated that a number of specific entities, including banks and insurance companies, already post variation margin for inter-affiliate swaps, largely because of prudential requirements, and that applying variation margin requirement to these entities is unnecessary.
With respect to the proposed common guarantor exception to the variation margin requirement, ISDA & SIFMA commented that the Commission has not provided adequate rationale for requiring a common guarantor as a condition for exempting group members from the proposed variation margin requirement, nor has the Commission made it clear which obligations must be guaranteed. ISDA & SIFMA requested that the Commission further clarify the guarantee exception in proposed § 39.6(g)(2)(iv), including to clarify that it includes “direct or indirect” ownership, and that swaps between the
CDEU commented that the Commission should not limit the guarantee exception to 100% commonly-owned affiliates and should allow the exception for majority-owned affiliates. CDEU requested that the Commission clarify that only the related market-facing swaps with third parties are required to be guaranteed by the common owner or parent. CDEU suggested that the Commission clarify that the parent company has the option to act as the guarantor of the transactions.
FSR commented that the variation margin requirement should not apply to 100% commonly-owned affiliates even if they do not have a common guarantor that is under 100% common ownership. According to FSR, the 100% common ownership requirement creates sufficient alignment of interests between swap counterparties and places the risk of the swap on the ultimate parent entity, and thus, the exchange of variation margin would do little to mitigate intercompany risk.
MetLife and Prudential commented that inter-affiliate swaps should not be commonly guaranteed by a 100% wholly-owned affiliate in order to be exempt from the variation margin requirement. Specifically, MetLife stated that the Commission should not require guarantees or explicit credit support as a condition for an exception from the variation margin requirement and should rely instead on the direct or indirect common ownership requirement. Both MetLife and Prudential stated that the corporate group of 100% wholly owned affiliates should be able to decide whether internal swaps need to be guaranteed by an affiliate.
After considering the comments submitted in response to the proposed variation margin requirement, the Commission is determining not to require variation or initial margin as a condition for electing the inter-affiliate exemption. In so doing, the Commission was guided by comments expressing concern that a variation margin requirement will limit the ability of U.S. companies to efficiently allocate risk among affiliates and manage risk centrally. Notwithstanding the Commission's determination not to impose variation margin as a condition of the inter-affiliate exemption, the Commission is encouraged by comments noting that many companies already exchange variation margin, and agrees with commenters that collateralizing risk exposure with respect to any swaps, including inter-affiliate swaps, is critical, and encourages market participants to do so as a matter of sound business practice.
Proposed § 39.6(g)(2)(v) provided that eligible affiliate counterparties to a swap may elect the inter-affiliate exemption from clearing provided that each affiliate counterparty either: (i) Is located in the United States; (ii) is located in a jurisdiction with a clearing requirement that is comparable and comprehensive to the clearing requirement in the United States; (iii) is required to clear swaps with non-affiliated parties in compliance with U.S. law; or (iv) does not enter into swaps with non-affiliated parties.
The Commission received several comments both in support of and in opposition to various aspects of the conditions related to the treatment of outward-facing swaps in proposed § 39.6(g)(2)(v). The Commission has considered each of the comments and has determined to adopt the treatment of outward-facing swaps conditions of the inter-affiliate exemption, with certain modifications described below, because such conditions are necessary to prevent evasion of the clearing requirement and to help protect the U.S. financial markets. The remainder of this Section II.G describes the comments received in response to proposed § 39.6(g)(2)(v) (now § 50.52(b)(4)), along with the Commission's responses and clarifications with respect to those comments.
While recognizing the benefits of exempting certain inter-affiliate transactions from the clearing requirement, in the NPRM, the Commission described two separate grounds for proposing the treatment of outward-facing swaps condition to the inter-affiliate exemption. First, the Commission explained that an inter-affiliate exemption from required clearing could enable entities to evade the clearing requirement through trades with affiliates that are located in foreign jurisdictions that do not have a comparable and comprehensive clearing regime. In addition, the Commission noted in the NPRM that uncleared inter-affiliate swaps may pose risk to other market participants, and therefore, the financial system if the affiliate enters into swaps with third parties that are related on a back-to-back or matched book basis with inter-affiliate swaps.
In support of the proposed treatment of outward-facing swaps conditions, AFR stated that inter-affiliate swaps could, without appropriate restrictions, bring risk back to the U.S. from foreign affiliates. AFR commented that an inter-affiliate swap might be used to move parts of the U.S. swaps market outside of U.S. regulatory oversight by transferring risk to jurisdictions with little or no regulatory oversight, whereby a non-U.S. affiliate of a U.S. entity could enter into an outward-facing swap. AFR stated that an inter-affiliate swap could contribute to financial contagion across different groups within a complex financial institution, making it more difficult to “ring-fence” risks in one part of an organization. AFR further commented that laws and regulations of a foreign country might prevent U.S. counterparties to swaps from having access to the financial resources of an affiliate in the event of a bankruptcy or insolvency.
By contrast, ISDA & SIFMA, The Working Group, and CDEU all stated that the treatment of outward-facing swaps condition of the proposed rule is not necessary or appropriate and that the Commission should eliminate it altogether. FSR commented that the inter-affiliate exemption should extend to swaps between non-U.S. affiliates, such that the swaps should not be subject to mandatory clearing or margin requirements, even if the affiliated parties are financial entities.
Certain commenters stated that the proposed treatment of outward-facing swaps condition is not necessary to prevent evasion. ISDA & SIFMA noted that the Commission's existing anti-evasion authority
Other commenters opposed the proposed treatment of outward-facing swaps condition based on their view that inter-affiliate swaps involving non-U.S. affiliates do not pose a risk to the U.S. financial markets. CDEU commented that the proposed “comparable and comprehensive” condition is not necessary or appropriate to reduce risk and prevent evasion because, according to CDEU, transactions between affiliates do not increase systemic risk, regardless of the location of the affiliate.
The Commission has considered these comments, and for the reasons described below, has determined to retain the treatment of outward-facing swaps condition to the inter-affiliate exemption, with certain modifications and amendments, in order to address comments and provide greater clarity.
As an initial matter, as discussed above, the Commission believes that the benefits of inter-affiliate swaps for entities in affiliated groups warrant the Commission's use of its exemptive authority under section 4(c) of the Act to exclude certain inter-affiliate swaps from the clearing requirement. However, the Commission must exercise its exemptive authority in view of the Commission's charge under the CEA to prevent evasion of the clearing requirement.
Section 2(h)(4)(A) of the CEA requires that “the Commission shall prescribe rules * * * as determined by the Commission to be necessary to prevent evasions of the clearing requirement under this Act.”
The Commission disagrees with commenters that suggest that the treatment of outward-facing swaps condition is not necessary to deter evasion because the Commission can rely on its general anti-evasion authority under the CEA or under section 721(c) of the Dodd-Frank Act to address the Commission's evasion concerns pertaining to the inter-affiliate exemption. The Commission notes that section 2(h)(4)(A) of the CEA specifically imposes an obligation on the part of the Commission to “prescribe rules” and “issue interpretations of rules” that are necessary to prevent evasions of the clearing requirement.
In response to ISDA & SIFMA's claim that anti-evasion authority should only be applied in limited scenarios where there are back-to-back trades involving affiliates and non-affiliates who are not subject to capital requirements, the Commission declines to pre-judge the potential incentives or ways of evading, or complying with, the Commission's clearing requirement and the inter-affiliate exemption from clearing. To the extent that ISDA & SIFMA suggest that the treatment of outward-facing swaps condition should be limited to transactions involving back-to-back trades where the affiliates and the respective third-party are subject to capital requirements, the Commission is not persuaded that the rule should be so narrowly tailored to address only the scenario ISDA & SIFMA describe. In particular, the Commission notes that back-to-back transactions may not serve as the only potential means by which
In addition to preventing evasion, the Commission believes that the treatment of outward-facing swaps condition will help to limit the potential transfer of risks to U.S. companies and financial markets that may result from third-party swaps between affiliates and non-affiliated entities domiciled in jurisdictions that do not regulate swaps or where the regulation is not comparable to, or as comprehensive as, the CEA and Commission regulations. As described in the preceding sections of this adopting release, there are numerous benefits associated with central clearing of swaps. In particular, clearing mitigates counterparty credit risk, provides an organized mechanism for collateralizing the risk exposures posed by swaps, and when applied on a market-wide scale, clearing reduces systemic risk. The counterparty and systemic risk mitigation benefits of central clearing are also realized from clearing transactions between affiliates.
The benefits of clearing notwithstanding, the Commission recognized in the NPRM, commenters' assertions that there is less counterparty risk associated with inter-affiliate swaps than with swaps between third parties to the extent that the affiliated counterparties that are members of the same corporate group internalize each other's counterparty credit risk.
In particular, the Commission is not persuaded that inter-affiliate swaps, and swaps between affiliate counterparties outside the U.S. and non-affiliated counterparties, pose no risks to the U.S financial markets or that central clearing would not mitigate the risks associated with such swaps. To the contrary, the counterparty and systemic risks associated with inter-affiliate swaps are heightened where, for example, the inter-affiliate transaction involves an uncleared swap with a foreign affiliate counterparty that is subsequently hedged with a third-party uncleared swap. Thus, the Commission disagrees with commenters that suggested that inter-affiliate swaps involving foreign affiliates do not have the potential to create systemic risk. As the Commission noted in the NPRM, systemic risk implications may be present where the foreign affiliate has large inter-affiliate swap positions and enters into related outward-facing swaps. If the foreign affiliate defaults on its obligations arising from the inter-affiliate swaps, it then increases the likelihood that the foreign affiliate could default on the outward-facing swaps, potentially jeopardizing the financial integrity of the third-party counterparty. Furthermore, to the extent that a foreign affiliate enters into both inter-affiliate swaps and related third-party swaps, any losses incurred by the foreign affiliate with respect to its inter-affiliate swaps may flow not only to the unaffiliated third-party counterparty, but conceivably, to the broader financial system.
Moreover, the Commission notes AFR's comment that inter-affiliate swaps can, in some circumstances, contribute to financial contagion across different groups within a complex financial institution, making it more difficult to contain risks in one part of an organization. As evidenced by the events surrounding the 2008 financial crisis, many large financial institutions are interconnected and highly inter-dependent, with affiliated legal entities that are inextricably linked to each other.
For the aforementioned reasons, the Commission believes that the risk of evasion of U.S. laws and the potential systemic risk associated with uncleared inter-affiliate swaps involving foreign affiliates necessitates that the inter-affiliate exemption include the treatment of outward-facing swaps condition.
The treatment of outward-facing swaps condition that is being adopted as part of the inter-affiliate clearing exemption in this final release is aimed at addressing the potential risks associated with an eligible foreign affiliate's swaps with non-affiliated counterparties. As modified, the final rule requires that, as a condition to the inter-affiliate exemption, each eligible affiliate counterparty must clear all swaps that it enters into with an unaffiliated counterparty to the extent that the swap is included in the Commission's clearing requirement,
For eligible affiliate counterparties that are not located in the U.S. or in a comparable foreign jurisdiction, as determined by the Commission, the rule permits such eligible affiliates to clear any outward-facing swap that is required to be cleared under § 50.4 through a registered DCO or a clearing organization that is subject to supervision by appropriate government authorities in the home country of the clearing organization and has been assessed to be in compliance with the Principles for Financial Market Infrastructures (PFMIs).
The Commission believes that this modified formulation of the treatment of outward-facing swaps condition being adopted as part of the final rule will
Moreover, in finalizing the requirement that eligible affiliate counterparties clear their swaps with unaffiliated counterparties, the Commission considered the approach adopted in EMIR. Articles 3, 4, and 13 of EMIR generally exempt from clearing OTC derivatives transactions between intragroup counterparties, where one counterparty is located in the European Union and the other counterparty is located outside the European Union, provided that, among other things, the European Commission determines that the foreign counterparty is established in a country with “equivalent” requirements to EMIR.
In addition to the modifications to the treatment of outward-facing swaps condition described above, the Commission also is providing a transition period with alternative compliance frameworks, in response to concerns raised by commenters pertaining to the timing and sequencing of the implementation of the inter-affiliate exemption, which are discussed below.
A number of commenters expressed concern with respect to the “comparable and comprehensive” requirement of the proposed rule. Several commenters expressed concern with respect to the timing and sequencing of the Commission's comparability determination in relation to the expected compliance date for the initial clearing requirement under section 2(h) of the Act.
The Working Group commented that because no other jurisdiction has a comparable clearing requirement,
The Commission recognizes commenters' concerns pertaining to the timing and sequencing of the inter-affiliate exemption in light of the Commission's clearing requirement, and in view of the ongoing progress of other jurisdictions to adopt and implement their respective clearing regimes. Accordingly, the Commission has determined to modify the proposed rule, as described in this release.
As an initial matter, and informed in large part by the reports of relevant international organizations and ongoing dialogue with international regulators, the Commission believes that many jurisdictions have made significant progress in implementing their clearing regimes. It is the Commission's understanding that the G–20 Leaders reaffirmed their commitment that all standardized OTC derivatives should be cleared through central counterparties by end-2012.
On November 15, 2012, the Singapore Parliament passed the Securities and Futures (Amendment) Bill 2012 to amend the Singapore Securities and Futures Act (SFA). This bill puts in place the regulatory regime for OTC derivatives in Singapore. This legislation institutes mandatory reporting and clearing requirements for financial entities and large non-financial entities. The Monetary Authority of
In the European Union, EMIR entered into force on August 16, 2012, and requires the clearing of all OTC derivatives subject to the clearing obligation. Clearing determinations are made at the initiative of the national authorities or the European Securities and Markets Authority (ESMA). Within six months of ESMA receiving notification by a national authority that a central counterparty has been authorized to clear a class of OTC derivatives, ESMA must determine whether that the class of OTC derivatives should be subject to the clearing obligation. At its own initiative, ESMA can also identify classes of OTC derivatives that should be subject to the clearing obligation. Additional details regarding the specific manner in which clearing determinations will be made have been set forth in implementing regulations adopted by the European Commission on December 19, 2012.
As evidenced by the progress of these jurisdictions, and others that host major financial markets across the world in implementing their clearing frameworks, the Commission agrees with ISDA & SIFMA that the comparability requirement of the inter-affiliate exemption is unlikely to pose a significant impediment to the use of the inter-affiliate exemption by most foreign affiliates because it is expected that the major financial jurisdictions will implement their own mandatory clearing regimes. Notwithstanding the progress of other jurisdictions to implement their clearing regimes, as discussed above, the Commission is mindful of commenters' concerns that the compliance timeframe for the clearing requirement in the U.S. is likely to precede the adoption and/or implementation of the clearing regimes of most other jurisdictions.
Accordingly, the Commission believes that it is important to provide for a transition period for foreign regimes to implement their clearing mandates to bring swaps into clearing. For certain eligible affiliate counterparties located in jurisdictions that have adopted swap clearing regimes and are currently in the process of implementation, namely Japan, the European Union, and Singapore, the Commission is modifying the proposed rule to allow for a transition period of one year from the first compliance date of the U.S. clearing mandate, until March 11, 2014, for those foreign jurisdictions that are working to implement their mandatory clearing regimes.
Moreover, the Commission has determined to provide further time-limited relief for certain eligible affiliated counterparties located in the European Union, Japan, or Singapore from complying with the requirements of § 50.52(b)(4)(i) (or (b)(4)(ii)(A)) as a condition of electing the inter-affiliate exemption. In particular, § 50.52(b)(4)(ii)(B) provides that if one of the eligible affiliate counterparties is located in the European Union, Japan, or Singapore, the requirements of paragraph (b)(4)(i) will not apply to such eligible affiliate counterparty until March 11, 2014, provided that two conditions are met. The first condition provides that the one counterparty that directly or indirectly holds a majority ownership interest in the other counterparty or the third party that directly or indirectly holds a majority ownership interest in both counterparties is not a “financial entity” as defined in section 2(h)(7)(C)(i) of the Act.
For eligible affiliate counterparties that are located in jurisdictions other than the European Union, Japan or Singapore, the Commission also is providing another time-limited alternative compliance framework for meeting the requirements of § 50.52(b)(4)(i). Specifically, § 50.52(b)(4)(iii) provides that if an eligible affiliate counterparty located in the United States enters into swaps (that are included in a class of swaps identified in § 50.4), with eligible
The options provided under the two alternative compliance frameworks described above are intended to mitigate the risk associated with uncleared third-party swaps. The payment and collection of variation margin is a vital component of the clearing process. As the Commission noted in the NPRM, variation margin is an essential risk-management tool that serves both as a check on risk-taking that might exceed a party's financial capacity and as a limitation on losses when there is a failure.
Notwithstanding the alternative compliance frameworks, the Commission encourages all eligible affiliate counterparties to clear their outward-facing swaps on a voluntary basis in order to best mitigate the risks associated with those swaps. The Commission notes that in lieu of complying with the alternative compliance frameworks through March 11, 2014, eligible affiliate counterparties also may satisfy the outward-facing swap condition by complying with § 50.52(b)(4)(ii)(E) by clearing their third-party swaps through a registered DCO or a clearing organization that is subject to supervision by the appropriate government authorities in the home country of the clearing organization and has been assessed to be in compliance with the PFMIs.
The Commission believes that the alternative compliance framework adopted in this release addresses commenters' concerns pertaining to the timing and sequencing of the inter-affiliate exemption and the effective date of the Commission's initial clearing determination, and incorporates ISDA & SIFMA's recommendation to provide an appropriate transition period for foreign jurisdictions to implement their clearing regimes.
In response to The Working Group, the Commission notes that the treatment of outward-facing swaps condition is needed to protect U.S. financial markets and to prevent evasion of the clearing requirement. The modified condition requires that eligible affiliate counterparties, whether domiciled in the U.S. or in a foreign jurisdiction, that elect the inter-affiliate exemption must clear their outward-facing swaps, if such swaps fall within a class identified in § 50.4, or satisfy one the provisions in the alternative compliance frameworks, as applicable, until March 11, 2014. The alternative compliance frameworks are a direct response to concerns raised by The Working Group, and other commenters, regarding providing other jurisdictions with sufficient time to implement their clearing regimes. The alternative compliance framework provides eligible affiliates that elect the inter-affiliate exemption with other options, in addition to clearing, for managing the risks associated with their outward-facing swaps. In response to concerns that foreign-domiciled eligible affiliates would not be able to enter into uncleared non-hedge swaps with third parties that are foreign-domiciled end users, the Commission notes that it would take into consideration any comparable exceptions or exemptions granted under a comparable foreign jurisdiction's clearing regime.
In response to The Working Group's statement that the treatment of outward-facing swap condition expands the cross-border application of the clearing requirement to cover swaps between U.S. persons and non-U.S. persons, the Commission observes that U.S. persons are subject to the CEA's clearing requirement and part 50 of the Commission's regulations. Furthermore, the Commission notes that the final rule would permit eligible affiliate counterparties that are not located in the U.S. or in a comparable and comprehensive jurisdiction, to elect the inter-affiliate exemption provided that they clear any outward-facing swaps that are required to be cleared under § 50.4, through a registered DCO or a clearing organization that is subject to supervision by appropriate government authorities in the home country of the clearing organization and has been assessed to be in compliance with the PFMIs.
Although the Commission believes that the alternative frameworks described above are necessary in the circumstances described, these alternatives are not equivalent to clearing and would not mitigate potential losses between swap counterparties in the same manner that clearing would. Thus, notwithstanding the alternative compliance frameworks, the Commission believes that the requirement that eligible affiliates clear
In the next section of the release, the Commission describes the specific comments raised with respect to the proposed “comparable and comprehensive” standard and provides a discussion of the its consideration of these comments, as well as an explanation of the Commission's anticipated process for reviewing and issuing comparability determinations in the context of the inter-affiliate exemption from clearing.
Commenters raised questions as to the criteria the Commission would consider in rendering a comparability determination. ISDA & SIFMA requested that the Commission clarify that “comparability” does not mean that the host country must have the “same” requirement. CDEU questioned what specific criteria the Commission would consider in making a comparability finding. CDEU recommended that the Commission limit the applicability of the comparability requirement to SDs and MSPs, and claimed that extending the condition to end-users would disproportionately impact end-users that have global operations, particularly in emerging markets.
AFR suggested that the final rule should specifically state that the “comparable and comprehensive” requirement must apply to each “specific type of swap” being considered for the exemption. AFR further stated that the Commission should provide a detailed comparability procedure, such as the procedure described in the proposed cross-border guidance. MetLife also suggested that rather than broadly prohibiting non-U.S. affiliates (that are not located in a comparable jurisdiction) from entering into any third-party swaps as a condition of the inter-affiliate exemption, the Commission should narrow the prohibition in the proposed rule to prohibit non-U.S. affiliates (that are not located in a comparable jurisdiction) from entering into “similar swaps of the same product type” with unaffiliated third parties.
As described above, a number of commenters requested further clarification on how the Commission will apply the “comparable and comprehensive” standard in the context of the mandatory clearing. The comparability requirement originally was discussed in the Commission's Proposed Cross-Border Interpretive Guidance. Drawing on its experience in exempting foreign brokers from certain registrations requirements under its rule 30.10 “comparability” determinations, the Commission proposed the “comparable and comprehensive” concept in the Proposed Cross-Border Interpretive Guidance
In the Proposed Cross-Border Interpretive Guidance, the Commission, in describing its intended approach to making comparability determinations, noted that similar to its policy with respect to rule 30.10, the Commission would retain broad discretion to determine that the objectives of any program elements are met, notwithstanding the fact that the foreign requirements may not be identical to that of the Commission.
In response to comments seeking additional clarity around the Commission's comparability determination process, the Commission clarifies that it will review the comparability and comprehensiveness of a foreign jurisdiction's clearing mandate under § 50.52(b)(4)(i)(B) by reviewing: (i) The foreign jurisdiction's laws and regulations with respect to its mandatory clearing regime (
As noted above, and in response to ISDA & SIFMA, the Commission reiterates that for purposes of the treatment of outward-facing swaps condition of the inter-affiliate exemption, comparability findings with respect to a foreign jurisdiction's clearing regime will not require an identical regime to the clearing framework established under the Act and Commission regulations. Rather, the Commission anticipates that it will
With respect to determining whether an exemption or exception under a comparable foreign clearing mandate is comparable to an exception or exemption under the CEA or part 50, as provided under § 50.52(b)(4)(i)(D), the Commission anticipates that it would review for comparability purposes the foreign jurisdiction's laws and regulations with respect to its mandatory clearing regime, as well as the relevant exception or exemption. In doing so, the Commission would exercise broad discretion to determine whether the requirements and objectives of such exemption or exception are consistent with those under the Dodd-Frank Act and that such objectives are being met, notwithstanding the fact that the exemption or exception from clearing under the comparable foreign clearing regime may not be identical to those established under the Act or the Commission's regulations. Accordingly, the Commission anticipates that comparability determinations with respect to a foreign jurisdiction's exemption or exception from mandatory clearing could be made at either the entity level, or the transaction type, as appropriate.
In response to comments seeking clarification on what will trigger a Commission comparability determination, the Commission anticipates that it will render jurisdiction-specific and product-specific comparability determinations upon the adoption of clearing regimes by foreign jurisdictions for classes of swaps covered under § 50.4, upon the request of a counterparty that is located in a foreign jurisdiction, or upon receipt of a request from another appropriate party.
The Commission further anticipates that once a comparability determination is made with respect to the foreign jurisdiction's clearing regime, and with regard to a particular class of swaps covered under § 50.4, eligible affiliates domiciled in such jurisdiction may rely on such determinations for swaps included within the applicable class, without further Commission action. To the extent that the Commission proposes a change to its regulations governing the clearing requirement generally or with respect to any particular product class, the Commission will reevaluate whether the proposed regulatory change would affect the basis upon which the Commission made the comparability determination. To the extent that there are discrepancies in the requirements between the foreign jurisdiction and the Commission's proposed regulatory change, the Commission anticipates that it would issue additional guidance or notifications to market participants to determine how affected entities can address any discrepancy in requirements.
The Commission declines to limit the condition that eligible affiliates clear their outward-facing swaps to SDs and MSPs, as suggested by CDEU. As explained throughout this release, the Commission believes that the requirements of § 50.52(b)(4) are necessary to prevent evasion of the clearing requirement and to protect U.S. financial markets. Moreover, the requirements of section 2(h)(1)(A) apply to all market participants not able to elect an exception under section 2(h)(7) of the CEA, not just to SDs and MSPs. The Commission believes that the modified rule and time-limited alternative compliance frameworks adopted in the final rule will provide end users, amongst others, with substantial flexibility to comply with the conditions of the exemption. Furthermore, the Commission notes that end users also may elect the end-user exception from clearing for hedging transactions that comply with the requirements of the CEA and § 50.50.
For the reasons described in this release, the Commission is adopting in § 50.52(b) the conditions to the inter-affiliate exemption, initially proposed as § 39.6(g)(2)(v), pertaining to swaps entered into with unaffiliated counterparties, with the modifications described above.
In the NPRM, the Commission explained that general reporting requirements under sections 2(a)(13) and 4r of the CEA and part 45 apply to uncleared inter-affiliate swaps.
Lastly, proposed § 39.16(g)(5) permits a counterparty to provide information related to how it generally meets its financial obligations and information related to its status as an electing SEC Filer on an annual basis in anticipation of electing the inter-affiliate clearing exemption for one or more swaps. This election is effective for inter-affiliate swaps entered into within 365 days following the date of such reporting. During the 365-day period, the affiliate counterparty would be required to amend the information as necessary to
The Commission received several comments in response to the reporting obligations of affiliates. Prudential and MetLife both commented that the Commission should clarify that only one counterparty is required to report the swap to an SDR. In addition, both Prudential and MetLife stated that annual reporting is more efficient than swap-by-swap reporting.
EEI stated that the Commission should eliminate the transaction-by-transaction reporting requirement under proposed § 39.6(g)(4)(i) for the election of the exemption and confirmation that the conditions have the exemption have been met. Instead, EEI recommended that one of the affiliates be permitted to file an annual notice on behalf of both affiliates to exempt all of their swaps from clearing for an entire year. EEI contended that it will increase costs if both affiliates have to communicate that they elect not to clear the swap and meet the conditions of the exemption for each swap. EEI also stated that the Commission should state that part 45 does not apply to inter-affiliate swaps because the Commission will be able to obtain information regarding an inter-affiliate transaction based on reporting of a corresponding market-facing swap.
CDEU also objected to reporting any information to an SDR on a trade-by-trade basis for inter-affiliate swaps as such reporting would be costly and onerous for parties. Instead, CDEU recommended that all reporting be done on an annual basis through a board resolution.
DLA Piper commented that the regulatory reporting requirements are unnecessary for inter-affiliate swaps and should be eliminated.
Under sections 2(a)(13) and 4r of the CEA, all swaps must be reported to an SDR (or the Commission if there is no available SDR) and are subject to comprehensive recordkeeping obligations.
In response to commenters' requests, the Commission is clarifying that the reporting obligations under § 39.6(g)(2)(i) (now § 50.52(c)) can be fulfilled by one of the affiliate counterparties on behalf of both counterparties. The selection of which affiliate will be considered to be the reporting counterparty should be determined in accordance with the provisions of § 45.8 and, for part 43, the reporting party under § 43.3(a)(3).
As noted in the NPRM, the Commission believes that affiliates within a corporate group may make independent determinations on whether to submit an inter-affiliate swap for clearing. Given the possibility that each affiliate may reach different conclusions regarding clearing the swap, § 39.6(g)(2)(i) would require that both counterparties elect the proposed inter-affiliate clearing exemption. The Commission is therefore adopting the electing requirement as proposed.
With regard to comments recommending that all reporting be done on an annual basis rather than a swap-by-swap basis, the Commission declines to modify the rule. The Commission believes it is appropriate to provide for annual reporting of certain information, including how affiliates generally meet their financial obligations and information related to its status as an electing SEC Filer.
The Commission does not agree with EEI's comment that the Commission will be able to obtain information on inter-affiliate swaps from the information reported on market-facing swaps, and disagrees with DLA Piper's comment that reporting and recordkeeping obligations are unnecessary or would increase systemic risk. The reporting and recordkeeping requirements promote accountability and transparency, and will aid the Commission in monitoring compliance with the inter-affiliate exemption. Moreover, the Commission does not believe that the information relating to inter-affiliate swaps will necessarily be identical to market-facing swaps. Also, the Commission does not believe that all inter-affiliate swaps will match up to market-facing swaps because, as The Working Group commented, entities use inter-affiliate trades to transfer physical commodity or futures exposure between affiliates for compliance with international tax law, customs, or accounting laws.
The clearing requirement under section 2(h)(1)(A) of the CEA and part 50 of the Commission's regulations shall not apply to a swap executed between affiliated counterparties that have the status of eligible affiliate counterparties, as defined in § 50.52(a), and elect not to clear such swap until the effective date of this rulemaking. The effective date of this rulemaking shall be 60 days after publication in the
Section 15(a) of the CEA
Prior to the passage of the Dodd-Frank Act, swaps were not required to be cleared. In the wake of the financial crisis of 2008, Congress adopted the Dodd-Frank Act, which, among other things, amends the CEA to impose a clearing requirement for swaps based on determinations by the Commission regarding which swaps are required to be cleared through a DCO.
In the discussion that follows, the Commission considers the costs and benefits of the inter-affiliate exemption to the public and market participants generally. The Commission also separately considers the costs and benefits of the conditions placed on affiliates that would elect the exemption: (1) Majority ownership and financial statements that are reported on a consolidated basis under GAAP or IFRS as conditions for status as an eligible affiliate counterparty; (2) swap trading relationship documentation, which would require affiliates to document in writing all terms governing the trading relationship; (3) centralized risk management requirement, which would require affiliates to subject the swap to centralized risk management; and (4) reporting requirements, which would require counterparties to advise an SDR, or the Commission if no SDR is available, that both counterparties elect the inter-affiliate clearing exemption and to identify the types of collateral used to meet financial obligations. In addition to the foregoing reporting requirements, counterparties that are issuers of securities registered under section 12 of the Securities Exchange Act of 1934 or those that are required to file reports under section 15(d) of that Act, would be required to identify the SEC central index key number and confirm that an appropriate committee of board of directors has approved of the affiliates' decision not to clear a swap. The rule also would permit affiliates to report certain information on an annual basis, rather
In the NPRM, where reasonably feasible, the Commission sought to estimate quantifiable dollar costs. In some instances, however, the Commission explained that certain costs were not susceptible to meaningful quantification, and in those instances, the Commission discussed proposed costs and benefits in qualitative terms. As stated above, the Commission received a total of 14 comment letters following the publication of the NPRM, many of which strongly supported the proposed regulations. Some commenters generally addressed the cost-and-benefit aspect of the current rule; none of them, however, provided any quantitative data in response to the Commission's requests for comment.
In the sections that follow the Commission considers: (1) Costs and benefits of the exemption for eligible affiliate counterparties; (2) costs and benefits of the exemption for market participants and the public; (3) alternatives contemplated by the Commission and the costs and benefits relative to the approach adopted herein; (4) the impact of exemption in light of the 15(a) factors. The Commission also discusses the corresponding comments accordingly.
Without the final rule exempting swaps between certain affiliated counterparties, those entities would have to clear their inter-affiliate swaps pursuant to section 2(h)(1)(A) of the CEA (unless one of the affiliates is able to claim an exception under section 2(h)(7) of the CEA and/or § 50.50).
The benefits of required clearing have been well-documented by the Commission.
The counterparty and systemic risk mitigation benefits of central clearing also are realized from clearing transactions between affiliates. Central clearing would ensure that inter-affiliate swaps are fully documented and abide by valuation procedures set by the DCO, which would help to ensure that affiliates have current and accurate information regarding the value of their positions and would help prevent the possibility of valuation disputes.
Moreover, in the event that a clearing member defaults on their obligations to the DCO, the latter has a number of remedies to manage associated risks, including transferring the swap positions of the defaulted member, and covering any losses that may have accrued with the defaulting member's margin and other collateral on deposit. In order to transfer the swap positions of a defaulting member and manage the risk of those positions while doing so, the DCO has the ability to: (1) Hedge the portfolio of positions of the defaulting member to limit future losses; (2) partition the portfolio into smaller pieces; (3) auction off the pieces of the portfolio, together with their corresponding hedges, to other members of the DCO; and (4) allocate any remaining positions to members of the DCO. In order to cover the losses associated with such a default, the DCO would typically draw from (in order): (1) The initial margin posted by the defaulting member; (2) the guaranty fund contribution of the defaulting member; (3) the DCO's own capital contribution; (4) the guaranty fund contribution of non-defaulting members; and (5) an assessment on the non-defaulting members. These mutualized risk mitigation capabilities are largely unique to clearinghouses, and help to ensure that they remain solvent and creditworthy swap counterparties even when dealing with defaults by their members or other challenging market circumstances.
This rule reduces these benefits by allowing affiliates to exempt swaps from required clearing. In the absence of clearing, affiliated entities will not be required to collect initial or variation margin, or to implement other measures that clearinghouses typically use to mitigate their own counterparty credit risk. As a consequence, the affiliates may accumulate large outstanding positions with one another as the value of their swap positions change value between payment dates. If an affiliate with large, out-of-the-money, inter-affiliate swap positions defaulted, it could cause financial instability in its affiliates, leading to a cascading series of defaults among them. As discussed below, the Commission expects that internalization of costs and risks among
As stated above, by exempting qualified affiliates from clearing inter-affiliate swaps that would otherwise be subject to the clearing requirement, the rule ensures that each affiliate will not incur the costs of required clearing for those swaps. These costs include clearing fees as well as costs associated with margin and capital requirements. Regarding clearing fees, assuming that the affiliated counterparties cannot clear on their own behalves or through an affiliated clearing member of a DCO, the affiliated counterparties would have to arrange to clear their swaps through a futures commission merchant (FCM) that is a member of a DCO. Regardless of whether the affiliated counterparties clear on their own behalf or contract with an FCM, they will incur fees from the DCO.
For customer clearing, DCOs typically charge FCMs an initial transaction fee for each customer swap that is cleared, as well as an annual maintenance fee for each of the customers' open positions. For example, not including customer-specific and volume discounts, the transaction fees for interest rate swaps at CME range from $1 to $24 per million notional amount and the maintenance fees are $2 per year per million notional amount for open positions.
Second, permitting an exemption from clearing for swaps between affiliates, the final rule will reduce the amount of initial margin that such entities are required to post or pay for those swaps. In the clearing requirement determination, the Commission estimated that if every interest rate swap and CDS that is not currently cleared were moved into clearing, the additional initial margin that would need to be posted is approximately $19.2 billion for interest rate swaps and $53 billion for CDS.
Third, by exempting inter-affiliate swaps from required clearing, inter-affiliate swaps would not be subject to variation margin requirements under a DCO's rules. Exempting inter-affiliate swaps from required clearing's variation margin requirements may help affiliates and corporate entities as a whole manage their liquidity needs because the entities would not have to routinely collateralize losses at the DCO. It is also likely to reduce the operational costs that the affiliates would otherwise bear in order to manage margin calls and associated variation margin payments.
A number of commenters stated that executing swaps with the market through one affiliate enables entities to more efficiently and effectively manage corporate risk.
Moreover, these affiliate structures may not only reduce costs, but certain types of risk for the corporation as well. By concentrating personnel with swap and hedging expertise in one affiliate, and running inter-affiliate and market facing swap activities through a single entity, corporations may reduce the risk of operational errors. Such errors can create considerable risk when engaging in large hedging transactions. Moreover, the corporation's operational risk may be further mitigated by reducing the total number of market facing swaps into which the affiliated entities enter.
Additionally, as stated above and as noted in the NPRM, affiliates that are commonly owned internalize a portion of one another's risk.
Reduced internalization of risk among affiliates may create incentives for certain affiliates to use inter-affiliate swaps to shift risk to other affiliates in ways that are not necessarily in the best interests of minority stakeholders or counterparties to certain affiliates. In order to address this concern, the Commission has conditioned election of the exemption on several requirements that are intended to mitigate the costs created by reduced internalization of risk among affiliates, as well as the foregone benefits of required clearing.
The inter-affiliate exemption from required clearing sets forth five conditions that must be satisfied in order to elect the exemption: (1) Both affiliates must be majority-owned and their financial statements must be reported on a consolidated basis; (2) the swap must be documented in a written swap trading relationship document; (3) the swap must be subject to a centralized risk management program; (4) certain information regarding the swap must be reported to an SDR; and (5) both affiliates must meet certain conditions with regard to their outward-facing swaps. The Commission believes that entities will have to incur costs to satisfy these conditions. Those costs may offset some of the benefits that would otherwise result from the exemption. However, the exemption is permissive, and therefore the Commission also believes that an affiliate will elect the exemption only if these costs are less than the costs that an affiliate will incur should it decide not to elect the exemption. Moreover, as described below, the conditions provide certain benefits to the affiliates' counterparties and to the public that the Commission believes are essential in order to mitigate counterparty credit risk in situations where affiliates do not completely internalize each other's risks. Lastly, the Commission believes that in some cases entities are already meeting some or all of the requirements for electing the exemption, in which cases the affiliates would bear less new costs, or no new costs at all, due to the conditions.
In order to qualify as an eligible affiliate counterparty under the terms of the exemption, two factors must be met. First, one affiliate must directly or indirectly hold a majority ownership interest in the other, or a third party must hold a majority ownership interest in both. Second, the financial statements of both affiliates are reported on a consolidated basis under Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).
The Commission anticipates that in a relatively small number of cases entities may alter their ownership structures in order to qualify for the inter-affiliate exemption's majority-ownership condition. In these cases, entities may bear certain legal costs, and in some cases, costs associated with negotiations with other owners in the entity. These costs could vary significantly, depending on the complexity of the entity's existing ownership structure, including the number of owners and the alignment or misalignment of their interests. The Commission does not have adequate information to determine which entities or how many entities may consider altering their ownership structure in order to become eligible for the inter-affiliate exemption, but notes again that entities would only do this if they anticipate that the benefits of the exemption are greater than the costs of meeting the qualifying criteria.
Four commenters supported proposed majority-ownership requirement. CDEU commented that the majority-ownership test strikes an appropriate balance between ensuring that the rule is not overly broad and providing companies with the flexibility to account for differences in corporate structures. EEI noted that majority-owned affiliates will have strong incentives to internalize one another's risks because the failure of one affiliate impacts all affiliates within the corporate group. The Working Group generally supported the Commission's definition, but stated that inter-affiliate swaps should be unconditionally exempt from mandatory clearing when the affiliates are consolidated for accounting purposes. MetLife stated that it would likely limit inter-affiliate trading to “commonly-owned” affiliates, but agreed with the flexibility of including majority-owned affiliates.
Two commenters objected to the proposal and requested the Commission require 100% ownership of affiliates. AFR stated that permitting such a low level of joint ownership would lead to evasion of the clearing requirement through the creation of joint ventures set up to enable swap trading between banks without the need to clear the swaps. Similarly, Better Markets agreed that only 100% owned affiliates should be eligible for the exemption because allowing the exemption for the majority owner permits that owner to disregard the views of its minority partners and creates an incentive to evade the clearing requirement by structuring subsidiary partnerships. Finally, Better Markets stated that the majority-ownership standard will result in corporate groups transferring price risk and credit risk to different locations facilitating interconnectedness and potentially giving rise to systemic risk during times of market stress.
As discussed above, the degree to which one affiliate's risks are internalized by another affiliate depends significantly on the percentage of common ownership between them. For example, two affiliates that are 100% commonly owned are likely to internalize much of one another's risk. This creates a strong incentive for affiliates to perform on their obligations to one another. Therefore, if the Commission were to increase the common ownership requirement above a majority stake, it would likely result in affiliate counterparties internalizing more of one another's risk with respect to inter-affiliate swaps in order to qualify for the exemption. This, in turn, would provide additional incentives for affiliates to perform on their inter-affiliate swap obligations. However, if the Commission were to increase the common ownership percentage requirement, it also would reduce the number of affiliates that could qualify for, and benefit from, the exemption.
On the other hand, if the Commission lowered the percentage of common ownership that is required to be eligible for the exemption (
The Commission considered each of these factors and concluded that the majority stake requirement is sufficient to internalize costs and incentivize affiliates to perform on their obligations
As an additional consideration, as noted above, the majority requirement also harmonizes with Commission's understanding of the EMIR requirements. Harmonizing with EMIR is likely to reduce compliance monitoring costs for entities electing the affiliated entity exemption. In terms of potential costs in the form of disregarding the interests of minority shareholders, the Commission recognizes that a 100% ownership requirement would eliminate the risk of minority shareholders' interests not being aligned with decisions to elect the exemption. However, the Commission is also cognizant that such a requirement would reduce the number of affiliates that are able to claim the exemption. The Commission believes that the majority-ownership requirement appropriately considers the risk of the former and the benefits of the latter.
With regard to the consolidation of financial statements, FSR requested that the Commission clarify that alternative accounting standards can be used for purposes of meeting the requirement that the financial statements of both affiliates be reported on a consolidated basis. The Commission considered this comment and is adopting the alternative suggested by FSR. As modified the rule requires that the financial statements of both counterparties be reported on a consolidated basis under GAAP or IFRS. This change recognizes the fact that some entities claiming the exemption may report their financial statements under different accounting standards, and makes it possible for those entities to elect the exemption as long as they would be required to report their financial statements on a consolidated basis under GAAP or IFRS. This likely increases the number of entities that may elect the exemption relative to the form of the rule proposed in the NPRM while maintaining the protections that were intended with the requirement for consolidated financial statements. The Commission also modified the rule to clarify which entities are subject to the consolidated financial statement requirement.
As proposed, the inter-affiliate exemption required that eligible affiliate counterparties that elect the inter-affiliate exemption must enter into swaps with a swap trading relationship document that is in writing and includes all the terms governing the relationship between the affiliates. These terms included, but were not limited to, payment obligations, netting of payments, transfer of rights and obligations, governing law, valuation, and dispute resolution. This requirement would be satisfied if an eligible affiliate counterparty is an SD or MSP that complies with the swap trading relationship documentation requirements of § 23.504.
The Commission received a number of comments both supporting and opposing the swap documentation requirement. Better Markets, MetLife, and Prudential all supported the proposed documentation requirement. Specifically, MetLife and Prudential did not believe that the documentation requirement would be any more “burdensome or costly” for them because they already document all of their swaps.
Cravath, EEI, CDEU, and DLA Piper opposed the proposed documentation requirement. Cravath stated that the costs associated with the imposition of documentation requirements outweigh any benefits to the financial system, and that the Commission should leave the determination as to the appropriate level of documentation to boards of directors and management of companies, to determine based on the “reasonable exercise of their fiduciary responsibilities.” DLA Piper commented that the documentation requirements are burdensome and questioned the benefits of imposing documentation requirements on transactions between two parties.
CDEU expressed concern that proposed documentation condition would require that full ISDA Master Agreements be used to document inter-affiliate swaps. CDEU explained that while many market participants use master agreements, some end users many not have full master agreements because inter-affiliate swaps are purely internal and do not increase systemic risk. CDEU recommended that the proposed rule be revised to require that the swap documentation “include all terms necessary for compliance with its centralized risk management program” and eliminate the list of required terms. CDEU also requested that the Commission clarify that (1) market participants can continue to use documentation required by their risk management programs and (2) the rule does not require market participants use ISDA Master Agreements.
EEI recommended that the Commission eliminate the documentation requirement because the requirement is duplicative of corporate accounting records that affiliates currently maintain. EEI commented that a documentation requirement imposes “an additional, costly layer of ministerial process and documentation that is unnecessary to achieve the Commission's stated objectives.” EEI commented on the NPRM's consideration of costs and benefits and stated that the costs of the proposed documentation requirement are unjustified. The NPRM included an estimate that there would be a one-time cost of $15,000 to develop appropriate documentation for use by an entity's affiliates. EEI objected to this estimate because, in its view, the legal costs associated with individually negotiating and amending standard agreements between individual affiliates would exceed the NPRM's estimates. In addition, EEI objected to the NPRM's estimate of 22 affiliated counterparties for each corporate group as “far too low” for U.S. energy companies.
ISDA & SIFMA stated that the documentation requirements were overly prescriptive and would impose unnecessary costs on affiliates. ISDA & SIFMA recommended a more flexible approach that would require adequate documentation of “all transaction terms under applicable law.”
In response to commenters' requests for a more flexible standard, the Commission modified the proposal for swaps between affiliates that are not
Under this modification, the Commission is eliminating the non-exclusive list of terms, which included payment obligations, netting of payments, transfer of rights and obligations, governing law, valuation, and dispute resolution. The change responds to commenters' requests for a more flexible approach that reflects current market best practices, and signals that market participants retain the ability to craft appropriate documentation for their affiliated entities so long as such documentation includes the terms of the swap and “all terms governing the trading relationship between the eligible affiliate counterparties.”
Entities that have already established systems for documenting the terms of their inter-affiliate swaps and all the terms of the trading relationship between eligible affiliates will not bear any costs as a consequence of this requirement.
In response to EEI's comment regarding duplicative requirements, to the extent that the documentation requirement is duplicative of an affiliate's existing recordkeeping practices, it will not introduce new costs. However, the Commission notes that if existing records do not contain the terms of each inter-affiliate swap or all the terms of the trading relationship between affiliates, affiliates will be required to implement new documentation that creates incremental costs, as noted above.
Regarding benefits, documentation of inter-affiliate swaps is essential to effective risk management. In the absence of such documentation, affiliates cannot track or value their swaps effectively. Documentation also helps ensure that affiliates have proof of claim in the event of bankruptcy. As explained earlier, insufficient proof of claim could create challenges and uncertainty at bankruptcy that could adversely affect affiliates and third party creditors. The documentation requirement, to the extent that it requires entities to document all the terms that are necessary in order to value inter-affiliate swaps and to provide legal certainty in the event of bankruptcy, will promote effective risk management and resolution of claims in the event of insolvency.
Another condition of the inter-affiliate exemption requires that the swap be subject to a centralized risk management program that is “reasonably designed to monitor and manage the risks associated with the swap.” If at least one of the eligible affiliate counterparties is an SD or MSP, the centralized risk management requirement is satisfied by complying with the requirements of § 23.600.
Four commenters objected to the proposed requirement, suggested alternatives, and/or requested clarification. FSR stated that the condition should be eliminated because integrated risk management systems “are generally not established across international boundaries” and are not consistent with general risk practices in large, multinational organizations. FSR suggested that the requirement be dropped in favor of each entity making “its own evaluations of the risk associated with an inter-affiliate position.”
Cravath stated that in many cases, for companies outside of the financial sector, the proposed rule will require a substantial change in the processes and procedures currently maintained by such companies, and the cost of complying with the risk management program requirements outweigh any benefits to the financial system. Cravath commented that rather than subject companies to a risk management rule, “[c]ompanies should have the flexibility to engage in prudent risk management for their corporate group in a manner consistent with the overall level of risks to their business.”
EEI suggested that the Commission eliminate the centralized risk
The Working Group requested that the Commission clarify whether non-SDs and non-MSPs would be subject to the same enterprise-level risk management program as required for SDs and MSPs under § 23.600. The Working Group proposed that the Commission require “a robust risk management program” rather than “a centralized risk management program.”
In response to comments asking that the Commission clarify the level of risk management required for non-SDs and non-MSPs, the Commission confirms that the risk management condition is intended to be flexible and does not require the same level of policies and procedures as required under § 23.600 for SDs and MSPs. Under the rule, a company would be free to structure its centralized risk management program according to its unique needs, provided that the program reasonably monitors and manages the risks associated with its uncleared inter-affiliate swaps. In all likelihood, if a corporate group has a centralized risk management program in place that reasonably monitors and manages the risk associated with its inter-affiliate swaps as part of current industry practice, it is likely that the program would fulfill the requirements of exemption and therefore the exemption would not create new costs in such cases.
Given that a number of commenters stated that it is common practice for market participants, including end users, to have risk management programs in place,
The Commission also declined to modify the requirement to state “a robust risk management program” rather than “a centralized risk management program.” While change proposed by the Working Group may prevent certain entities from having to reorganize their risk management program in order to meet the requirements of the inter-affiliate exemption, it could also significantly reduce the ability of the risk management program to mitigate counterparty risk among affiliates. In the absence of variation margin, or clearing to mitigate counterparty credit risk among affiliates, risk management committees must have a clear line of sight into the financial health and obligations of each affiliate involved in inter-affiliate swaps.
In the NPRM, the Commission explained that some affiliates may have to create a risk management system to meet the risk management condition.
There are benefits that derive from the centralized-risk management condition. The Commission expects that centralized risk management programs will establish appropriate measurements and procedures to monitor the amount of risk that each individual affiliate bears, and to monitor the condition of each entity's affiliate counterparties. Because a centralized risk management program is more likely to have a clear line of sight into the financial condition of all affiliated entities, it is better positioned to manage each affiliate's exposure to the counterparty risk of other affiliates than a risk management program situated inside any single affiliate. As a consequence, centralized risk management programs may reduce the likelihood that individual affiliates could become insolvent because of their exposure to other affiliates, which not only benefits the affiliates, but their third party counterparties as well.
Another condition of electing the inter-affiliate exemption is that certain information about the swap and the election of the exemption be reported to an SDR. The reporting condition requires affiliates to report specific information to an SDR, or to the Commission if no SDR is available. Such information includes a notice that both affiliates are electing the exemption and that they both meet the other conditions of exemption, as well as information regarding how the financial obligations of both affiliates are generally satisfied with respect to uncleared swaps. The final rule also requires reporting certain information if the affiliate is an SEC filer.
The Commission received several comments in response to the reporting obligations of affiliates. Prudential and MetLife both commented that the Commission should clarify that only one counterparty is required to report the swap to an SDR. EEI stated that the Commission should eliminate the transaction-by-transaction reporting
In response to commenters' requests, the Commission clarified that the reporting condition can be fulfilled by one of the affiliate counterparties on behalf of both counterparties. As noted in the NPRM, the Commission believes that affiliates within a corporate group may make independent determinations on whether to submit an inter-affiliate swap for clearing. Given the possibility that each affiliate may reach different conclusions regarding clearing the swap, the final rule requires that both counterparties elect the proposed inter-affiliate clearing exemption.
DLA Piper commented that corporate groups do not maintain back-office systems necessary to keep the level of detail required under parts 45 and 46 with respect to their inter-company swaps. DLA Piper further commented that many corporate groups will need to develop costly systems and procedures, which will increase their hedging costs, in order to comply with the reporting rules. The Commission observes that the costs of parts 45 and 46 reporting have been addressed in prior rulemakings and are beyond the scope of this rule.
With regard to comments recommending that all reporting be done on an annual basis rather than a swap-by-swap basis, the Commission declines to modify the rule. The Commission believes it is appropriate to provide for annual reporting of certain information, including how affiliates generally meet their financial obligations and information related to its status as an electing SEC Filer. However, it would not be sufficient to allow one annual report to cover both affiliate counterparties' election of the exemption from clearing and the confirmation that both affiliates meet the conditions of the exemption.
Eligible affiliates may choose to elect or not elect the exemption on a swap-by-swap basis. As noted above, whether a swap is cleared or not has a significant impact on its ability to transfer credit risk from one entity to another. Regulators must know which swaps are cleared and which swaps are not cleared in order to monitor potential accumulations and transfers of risk within the financial system. In addition, they must know which exemption is being used to exempt certain swaps in order to monitor the use of each exemption and its possible effect on systemic risk. Consequently, the election of the exemption and the confirmation that the exemption's conditions are met must be made for each swap.
The Commission does not believe that this reporting requirement will impose a significant burden on affiliate counterparties because, as discussed above, other detailed information for every swap must be reported under sections 2(a)(13) and 4r of the CEA and Commission regulations. This approach comports with the approach adopted for market participants claiming the end-user exception under section 2(h)(7) of the CEA.
In the NPRM, the Commission estimated specific costs for the reporting condition, including entering a notice of election into the reporting system.
The benefits of the reporting condition include enhancing the level of transparency associated with inter-affiliate swaps activity, thereby affording the Commission new insights into the practices of affiliates that engage in inter-affiliate swaps, and helping the Commission and other appropriate regulators identify emerging or potential risks. As noted above, regulators must know whether swaps are cleared or uncleared in order to use swap data to monitor emerging risks. In short, the overall benefit of reporting would be a greater body of information for the Commission to analyze with the goal of identifying and reducing systemic risk.
The final condition imposed on the inter-affiliate exemption from required clearing relates to the treatment of outward-facing swaps entered into by the two eligible affiliate counterparties to the inter-affiliate swap. As proposed, the condition required that each affiliate counterparty either: (i) Is located in the United States; (ii) is located in a jurisdiction with a clearing requirement that is comparable and comprehensive to the clearing requirement in the United States; (iii) is required to clear swaps with non-affiliated parties in compliance with U.S. law; or (iv) does not enter into swaps with non-affiliated parties.
The Commission received a number of comments in support of and opposed to this proposed condition, but did not receive any comments quantifying the costs or benefits of the proposed condition. AFR supported the proposal and stated that inter-affiliate swaps could, without appropriate restrictions, bring risk back to the U.S. from foreign affiliates. AFR commented that an inter-affiliate swap might be used to move parts of the U.S. swaps market outside of U.S. regulatory oversight by transferring risk to jurisdictions with little or no regulatory oversight, whereby a non-U.S. affiliate of a U.S. entity could enter into an outward-facing swap. AFR stated that an inter-affiliate swap could contribute to financial contagion across different groups within a complex financial institution, making it more difficult to “ring-fence” risks in one part of an organization. AFR further commented that laws and regulations of a foreign country might prevent U.S. counterparties to swaps from having access to the financial resources of an affiliate in the event of a bankruptcy or insolvency. Better Markets also supported the proposed treatment of outward-facing swaps condition.
In opposition to the proposed condition, CDEU commented that the proposed “comparable and comprehensive” condition is not necessary or appropriate to reduce risk and prevent evasion because, according to CDEU, transactions between affiliates do not increase systemic risk, regardless of the location of the affiliate. ISDA & SIFMA stated that the concern that foreign inter-affiliate swaps pose risk to the U.S. financial system is unfounded because internal swaps have no conclusive effect on systemic risk.
The Commission considered each of these comments and decided to adopt the treatment of outward-facing swaps condition, with certain important modifications, because the Commission believes that the risk of evasion of the U.S. clearing requirement and the potential systemic risk associated with uncleared inter-affiliate swaps involving foreign affiliates and non-affiliated counterparties necessitates that the inter-affiliate exemption include such a condition. As modified, the final rule requires that each eligible affiliate counterparty must clear all swaps that it enters into with third parties to the extent that the swap is subject to the Commission's clearing requirement. In order to satisfy this requirement, eligible affiliates may clear their third-party swaps pursuant to the Commission's clearing requirement or comply with the requirements for clearing the swap under a foreign jurisdiction's clearing mandate that is comparable to, and as comprehensive as, the clearing requirement of section 2(h) of the Act and part 50 of the Commission's regulations, as determined by the Commission. In addition, the Commission modified the condition to allow for recognition of clearing exemptions and exceptions under the CEA and an exception or exemption under a comparable foreign jurisdiction's clearing mandate that is comparable to an exception or exemption under section 2(h)(7) of the CEA or part 50. For entities that are not in a jurisdiction with a clearing requirement that is comparable to, and as comprehensive as, the clearing mandate in 2(h) of the Act, they may comply by clearing swaps with unaffiliated counterparties through a registered DCO or clearing organization that is subject to supervision by appropriate government authorities in the home country of the clearing organization and has been assessed to be in compliance with the PFMIs.
The Commission believes that this modification will provide greater clarity and transparency by more clearly establishing the conditions to the exemption and alternative methods by which eligible affiliates may satisfy the requirements. In addition, the Commission considered the approach adopted in EMIR.
As AFR noted, without appropriate restrictions, inter-affiliate swaps could transfer risk back to the United States from foreign affiliates. The final rule takes steps to mitigate this risk insofar as the intent of the condition on outward-facing swaps is to narrow the exemption such that the risk of a cascading series of defaults among unrelated entities is reduced.
For companies whose inter-affiliate swap activities are conducted exclusively through entities in the United States and jurisdictions with clearing mandates that are comparable to, and as comprehensive as, the clearing requirement of section 2(h) of the CEA, all outward-facing swaps that fall under a § 50.4 class will be subject to required clearing,
For companies whose inter-affiliate swap activities extend to countries without clearing mandates that are comparable to, and as comprehensive as, the clearing requirement of section 2(h) of the CEA, the requirements of the rule mitigate counterparty risk associated with swaps that are required to be cleared under § 50.4 by requiring those swaps to be cleared at a DCO or a clearing organization that is subject to supervision by appropriate government authorities and that is in compliance with the PFMIs. In this manner, swaps that the Commission has determined must be cleared cannot be used as a means of transferring financial risk among unaffiliated entities where one of the counterparties is also claiming an exemption from required clearing under this inter-affiliate exemption. However, the Commission observes that outward-facing swaps that are not required to be cleared under § 50.4 and that are entered into between unrelated entities in a jurisdiction without comparable margin requirements, may be a means through which financial risk could be passed between unaffiliated entities without the protection of required clearing, creating the possibility of
The Commission does not agree with CDEU's assertion that transactions between affiliates do not increase systemic risk, regardless of the location of the affiliate, or with ISDA & SIFMA's comment that the concern that foreign inter-affiliate swaps pose risk to the U.S. financial system is unfounded. As noted above, in the absence of any restrictions on outward-facing swaps, inter-affiliate swaps could be used to transfer risk to jurisdictions without clearing requirements or margin requirements for uncleared swaps. Risk could then be transferred between unrelated entities without the protection of clearing or margin requirements to mitigate the risk of financial contagion spreading from one to the other.
In addition to the modifications to the treatment of outward-facing swaps condition described above, the Commission also accepted commenter's suggestions and is providing a transition period with two alternative compliance frameworks for eligible affiliates domiciled in certain foreign jurisdictions that have the legal authority to implement mandatory clearing regimes. As noted above, ISDA & SIFMA and CDEU stated that questions of timing and criteria for comparability render the proposed treatment of outward-facing swaps condition problematic, and that unless the condition is satisfactorily resolved, the condition could hamper the ability of U.S.-based groups to compete in foreign markets. ISDA & SIFMA further commented that if the Commission retains the cross-border requirements, the Commission should provide an appropriate transition period in order to allow foreign jurisdictions to implement their own G–20 mandates. The Commission is adopting two alternative compliance frameworks in response to concerns raised by commenters pertaining to the timing and sequencing of the implementation of the inter-affiliate exemption.
The Commission is adopting a time-limited alternative compliance framework, available until March 11, 2014, for certain eligible affiliates transacting swaps with affiliated counterparties located in the European Union, Japan, or Singapore. The alternative compliance framework will allow affiliated counterparties, or a third party that directly or indirectly holds a majority interest in both eligible affiliate counterparties, to pay and collect full variation margin daily on all swaps entered into between affiliates or between an affiliate and its unaffiliated counterparties, rather than submitting such swaps for clearing. In addition, the Commission has determined to provide time-limited relief for certain eligible affiliated counterparties located in the European Union, Japan, or Singapore from complying with the requirements of § 50.52(b)(4)(i) as a condition of electing the inter-affiliate exemption. In particular, § 50.52(b)(4)(ii)(B) provides that if one of the eligible affiliate counterparties is located in the European Union, Japan, or Singapore, the requirements of paragraph (b)(4)(i) will not apply to such eligible affiliate counterparty until March 11, 2014, provided that: (1) The one counterparty that directly or indirectly holds a majority ownership interest in the other counterparty or the third party that directly or indirectly holds a majority ownership interest in both counterparties is not a “financial entity” as defined in section 2(h)(7)(C)(i) of the Act, and (2) neither eligible affiliate counterparty is affiliated with an entity that is a swap dealer or major swap participant, as defined in § 1.3.
Another time-limited alternative compliance framework also will be available for eligible affiliates transacting swaps with affiliated counterparties located outside the European Union, Japan, and Singapore, as long as the aggregate notional value of such swaps, which are included in a class of swaps identified in § 50.4, does not exceed five percent of the aggregate notional value of all swaps, which are included in a class of swaps identified in § 50.4, in each instance the notional value as measured in U.S. dollar equivalents and calculated for each calendar quarter, entered into by the eligible affiliate counterparty located in the United States.
These alternative compliance frameworks will mitigate the competitive effects that ISDA & SIFMA and CDEU noted by allowing certain entities to collect variation margin rather than clearing such swaps until March 11, 2014. The Commission expects that collecting full variation margin is likely to be less costly than clearing because the latter includes initial margin in addition to variation margin, as well as clearing fees. To the extent that the alternative compliance approach is less costly, it will reduce the competitive effects that foreign affiliates experience during the period of time when comparable clearing requirements do not yet exist for competitors operating in foreign jurisdictions.
The time-limited alternative compliance frameworks may, nevertheless, have some temporary competitive effects in the market. Companies with foreign affiliates that are required to pay and collect variation margin daily on all swaps entered into between affiliates or between an affiliate and its unaffiliated counterparties will bear some costs that competing firms based entirely in foreign jurisdictions may not bear because comparable clearing mandates have not yet been implemented. In the European Union, Japan, and Singapore, these effects are likely to largely disappear once comparable regimes are established and companies with entities in those jurisdictions are required to clear. In jurisdictions where comparable regimes are never implemented, the competitive effects will be longer-standing.
The Commission, however, believes that such costs are warranted in light of the benefits provided by mitigating the likelihood of transferring risk back to the United States through inter-affiliate swaps that are not cleared or margined. Requiring the payment and collection of full variation margin will address the possibility of foreign affiliates developing significant counterparty credit risk exposures and then passing that risk back to affiliates in the United States through non-cleared swaps. Variation margin is one of the tools used by clearinghouses to mitigate counterparty credit risk. As an independent risk management tool, it reduces counterparty credit risk by requiring counterparties to make daily payments reflecting gains or losses based on each swap's value. However, it is not a complete replacement for the panoply of risk management tools that are used by clearinghouses to manage counterparty credit risk. As a consequence, this time-limited alternative compliance framework will mitigate counterparty credit risk, but not to the extent that clearing would. The Commission, however, believes that this measure will enable affiliates in the European Union, Japan, or Singapore to take advantage of the exemption while comparable clearing regimes are being established in those jurisdictions, while
Moreover, the Commission believes that providing additional time-limited relief for certain affiliates located in the European Union, Japan, or Singapore from the requirements of § 50.52(b)(4)(i) to clear their outward-facing swaps until March 11, 2014 under § 50.52(b)(4)(ii)(B) also will mitigate the competitive effects noted commenters by allowing such entities to continue to enter into inter-affiliate swaps without requiring those swaps to be submitted to clearing or variation margin, and is likely to be less costly than requiring such entities to either clear or exchange variation margin on their inter-affiliate or outward-facing swaps.
Lastly, the Commission received several comments regarding the criteria for issuing comparability determinations, and expressing concern that unless such issues are satisfactorily resolved, the condition could hamper the ability of U.S.-based groups to compete in foreign markets. In response, the Commission has provided in this final release a significant amount of additional information regarding how and when those determinations will be made.
In the NPRM, the Commission stated that the condition for the treatment of outward-facing swaps would not impose additional costs.
In terms of benefits, the Commission stated in the NPRM that the corporate group and U.S. financial markets may bear additional risk if the foreign affiliate is free to enter into an uncleared swap with a third-party that would be subject to clearing were it entered into in the United States. The Commission believes that the requirements for outward-facing swaps will prevent foreign affiliates from taking on significant risk through outward-facing swaps that fall under a § 50.4 class, which reduces the risk that could then be transferred back to the United States through exempt inter-affiliate swaps.
Many commenters asserted that inter-affiliate swaps do not create any additional risk for third parties facing those affiliates.
The Commission recognizes that these claims may be true to the extent that each affiliate, or a common parent, completely internalizes the risks facing the other affiliate. Majority ownership facilitates such internalization of costs among affiliated entities, and the threat of reputational risk is another factor that may cause related entities to act in the best interests of affiliate counterparties. However, as discussed above, two other factors reduce the degree to which affiliated entities may internalize each other's costs. Ownership stakes that are less than 100% reduce the percentage of costs that one affiliate internalizes from another, and bankruptcy laws providing protection for the assets of one affiliate from the creditors of another affiliate may create incentives to permit one affiliate to fail. These factors reduce the internalization of costs among affiliates.
As a consequence, the counterparty risk that creditors to a given entity face may be increased by the inter-affiliate swaps into which that the entity enters. This risk may not be “new” in the sense that it is risk that was previously borne by another affiliate. But from the perspective of counterparties to the entity that now bears the risk, it is new. It increases the credit risk that the entity they face bears.
The Commission, however, has established conditions on the inter-affiliate exemption that are intended to mitigate any increase in counterparty risk that third parties might bear as the result of the exemption. As described above, the documentation and centralized risk management requirements help to ensure that each group of affiliates engaging in inter-affiliate swaps has a centralized risk management program with adequate information to value and risk manage swap positions effectively. Moreover, the reporting requirements will help to ensure that regulators have information that is necessary to understand the use of inter-affiliate swaps under this exemption.
In terms of costs, some commenters assert that this exception creates risk of contagion and systemic risk that could threaten the U.S. financial system.
AFR stated that the exemption may deprive DCOs of swaps volume and liquidity that is necessary for risk management. In effect, the exemption will reduce the number of swaps being cleared. All other things being equal, this may cause DCOs to increase the margin requirements for those swaps to compensate for having less volume, which may increase the cost of using cleared swaps. AFR also stated that the inter-affiliate exception will enable banks to set up joint ventures to trade swaps without clearing them. The Commission believes that its conditions with regard to treatment of outward-facing swaps address AFR's concerns about evasion of the clearing requirement.
The Commission considered several alternatives to the final rulemaking, including: (1) Alternative definitions of eligible affiliate counterparty; (2) more prescriptive documentation requirements; (3) alternative risk management requirements; (4) different requirements for treatment of outward-facing swaps; and (5) requiring variation margin for swaps between affiliated financial entities. The first four alternatives are discussed at length above. The fifth alternative, the imposition of variation margin on swaps between affiliates that are financial entities, was considered by the Commission and ultimately rejected based on comments.
As proposed, the inter-affiliate exemption would have required affiliated financial entities to pay and collect variation margin associated with their swaps unless the affiliates were 100% commonly owned and commonly guaranteed by a 100% commonly owned guarantor. In the final rule, the Commission has eliminated the variation margin requirement. This change is likely to create significant savings for eligible affiliates. Reduced margin requirements will reduce the capital costs that entities bear when transacting inter-affiliate swaps, and may reduce the capital requirements for financial entities under prudential regulation. In addition, it may help entities avoid liquidity crunches when their positions move significantly out of the money in a short period of time.
However, eliminating the variation margin requirement also significantly reduces the protective value of the eligibility requirements that the Commission established in order to reduce the likelihood of cascading defaults among affiliated entities, and the associated risk to third parties transacting with those entities. Without the variation margin requirements, affiliated entities may develop large outstanding exposures toward one another, and to the degree that affiliated entities do not internalize one another's costs, an affiliate that is out of the money will have incentives not to perform on its obligations. In addition if the obligations of one entity are sufficiently large, its default may jeopardize the health of other affiliated entities, which would also increase counterparty risk for third parties that have uncleared outstanding positions with those entities.
In deciding to finalize the inter-affiliate clearing exemption, the Commission assessed how to protect affiliated entities, third parties in the swaps market, and the public. The Commission has sought to ensure that in the absence of a clearing requirement the risks presented by uncleared inter-affiliate swaps would be mitigated so that significant losses to one affiliate counterparty or a default of one of the affiliate counterparties is less likely to create significant repercussions for third-parties or the American public. Toward that end, the Commission has required that affiliates to execute swap trading relationship documentation, maintain a centralized-risk management process, and report specific information to an SDR, and meet certain requirements related to outward-facing swaps in order to be eligible for the exception. As explained in this cost-benefit section, these conditions serve multiple objectives that ultimately protect market participants and the public.
For instance, the documentation requirement will reduce uncertainties where affiliates incur significant swaps-related losses or where there is a defaulting affiliate. Because the documentation would be in writing, the Commission expects that there will be less contractual ambiguity should disagreements between affiliates arise. The condition that an inter-affiliate swap be subject to a centralized risk management program reasonably designed to monitor and manage risk will also help mitigate the risks associated with inter-affiliate swaps. As noted throughout this final rulemaking, inter-affiliate swap risk could adversely impact third parties that enter into uncleared swaps or other contracts with affiliates engaging in inter-affiliate swaps.
The reporting condition would help the Commission and the affiliate's leadership monitor compliance with the inter-affiliate clearing exemption. For example, an affiliate that also is an SEC Filer must receive a governing board's approval for electing the proposed exemption. It cannot act independently. In the Commission's opinion, the reporting conditions promote accountability and transparency, offering another public safeguard by keeping the Commission and each entity's board of directors informed.
On the other hand, the rule also creates certain costs that will be borne by eligible entities, the counterparties to those entities, and the public. Regarding costs for eligible entities, the qualification requirements will create some new costs for those that do not already have recordkeeping and risk management systems that are in compliance with the rule. However, as noted above, the Commission believes that some entities may already have systems in place that meet most or all of the requirements. Moreover, entities will elect the exemption only if they project the benefit of doing so is greater than the costs associated with the qualifying requirements. Therefore, these costs may decrease the value of the exemption, but they will not create new costs for entities that choose not to elect the exemption.
Exempting swaps between majority-owned affiliates within a corporate group from the clearing requirement will promote allocational efficiency by reducing overall clearing costs for eligible affiliate counterparties. The Commission also anticipates that the exemption will increase allocational efficiency and the financial integrity of markets because it will make it less costly for corporate groups to centralize their hedging and market facing swap activities within a single affiliate. As explained above, commenters stated that clearing swaps through single affiliates enables affiliates and corporate groups to more efficiently and effectively manage corporate risk.
Certain provisions of the proposed rule, such as the requirements that inter-affiliate swaps be subject to centralized risk management and that certain information be reported, also would discourage abuse of the exemption. Together, these conditions promote the financial integrity of swap markets and financial markets as a whole.
Under Commission regulation 43.2, a “publicly reportable swap transaction,” means, among other things, “any executed swap that is an arm's length transaction between two parties that results in a corresponding change in the market risk position between the two parties.”
As a general rule, the Commission believes that clearing swaps is a sound
Also, as noted above, without clearing to mitigate transmission of risk among affiliates, the risk that any one affiliate takes on, and any contagion that may be caused by that risk, may be transferred more easily to other affiliates. This makes the risk mitigation requirements for outward-facing swaps more important. The Commission's requirements for outward-facing swaps mitigate the risk that swaps that the Commission has determined are required to be cleared could transfer risk that would then be spread among the affiliates, but does not eliminate the possibility that swaps that are not required to be cleared and are transacted in a regime without mandatory clearing (or bilateral margin requirements) for uncleared swaps could result in financial risk that impacts its affiliates and counterparties of those affiliates.
The Commission also believes that SEC Filer reporting is a prudent practice. As detailed in this preamble and the rule text, SEC Filers are affiliates that meet certain SEC-related qualifications, and their governing boards or equivalent bodies are directly responsible to shareholders for the financial condition and performance of the affiliate. The boards also have access to information that would give them a comprehensive picture of the company's financial condition and risk management strategies. Therefore, any oversight they provide to the affiliate's risk management strategies would likely encourage sound risk management practices. In addition, the condition that affiliates electing the inter-affiliate clearing exemption must report their boards' knowledge of the election is a sound risk management practice.
Aside from those discussed in Section II.A above, the Commission has identified no other public interest considerations.
The Regulatory Flexibility Act (RFA) requires that agencies consider whether the rules they propose will have a significant economic impact on a substantial number of small entities and, if so, provide a regulatory flexibility analysis respecting the impact.
The Commission has previously determined that ECPs are not small entities for purposes of the RFA.
Thus, because nearly all of the ECPs that may be subject to the proposed clearing requirement are not small entities, and because the few ECPs that have been determined by the SBA to be small entities are unlikely to be subject to the clearing requirement, the Chairman, on behalf of the CFTC, hereby certifies pursuant to 5 U.S.C. 605(b) that the rules herein will not have a significant economic impact on a substantial number of small entities.
The Paperwork Reduction Act of 1995 (PRA)
Certain provisions of this final rulemaking impose new information collection requirements within the meaning of the PRA, for which the Commission must obtain a valid control number. Accordingly, the Commission requested, and OMB has assigned control number 3038–0104 for the new collection of information. The Commission also has submitted this final rule release, the proposed rulemaking, and all required supporting documentation to OMB for review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The title for this new collection of information is “Rule 50.52 (proposed as rule 39.6(g)) Affiliate Transaction Uncleared Swap Notification.” Responses to this collection of information will be mandatory.
The Commission will protect proprietary information in accordance with the Freedom of Information Act and 17 CFR part 145, entitled “Commission Records and Information.” In addition, section 8(a)(1) of the CEA strictly prohibits the Commission, unless specifically authorized by the Act, from making public “data and information that would separately disclose the business transactions or market positions of any person and trade secrets or names of customers.”
The regulations being adopted in this final rule release impose certain reporting requirements on eligible affiliates that enter into inter-affiliate swaps and elect the inter-affiliate exemption from clearing such swaps. As described in the NPRM and in this final release, the reporting requirements are designed to address Commission concerns regarding inter-affiliate swap risk and to provide the Commission with information necessary to regulate the swaps market. In particular, regulation 50.52(c) (proposed as § 39.6(g)(4)) will require an electing counterparty to provide, or cause to be provided, certain information to a registered SDR or, if no registered SDR is available to receive the information, to the Commission, in the form and manner specified by the Commission. As further described in this final rule release, § 50.52(c)(1) requires reporting counterparties to notify the Commission each time they elect the inter-affiliate clearing exemption for each swap, by reporting certain information to a registered SDR, or to the Commission, if no registered SDR is available to receive the information. Reporting counterparties also must report the information required by § 50.52(c)(2) and (3), and have the option to report such information each time that the eligible counterparties elect the inter-affiliate exemption for each swap, or on an annual basis in anticipation of electing the exemption.
To determine the total time burden and cost associated with the proposed rule for PRA purposes, the Commission estimated the number of affiliates that likely would seek to claim the exemption and the average number of inter-affiliate swaps for which the affiliates would elect to use the proposed exemption. The Commission also estimated the time burden required for entities to comply with the reporting requirements.
In estimating the number of affiliates and the average number of inter-affiliate swaps that likely would claim the inter-affiliate exemption, the Commission used data from the U.S. Bureau of Economic Analysis (BEA) to estimate that there are approximately 22 subsidiaries per U.S. multinational parent company (MNC), resulting in a total of 53,195 affiliates that might elect the inter-affiliate exemption.
In estimating the time burden associated with complying with the reporting requirements of the rules, the Commission stated in the NPRM that it expected each reporting counterparty would likely spend between 15 seconds to two minutes per transaction entering information required by § 50.52(c)(1) (proposed § 39.6(g)(4)(i)) into the reporting system.
With respect to the annual reporting option described in § 50.52(d), the Commission stated in the NPRM that it anticipated that at least 90% of MNCs would choose to file an annual report in lieu of reporting each swap separately. The Commission estimated in the NPRM that it would take an average of 30 to 90 minutes to complete and submit the filing, resulting in an annual aggregate cost for submitting the annual report of approximately $195 to $585.
In addition to the specific reporting obligations described in the rules, the NPRM also noted that reporting counterparties may need to update established reporting systems to comply with the reporting requirement, and non-reporting affiliate counterparties may need to transmit information to reporting counterparties after entering into a swap subject to the rules. In the NPRM, the Commission stated that it anticipated that reporting counterparties may have to modify their established reporting systems in order to accommodate the additional data fields required by § 50.52(c) (proposed § 39.6(g)(4)), and estimated that the modifications would create a one-time cost of between $341 and $3,410 per entity.
Using these figures, the Commission estimated that the inter-affiliate exemption could result in an average total annual burden of 1,758,369 hours and average total annual costs of $685,309,281, or approximately 1.8 minutes and $10.48 per inter-affiliate swap.
The Commission invited public comment on the proposed PRA analysis and estimates and on any aspect of the reporting burdens resulting from proposed § 39.6(g) (now § 50.52(c)). One commenter submitted comments in relation to the Commission's estimate of the number of eligible affiliates seeking to claim the exemption. No commenters submitted comments to OMB, and OMB itself did not submit any comments to the Commission pertaining to the proposed rule.
In the context of its comments pertaining to the costs and benefits of the reporting requirements of the proposed rule, EEI claimed that the Commission's estimation of 22 eligible affiliates per MNC was “far too low” for many U.S. energy companies. Although EEI commented that the Commission's estimate of the number of affiliates per MNC was too low in the context of U.S. energy companies, EEI did not provide an alternative estimate or point to any other sources of information that might provide an alternative source for estimating the average number of subsidiaries per MNC.
The Commission has considered EEI's comment and declines to revise its estimate of the number of affiliates of an MNC.
The Commission further notes that the estimate of the number of affiliates per MNC proposed in the NPRM and adopted in this release for purposes of the PRA, is an averaged approximation based on publically available information collected by the BEA, and acknowledges that the number of affiliates of an MNC may be higher or lower than 22. However, there is no basis for concluding that the use of a different source for estimating the average number of affiliates per MNC would result in a higher number estimate, nor did the Commission receive comments to that effect. Accordingly, the Commission believes that its estimation is reasonable in light of the information that is publicly available at this time, and that its original proposed estimates remain appropriate for purposes of the PRA.
Business and industry, Clearing, Swaps.
For the reasons stated in the preamble, amend 17 CFR part 50 as follows:
7 U.S.C. 2(h) and 7a–1 as amended by Pub. L. 111–203, 124 Stat. 1376.
(a)
(1) Counterparties to a swap may elect not to clear a swap subject to the clearing requirement of section 2(h)(1)(A) of the Act and this part if:
(i) One counterparty, directly or indirectly, holds a majority ownership interest in the other counterparty, and the counterparty that holds the majority interest in the other counterparty reports its financial statements on a consolidated basis under Generally Accepted Accounting Principles or International Financial Reporting Standards, and such consolidated financial statements include the financial results of the majority-owned counterparty; or
(ii) A third party, directly or indirectly, holds a majority ownership interest in both counterparties, and the third party reports its financial statements on a consolidated basis under Generally Accepted Accounting Principles or International Financial Reporting Standards, and such consolidated financial statements include the financial results of both of the swap counterparties.
(2) For purposes of this section:
(i) A counterparty or third party directly or indirectly holds a majority ownership interest if it directly or indirectly holds a majority of the equity securities of an entity, or the right to receive upon dissolution, or the contribution of, a majority of the capital of a partnership; and
(ii) The term “eligible affiliate counterparty” means an entity that meets the requirements of this paragraph.
(b)
(1) Both counterparties elect not to clear the swap;
(2)(i) A swap dealer or major swap participant that is an eligible affiliate counterparty to the swap satisfies the requirements of § 23.504 of this chapter; or
(ii) If neither eligible affiliate counterparty is a swap dealer or major swap participant, the terms of the swap are documented in a swap trading relationship document that shall be in writing and shall include all terms governing the trading relationship between the eligible affiliate counterparties;
(3) The swap is subject to a centralized risk management program that is reasonably designed to monitor and manage the risks associated with the swap. If at least one of the eligible affiliate counterparties is a swap dealer or major swap participant, this centralized risk management requirement shall be satisfied by complying with the requirements of § 23.600 of this chapter; and
(4)(i) Each eligible affiliate counterparty that enters into a swap, which is included in a class of swaps identified in § 50.4, with an unaffiliated counterparty shall:
(A) Comply with the requirements for clearing the swap in section 2(h) of the Act and this part;
(B) Comply with the requirements for clearing the swap under a foreign jurisdiction's clearing mandate that is comparable, and comprehensive but not necessarily identical, to the clearing requirement of section 2(h) of the Act and this part, as determined by the Commission;
(C) Comply with an exception or exemption under section 2(h)(7) of the Act or this part;
(D) Comply with an exception or exemption under a foreign jurisdiction's clearing mandate, provided that:
(
(
(E) Clear such swap through a registered derivatives clearing organization or a clearing organization that is subject to supervision by appropriate government authorities in the home country of the clearing organization and has been assessed to be in compliance with the Principles for Financial Market Infrastructures.
(ii)(A) Except as provided in paragraph (b)(4)(ii)(B) of this section, if one of the eligible affiliate counterparties is located in the European Union, Japan, or Singapore, the following may satisfy the requirements of paragraph (b)(4)(i) of this section until March 11, 2014:
(
(
(B) If one of the eligible affiliate counterparties is located in the European Union, Japan, or Singapore, the requirements of paragraph (b)(4)(i) of this section shall not apply to the eligible affiliate counterparty located in the European Union, Japan, or Singapore until March 11, 2014, provided that:
(
(
(iii) If an eligible affiliate counterparty located in the United States enters into swaps, which are included in a class of swaps identified in § 50.4, with eligible affiliate counterparties located in jurisdictions other than the United States, the European Union, Japan, and Singapore, and the aggregate notional value of such swaps, which are included in a class of swaps identified in § 50.4, does not exceed five percent of the aggregate notional value of all swaps, which are included in a class of swaps identified in § 50.4, in each instance the notional value as measured in U.S. dollar equivalents and calculated for each calendar quarter, entered into by the eligible affiliate counterparty located in the United States, then such swaps shall be deemed to satisfy the requirements of paragraph (b)(4)(i) of this section until March 11, 2014, provided that:
(A) Each eligible affiliate counterparty, or a third party that directly or indirectly holds a majority interest in both eligible affiliate counterparties, pays and collects full variation margin daily on all swaps entered into between the eligible affiliate counterparties located in jurisdictions other than the United States, the European Union, Japan, and Singapore and an unaffiliated counterparty; or
(B) Each eligible affiliate counterparty, or a third party that directly or indirectly holds a majority interest in both eligible affiliate counterparties, pays and collects full variation margin daily on all of the eligible affiliate counterparties' swaps with other eligible affiliate counterparties.
(c)
(1) Confirmation that both eligible affiliate counterparties to the swap are electing not to clear the swap and that each of the electing eligible affiliate counterparties satisfies the requirements in paragraph (b) of this section applicable to it;
(2) For each electing eligible affiliate counterparty, how the counterparty generally meets its financial obligations associated with entering into non-cleared swaps by identifying one or more of the following categories, as applicable:
(i) A written credit support agreement;
(ii) Pledged or segregated assets (including posting or receiving margin pursuant to a credit support agreement or otherwise);
(iii) A written guarantee from another party;
(iv) The electing counterparty's available financial resources; or
(v) Means other than those described in paragraphs (c)(2)(i), (ii), (iii) or (iv) of this section; and
(3) If an electing eligible affiliate counterparty is an entity that is an issuer of securities registered under section 12 of, or is required to file reports under section 15(d) of, the Securities Exchange Act of 1934:
(i) The relevant SEC Central Index Key number for that counterparty; and
(ii) Acknowledgment that an appropriate committee of the board of directors (or equivalent body) of the eligible affiliate counterparty has reviewed and approved the decision to enter into swaps that are exempt from the requirements of section 2(h)(1) and 2(h)(8) of the Act.
(d)
The following appendices will not appear in the Code of Federal Regulations.
On this matter, Chairman Gensler and Commissioners Chilton, O'Malia, and Wetjen voted in the affirmative; Commissioner Sommers voted in the negative.
I support the final rule to exempt swaps between certain affiliated entities within a corporate group from the clearing requirement in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Since the late 19th century, clearinghouses have lowered risk for the public and fostered competition in the futures market. Clearing also has democratized the market by fostering access for farmers, ranchers, merchants and other participants.
The Commission approved the first clearing requirement for swaps last November, following through on the U.S. commitment at the 2009 G–20 meeting that standardized swaps be cleared by the end of 2012. Following Congress' direction, end-users are not required to bring swaps into central clearing.
A key milestone was reached on March 11 with the requirement that swap dealers and the largest hedge funds begin clearing the vast majority of interest rate and credit default index swaps. Compliance will continue to be phased in throughout this year. Other financial entities begin clearing June 10. Accounts managed by third party investment managers and ERISA pension plans have until September 9.
The final rule allows for an exemption from clearing for swaps between affiliates under the following limitations:
• First, the exemption covers swaps between majority-owned affiliates whose financial statements are reported on a consolidated basis.
• Second, the rule requires documentation of such exempted swaps, centralized risk management, and reporting requirements for such swaps.
• Third, the exemption requires that each swap entered into by the affiliated counterparties with unaffiliated counterparties must be cleared. This approach largely aligns with the Europeans' approach to an exemption for inter-affiliate clearing.
In order to promote international harmonization regarding mandatory clearing, the final rulemaking provides for two time-limited alternative compliance frameworks for swaps entered into with unaffiliated counterparties in jurisdictions outside of the United States.
With regard to affiliated counterparties located in the European Union, Japan and Singapore—jurisdictions that have adopted swap clearing regimes and are currently in the process of implementation—the Commission is phasing compliance with the requirement to clear swaps with unaffiliated counterparties until March 11, 2014. During the phase-in period affiliated counterparties located in these jurisdictions will be able to pay and collect variation margin in lieu of clearing. Affiliated counterparties that are located in these jurisdictions (that are not affiliated with swap dealers or major swap participants) will not have to pay or collect such variation margin during the phase-in period, provided they are not directly or indirectly majority-owned by a financial entity.
With regard to affiliated counterparties located in other foreign jurisdictions, the Commission is phasing compliance with the requirement to clear swaps with unaffiliated counterparties until March 11, 2014. Until that date, an affiliated counterparty located outside the United States, the European Union, Japan and Singapore does not have to clear its swaps with unaffiliated counterparties so long as the aggregate notional value of such swaps does not exceed five percent of the notional value of all swaps entered into by the affiliated counterparty located in the United States.
This phasing in of the inter-affiliate exemption provides a transition period for foreign jurisdictions to implement comparable and comprehensive clearing regimes.
United States Patent and Trademark Office, Commerce.
Notice of proposed rulemaking.
The Patent Law Treaties Implementation Act of 2012 (PLTIA) amends the patent laws to implement the provisions of the Hague Agreement Concerning International Registration of Industrial Designs (Hague Agreement) in title I, and the Patent Law Treaty (PLT) in title II. The PLT harmonizes and streamlines formal procedures pertaining to the filing and processing of patent applications. This notice proposes changes to the rules of practice for consistency with the changes in the PLT and title II of the PLTIA. The United States Patent and Trademark Office (Office) is implementing the Hague Agreement and title I of the PLTIA in a separate rulemaking. The notable changes in the PLT and title II of the PLTIA pertain to: (1) The filing date requirements for a patent application; (2) the restoration of patent rights via the revival of abandoned applications and acceptance of delayed maintenance fee payments; and (3) the restoration of the right of priority to a foreign application or the benefit of a provisional application via the permitting of a claim to priority to a foreign application or the benefit of a provisional application in a subsequent application filed within two months of the expiration of the twelve-month period (six-month period for design applications) for filing such a subsequent application.
Comments should be sent by electronic mail message over the Internet addressed to:
Comments may also be sent by electronic mail message over the Internet via the Federal eRulemaking Portal. See the Federal eRulemaking Portal Web site (
Although comments may be submitted by postal mail, the Office prefers to receive comments by electronic mail message over the Internet because sharing comments with the public is more easily accomplished. Electronic comments are preferred to be submitted in plain text, but also may be submitted in ADOBE® portable document format or MICROSOFT WORD® format. Comments not submitted electronically should be submitted on paper in a format that facilitates convenient digital scanning into ADOBE® portable document format.
The comments will be available for public inspection at the Office of the Commissioner for Patents, currently located in Madison East, Tenth Floor, 600 Dulany Street, Alexandria, Virginia. Comments also will be available for viewing via the Office's Internet Web site (
Robert W. Bahr, Senior Patent Counsel, Office of Patent Examination Policy, at (571) 272–8090.
The Office is specifically proposing to revise the rules of practice pertaining to the filing date requirements for a patent application to provide that a claim is not required for a nonprovisional application (other than for a design patent) to be entitled to a filing date (a claim is currently not required for a provisional application to be entitled to a filing date). The Office is also providing for the filing of a nonprovisional application “by reference” to a previously filed application in lieu of filing the specification and drawings. An application filed either without at least one claim or “by reference” to a previously filed application in lieu of the specification and drawings will be treated in a manner analogous to the current provisions for treating an application that is missing application components not required for a filing date under 35 U.S.C. 111(a) (37 CFR 1.53(f)), in that the applicant will be given a period of time within which to supply a claim and/or claims or a copy of the specification and drawings of the previously filed application.
The Office is also proposing to revise the rules of practice pertaining to the revival of abandoned applications (37 CFR 1.137) and acceptance of delayed maintenance fee payments (37 CFR 1.378) to provide for the revival of abandoned applications and acceptance of delayed maintenance fee payments solely on the basis of “unintentional” delay. The PLTIA eliminates the provisions of the patent statutes relating to revival of abandoned applications or acceptance of delayed maintenance fee payments on the basis of a showing of “unavoidable” delay.
The Office is also proposing to revise the rules of practice pertaining to priority and benefit claims to provide for the restoration of the right of priority to a prior-filed foreign application and restoration of the right to benefit of a prior-filed provisional application. The Office is providing with respect to the right of priority to a prior-filed foreign application that if the subsequent application is filed after the expiration of the twelve-month period (six-month period in the case of a design application) set forth in 35 U.S.C. 119(a), but within two months from the expiration of the twelve-month period (six-month period in the case of a design application), the right of priority in the subsequent application may be restored upon petition and payment of the applicable fee if the delay in filing the subsequent application within the twelve- or six-month period was
The Office is also proposing to revise the patent term adjustment rules to provide for a reduction of any patent term adjustment if an application is not in condition for examination within eight months of its filing date (or date of commencement of national stage in an international application). The PLT and PLTIA provide applicants with additional opportunities to delay the examination process (e.g., the ability to file an application without any claims and to file an application merely by reference to a previously filed application). This proposed change to the patent term adjustment rules is to avoid the situation in which an applicant obtains patent term adjustment as a consequence of the applicant's taking advantage of the additional opportunities to delay the examination process provided by the PLT and PLTIA.
The United States Senate ratified the PLT on December 7, 2007. The PLT did not enter into force in the United States upon ratification in 2007 as the PLT is not a self-executing treaty.
PLT Article 5 sets forth the requirements for obtaining a filing date. PLT Article 5(1) provides that a filing date will be accorded to an application upon compliance with three formal requirements: (1) An indication that the elements received by the Office are intended to be an application for a patent for an invention; (2) indications that would allow the Office to identify and to contact the applicant; and (3) a part which appears to be a description of the invention. No additional elements (such as a claim or a drawing) can be required for a filing date to be accorded to an application. Pre-PLTIA 35 U.S.C. 111(a) provides that the filing date of an application shall be the date on which “the specification and any required drawing” are received in the Office, and thus requires that an application contain a drawing where necessary for an understanding of the invention (35 U.S.C. 113 (first sentence)) and at least one claim to be entitled to a filing date.
PLT Article 5(1)(b) permits a Contracting Party to accept a drawing as a description of the invention in appropriate circumstances. This is considered to be consistent with current jurisprudence in the United States and thus no change in that regard is necessary.
PLT Article 5 and PLTIA 35 U.S.C. 111(a) specify the formal requirements necessary for an application to be entitled to a filing date, and compliance with these requirements ensures only that the disclosure present upon filing in the application will be entitled to a filing date. An application whose disclosure satisfies only the requirements of 35 U.S.C. 111(a) to be entitled to a filing date may nonetheless not meet the requirements of 35 U.S.C. 112 and 113 necessary for the applicant to be entitled to a patent for any claimed invention presented in the application, or even for the application to effectively serve as a priority or benefit application for an application subsequently filed in the United States or abroad. Therefore, the ability to file an application without a claim or drawing should be viewed as a safeguard against the loss of a filing date due to a technicality and not as a best practice.
PLT Article 5(2) permits the description of the invention to be filed in any language.
As discussed previously, the filing date requirements in PLT Article 5 are not simply the maximum requirements but constitute the absolute requirements for an application to be accorded a filing date.
Finally, as discussed previously, the PLT does not apply to design applications. Section 202(a) of the PLTIA amends 35 U.S.C. 171 to provide that the filing date of an application for design patent shall be the date on which the specification as prescribed by 35 U.S.C. 112 and any required drawings are filed.
35 U.S.C. 111(a) currently provides that the fee and oath or declaration may be submitted after the specification and any required drawing are submitted, within such period and under such conditions, including the payment of a surcharge, as may be prescribed by the Director, and that upon failure to submit the fee and oath or declaration within such prescribed period, the application shall be regarded as abandoned.
Section 201(a) of the PLTIA further amends 35 U.S.C. 111 to: (1) more closely align the corresponding provisions for nonprovisional applications in 35 U.S.C. 111(a) and provisional applications in 35 U.S.C. 111(b); (2) more clearly distinguish the filing date requirements in those sections from the more substantive requirements of 35 U.S.C. 112 and 113; and (3) delete the reference to the “unavoidable or unintentional” standard in favor of an “unintentional” standard in new 35 U.S.C. 27.
PLT Article 5(6) pertains to applications containing a missing part of the description or a missing drawing. PLT Article 5(6)(a) provides that if the missing part of the description or a missing drawing is timely filed, the filing date of the application shall be the date on which the Office has received that part of the description or that drawing. PLT Article 5(6)(c) provides that if the missing part of the description or the missing drawing is timely withdrawn by the applicant, the filing date of the application shall be the date on which the applicant complied with requirements provided for in PLT Article 5(1) and (2). PLT Article 5(6)(b) provides that where a prior-filed application contains the missing part of the description and/or missing drawing, the application as filed claims the priority to the prior-filed application, and the applicant timely files a copy of the prior-filed application (and translation if necessary), the filing date of the application (including the missing part of the description and/or missing drawing) shall be the date on which the applicant complied with requirements provided for in PLT Article 5(1) and (2). The Office's procedures concerning the handling of applications containing a missing part of the description or a missing drawing are set forth in MPEP 601.01(d) (applications filed without all pages of the specification) and 601.01(g) (applications filed without all figures of drawings).
PLT Article 5(7) provides that a reference to a previously filed application, made upon the filing of the application, shall replace the description and any drawings of the application for purposes of the filing date of the application. PLT Rule 2(5) requires that this reference to the previously filed application indicate that, for the purposes of the filing date, the description and any drawings of the application are replaced by the reference to the previously filed application, and also indicate the application number and Office with which the previously filed application was filed. PLT Rule 2(5) further provides that a Contracting Party may require that: (1) a copy of the previously filed application and a translation of the previously filed application (if not in a language accepted by the Office) be filed with the Office within a time limit of not less than two months from the date on which the application containing the reference was received by the Office; and (2) a certified copy of the previously filed application be filed with the Office within a time limit of not less than four months from the date on which the application containing the reference was received by the Office.
Section 201(a) of the PLTIA amends 35 U.S.C. 111 to provide for this reference filing in a new 35 U.S.C. 111(c). New 35 U.S.C. 111(c) provides that a reference made upon the filing of an application to a previously filed application shall, as prescribed by the Office, constitute the specification and any drawings of the subsequent application for purposes of a filing date.
PLT Article 6 standardizes application format requirements by providing that a Contracting Party may not impose form or content requirements different from or in addition to the form and content requirements provided for in the Patent Cooperation Treaty (PCT), or permitted by the PCT for international applications during national processing or examination, or as prescribed in the PLT Regulations. The United States has taken a reservation with respect to PLT Article 6, in that PLT Article 6(1) shall not apply to any requirement relating to unity of invention applicable under the PCT to an international application.
The PLT further provides for the establishment of standardized Model International Forms, which will have to be accepted by all Contracting Parties. The following Model International Forms have been established under the PLT: (1) Model International Request Form; (2) Model International Power of Attorney Form; (3) Model International Request for Recordation of Change in Name or Address Form; (4) Model International Request for Correction of Mistakes Form; (5) Model International Request for Recordation of Change in Applicant or Owner Form; (6) Model International Certificate of Transfer Form; (7) Model International Request for Recordation of a License/Cancellation of the Recordation of a License Form; and (8) Model International Request for Recordation of a Security Interest/Cancellation of the Recordation of a Security Interest Form.
PLT Articles 6, 7, and 8 provide for simplified procedures, such as exceptions from mandatory representation for certain actions, restrictions on requiring evidence on a systematic basis, permitting a single communication for more than one application or patent from the same person in certain situations (e.g., powers
PLT Rule 7(2)(b) specifically provides that a single power of attorney is sufficient even where it relates to more than one application or patent of the same person, and also that a power of attorney will be sufficient where it relates to future applications of such person. PLT Rule 7(2)(b) permits the Office to require a separate copy of the power of attorney be filed in each application and patent to which it relates. The Office permits a single power of attorney for multiple applications or patents of the same person, but requires a separate copy of the power of attorney be filed in each application or patent to which it relates.
PLT Articles 11, 12, and 13 provide procedures to avoid the loss of substantive rights as a result of an unintentional failure to comply with formality requirements or time periods.
PLT Article 11 requires a Contracting Party to provide for either extensions of time (or an alternative to reinstate the applicant or owner's rights) for time limits fixed by the Contracting Party. The PLT distinguishes between time limits fixed by applicable law and time limits fixed by the Contracting Party. A time limit is fixed by applicable law when the time limit is provided for in a statute (e.g., the three-month period in 35 U.S.C. 151) or regulation (e.g., the three-month period in 37 CFR 1.85(c)). A time limit is fixed by the Contracting Party when the applicable statute or regulation provides for a time period to be set, but does not specify the time limit itself (e.g., 35 U.S.C. 133, 37 CFR 1.53(f)(1), or 37 CFR 1.134). While many time limits fixed by regulation are extendable (e.g., 37 CFR 1.53(f)(1), and 1.137(e)), PLT Article 11 applies only to time limits that are not fixed by statute or regulation.
PLT Article 12 provides for reinstatement of rights on the basis of unintentional delay (or alternatively if the failure occurred in spite of due care). Section 201(b) of the PLTIA adds a new section 27 to title 35. New 35 U.S.C. 27 provides that the Director may establish procedures, including the payment of a surcharge, to revive an unintentionally abandoned application for patent, accept an unintentionally delayed payment of the fee for issuing each patent, or accept an unintentionally delayed response by the patent owner in a reexamination proceeding, upon petition by the applicant for patent or patent owner.
Section 202(b)(1)(A) of the PLTIA amends 35 U.S.C. 41(a)(7) to provide that the Office shall charge $1,700.00 on filing each petition for the revival of an abandoned application for a patent, for the delayed payment of the fee for issuing each patent, for the delayed response by the patent owner in any reexamination proceeding, for the delayed payment of the fee for maintaining a patent in force, for the delayed submission of a priority or benefit claim, or for the extension of the twelve-month period for filing a subsequent application.
Section 202(b)(1)(B) of the PLTIA also amends 35 U.S.C. 41(c)(1) to conform procedures for the late payment of maintenance fees to those provided in new 35 U.S.C. 27. Section 202(b)(1)(B) of the PLTIA specifically amends 35 U.S.C. 41(c)(1) to delete the twenty-four month time limit for unintentionally delayed maintenance fee payments and the reference to an unavoidable standard. PLTIA 35 U.S.C. 41(c)(1) provides that: (1) The Director may accept the payment of any maintenance fee required by 35 U.S.C. 41(b) after the six-month grace period if the delay is shown to the satisfaction of the Director to have been unintentional; (2) the Director may require the payment of the fee specified in 35 U.S.C. 41(a)(7) as a condition of accepting payment of any maintenance fee after the six-month grace period; and (3) if the Director accepts payment of a maintenance fee after the six-month grace period, the patent shall be considered as not having expired at the end of the grace period (subject to the current intervening rights provision of 35 U.S.C. 41(c)(2)).
Section 202(b) of the PLTIA also amends 35 U.S.C. 122(b)(2)(B)(iii), 133, 151, 364(b), and 371(d) to delete the reference to an unavoidable standard in light of new 35 U.S.C. 27.
Section 202(b)(6) of the PLTIA also amends 35 U.S.C. 151 to delete the third and fourth paragraphs pertaining to the lapsed patent practice.
PLT Article 13 provides for the restoration of the right of priority where there is a failure to timely claim priority to the prior application, and also where there is a failure to file the subsequent application within twelve months of the filing date of the priority application. Section 201(c) of the PLTIA amends 35 U.S.C. 119 to provide that the twelve-month periods set forth in 35 U.S.C. 119(a) and (e) may be extended by an additional two months if the delay in filing an application claiming priority to a foreign application or the benefit of a provisional application within the twelve-month period was unintentional. Section 201(c) of the PLTIA also amends 35 U.S.C. 119(a) and 365(b) to provide for unintentionally delayed claims for priority under the PCT and the Regulations under the PCT, and priority claims to an application not filed within the priority period specified in the PCT and the Regulations under the PCT but filed within the additional two-month period.
Section 201(c) of the PLTIA specifically amends 35 U.S.C. 119(a) by adding that the Director may prescribe regulations, including the requirement for payment of the fee specified in 35 U.S.C. 41(a)(7), pursuant to which the twelve-month period set forth in 35 U.S.C. 119(a) may be extended by an additional two months if the delay in filing the application in the United States within the twelve-month period was unintentional.
Section 201(c) of the PLTIA specifically amends 35 U.S.C. 119(e)(1) by adding that the Director may prescribe regulations, including the requirement for payment of the fee specified in 35 U.S.C. 41(a)(7), pursuant to which the twelve-month period set forth in 35 U.S.C. 119(e) may be extended by an additional two months if the delay in filing the application under 35 U.S.C. 111(a) or 363 within the twelve-month period was unintentional.
Section 201(c) of the PLTIA amends 35 U.S.C. 119(e)(3) by adding that for an application for patent filed under 35 U.S.C. 363 in a Receiving Office other than the United States Patent and
Section 201(c) of the PLTIA amends 35 U.S.C. 365(b) by adding that the Director may establish procedures, including the requirement for payment of the fee specified in 35 U.S.C. 41(a)(7), to accept an unintentionally delayed claim for priority under the PCT and PCT Regulations, and to accept a priority claim that pertains to an application that was not filed within the priority period specified in the PCT and PCT Regulations, but was filed within the additional two-month period specified under 35 U.S.C. 119(a) or the PCT or PCT Regulations.
Sections 201(c) and 202(b)(2) and (b)(3) of the PLTIA amend 35 U.S.C. 119(b), 119(e), and 120 to change the phrase “including the payment of a surcharge” in the provision pertaining to the submission of delayed priority or benefit claims to “including the requirement for payment of the fee specified in [35 U.S.C.] 41(a)(7).”
PLT Article 14 and PLT Rules 15, 16, and 17 pertain to requests for a change in the applicant's or owner's name or address, requests for a change in the applicant or owner (e.g., due to an assignment), requests for recordation of a license or a security interest, and requests for correction of a mistake.
35 U.S.C. 261 currently provides that: “Subject to the provisions of this title, patents shall have the attributes of personal property.” Section 201(d) of the PLTIA amends 35 U.S.C. 261, first paragraph, by adding: “The [United States] Patent and Trademark Office shall maintain a register of interests in applications for patents and patents and shall record any document related thereto upon request, and may require a fee therefor.”
PLT Rule 15(3)(b) provides that a single request for recordation of a change in the name and/or address of the applicant or owner is sufficient even where it relates to more than one application or patent of the same person, but also permits the Office to require a separate copy of the request for each application and patent to which it relates. PLT Rules 16(5) and 17(5) provide that a single request for recordation of a change in the applicant or owner and a single request for recordation of a license or security interest is sufficient even where it relates to more than one application or patent of the same person, but also permits the Office to require a separate copy of the request for each application and patent to which it relates. The Office will permit a single request for recordation of a change in the name and/or address of the applicant or owner, single request for recordation of a change in the applicant or owner, and a single request for recordation of a license or security interest power of attorney for multiple applications or patents of the same person, but will require that a separate copy of such a request for each application and patent to which it relates.
PLT Rule 18(3) provides that a single request for correction of a mistake is sufficient even where it relates to more than one application or patent of the same person, provided that the mistake and correction are common to all applications or patents concerned, but also permits the Office to require a separate copy of the request for each application and patent to which it relates. The Office will permit a single request for correction of a mistake to more than one application or patent of the same person, provided that the mistake and correction are common to all applications or patents concerned, but will require a separate copy of such a request for each application and patent to which it relates.
Section 203(a) provides that the amendments made by title II of the PLTIA take effect on December 18, 2013 (the date that is one year after the date of the enactment of the PLTIA) and apply to: (1) any patent issued before, on, or after December 18, 2013; and (2) any application for patent that is pending on or filed after December 18, 2013.
The following is a discussion of proposed amendments to Title 37 of the Code of Federal Regulations, Part 1.
Section 1.4(d) is proposed to be amended to implement the signature provisions of PLT Rule 9(4) concerning electronic communications. PLT Rule 9(4) provides that where an Office permits the filing of communications in electronic form or by electronic means of transmittal, it shall consider such a communication signed if a graphic representation of a signature accepted by that Office appears on that communication as received by the Office. Section 1.4(d) is specifically proposed to be amended to provide that correspondence permitted via the Office electronic filing system may be signed by a graphic representation of a handwritten signature as provided for in § 1.4(d)(1) or a graphic representation of an S-signature as provided for in § 1.4(d)(2) when it is submitted via the Office electronic filing system.
Section 1.17(m) is proposed to be amended to implement the change to 35 U.S.C. 41(a)(7), 41(c)(1), 119, 120 and 365 in section 202(b) of the PLTIA. Section 202(b)(1)(A) of the PLTIA amends 35 U.S.C. 41(a)(7) to provide that the Office shall charge $1,700.00 ($850.00 small entity) on filing each petition for the revival of an abandoned application for a patent, for the delayed payment of the fee for issuing each patent, for the delayed response by the patent owner in any reexamination proceeding, for the delayed payment of the fee for maintaining a patent in force, for the delayed submission of a priority or benefit claim, or for the extension of the twelve-month period for filing a subsequent application. Sections
Section 1.17(p) is proposed to be amended and § 1.17(o) is proposed to be added to provide for information disclosure statements under §§ 1.97(c) or (d) in § 1.17(p) and for third-party submissions under § 1.290 in § 1.17(o). Section 1.17(p) currently provides for both information disclosure statements under §§ 1.97(c) or (d) and third-party submissions under § 1.290, which may cause confusion as a third party is not eligible for the micro entity discount. Thus, § 1.17(p) as proposed provides for information disclosure statements under §§ 1.97(c) or (d) and includes both a small entity and micro entity discount, and § 1.17(o) as proposed provides for third-party submissions under § 1.290 and includes only a small entity discount.
Sections 1.17(l) and 1.17(t) are proposed to be removed in view of the change to 35 U.S.C. 41(a)(7), 119, and 120 in section 202(b) of the PLTIA.
Section 1.29(k)(4) is proposed to be amended to delete “but payment of a deficiency based upon the difference between the current fee amount for a small entity and the amount of the previous erroneous micro entity fee payment will not be treated as an assertion of small entity status under § 1.27(c)” and “[o]nce a deficiency payment is submitted under this paragraph, a written assertion of small entity status under § 1.27(c)(1) is required to obtain small entity status.” This proposed change is for consistency with the provision of § 1.29(i) that a notification of loss of micro entity status is not automatically treated as a notification of loss of small entity status.
Section 201(a) of the PLTIA amends 35 U.S.C. 111(a) to provide that the filing date of an application (other than for a design patent) is the date on which a specification, “with or without claims,” is received in the Office. Section 1.53(b) is thus proposed to be amended to provide that the filing date of an application for patent filed under § 1.53, except for an application for a design patent or a provisional application under § 1.53(c), is the date on which a specification, with or without claims is received in the Office.
Section 202(a) of the PLTIA amends 35 U.S.C. 171 to provide that the filing date of an application for design patent shall be the date on which the specification as prescribed by 35 U.S.C. 112 and any required drawings are filed. Therefore, a design application must contain a claim to be entitled to a filing date. Section 1.53(b) is thus proposed to be amended to provide that the filing date of an application for a design patent filed under this section, except for a continued prosecution application under § 1.53(d), is the date on which the specification as prescribed by 35 U.S.C. 112, including at least one claim, and any required drawings are received in the Office.
Section 201(a) of the PLTIA amends 35 U.S.C. 111(b) to more closely align the corresponding provisions for nonprovisional applications in 35 U.S.C. 111(a) and provisional applications in 35 U.S.C. 111(b). Section 1.53(c) is thus proposed to be amended to provide that the filing date of a provisional application is the date on which a specification, with or without claims, is received in the Office.
As discussed previously, PLT Article 5 and PLTIA 35 U.S.C. 111(a) provide minimal formal requirements necessary for an application to be entitled to a filing date to safeguard against the loss of a filing date due to a technicality. PLT Article 5 and PLTIA 35 U.S.C. 111 should not be viewed as prescribing a best practice for the preparation and filing of a patent application. The drafting of claims at the time an application (provisional or nonprovisional) is prepared to any claimed invention for which patent protection is desired and inclusion of such claims with the application will help ensure that the application will contain an adequate disclosure under 35 U.S.C. 112.
Section 201(a) of the PLTIA amends 35 U.S.C. 111(a) to provide that the claim or claims may be submitted after the filing date of the application, within such period and under such conditions, including the payment of a surcharge, as may be prescribed by the Office, and that upon failure to submit one or more claims within the period prescribed by the Office, the application shall be regarded as abandoned. Section 1.53(f) is thus proposed to be amended to provide that an application filed without at least one claim would be treated in a manner analogous to how an application without the filing, search, or examination fee is treated under current § 1.53. Section 1.53(f) is specifically proposed to be amended to provide that if an application which has been accorded a filing date pursuant to § 1.53(b) does not include at least one claim: (1) the applicant will be notified and given a period of time within which to file a claim or claims and pay the surcharge if required by § 1.16(f) to avoid abandonment if the applicant has provided a correspondence address; and (2) the applicant has three months from the filing date of the application within which to file a claim or claims and pay the surcharge required by § 1.16(f) to avoid abandonment if the applicant has not provided a correspondence address.
In the rulemaking to implement the inventor's oath or declaration provisions of the AIA, the Office provided that applicants may postpone filing the inventor's oath or declaration until the application is otherwise in condition for allowance if the applicant provides an application data sheet before examination indicating the name, residence, and mailing address of each
Section 1(f) of the Act to correct and improve certain provisions of the Leahy-Smith America Invents Act and title 35, United States Code (AIA Technical Corrections Act) amends 35 U.S.C. 115(f) to read as follows: “The applicant for patent shall provide each required oath or declaration under [35 U.S.C. 115](a), substitute statement under [35 U.S.C. 115](d), or recorded assignment meeting the requirements of [35 U.S.C. 115](e) no later than the date on which the issue fee for the patent is paid.”
35 U.S.C. 115(f) does not specifically provide for the consequence that results if an applicant fails to provide an oath or declaration in compliance with § 1.63, or a substitute statement in compliance with § 1.64, executed by or with respect to each actual inventor. PLTIA 35 U.S.C. 111(a)(3), however, provides that the “fee, oath or declaration, and 1 or more claims may be submitted after the filing date of the application, within such period and under such conditions, including the payment of a surcharge, as may be prescribed by the Director,” and that “[u]pon failure to submit the fee, oath or declaration, and 1 or more claims within such prescribed period, the application shall be regarded as abandoned.” The Office is thus proposing to amend § 1.53(f)(3)(ii) to provide that if the applicant is notified in a notice of allowability that an oath or declaration in compliance with § 1.63, or substitute statement in compliance with § 1.64, executed by or with respect to each named inventor has not been filed, the applicant must file each required oath or declaration in compliance with § 1.63, or substitute statement in compliance with § 1.64, no later than the date on which the issue fee is paid to avoid abandonment (which time period is not extendable). The Office is also proposing to amend § 1.53(f)(3)(ii) to provide that: (1) the applicant must file each required oath or declaration in compliance with § 1.63, or substitute statement in compliance with § 1.64, no later than the date on which the issue fee for the patent is paid (as required by 35 U.S.C. 115(f)); and (2) that the Office may dispense with the notice provided for in § 1.53(f)(1) if each required oath or declaration in compliance with § 1.63, or substitute statement in compliance with § 1.64, has been filed before the application is in condition for allowance.
Section 1.55(b) as proposed also provides that the right of priority in the subsequent application may be restored under PCT Rule 26
Section 1.55(c) is proposed to provide for the situation in which a certified copy of the foreign application is not filed during the international stage of an international application. Section 1.55(c) is specifically proposed to provide that in such a situation: (1) A certified copy of the foreign application must be filed within four months from the date of entry into the national stage as set forth in § 1.491 or sixteen months from the filing date of the prior-filed foreign application (except as provided in §§ 1.55(h) and (i)); and (2) the certified copy of the foreign application must be accompanied by a petition including a showing of good and sufficient cause for the delay and the petition fee set forth in § 1.17(g), if a certified copy of the foreign application is not filed within the later of four months from the date of entry into the national stage as set forth in § 1.491 or sixteen months from the filing date of the prior-filed foreign application, and the exceptions in §§ 1.55(h) and (i) are not applicable.
Section 1.55(e) is proposed to be amended to provide for delayed priority claims under 35 U.S.C. 365(b) in a national stage application under 35 U.S.C. 371. Section 1.55(e) is also proposed to be amended for consistency with the change to 35 U.S.C. 119(b) in section 202(b)(2) of the PLTIA (replaces “payment of a surcharge” with “payment of the fee specified in section 41(a)(7)”).
Section 1.55(i) is proposed to be amended to also refer to § 1.55(c) for consistency with the proposed change to § 1.55(c).
35 U.S.C. 111(c) provides that a reference made upon the filing of an application to a previously filed application shall, as prescribed by the Office, constitute the specification and any drawings of the subsequent application for purposes of a filing date.
35 U.S.C. 111(c) specifically provides that the Director may prescribe the conditions, including the payment of a surcharge, under which a reference made upon the filing of an application under 35 U.S.C. 111(a) to a previously filed application, specifying the previously filed application by application number and the intellectual property authority or country in which the application was filed, shall constitute the specification and any drawings of the subsequent application for purposes of a filing date. PLT Rule 2(5) requires that this reference to the previously filed application indicate that, for the purposes of the filing date, the description and any drawings of the application are replaced by the reference to the previously filed application, and also provides that a Contracting Party may require that the reference also indicate the filing date of the previously filed application. Proposed § 1.57(a) thus provides that, subject to the conditions and requirements of § 1.57(a), a reference made in the English language in an application data sheet in accordance with § 1.76 upon the filing of an application under 35 U.S.C. 111(a) to a previously filed application, indicating that the specification and any drawings of the application are replaced by the reference to the previously filed application, and specifying the previously filed application by application number, filing date, and the intellectual property authority or country in which the application was filed, shall constitute the specification and any drawings of the subsequent application for purposes of a filing date under § 1.53(b). The requirement for a reference to the previously filed application in an application data sheet will be satisfied by the presentation of such priority or benefit claim on the Patent Law Treaty Model International Request Form filed in the Office (
For an application filed by reference to a previously filed application under proposed § 1.57(a), the specification and any drawings of the previously filed application will constitute the specification and any drawings of the application filed by reference under proposed § 1.57(a). Thus, the specification and any drawings of the previously filed application will be considered in determining whether an application filed by reference under proposed § 1.57(a) is entitled to a filing date under § 1.53(b).
35 U.S.C. 111(c) further provides that a copy of the specification and any drawings of the previously filed application shall be submitted within such period and under such conditions as may be prescribed by the Director, and that a failure to submit the copy of the specification and any drawings of the previously filed application within the prescribed period shall result in the application's being regarded as abandoned. Proposed § 1.57(a) thus provides that: (1) The applicant will be notified and given a period of time within which to file a copy of the specification and drawings from the previously filed application, an English language translation of the previously filed application and the fee required by § 1.17(i) if the previously filed application is in a language other than English, and pay the surcharge required by § 1.16(f) to avoid abandonment if the applicant has provided a correspondence address (proposed § 1.57(a)(1)); and (2) the applicant has three months from the filing date of the application to file a copy of the specification and drawings from the previously filed application, an English language translation of the previously filed application and the fee required by § 1.17(i) if the previously filed application is in a language other than English, and pay the surcharge required by § 1.16(f) to avoid abandonment if the applicant has not provided a correspondence address (proposed § 1.57(a)(2)). Proposed § 1.57(a)(1) also provides that such a notice may be combined with a notice under § 1.53(f) (e.g., a notice requiring that the applicant provide at least one claim and pay the filing fees).
35 U.S.C. 111(c) finally provides that such an application shall be treated as having never been filed, unless: (1) the application is revived under 35 U.S.C. 27; and (2) a copy of the specification and any drawings of the previously filed application are submitted to the Director. Section 1.57(a)(3) is thus proposed to provide that an application abandoned under §§ 1.57(a)(1) or (a)(2) shall be treated as having never been filed, unless: (1) the application is revived under § 1.137; and (2) a copy of the specification and any drawings of the previously filed application are filed in the Office.
Section 1.57(a)(4) is proposed to provide that a certified copy of the previously filed application must be filed in the Office or received by the
Section 1.57(i) is proposed to be added to provide that an application transmittal letter limited to the transmittal of a copy of the specification and drawings from a previously filed application submitted under §§ 1.57(a) or (b) of this section may be signed by a juristic applicant or patent owner. PLT Article 7(2) and PLT Rule 7(1) provide that an assignee of an application, an applicant, owner or other interested person may act
Section 1.76 is also proposed to be amended to permit the use of PLT Model International Forms as appropriate in lieu of an application data sheet under § 1.76. Section 1.76(f) specifically provides that: (1) the requirement in § 1.55 or 1.78 for the presentation of a priority or benefit claim under 35 U.S.C. 119, 120, 121, or 365 in an application data sheet will be satisfied by the presentation of such priority or benefit claim in the Patent Law Treaty Model International Request Form; (2) the requirement in § 1.57(a) for a reference to the previously filed application in an application data sheet will be satisfied by the presentation of such priority or benefit claim in the Patent Law Treaty Model International Request Form; and (3) the requirement in § 1.46 for the presentation of the name of the applicant under 35 U.S.C. 118 in an application data sheet will be satisfied by the presentation of the name of the applicant in the Patent Law Treaty Model International Request Form, Patent Law Treaty Model International Request for Recordation of Change in Name or Address Form, or Patent Law Treaty Model International Request for Recordation of Change in Applicant or Owner Form, as applicable. Section 1.76 is also proposed to be amended to permit the use of a PCT Request Form in lieu of an application data sheet under § 1.76 if the PCT Request Form is accompanied by a clear indication that treatment of the application as an application under 35 U.S.C. 111 is desired.
Section 1.78(a) as proposed also provides that the right of priority in the subsequent application may be restored under PCT Rule 26
Section 1.78(a) as proposed provides that the restoration of the right of priority under PCT Rule 26
Section 1.78(a) is also proposed to be amended to provide that the twelve-month period is subject to PCT Rule 80.5, as well as 35 U.S.C. 21(b) (and § 1.7(a)).
Section 1.78(a)(4) is proposed to be amended to provide that if the later-filed application is a national stage application under 35 U.S.C. 371, this reference must be submitted within the latest of four months from the date on which the national stage commenced under 35 U.S.C. 371(b) or (f), four
Section 1.78(b) is proposed to be amended to implement the changes to 35 U.S.C. 119(e) in section 201(c)(1)(B)(i)(II) of the PLTIA. Section 201(c)(1)(B)(i)(II) of the PLTIA replaces “payment of a surcharge” with “payment of the fee specified in section 41(a)(7)” (
Section 1.78(c)(3) is proposed to be amended to provide that if the later-filed application is a nonprovisional application entering the national stage from an international application under 35 U.S.C. 371, this reference must also be submitted within the latest of four months from the date on which the national stage commenced under 35 U.S.C. 371(b) or (f) in the later-filed international application, four months from the date of the initial submission under 35 U.S.C. 371 to enter the national stage, or sixteen months from the filing date of the prior-filed application. This change is proposed to avoid the need for petitions under both § 1.137 and § 1.78(d) in the situation in which the applicant does not make the initial submission under 35 U.S.C. 371 to enter the national stage within four months from the date on which the national stage commenced under 35 U.S.C. 371(b) or (f) in an international application.
Section 1.78(d)(2) is proposed to be amended for consistency with the change to 35 U.S.C. 120 in section 202(b)(3) of the PLTIA (replaces “payment of a surcharge” with “payment of the fee specified in section 41(a)(7)”).
As discussed previously, PLT Article 5 and PLTIA 35 U.S.C. 111 should not be viewed as prescribing a best practice for the preparation and filing of a patent application. The preparation of drawings at the time an application (provisional or nonprovisional) is prepared for any claimed invention for which patent protection is desired where a drawing is necessary for the understanding of the subject matter sought to be patented, and inclusion of such drawing(s) will help ensure that the application will contain a drawing where required by 35 U.S.C. 113 for any such claimed invention.
Sections 1.137(a) is proposed to be amended to eliminate the provisions pertaining to petitions on the basis of unavoidable delay. Section 1.137(a) is proposed to be amended to instead provide that if the delay in reply by applicant or patent owner was unintentional, a petition may be filed
Section 1.137(b) is proposed to be amended to set out the petition requirements. Section 1.137(b) is specifically proposed to be amended to provide that a grantable petition pursuant to § 1.137 must be accompanied by: (1) The reply required to the outstanding Office action or notice, unless previously filed; (2) the petition fee as set forth in § 1.17(m); (3) a statement that the entire delay in filing the required reply from the due date for the reply until the filing of a grantable petition pursuant to this section was unintentional; and (4) any terminal disclaimer (and fee as set forth in § 1.20(d)) required pursuant to § 1.137(d). Section 1.137 as proposed would continue to provide that the Director may require additional information where there is a question whether the delay was unintentional.
Sections 1.137(c) and (e) are proposed to be amended to remove the language pertaining to “lapsed” patents. Section 202(b)(6) of the PLTIA amends 35 U.S.C. 151 to delete the third and fourth paragraphs pertaining to the lapsed patent practice.
Section 1.137(c) is also proposed to be amended to provide that in an application abandoned under § 1.57(a), the reply must include a copy of the specification and any drawings of the previously filed application, and to clarify that an application must be abandoned after the close of prosecution as defined in § 1.114(b), for the reply requirement to be met by the filing of a request for continued examination in compliance with § 1.114.
Section 1.137(f) is proposed to be amended to remove as unnecessary the language limiting petitions to the unintentional standard. The PLTIA eliminates revival of abandoned applications under the “unavoidable” standard.
Sections 1.378(a) is proposed to be amended to eliminate the provisions pertaining to petitions on the basis of unavoidable delay.
Section 1.378(b) is also proposed to be amended to eliminate the provisions pertaining to petitions asserting unavoidable delay. Section 1.378(b) is proposed to be amended to set out the requirements for petitions asserting unintentional delay (these requirements are currently set out in § 1.378(c)). Section 1.378(b) is also proposed to be amended to refer to the petition fee set forth in § 1.17(m) rather than the surcharge set forth in § 1.20(i) as PLTIA 35 U.S.C. 41(c)(1) refers to the fee specified in 35 U.S.C. 41(a)(7) rather than a surcharge.
Section 1.378(c) is proposed to be amended to provide that any petition under this section must be signed in compliance with § 1.33(b) (§ 1.378(d) sets out the current signature requirement for a petition to accept a delayed maintenance fee payment).
Section 1.378(d) is proposed to be amended to include the current provisions pertaining to a request for reconsideration of a maintenance fee decision, except that § 1.378(d) is proposed to be amended to eliminate the provision that after the decision on the petition for reconsideration, no further reconsideration or review of the matter will be undertaken by the Director.
Section 1.378(e) is proposed to be amended to include the current provisions of § 1.378(e) pertaining to the situation in which the maintenance fee or any petition fee will be refunded.
Section 1.452(d) currently contains a caveat that restoration of a right of priority to a prior application by the United States Receiving Office under § 1.452, or by any other Receiving Office under the provisions of PCT Rule 26
The PLT and PLTIA 35 U.S.C. 111 provide applicants with additional opportunities to delay the examination process (e.g., the ability to file an application without any claims and to file an application merely by reference to a prior-filed application). Specifically, the fourteen-month timeframe specified in 35 U.S.C. 154(b)(1)(A)(i) may now begin before the specification and drawings of an application are filed in the Office in an application filed under 35 U.S.C. 111(a), due to the change to 35 U.S.C. 111 in the PLTIA. In addition, the fourteen-month timeframe specified in 35 U.S.C. 154(b)(1)(A)(i) may now begin before the specification and drawings of an application are filed in the Office in an international application, due to the change to 35 U.S.C. 154(b)(1)(A)(i)(II) in section 1(h)(1)(A) of the AIA Technical Corrections Act, Public Law 112–274, 126 Stat. 2456, 2457 (2013), (changing “the date on which an international application fulfilled the requirements of section 371” to “the date of commencement of the national stage under section 371 in an international application”)).
The Office is not proposing to require that applications be in condition for examination on filing (or commencement of national stage in an international application) in order for an applicant to avoid a reduction of patent term adjustment. It is, however, reasonable to expect that an application should be placed in condition for examination within eight months of its filing date (or date of commencement of national stage in an international application). Therefore, the Office is proposing to provide that the circumstances that constitute a failure of the applicant to engage in reasonable efforts to conclude processing or examination of an application also include the failure to provide an application in condition for examination within eight months from the date on which the application was filed under 35 U.S.C. 111(a) or the date of commencement of the national stage under 35 U.S.C. 371(b) or (f) in an international application. Section 1.704(c) is also proposed to be amended to provide that in such a case the period of adjustment set forth in § 1.703 shall be reduced by the number of days, if any, beginning on the day after the date that is eight months from the date on which the application was filed under 35 U.S.C. 111(a) or the date of commencement of the national stage under 35 U.S.C. 371(b) or (f) in an international application and ending on
Section 1.704(f) is proposed to be added to define when an application is “in condition for examination” for purposes of § 1.704(c). Proposed § 1.704(f) provides that an application filed under 35 U.S.C. 111(a) is in condition for examination when the application includes a specification, including at least one claim and an abstract (§ 1.72(b)), and has papers in compliance with § 1.52, drawings in compliance with § 1.84, any English translation required by § 1.52(d) or § 1.57(a), a sequence listing in compliance with §§ 1.821 through 1.825 (if applicable), the inventor's oath or declaration or application data sheet containing the information specified in § 1.63(b), the basic filing fee (§ 1.16(a) or § 1.16(c)), any certified copy of the previously filed application required by § 1.57(a), and any application size fee required by the Office under § 1.16(s). Section 1.704(f) as proposed provides that an international application is in condition for examination when the application has entered the national stage as defined in § 1.491(b), and includes a specification, including at least one claim and an abstract (§ 1.72(b)), and has papers in compliance with § 1.52, drawings in compliance with § 1.84, a sequence listing in compliance with §§ 1.821 through 1.825 (if applicable), the inventor's oath or declaration or application data sheet containing the information specified in § 1.63(b), and any application size fee required by the Office under § 1.492(j).
Accordingly, prior notice and opportunity for public comment are not required pursuant to 5 U.S.C. 553(b) or (c) (or any other law), except for the proposed change to the patent term adjustment provisions of 37 CFR 1.704.
The changes proposed in this notice are to revise application filing and prosecution procedures to conform them to the changes to the patent laws in title II of the PLTIA and to eliminate procedural requirements to ensure that the rules of practice are consistent with the PLT.
The notable changes in the PLT and title II of the PLTIA pertain to: (1) The filing date requirements for a patent application; (2) the restoration of patent rights via the revival of abandoned applications and acceptance of delayed maintenance fee payments; and (3) the restoration of the right of priority to a foreign application or the benefit of a provisional application via the permitting of a claims to priority to a foreign application or the benefit of a provisional application in a subsequent application filed within two months of the expiration of the twelve-month period (six-month period for design applications) for filing such a subsequent application.
The requirements and fees for filing of an application without a claim track the existing provisions in 37 CFR 1.53(f) for an application that is missing application components not required for a filing date. The requirements and fees for filing of an application “by reference” to a previously filed application in lieu of filing the specification and drawings (reference filing) are simpler than the existing requirements in 37 CFR 1.57(a) that apply when relying upon the specification and drawings of a prior-filed application as the specification and drawings of an application.
The requirements for a petition to revive an abandoned application (37 CFR 1.137) or accept a delayed maintenance fee payment (37 CFR 1.378) on the basis of “unintentional” delay are the current requirements for a petition to revive an abandoned application or accept a delayed maintenance fee payment. PLTIA 35 U.S.C. 41(a)(7) and (c)(1) set the petition fee amount for a petition to accept a delayed maintenance fee payment at an amount equal to the fee for a petition to revive an unintentionally abandoned application, which is lower than the current surcharge for accepting an unintentionally delayed maintenance fee payment.
The requirements and fees for a petition to restore the right of priority to a prior-filed foreign application or a petition to restore the right to benefit of a prior-filed provisional application correspond to the current requirements for petitions based upon unintentional delay (i.e., a petition to revive an abandoned application (37 CFR 1.137) or accept a delayed maintenance fee payment (37 CFR 1.378)). PLTIA 35 U.S.C. 41(a)(7) and 119 set the petition fee amount for a petition to restore the right of priority to a prior-filed foreign application or a petition to restore the right to benefit of a prior-filed provisional application at an amount equal to the fee for a petition to revive an unintentionally abandoned application. Current 35 U.S.C. 119 does not permit an applicant who missed the filing period requirement in 35 U.S.C. 119(a) or (e) to restore the right of priority to the prior-filed foreign application or restore the right to benefit of the prior-filed provisional application.
The proposed changes to the patent term adjustment reduction provisions do not impose any additional burden on applicants. The proposed change to 37 CFR 1.704(c) simply specifies that the failure to place an application in condition for examination within eight months from the date on which the application was filed under 35 U.S.C. 111(a) (or the date of commencement of the national stage under 35 U.S.C. 371(b) or (f) in an international application) constitutes failure of an applicant to engage in reasonable efforts to conclude processing or examination of an application. This proposed change will not have a significant economic impact on a substantial number of small entities because: (1) Applicants already have to place an application in a condition for examination; (2) applicants are not entitled to patent term adjustment for examination delays that result from an applicant's delay in prosecuting the application (35 U.S.C. 154(b)(2)(C)(i) and 37 CFR 1.704(a)); and (3) applicants may avoid any consequences from this provision simply by placing the application in condition for examination within eight months from the date on which the application was filed under 35 U.S.C. 111(a) (or the date of commencement of the national stage under 35 U.S.C. 371(b) or (f) in an international application).
For the foregoing reasons, the changes proposed in this notice will not have a significant economic impact on a substantial number of small entities.
The notable changes in the PLT and title II of the PLTIA pertain to: (1) The filing date requirements for a patent application; (2) the restoration of patent rights via the revival of abandoned applications and acceptance of delayed maintenance fee payments; and (3) the restoration of the right of priority to a foreign application or the benefit of a provisional application via the permitting of a claims to priority to a foreign application or the benefit of a provisional application in a subsequent application filed within two months of the expiration of the twelve-month period (six-month period for design applications) for filing such a subsequent application.
The information collection requirements pertaining to petitions to accept a delayed maintenance fee payment have been reviewed and approved by the OMB under OMB control number 0651–0016. The information collection requirements pertaining to patent term adjustment have been reviewed and approved by the OMB under OMB control number 0651–0020. The information collection requirements pertaining to recording assignments (and other interests) in patents and patent applications have been reviewed and approved by the OMB under OMB control number 0651–0027. The information collection requirements pertaining to petitions to revive an abandoned application have been reviewed and approved by the OMB under OMB control number 0651–0031. The information collection requirements pertaining to the specification (including claims) and drawings required for a patent application have been reviewed and approved by the OMB under OMB control number 0651–0032. The information collection requirements pertaining to representative and correspondence address have been reviewed and approved by the OMB under OMB control number 0651–0035. The changes in this rulemaking pertaining to petitions to accept a delayed maintenance fee payment, patent term adjustment, petitions to revive an abandoned application, the specification (including claims) and drawings required for a patent application, and representative and correspondence address, do not propose to add any additional requirements (including information collection requirements) or fees for patent applicants or patentees. Therefore, the Office is not resubmitting information collection packages to OMB for its review and approval because the changes in this rulemaking do not affect the information collection requirements associated with the information collections approved under OMB control numbers 0651–0016, 0651–0020, 0651–0027, 0651–0031, 0651–0032, and 0651–0035.
This rulemaking also provides for the optional use by applicants of the following Patent Law Treaty Model International Forms: (1) Model International Request Form; (2) Model International Power of Attorney Form; (3) Model International Request for Recordation of Change in Name or Address Form; (4) Model International Request for Correction of Mistakes Form; (5) Model International Request for Recordation of Change in Applicant or Owner Form; (6) Model International Certificate of Transfer Form; (7) Model International Request for Recordation of a License/Cancellation of the Recordation of a License Form; and (8) Model International Request for Recordation of a Security Interest/Cancellation of the Recordation of a Security Interest Form. This rulemaking also requires revisions to the pre-printed information on the forms for petitions to accept a delayed maintenance fee payment and petitions to revive an abandoned application (PTO/SB/64, PTO/SB/64a, PTO/SB/66) and elimination of the forms for petitions based upon unavoidable delay (PTO/SB/61 and PTO/SB/65) in the information collections approved under OMB control numbers 0651–0016 and 0651–0031. The Office will submit a change worksheet to OMB to add these Patent Law Treaty Model International Forms and form revisions to the information collections approved under OMB control numbers 0651–0016, 0651–0020, 0651–0027, 0651–0031, 0651–0032, and 0651–0035.
This rulemaking proposes to add petitions to restore the right of priority to a prior-filed foreign application or a petition to restore the right to benefit of a prior-filed provisional application. The collection of information involved in this notice has been submitted to OMB under OMB control number 0651–00xx. The proposed collection will be available at OMB's Information Collection Review Web site:
The Office is soliciting comments to: (1) Evaluate whether the proposed information requirement is necessary for the proper performance of the functions of the Office, including whether the information will have practical utility; (2) evaluate the accuracy of the Office's estimate of the burden; (3) enhance the quality, utility, and clarity of the information to be collected; and (4) minimize the burden of collecting the information on those who are to respond, including by using appropriate automated, electronic, mechanical, or other technological collection
Please send comments on or before June 10, 2013 to Mail Stop Comments—Patents, Commissioner for Patents, P.O. Box 1450, Alexandria, VA 22313–1450, marked to the attention of Raul Tamayo, Legal Advisor, Office of Patent Legal Administration, Office of the Deputy Commissioner for Patent Examination Policy. Comments should also be submitted to the Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10202, 725 17th Street NW., Washington, DC 20503, Attention: Desk Officer for the United States Patent and Trademark Office.
Notwithstanding any other provision of law, no person is required to respond to, nor shall a person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act, unless that collection of information displays a currently valid OMB control number.
Administrative practice and procedure, Courts, Freedom of Information, Inventions and patents, Reporting and record keeping requirements, Small Businesses.
Administrative practice and procedure, Inventions and patents, Trademarks.
For the reasons set forth in the preamble, 37 CFR parts 1 and 3 are proposed to be amended as follows:
35 U.S.C. 2(b)(2).
(c) Since different matters may be considered by different branches or sections of the Office, each distinct subject, inquiry or order must be contained in a separate paper to avoid confusion and delay in answering papers dealing with different subjects. Subjects provided for on a single Office or World Intellectual Property Organization form may be contained in a single paper.
(d) * * *
(3)
3. Section 1.16 is amended by revising paragraph (f) to read as follows:
(f) Surcharge for filing any of the basic filing fee, the search fee, the examination fee, or the inventor's oath or declaration on a date later than the filing date of the application, for an application that does not contain at least one claim on the filing date of the application, and for an application filed by reference to a previously filed application under § 1.57(a), except provisional applications:
(f) For filing a petition under one of the following sections which refers to this paragraph:
§ 1.36(a)—for revocation of a power of attorney by fewer than all of the applicants.
§ 1.53(e)—to accord a filing date.
§ 1.57(a)—to accord a filing date.
§ 1.57(b)—to accord a filing date.
§ 1.182—for decision on a question not specifically provided for.
§ 1.183—to suspend the rules.
§ 1.741(b)—to accord a filing date to an application under § 1.740 for extension of a patent term.
(l) [Reserved]
(m) For filing a petition for the revival of an abandoned application for a patent, for the delayed payment of the fee for issuing each patent, for the delayed response by the patent owner in any reexamination proceeding, for the delayed payment of the fee for maintaining a patent in force, for the delayed submission of a priority or benefit claim, or for the extension of the twelve-month (six-month for designs) period for filing a subsequent application (§§ 1.55(b), 1.55(d), 1.78(a)(1), 1.78(b), 1.78(d), 1.137, and 1.378):
(o) For every ten items or fraction thereof in a third-party submission under § 1.290:
(p) For an information disclosure statement under § 1.97(c) or (d):
(t) [Reserved]
(i) [Reserved]
(c) A fee transmittal letter may be signed by a juristic applicant or patent owner.
(e) Micro entity status is established in an application by filing a micro entity certification in writing complying with the requirements of either paragraph (a) or paragraph (d) of this section and signed either in compliance with § 1.33(b) or in an international application filed in a Receiving Office other than the United States Receiving Office by a person authorized to represent the applicant under § 1.455. * * *
(k) * * *
(4) Any deficiency payment (based on a previous erroneous payment of a micro entity fee) submitted under this paragraph will be treated as a notification of a loss of entitlement to micro entity status under paragraph (i) of this section.
(a) Applications for patents must be made to the Director of the United States Patent and Trademark Office. An application transmittal letter limited to the transmittal of the documents and fees comprising a patent application under this section may be signed by a juristic applicant or patent owner.
(b)
(c)
(f)
(2) If an application which has been accorded a filing date pursuant to paragraph (b) of this section does not include the basic filing fee, the search fee, the examination fee, at least one claim, or the inventor's oath or declaration, and the applicant has not provided a correspondence address (§ 1.33(a)), the applicant has three months from the filing date of the application within which to file a claim or claims, pay the basic filing fee, search fee, and examination fee, and pay the surcharge required by § 1.16(f) to avoid abandonment.
(3) * * *
(ii) The applicant must file each required oath or declaration in compliance with § 1.63, or substitute statement in compliance with § 1.64, no later than the date on which the issue fee for the patent is paid. If the applicant is notified in a notice of allowability that an oath or declaration in compliance with § 1.63, or substitute statement in compliance with § 1.64, executed by or with respect to each named inventor has not been filed, the applicant must file each required oath or declaration in compliance with § 1.63, or substitute statement in compliance with § 1.64, no later than the date on which the issue fee is paid to avoid abandonment. This time period is not extendable under § 1.136 (
(b) Applicant will be informed of the application number and filing date by a filing receipt, unless the application is an application filed under § 1.53(d). A letter limited to a request for a filing receipt may be signed by a juristic applicant or patent owner.
(b)
(2) If the subsequent application has a filing date which is after the expiration of the twelve-month period (six-month period in the case of a design application) set forth in paragraph (b)(1) of this section but within two months from the expiration of the period set forth in paragraph (b)(1) of this section, the right of priority in the subsequent application may be restored under PCT Rule 26
(i) The priority claim under 35 U.S.C. 119(a) through (d) or (f), or 365(a) or (b) in an application data sheet (§ 1.76(b)(6)), identifying the foreign application for which priority is claimed, by specifying the application number, country (or intellectual property authority), day, month, and year of its filing, unless previously submitted;
(ii) The petition fee as set forth in § 1.17(m); and
(iii) A statement that the delay in filing the subsequent application within the twelve-month period (six-month period in the case of a design application) as set forth in paragraph (b)(1) of this section was unintentional. The Director may require additional
(c)
(e)
(1) The priority claim under 35 U.S.C. 119(a) through (d) or (f), or 365(a) or (b) in an application data sheet (§ 1.76(b)(6)), identifying the foreign application for which priority is claimed, by specifying the application number, country (or intellectual property authority), day, month, and year of its filing, unless previously submitted;
(2) A certified copy of the foreign application if required by paragraph (c) or (f) of this section, unless previously submitted;
(3) The petition fee as set forth in § 1.17(m); and
(4) A statement that the entire delay between the date the priority claim was due under paragraph (c) or (d) of this section and the date the priority claim was filed was unintentional. The Director may require additional information where there is a question whether the delay was unintentional.
(i)
(a) Subject to the conditions and requirements of this paragraph, a reference made in the English language in an application data sheet in accordance with § 1.76 upon the filing of an application under 35 U.S.C. 111(a) to a previously filed application, indicating that the specification and any drawings of the application are replaced by the reference to the previously filed application, and specifying the previously filed application by application number, filing date, and the intellectual property authority or country in which the application was filed, shall constitute the specification and any drawings of the subsequent application for purposes of a filing date under § 1.53(b).
(1) If the applicant has provided a correspondence address (§ 1.33(a)), the applicant will be notified and given a period of time within which to file a copy of the specification and drawings from the previously filed application, an English language translation of the previously filed application and the fee required by § 1.17(i) if it is in a language other than English, and pay the surcharge required by § 1.16(f) to avoid abandonment. Such a notice may be combined with a notice under § 1.53(f).
(2) If the applicant has not provided a correspondence address (§ 1.33(a)), the applicant has three months from the filing date of the application to file a copy of the specification and drawings from the previously filed application, an English language translation of the previously filed application and the fee required by § 1.17(i) if it is in a language other than English, and pay the surcharge required by § 1.16(f) to avoid abandonment.
(3) An application abandoned under paragraph (a)(1) or (a)(2) of this section shall be treated as having never been filed, unless:
(i) The application is revived under § 1.137; and
(ii) A copy of the specification and any drawings of the previously filed application are filed in the Office.
(4) A certified copy of the previously filed application must be filed in the Office or received by the Office from a foreign intellectual property office participating in a priority document exchange agreement within the later of four months from the filing date of the application or sixteen months from the filing date of the previously filed application, unless the previously filed application is an application filed under 35 U.S.C. 111 or 363. Failure to comply with this requirement will result in the application not being accorded a filing date earlier than the date a copy of the specification and drawings from the previously filed application is filed in or received by the Office in the absence of a petition pursuant to this paragraph accompanied by the fee set forth in § 1.17(f).
(i) An application transmittal letter limited to the transmittal of a copy of the specification and drawings from a previously filed application submitted under paragraph (a) or (b) of this section may be signed by a juristic applicant or patent owner.
(a) The specification, including the claims, may contain chemical and mathematical formulae, but shall not contain drawings or flow diagrams. The description portion of the specification may contain tables, but the same tables should not be included in both the drawings and description portion of the specification. Claims may contain tables either if necessary to conform to 35 U.S.C. 112 or if otherwise found to be desirable.
(b) A brief abstract of the technical disclosure in the specification must commence on a separate sheet, preferably following the claims, under the heading “Abstract” or “Abstract of the Disclosure.” The sheet or sheets presenting the abstract may not include other parts of the application or other material. The abstract must be as concise as the disclosure permits, preferably not exceeding 150 words in length. The purpose of the abstract is to enable the Office and the public generally to determine quickly from a cursory inspection the nature and gist of the technical disclosure.
(b) * * *
(3)
(f)
(a) * * *
(1)(i) Except as provided in paragraph (a)(1)(ii) of this section, the nonprovisional application or international application designating the United States of America must be filed not later than twelve months after the date on which the provisional application was filed, or be entitled to claim the benefit under 35 U.S.C. 120, 121, or 365(c) of an application that was filed not later than twelve months after the date on which the provisional application was filed. This twelve-month period is subject to 35 U.S.C. 21(b) (and § 1.7(a)) and PCT Rule 80.5.
(ii) If the nonprovisional application or international application designating the United States of America has a filing date which is after the expiration of the twelve-month period set forth in paragraph (a)(1)(i) of this section but within two months from the expiration of the period set forth in paragraph (a)(1)(i) of this section, the benefit of the provisional application may be restored under PCT Rule 26
(A) The reference required by 35 U.S.C. 119(e) and paragraph (a)(3) of this section to the prior-filed provisional application, unless previously submitted;
(B) The petition fee as set forth in § 1.17(m); and
(C) A statement that the delay in filing the nonprovisional application or international application designating the United States of America within the twelve-month period set forth in paragraph (a)(1)(i) of this section was unintentional. The Director may require additional information where there is a question whether the delay was unintentional.
(iii) The restoration of the right of priority under PCT Rule 26
(4) The reference required by paragraph (a)(3) of this section must be submitted during the pendency of the later-filed application. If the later-filed application is an application filed under 35 U.S.C. 111(a), this reference must also be submitted within the later of four months from the actual filing date of the later-filed application or sixteen months from the filing date of the prior-filed provisional application. If the later-filed application is a national stage application under 35 U.S.C. 371, this reference must also be submitted within the later of four months from the date on which the national stage commenced under 35 U.S.C. 371(b) or (f), four months from the date of the initial submission under 35 U.S.C. 371 to enter the national stage, or sixteen months from the filing date of the prior-filed provisional application. Except as provided in paragraph (b) of this section, failure to timely submit the reference is considered a waiver of any benefit under 35 U.S.C. 119(e) of the prior-filed provisional application.
(b)
(1) The reference required by 35 U.S.C. 119(e) and paragraph (a)(3) of this section to the prior-filed provisional application, unless previously submitted;
(2) The petition fee as set forth in § 1.17(m); and
(3) A statement that the entire delay between the date the benefit claim was due under paragraph (a)(4) of this section and the date the benefit claim was filed was unintentional. The Director may require additional information where there is a question whether the delay was unintentional.
(c) * * *
(3) The reference required by 35 U.S.C. 120 and paragraph (c)(2) of this section must be submitted during the pendency of the later-filed application. If the later-filed application is an application filed under 35 U.S.C. 111(a), this reference must also be submitted within the later of four months from the actual filing date of the later-filed application or sixteen months from the filing date of the prior-filed application. If the later-filed application is a nonprovisional application entering the national stage from an international application under 35 U.S.C. 371, this reference must also be submitted within the later of four months from the date on which the national stage commenced under 35 U.S.C. 371(b) or (f) in the later-filed international application, four months from the date of the initial submission under 35 U.S.C. 371 to enter the national stage, or sixteen months from the filing date of the prior-filed application. Except as provided in paragraph (d) of this section, failure to timely submit the reference required by 35 U.S.C. 120 and paragraph (c)(2) of this section is considered a waiver of any benefit under 35 U.S.C. 120, 121, or 365(c) to the prior-filed application. The time periods in this paragraph do not apply in a design application.
(d) * * *
(2) The petition fee as set forth in § 1.17(m); and
(a) The applicant for a patent is required to furnish a drawing of his or her invention where necessary for the understanding of the subject matter sought to be patented. Since corrections are the responsibility of the applicant, the original drawing(s) should be retained by the applicant for any necessary future correction.
(a) The drawing in a nonprovisional application must show every feature of the invention specified in the claims. However, conventional features disclosed in the description and claims, where their detailed illustration is not essential for a proper understanding of the invention, should be illustrated in the drawing in the form of a graphical drawing symbol or a labeled representation (e.g., a labeled rectangular box). In addition, tables that are included in the specification and sequences that are included in sequence listings should not be duplicated in the drawings.
(c) If a corrected drawing is required or if a drawing does not comply with § 1.84 at the time an application is allowed, the Office may notify the applicant in a notice of allowability and set a three-month period of time from the mail date of the notice of allowability within which the applicant must file a corrected drawing in compliance with § 1.84 to avoid abandonment. This time period is not extendable under § 1.136 (
(a)
(b)
(1) The reply required to the outstanding Office action or notice, unless previously filed;
(2) The petition fee as set forth in § 1.17(m);
(3) A statement that the entire delay in filing the required reply from the due date for the reply until the filing of a grantable petition pursuant to this section was unintentional. The Director may require additional information where there is a question whether the delay was unintentional; and
(4) Any terminal disclaimer (and fee as set forth in § 1.20(d)) required pursuant to paragraph (d) of this section.
(c)
(e)
(1) The provisions of § 1.136 for an abandoned application;
(2) The provisions of § 1.550(c) for a terminated
(3) The provisions of § 1.956 for a terminated
(f)
(f) Any third-party submission under this section must be accompanied by the fee set forth in § 1.17(o) for every ten items or fraction thereof identified in the document list.
(a) The patentee may pay maintenance fees and any necessary surcharges, or any person or organization may pay maintenance fees and any necessary surcharges on behalf of a patentee. A maintenance fee transmittal letter may be signed by a juristic applicant or patent owner. A patentee need not file authorization to enable any person or organization to pay maintenance fees and any necessary surcharges on behalf of the patentee.
(a) The Director may accept the payment of any maintenance fee due on a patent after expiration of the patent if, upon petition, the delay in payment of the maintenance fee is shown to the satisfaction of the Director to have been unintentional. If the Director accepts payment of the maintenance fee upon petition, the patent shall be considered as not having expired, but will be subject to the conditions set forth in 35 U.S.C. 41(c)(2).
(b) Any petition to accept an unintentionally delayed payment of a maintenance fee must include:
(1) The required maintenance fee set forth in § 1.20(e) through (g);
(2) The petition fee as set forth in § 1.17(m); and
(3) A statement that the delay in payment of the maintenance fee was unintentional. The Director may require additional information where there is a question whether the delay was unintentional.
(c) Any petition under this section must be signed in compliance with § 1.33(b).
(d) Reconsideration of a decision refusing to accept a maintenance fee may be obtained by filing a petition for reconsideration within two months of the decision, or such other time as set in the decision refusing to accept the delayed payment of the maintenance fee. Any such petition for reconsideration must be accompanied by the petition fee set forth in § 1.17(f).
(e) If the delayed payment of the maintenance fee is not accepted, the maintenance fee will be refunded following the decision on the petition for reconsideration, or after the expiration of the time for filing such a petition for reconsideration, if none is filed. Any petition fee under this section will not be refunded unless the refusal to accept and record the maintenance fee is determined to result from an error by the Office.
(b) * * *
(2) The petition fee as set forth in § 1.17(m); and
(c) * * *
(3) * * *
(ii) The applicant must file each required oath or declaration in compliance with § 1.63, or substitute statement in compliance with § 1.64, no later than the date on which the issue fee for the patent is paid. If the applicant is notified in a notice of allowability that an oath or declaration in compliance with § 1.63, or substitute statement in compliance with § 1.64, executed by or with respect to each named inventor has not been filed, the applicant must file each required oath or declaration in compliance with § 1.63, or substitute statement in compliance with § 1.64, no later than the date on which the issue fee is paid to avoid abandonment. This time period is not extendable under § 1.136 (
(c) * * *
(11) Failure to provide an application in condition for examination as defined in paragraph (f) of this section within eight months from either the date on which the application was filed under 35 U.S.C. 111(a) or the date of commencement of the national stage under 35 U.S.C. 371(b) or (f) in an international application, in which case the period of adjustment set forth in § 1.703 shall be reduced by the number of days, if any, beginning on the day after the date that is eight months from either the date on which the application was filed under 35 U.S.C. 111(a) or the date of commencement of the national stage under 35 U.S.C. 371(b) or (f) in an international application and ending on the date the application is in condition for examination as defined in paragraph (f) of this section.
(f) An application filed under 35 U.S.C. 111(a) is in condition for examination when the application includes a specification, including at least one claim and an abstract (§ 1.72(b)), and has papers in compliance with § 1.52, drawings (if any) in compliance with § 1.84, any English translation required by § 1.52(d) or § 1.57(a), a sequence listing in compliance with § 1.821 through § 1.825 (if applicable), the inventor's oath or declaration or application data sheet containing the information specified in
(c) If an application for patent is otherwise in condition for allowance except for a needed deposit and the Office has received a written assurance that an acceptable deposit will be made, the Office may notify the applicant in a notice of allowability and set a three-month period of time from the mail date of the notice of allowability within which the deposit must be made in order to avoid abandonment. This time period is not extendable under § 1.136 (
15 U.S.C. 1123; 35 U.S.C. 2(b)(2).
(a) Assignments of applications, patents, and registrations, and other documents relating to interests in patent applications and patents, accompanied by completed cover sheets as specified in § 3.28 and § 3.31, will be recorded in the Office. Other documents, accompanied by completed cover sheets as specified in § 3.28 and § 3.31, affecting title to applications, patents, or registrations, will be recorded as provided in this part or at the discretion of the Director.
(h) The assignment cover sheet required by § 3.28 for a patent application or patent will be satisfied by the Patent Law Treaty Model International Request for Recordation of Change in Applicant or Owner Form, Patent Law Treaty Model International Request for Recordation of a License/Cancellation of the Recordation of a License Form, Patent Law Treaty Model Certificate of Transfer Form or Patent Law Treaty Model International Request for Recordation of a Security Interest/Cancellation of the Recordation of a Security Interest Form, as applicable, except where the assignment is also an oath or declaration under § 1.63 of this chapter. An assignment cover sheet required by § 3.28 must contain a conspicuous indication of an intent to utilize the assignment as an oath or declaration under § 1.63 of this chapter.