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Food and Drug Administration, HHS.
Final rule.
The Food and Drug Administration (FDA) is amending the animal drug regulations to reflect approval actions for new animal drug applications (NADAs) and abbreviated new animal drug applications (ANADAs) during April 2013. FDA is also informing the public of the availability of summaries for the basis of approval and of environmental review documents, where applicable.
This rule is effective May 22, 2013.
George K. Haibel, Center for Veterinary Medicine (HFV–6), Food and Drug Administration, 7519 Standish Pl., Rockville, MD 20855, 240–276–9019,
FDA is amending the animal drug regulations to reflect approval actions for NADAs and ANADAs during April 2013, as listed in table 1. In addition, FDA is informing the public of the availability, where applicable, of documentation of environmental review required under the National Environmental Policy Act (NEPA) and, for actions requiring review of safety or effectiveness data, summaries of the basis of approval (FOI Summaries) under the Freedom of Information Act (FOIA). These public documents may be seen in the Division of Dockets Management (HFA–305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday. Persons with access to the Internet may obtain these documents at the CVM FOIA Electronic Reading Room:
This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801–808.
Animal drugs.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR part 520 is amended as follows:
21 U.S.C. 360b.
(a)
(b)
(c)
(i)
(ii)
(2)
(3)
Office of Natural Resources Revenue (ONRR), Office of the Secretary, Interior.
Direct final rule.
On May 19, 2010, the Secretary of the Interior separated and reassigned responsibilities previously performed by the former Minerals Management Service (MMS) to three separate organizations. As part of this reorganization, on October 1, 2010, the Secretary established the Office of Natural Resources Revenue (ONRR) within the Office of the Assistant Secretary—Policy, Management and Budget (PMB). At the same time, ONRR initiated a CFR chapter reorganization. This direct final rule amends the remaining Office of Management and Budget (OMB) approved form numbers for information collection requirements and corresponding technical corrections to part and position titles, agency names, and acronyms.
This rule is effective on May 22, 2013.
For questions on technical issues, contact Armand Southall, Regulatory Specialist, ONRR, telephone (303) 231–3221; or email
On May 19, 2010, by Secretarial Order No. 3299, the Secretary of the Department of the Interior (Secretary) announced the restructuring of MMS. On June 18, 2010, by Secretarial Order No. 3302, the Secretary announced the name change of MMS to the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE). By these orders, the Secretary separated and reassigned the responsibilities previously performed by the former MMS to three separate organizations: the Office of Natural Resources Revenue, the Bureau of Ocean Energy Management (BOEM), and the Bureau of Safety and Environmental Enforcement (BSEE). ONRR is responsible for the royalty management functions of the former MMS's Minerals Revenue Management Program.
In this direct final rule, ONRR merely amends its remaining OMB-approved form numbers for information collection requests listed in certain parts of title 30 CFR, chapter XII. ONRR does not make any substantive changes in this direct final rule to the regulations or requirements in chapter XII. We also merely make any necessary corresponding technical corrections to part and position titles, agency names, and acronyms. This rule will not have any effect on the rights, obligations, or interests of any affected parties. Thus, under 5 U.S.C. 553(b)(B), ONRR, for good cause, finds that notice and comment on this rule are unnecessary and contrary to the public interest. Additionally, because this document is a “rule(. . .) of agency organization, procedure or practice” under 5 U.S.C. 553(b)(A), this document is, in any event, exempt from the notice and comment requirements of 5 U.S.C. 553(b). Lastly, because this non-substantive rule makes no changes to the legal obligations or rights of any affected parties, and because it is in the public interest for this rule to be effective as soon as possible, ONRR finds that good cause exists under 5 U.S.C. 553(d)(3) to make this rule effective immediately upon publication in the
As noted, this direct final rule amends the following 30 CFR parts and the related existing subparts:
• Part 1202—Royalties
• Part 1204—Alternatives for Marginal Properties
• Part 1206—Product Valuation
• Part 1207—Sales Agreements or Contracts Governing the Disposal of Lease Products
• Part 1210—Forms and Reports
• Part 1218—Collection of Royalties, Rentals, Bonuses, and Other Monies Due the Federal Government
• Part 1220—Accounting Procedures For Determining Net Profit Share Payment For Outer Continental Shelf Oil and Gas Leases
• Part 1243—Suspensions Pending Appeal and Bonding—Office of Natural Resources Revenue
• Part 1290—Appeal Procedures
The following sections explain further these amendments to the regulations:
We are revising part 1202, subparts C, D, and H.
We are revising part 1204, subpart C.
We are revising part 1206, subparts B, C, D, E, F, H, and J.
We are revising part 1207, subpart A.
We are revising part 1210, subparts A, B, C, D, E, and H.
We are revising part 1218, subparts A, B, D, E, and H.
We are revising part 1243, subpart A.
We are amending part 1290 by updating referenced section text to replace “subpart” with “part” due to reorganizing and repromulgating our regulations in chapter XII, title 30 CFR.
Executive Order (E.O.) 12866 provides that the Office of Information and Regulatory Affairs (OIRA) will review all significant rules. OIRA has determined that this rule is not significant.
Executive Order 13563 reaffirms the principles of E.O. 12866, while calling for improvements in the Nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. E.O. 13563 directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. E.O. 13563 emphasizes further that agencies must base regulations on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. We have developed this rule in a manner consistent with these requirements.
DOI certifies that this direct final rule does not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
This direct final rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This direct final rule:
a. Does not have an annual effect on the economy of $100 million or more.
b. Will not cause a major increase in costs or prices for consumers; individual industries; Federal, State, or local government agencies; or geographic regions.
c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.
This is only a technical rule renumbering already approved OMB control numbers, renaming certain forms, and correcting corresponding part and position titles, agency names, and acronyms for ONRR's information collection requirements (ICRs) listed in title 30 CFR, chapter XII, regulations.
This direct final rule does not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. This direct final rule does not have a
Under the criteria in section 2 of Executive Order 12630, this direct final rule does not have any significant takings implications. This direct final rule applies to Outer Continental Shelf (OCS), Federal onshore, and Indian onshore leases. It does not apply to private property. This direct final rule does not require a Takings Implication Assessment.
Under the criteria in section 1 of Executive Order 13132, this direct final rule does not have sufficient federalism implications to warrant the preparation of a Federalism summary impact statement. This is a technical rule renumbering already approved OMB control numbers, renaming certain forms, and correcting corresponding part and position titles, agency names, and acronyms for ONRR's ICRs listed in title 30 CFR, chapter XII, regulations. This direct final rule does not require a Federalism summary impact statement.
This direct final rule complies With the requirements of E. O. 12988 for the reasons outlined in the following paragraphs.
a. This rule meets the criteria of section 3(a), which requires that we review all regulations to eliminate errors and ambiguity and to write them to minimize litigation.
b. This rule meets the criteria of section 3(b)(2), which requires that we write all regulations in clear language with clear legal standards.
DOI strives to strengthen its government-to-government relationship with Indian Tribes through a commitment to consultation with Indian Tribes and recognition of their right to self-governance and tribal sovereignty. Under DOI's consultation policy and the criteria in Executive Order 13175, we have evaluated this direct final rule and determined that it has no substantial direct effects on federally recognized Indian tribes. Therefore, we are not required to complete a consultation under DOI's tribal consultation policy.
This direct final rule does not contain any information collection requirements and does not require a submission to OIRA under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
This rule does not constitute a major Federal action significantly affecting the quality of the human environment. We are not required to provide a detailed statement under the National Environmental Policy Act of 1969 (NEPA) because this rule qualifies for categorical exclusion under 43 CFR 46.210(i) and the DOI Departmental Manual, part 516, section 15.4.D: “(i) Policies, directives, regulations, and guidelines: that are of an administrative, financial, legal, technical, or procedural nature.” We have also determined that this rule is not involved in any of the extraordinary circumstances listed in 43 CFR 46.215 that would require further analysis under NEPA. The procedural changes resulting from these amendments have no consequences with respect to the physical environment. This rule will not alter in any material way natural resource exploration, production, or transportation.
In accordance with the Information Quality Act, DOI has issued guidance regarding the quality of information that it relies on for regulatory decisions. This guidance is available on DOI's Web site at
This direct final rule is not a significant energy action under the definition in E.O. 13211, and, therefore, it does not require a Statement of Energy Effects.
Coal, Continental shelf, Geothermal energy, Government contracts, Indians—lands, Mineral royalties, Oil and gas exploration, Public lands—mineral resources, Reporting and recordkeeping requirements, Sulfur.
Accounting and auditing relief, Barrels of oil equivalent (BOE), Continental shelf, Federal lease, Marginal property, Mineral royalties, Royalty prepayment, Royalty relief.
Coal, Continental shelf, Geothermal energy, Government contracts, Indians—lands, Mineral royalties, Oil and gas exploration, Public lands—mineral resources, Reporting and recordkeeping requirements.
Continental shelf, Government contracts, Indians—lands, Mineral royalties, Public lands—mineral resources, Reporting and recordkeeping requirements.
Continental shelf, Geothermal energy, Government contracts, Indians—lands, Mineral royalties, Oil and gas exploration, Public lands—mineral resources, Reporting and recordkeeping requirements, Sulfur.
Continental shelf, Electronic funds transfers, Geothermal energy, Indians—lands, Mineral royalties, Oil and gas exploration, Public lands—mineral resources, Reporting and recordkeeping requirements.
Accounting, Continental shelf, Government contracts, Mineral royalties, Oil and gas exploration, Public lands—mineral resources, Reporting and recordkeeping requirements.
Administrative practice and procedure, Government contracts, Mineral royalties, Public lands—mineral resources.
Administrative practice and procedure.
For the reasons discussed in the preamble, under the authority provided by the Reorganization Plan No. 3 of 1950 (64 Stat. 1262) and Secretarial Order Nos. 3299 and 3302, ONRR amends parts 1202, 1204, 1206, 1207, 1210, 1218, 1220, 1243, and 1290 of title 30 CFR, chapter XII, subchapters A and B, as follows:
5 U.S.C. 301
30 U.S.C. 1701
OMB approved the information collection requirements contained in this subpart under 44 U.S.C. 3501
5 U.S.C. 301
5 U.S.C. 301
(a) ONRR uses the information collected to determine a proper transportation allowance for the cost of transporting royalty oil from the lease to a delivery point remote from the lease. The information is required so that the lessee may obtain a benefit under the Federal Oil and Gas Royalty Management Act of 1982, 30 U.S.C. 1701
(b) Send comments regarding the burden estimates or any other aspect of this information collection, including suggestions for reducing burden, to the Office of Natural Resources Revenue, Attention: Rules & Regs Team, OMB Control Number 1012–0002, P.O. Box 25165, Denver, CO 80225–0165.
5 U.S.C. 301
(a)
You must submit a completed Report of Sales and Royalty Remittance (Form ONRR–2014) each month once sales or use of production occur, even though sales may be intermittent, unless ONRR otherwise authorizes. This report is due on or before the last day of the month following the month in which production was sold or used, together with the royalties due to the United States.
25 U.S.C. 396
5 U.S.C. 301
Environmental Protection Agency (EPA).
Final rule.
EPA is approving revisions to the Wisconsin State Implementation Plan (SIP), submitted by the Wisconsin Department of Natural Resources (WDNR) to EPA on May 4, 2011, June 20, 2012, and September 28, 2012. The revisions modify Wisconsin's Prevention of Significant Deterioration (PSD) program to establish appropriate emission thresholds for determining which new stationary sources and modification projects become subject to Wisconsin's PSD permitting requirements for their greenhouse gas (GHG) emissions. Additionally, these revisions defer until July 21, 2014, the application of the PSD permitting requirements to biogenic carbon dioxide (CO
This final rule is effective on June 21, 2013.
EPA has established a docket for this action under Docket ID No. EPA–R05–OAR–2011–0467, or EPA–R05–OAR–2012–0538. All documents in the docket are listed in the
Danny Marcus, Environmental Engineer, Air Permits Section, Air Programs Branch (AR–18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 353–8781,
Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This
On December 28, 2012, at 77 FR 76430, EPA proposed to approve into the state's Federally-approved SIP regulatory additions that Wisconsin submitted which are consistent with the “PSD and Title V Greenhouse Gas Tailoring; Final Rule,” 75 FR 31514 (June 3, 2010) (The “Tailoring Rule”), the “Limitation of Approval of Prevention of Significant Deterioration Provisions Concerning Greenhouse Gas Emitting-Sources in State Implementation Plans Final Rule,” 75 FR 82536 (December 30, 2010) (The “PSD SIP Narrowing Rule”) and the “Deferral for CO
These rules establish thresholds and time frames that ensure that smaller GHG sources emitting less than these thresholds will not be subject to PSD permitting requirements for the GHGs that they emit, and defer consideration of CO
EPA provided a 30-day review and comment period. The comment period closed on January 28, 2013. EPA received one comment supporting EPA's approval of these revisions. EPA received no adverse comments.
EPA is approving Wisconsin's May 4 2011, June 20 2012, and September 28 2012, SIP submittals. Specifically, EPA is approving revisions to chapters NR 400.02 (74m); 400.03 (3) (om), and (4) (go) and (kg); 405.02 (28m); 405.07 (9) of the Wisconsin Administrative Code and Wisconsin State Statutes, Sections 285.60(3m) and 285.63(3m) into the SIP. These revisions implement the Tailoring Rule and Deferral of CO
Because Wisconsin's changes to its air quality regulations will incorporate the appropriate thresholds for GHG permitting applicability into its SIP, EPA is also amending 40 CFR 52.2572, to remove subsection (b), which is being replaced by the new rules that Wisconsin has submitted. The new rules are consistent with the Federal Tailoring Rule provisions, which limit the applicability of PSD to GHG-emitting sources below the Tailoring Rule thresholds.
Under the CAA, the Administrator is required to approve a SIP submission
• 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 CAA; 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 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
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 July 22, 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, Incorporation by reference, Intergovernmental relations, and Reporting and recordkeeping requirements.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(c) * * *
(126) On May 4, 2011, June 20, 2012, and September 28, 2012, the Wisconsin Department of Natural Resources submitted a request to revise Wisconsin's Prevention of Significant Deterioration (PSD) program to incorporate the “Tailoring Rule” and the Federal deferral for biogenic CO
(i) Incorporation by reference.
(A) Wisconsin Administrative Code, NR 400.02 Definitions. NR 400.02 (74m) “Greenhouse gases” or “GHG”, as published in the Wisconsin Administrative Register August 2011, No. 668, effective September 1, 2011.
(B) Wisconsin Administrative Code, NR 400.03 Units and abbreviations. NR 400.03(3)(om) “SF6”, NR 400.03(4)(go) “GHG”, and NR 400.03(4)(kg) “PFC”, as published in the Wisconsin Administrative Register August 2011, No. 668, effective September 1, 2011.
(C) Wisconsin Administrative Code, NR 405.02 Definitions. NR 405.02(28m) “Subject to regulation under the Act”, as published in the Wisconsin Administrative Register August 2011, No. 668, effective September 1, 2011.
(D) Wisconsin Administrative Code, NR 405.07 Review of major stationary sources and major modifications—source applicability and exemptions. NR 405.07(9), as published in the Wisconsin Administrative Register August 2011, No. 668, effective September 1, 2011.
(E) Wisconsin Statutes, section 285.60(3m) Consideration of Certain Greenhouse Gas Emissions, enacted on April 2, 2012, by 2011 Wisconsin Act 171.
(F) Wisconsin Statutes, section 285.63(3m) Consideration of Certain Greenhouse Gas Emissions, enacted on April 2, 2012, by 2011 Wisconsin Act 171.
Environmental Protection Agency (EPA).
Final rule.
EPA is taking final action to approve three revisions to the Arizona State Implementation Plan submitted by the Arizona Department of Environmental Quality. Two of these revisions relate to an amendment to Arizona's vehicle emissions inspection program that exempts motorcycles in the Phoenix metropolitan area from
EPA has established docket number EPA–R09–OAR–2011–0552 for this action. Generally, documents in the docket for this action are available electronically at
Jeffrey Buss, Office of Air Planning, U.S. Environmental Protection Agency, Region 9, (415) 947–4152, email:
Throughout this document, the terms “we,” “us,” and “our” refer to EPA.
On November 5, 2012 (77 FR 66422), EPA proposed to approve revisions to the Arizona state implementation plan (SIP) submitted by the Arizona Department of Environmental Quality (ADEQ) that would exempt motorcycles in the Phoenix metropolitan area from testing under the Arizona motor vehicle emissions inspections and maintenance (“VEI”) program and that would expand the geographic area in which certain air pollution control programs apply within the Phoenix metropolitan area. We proposed these actions under section 110(k) of the Clean Air Act (CAA or “Act”). (The State of Arizona developed the VEI program to reduce emissions of carbon monoxide (CO), volatile organic compounds (VOC) and oxides of nitrogen (NO
Specifically, we proposed to approve the submittal on November 6, 2009 of “Final Arizona State Implementation Plan Revision, Exemption of Motorcycles from Vehicle Emissions Inspections and Maintenance Program Requirements in Area A” (October 2009) (“2009 VEI SIP Revision”) and the submittal on January 11, 2011 of “Final Addendum to the Arizona State Implementation Plan Revision, Exemption of Motorcycles from Vehicle Emissions Inspections and Maintenance Program Requirements in Area A, October 2009” (December 2010) (“2011 VEI SIP Addendum”).
As described in our November 5, 2012 proposed rule, the 2009 VEI SIP Revision submittal includes a non-regulatory portion that provides analyses of emission impacts due to the motorcycle exemption, a demonstration that the exemption would not interfere with attainment or maintenance of the national ambient air quality standards (NAAQS or “standards”), and a contingency measure establishing a binding commitment on ADEQ to request Legislative action to reinstate emissions testing for motorcycles in the Phoenix area should the Phoenix area experience a violation of the carbon monoxide NAAQS. The 2009 VEI SIP Revision also includes a regulatory portion comprised by House Bill (HB) 2280, enacted by Arizona in 2008 to take effect upon EPA approval. HB 2280 amends the Arizona Revised Statutes (ARS) section 49–542 (“Emissions inspection program; powers and duties of director; administration; periodic inspection; minimum standards and rules; exceptions; definition”) by exempting motorcycles in Area A (i.e., the Phoenix area) from emissions testing under the VEI program.
With respect to the SIP revision that would expand the geographic area in which certain air pollution control programs apply within the Phoenix metropolitan area, we noted in our November 5, 2012 proposed rule that the relevant amended statutory definition of “Area A” was included in ADEQ's May 25, 2012 submittal of the
As explained in our proposed rule, Area A, as last approved in 2003 (68 FR 2912 (January 22, 2003)), includes all of the metropolitan Phoenix carbon monoxide and 1-hour ozone nonattainment areas plus additional areas in Maricopa County to the north, east, and west, as well as a small portion of Yavapai County and the western portions of Pinal County. “Area A” is also used by the State of Arizona to identify the applicable area for implementation of a number of air pollution control measures, including but not limited to the VEI, cleaner burning gasoline (CBG), and “stage II” vapor recovery programs. The amended “Area A” definition, included with the 2012 Phoenix Area PM–10 Five Percent Plan, extends Area A beyond the boundaries approved by EPA in 2003 to add portions of Maricopa County west of Goodyear and Peoria and a small piece of land on the north side of Lake Pleasant in Yavapai County.
As discussed in more detail on pages 66424–66428 of the November 5, 2012 proposed rule, we proposed to approve
• With respect to all three SIP revisions, ADEQ has met the procedural (i.e. public process) requirements for SIP revisions under CAA section 110(l) and 40 CFR part 51, subpart F;
• With the emissions testing exemption for motorcycles in the Phoenix metropolitan area, the Arizona VEI would continue to meet Federal minimum requirements for vehicle inspection and maintenance (I/M) programs;
• The VEI program, as amended to exempt motorcycles from the emissions testing requirement, would continue to meet or exceed the alternate low enhanced I/M performance standard in the Phoenix area as required under 40 CFR 51.351 and 51.905(a)(1);
• The motorcycle exemption would not interfere with attainment or maintenance of any of the NAAQS and would thereby comply with section 110(l) of the CAA because the potential incremental increase in emissions of CO, VOC and PM–10 due to foregone motorcycle emissions testing and maintenance would be more than offset by the emissions impact of expanding the boundaries of “Area A”
• The 2009 VEI SIP Revision includes a commitment by ADEQ, i.e., to request Legislative action to reinstate emissions testing for motorcycles in the Phoenix area should the area experience a violation of the CO standards, that we find complies with the contingency measure requirements under section 175A(d) of the CAA with respect to the Phoenix area, which is a “maintenance” area for the CO standard.
For background information about the EPA's regulations governing motor vehicle inspection and maintenance programs (I/M), the development and evolution of Arizona's VEI program, EPA's actions in connection with that program, as well as additional information concerning the State's public process for adopting these SIP revisions, and our rationale for proposing approval of the three subject SIP revisions, please see our November 5, 2012 proposed rule.
Our November 5, 2012 proposed rule provided a 30-day public comment period. We received comments from 15 commenters on our proposed rule during the public comment period. All of the commenters except for two expressed their support for EPA's proposed action. In the following paragraphs, we summarize the comments objecting to our proposed action and provide our responses.
Second, we note that the commenter does not challenge EPA's conclusion that the expansion of Area A meets all applicable CAA requirements but rather contends that the extension of CBG to a larger area would increase retail fuel costs and lead to fuel shortages. However, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the minimum criteria set in the Clean Air Act or any applicable EPA regulations. Thus, considerations such as whether a State rule may be economically or technologically challenging cannot form the basis for EPA disapproval of a rule submitted by a state as part of a SIP [see
Lastly, with respect to the suggestion that the emissions testing exemption for newer model year vehicles should be increased from 5 to 10 years, any changes to the exemption for motor vehicle emissions testing would first require a change in Arizona law. Thus, the commenter should direct this suggestion to State officials in the first instance. If such a statutory change were to be adopted, ADEQ would need to adopt and submit the change as a revision to the Arizona SIP, including documentation showing that the revision meets all relevant CAA and EPA requirements—including a demonstration that the change would not interfere with reasonable further progress or attainment of the NAAQS under section 110(l) of the Act. Upon receipt of a complete SIP revision, EPA would then consider approval or disapproval in the context of notice-and-comment rulemaking.
More specifically, in connection with the emissions impact analysis submitted by ADEQ, we agreed with its focus on the incremental change due to foregone emissions testing and maintenance of motorcycles under the VEI program rather than on total motorcycle-related emissions. Next, we found ADEQ's emissions estimates for the incremental increase to be reasonable. Converted to tons per year, ADEQ's estimates for the incremental increase amounts to approximately 20 tpy for VOC and 100 tpy for CO (see the column labeled “I/M benefit from motorcycle testing and repair” in table 2 of EPA's November 5, 2012 proposed rule). As to this incremental increase in VOC and CO emissions, we concluded that the incremental increase in emissions due to foregone emissions testing and maintenance would not interfere with attainment or maintenance of any of the NAAQS given the emissions benefits associated with the expansion of Area A and the related extension of various air quality control measures to the larger area, including the VEI program, the CBG program, the vapor recovery program, and various PM–10 control measures, given that the geographic applicability for all of these programs is defined by “Area A.” See page 66426–66428 of EPA's November 5, 2012 proposed rule.
Under section 110(k) of the CAA, and for the reasons set forth in our November 5, 2012 proposed rule and summarized herein, EPA is taking final action to approve the revisions to the Arizona SIP submitted by ADEQ on November 6, 2009 and January 11, 2011 concerning the exemption of motorcycles from the emissions testing requirements under the Arizona VEI program in the Phoenix area, because we find that the revisions meet all applicable requirements, and together with the expansion of the geographic area to which the VEI and other air pollution control measures apply, would not interfere with reasonable further progress or attainment of any of the national ambient air quality standards. In connection with our approval of the State's exemption of motorcycles from the VEI emissions testing requirements, we are approving an amended statute, Arizona Revised Statutes (ARS) section 49–542, that codifies this exemption in State law.
EPA is also approving the revised statutory provision [amended Arizona Revised Statutes (ARS) section 49–541(1)], submitted by ADEQ on May 25, 2012,
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 proposes to approve 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, as appropriate, disproportionate human health or environmental effects, using practicable 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 CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 22, 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. (
Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Oxides of nitrogen, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
Part 52, chapter I, title 40 of the Code of Federal Regulations are amended as follows:
42 U.S.C. 7401
(c) * * *
(155) The following plan was submitted on November 6, 2009 by the Governor's designee.
(i) Incorporation by reference.
(A) Arizona Department of Environmental Quality.
(
(
(ii) Additional materials.
(A) Arizona Department of Environmental Quality.
(
(156) The following plan was submitted on January 11, 2011 by the Governor's designee.
(i) [Reserved]
(ii) Additional materials.
(A) Arizona Department of Environmental Quality.
(
(157) The following plan was submitted on May 25, 2012 by the Governor's designee.
(i) Incorporation by reference.
(A) Arizona Department of Environmental Quality.
(
(
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes tolerances for residues of 1-naphthaleneacetic acid in or on avocado; fruit, pome, group 11–10; mango; sapote, mamey; and rambutan. This regulation additionally deletes certain tolerances, identified and discussed later in this document. Interregional Research Project Number 4 (IR–4) requested these tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA).
This regulation is effective May 22, 2013. Objections and requests for hearings must be received on or before July 22, 2013, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The docket for this action, identified by docket identification (ID) number EPA–HQ–OPP–2012–0203, is available at
Laura Nollen, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA–HQ–OPP–2012–0203 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before July 22, 2013. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).
In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA–HQ–OPP–2012–0203, by one of the following methods:
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In the
Based upon review of the data supporting the petition, EPA has revised the proposed tolerance on rambutan from 3.0 ppm to 2.0 ppm. The Agency has also revised the tolerance expression for all established commodities to be consistent with current Agency policy. The reason for these changes is explained in Unit IV.C.
Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”
Consistent with FFDCA section 408(b)(2)(D), and the factors specified in that section, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for 1-naphthaleneacetic acid, including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with 1-naphthaleneacetic acid follows.
EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.
Based on structural activity relationship and metabolism data, all forms of 1-naphthaleneacetic acid, its salts, ester, and acetamide which are collectively referred to as naphthalene acetates (NAA), are expected to exhibit similar toxicological effects. In selecting endpoints of toxicity for risk assessment to exposures to the various NAA forms, the most conservative endpoint was selected from the studies that showed the lowest NOAELs for assessing a particular exposure. In addition, all forms degrade to the acid fairly quickly in the field and in biological systems.
Repeated oral exposures to NAA in rats and dogs resulted in decreased body weights, and body weight gains accompanied by decreased food consumption. The major target organs from subchronic and chronic oral exposures were the liver, stomach, and lung. Repeated oral exposures also resulted in decreased hematocrit and hemoglobin, along with reduced red blood cell count in rats and dogs and hypocellularity of the bone marrow in dogs.
There was no developmental toxicity at the highest dose of NAA (the acid) tested in the rat or in the rabbit (orally gavaged), but developmental toxicity (decreased fetal weight and minor skeletal changes) were seen in rats orally gavaged with the sodium salt. Reproductive effects of NAA sodium salts were limited to reduced litter survival and pup weight throughout lactation in both generations of offspring in a 2-generation reproduction study.
NAA and its acetamide and the ethyl ester were tested for mutagenic effects in a gene mutation bacterial assay, mouse lymphoma assay, and mouse erythrocyte micronucleus assay, mouse lymphoma assay, and mouse erythrocyte micronucleus assay and were not found to be mutagenic. Additionally, NAA was tested for mitotic gene conversion and dominant lethality in rats and found to be negative. In a published carcinogenicity study of NAA acetamide in mice and a guideline chronic/oncogenicity study of NAA sodium salt in rats and mice, NAA compounds were not carcinogenic in mice or rats.
Specific information on the studies received and the nature of the adverse effects caused by NAA as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at
Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern (LOC) to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors (U/SF) are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD)—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see
A summary of the toxicological endpoints for NAA used for human risk assessment is shown in Table 1 of this unit.
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Based on the First Index Reservoir Screening Tool (FIRST) and Concentration in Ground Water (SCI–GROW) models, the estimated drinking water concentrations (EDWCs) of NAA for chronic exposures for non-cancer assessments are estimated to be 2.99 parts per billion (ppb) for surface water and 0.0226 ppb for ground water.
Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For chronic dietary risk assessment, the water concentration of value 3.0 ppb was used to assess the contribution to drinking water.
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Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at
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EPA has not found NAA to share a common mechanism of toxicity with any other substances, and NAA does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that NAA does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's Web site at
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i. The toxicity database for NAA is not complete. EPA concluded that a 28-day inhalation toxicity study is required for NAA, based on a weight-of-evidence approach. A 10X SF was retained for the inhalation route of exposure due to the lack of the required 28-day inhalation study and given that the endpoint for subchronic inhalation is based on a developmental study (NOAEL = 50 mg/kg/day) that noted decreased body weight gains during gestation.
Additionally, recent changes to 40 CFR part 158 imposed new data requirements for immunotoxicity testing
Acute and subchronic neurotoxicity studies are also required as a part of new data requirements in 40 CFR part 158; however, EPA has waived the requirement for these studies at the present time. This decision is based on: (1) The lack of neurotoxicity and neuropathology in the available toxicology studies for NAA; and (2) liver, stomach, and lung were identified as the target organs, with dogs being the most sensitive species. Therefore, neurotoxicity studies conducted in rats would not provide a more sensitive endpoint for risk assessment, and studies would be unlikely to yield PODs lower than the current PODs used for overall risk assessment.
ii. There is no indication that NAA is a neurotoxic chemical and there is no need for a developmental neurotoxicity study or additional UFs to account for neurotoxicity.
iii. There is no evidence that NAA results in increased susceptibility in
iv. There are no residual uncertainties identified in the exposure databases. The chronic dietary food exposure assessment was performed based on 100 PCT and tolerance-level residues. EPA made conservative (protective) assumptions in the ground water and surface water modeling used to assess exposure to NAA in drinking water. Based on the discussion in Unit III.C.3., regarding limited residential use patterns, exposure to residential handlers is very low and EPA does not anticipate postapplication exposure to children or incidental exposures to toddlers resulting from use of NAA in residential settings. These assessments will not underestimate the exposure and risks posed by NAA.
EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.
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An adequate enforcement method, a high performance liquid chromatography (HPLC) method using fluorescence detection (Method NAA–AM–001) and a similar method (Method NAA–AM–002), is available to enforce the tolerance expression for NAA in plant commodities.
The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755–5350; telephone number: (410) 305–2905; email address:
In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.
The Codex has not established a MRL for NAA.
Based on the data supporting the petition, EPA revised the proposed tolerance on rambutan from 3.0 ppm to
Finally, the Agency has revised the tolerance expression to clarify: (1) That, as provided in FFDCA section 408(a)(3), the tolerance covers metabolites and degradates of NAA not specifically mentioned; and (2) that compliance with the specified tolerance levels is to be determined by measuring only the specific compounds mentioned in the tolerance expression.
Therefore, tolerances are established for residues of NAA, 1-naphthaleneacetic acid, in or on avocado at 0.05 ppm; fruit, pome, group 11–10 at 0.15 ppm; sapote, mamey at 0.05 ppm; mango at 0.05 ppm; and rambutan at 2.0 ppm. This regulation additionally removes the tolerance in or on fruit, pome, group 11 at 0.15 ppm and the time-limited tolerance in or on avocado at 0.05 ppm.
This final rule establishes tolerances under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this final rule has been exempted from review under Executive Order 12866, this final rule is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this final rule. In addition, this final rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, 40 CFR chapter I is amended as follows:
21 U.S.C. 321(q), 346a and 371.
(a)
(b)
(c)
(d)
Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS).
Interim final rule with comment period.
This interim final rule with comment period sets the payment rates for covered services furnished to individuals enrolled in the Pre-Existing Condition Insurance Plan (PCIP) program administered directly by HHS beginning with covered services furnished on June 15, 2013. This interim
In commenting, please refer to file code CMS–9995–IFC3. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one of the ways listed).
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Please allow sufficient time for mailed comments to be received before the close of the comment period.
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a. For delivery in Washington, DC—
(Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)
b. For delivery in Baltimore, MD—
If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786–4492 in advance to schedule your arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.
Comments received timely will be also available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1–800–743–3951.
Kevin Simpson, Centers for Medicare & Medicaid Services, Department of Health and Human Services, (410) 786–0017.
The Patient Protection and Affordable Care Act, (Pub. L. 111–148) was enacted on March 23, 2010; the Health Care and Education Reconciliation Act of 2010 (Reconciliation Act), (Pub. L. 111–152) was enacted on March 30, 2010 (collectively, “Affordable Care Act”). Section 1101 of the Affordable Care Act directs the Secretary of Health and Human Services (HHS) to establish, either directly or through contracts with states or nonprofit private entities, a temporary high risk health insurance pool program to provide access to affordable health insurance coverage to eligible uninsured individuals with pre-existing conditions. A number of states elected to contract with HHS to establish and administer a high risk pool using PCIP funds. HHS directly established and administers a high risk pool in the remaining states and the District of Columbia. (Hereafter, we generally refer to this program as the Pre-Existing Condition Insurance Plan program, or the PCIP program. We refer to the PCIP program administered by HHS as the “federally-administered PCIP” or the “Plan” and a PCIP program administered by a state or its designated entity as a “state-based PCIP.”) The PCIP program is intended to provide health insurance coverage to eligible uninsured individuals with pre-existing conditions until 2014. Beginning in 2014, most health insurance issuers will be required to offer coverage to all individuals, regardless of pre-existing conditions, pursuant to section 2704 of the Public Health Service Act. Eligible individuals will be able to obtain health insurance coverage either by enrolling in a qualified health plan offered through the new Health Insurance Exchanges (also called Marketplaces) established under section 1311 or 1321 of the Affordable Care Act, or by enrolling in health insurance coverage offered in the individual or group market outside of the Exchanges.
As a temporary bridge to the provisions that go into effect beginning in 2014, the PCIP program was designed to provide coverage to eligible individuals who have been locked out of the insurance market due to their health status. Since enrollment began in July 2010, the PCIP program has experienced significant and sustained growth, enrolling more than 135,000 otherwise uninsured individuals with pre-existing conditions. Many PCIP enrollees have serious health conditions that require immediate and ongoing medical treatment including severe or life threatening conditions such as cancer. In 2012, the average annual claims cost paid per enrollee was $32,108. This cost per enrollee exceeds even that of state high risk pools that predate the Affordable Care Act for several reasons. Like other high risk pools, PCIP enrollees are limited to people that were previously considered uninsurable due to high expected claims cost. In contrast to many state high risk pools, PCIP enrollees also do not
The combined effect of the number of individuals enrolled in the program, particularly very sick individuals, their high utilization of covered services, and the statutory limitations on enrollee cost-sharing (which limits the maximum amount an enrollee pays out-of-pocket for covered services to $6,250 in 2013) has led to a situation where the overall cost of the PCIP program is higher than originally projected. While the actuarial estimates that HHS relies on to manage the program fluctuate as new claims data is received and processed, given the current enrollment projections and the current rate of claims payment, the aggregate amount needed for the payment of the expenses of the PCIP program is estimated to exceed the amount of remaining funding appropriated by Congress to pay for such expenses until the statutory end to the program in 2014, unless we implement the policy changes being announced in this interim final rule.
We have already taken measures to contain costs, with the intent of sustaining the program until 2014. In May of 2012, the federally-administered PCIP ceased paying referral fees to agents and brokers in connection with enrolled individuals they had referred to the program and began requiring that applications for enrollment include documentation showing that the individual had been denied health insurance coverage due to the existence of a pre-existing condition. On August 1, 2012, the federally-administered PCIP switched provider networks, reducing both its negotiated and out-of-network payment rates to providers. This network change was followed by a targeted effort to negotiate additional discounts from in-network inpatient facilities that were treating a large number of PCIP enrollees. Additionally in 2012, the federally-administered PCIP limited the specialty drug benefit such that the plan would only cover specialty drugs dispensed by in-network pharmacies.
Beginning January 1, 2013, the federally-administered PCIP implemented additional cost containment measures, including—(1) The elimination of two of three former plan options in favor of a single plan option; (2) an increase in the maximum out-of-pocket limit from $4,000 to $6,250 for in-network services; and (3) an increase in coinsurance, once the deductible has been met, from 20 percent to 30 percent of the plan allowance for in-network covered services. Furthermore, on February 15, 2013, the federally-administered PCIP suspended its acceptance of new enrollment applications until further notice.
State-based PCIPs suspended their acceptance of new enrollment applications received after March 2, 2013. Additionally, a number of state-based PCIPs have taken measures to constrain costs in their programs, for example, by renegotiating their facility and physician reimbursement rates or by setting their payment rates at levels similar to the rates paid by Medicare. Lastly, in May 2013 HHS began negotiations with state-based PCIPs on a final program contract, with a period of performance running from June 1, 2013 through December 31, 2013. The contract HHS will offer to state-based PCIPs will be a cost reimbursement contract up to, but not exceeding, the funding obligated in the contract.
Based on estimates, HHS believes it is prudent and necessary to make additional adjustments in the federally-administered PCIP with respect to payment rates for covered services in order to ensure that there is sufficient funding available to provide coverage to currently enrolled individuals until the program ends in 2014.
This interim final rule specifies that we are using our authority under section 1101(g)(2) of the Affordable Care Act to set the payment rates for covered services in the federally-administered PCIP for dates of service beginning on June 15, 2013. As explained below, with the exception of covered services furnished under the prescription drug, organ/tissue transplant, dialysis and durable medical equipment benefits, covered services furnished to enrollees in the federally-administered PCIP program will be paid at—(1) 100 percent of Medicare payment rates, or (2) where Medicare payment rates cannot be implemented by the federally-administered PCIP, 50 percent of billed charges or a rate generated pricing methodology using a relative value scale which is generally based on the difficulty, time, work, risk and resources of the service. (Hereafter, we generally refer to this pricing methodology as “relative value scale” pricing.) These rates will become the new plan allowances for the covered services, with the Plan being responsible for reimbursing the facility or a provider for a portion and the enrollee being responsible for reimbursing the facility or provider for the remainder, as calculated by the Plan using the current cost sharing rules described in the Plan brochure.
Furthermore, to protect enrollees in the federally-administered PCIP from having to shoulder potentially significant costs that could be shifted to them as a result of this new payment policy, we are also adopting a policy that prohibits any facility or provider who, with respect to dates of service beginning on June 15, 2013, accepts payment for a covered service provided to an enrollee in the federally-administered PCIP (excepting only the four benefit categories discussed below) from charging the enrollee an amount greater than the enrollee's out-of-pocket cost for the covered service as calculated by the Plan based on the plan allowance for the covered service. In other words, as a condition of accepting payment for most covered services, facilities and providers will be prohibited from “balance billing” enrollees in the federally-administered PCIP for the difference between the plan allowance for those covered services and the charge for the covered service that they might otherwise bill to a patient who is not a federally-administered PCIP enrollee.
Presented below is a discussion of the specific regulatory provisions set forth in this interim final rule.
Section 1101(g)(2) of the Affordable Care Act states that “[i]f the Secretary estimates for any fiscal year that the aggregate amounts available for the payment of the expenses of the high risk pool will be less than the actual amount of such expenses, the Secretary shall make such adjustments as are necessary to eliminate such deficit.” We have codified this provision at 45 CFR 152.35(b).
Since enrollment began in July 2010, the PCIP program has experienced significant and sustained growth, providing affordable health care insurance to more than 135,000 of the sickest and most vulnerable uninsured individuals with pre-existing conditions. As a result, claims paid by the PCIP program are, on average, 2.5 times higher than claims paid by state high risk pools that predate the PCIP program. Based on enrollment and claims data, current HHS estimates indicate that the aggregate amount needed to pay for PCIP program expenses may be greater than the remaining funding appropriated by Congress to pay for such expenses until coverage under the program ends in 2014. Thus, to ensure that there is sufficient funding to pay for the expenses of the PCIP program until 2014, as directed by the statute, we are adding a new § 152.35(c) to our
HHS chose to index the new payment rates that will apply to most covered services to the Medicare payment rate because Medicare rates are widely accepted, familiar, and publicly available. Since Medicare payment rates are well known by facilities and providers, we believe using a rate indexed to Medicare best informs them of what the payment rate for most covered services will be. Based on enrollment and claims data, current HHS estimates indicate that implementing a payment rate that is 100% percent of Medicare will allow us to ensure that there is sufficient funding to pay for the claims and administrative expenses of the PCIP program until coverage under the program ends in 2014.
Since the federally-administered PCIP utilizes a third party administrator to administer the Plan, there are a few instances where Medicare rates cannot serve as the basis for indexing the new Plan rates. The payment rate for these covered services will be 50 percent of billed charges or calculated using a relative value scale pricing methodology. We have chosen to adopt a different payment rate in such instances to ensure that the services currently covered under the Plan can continue to be covered by the federally-administered PCIP while also addressing the need to further contain program costs. These rates were chosen because the federally-administered PCIP can immediately operationalize them. Given the short remaining life of the program, and the limited number of covered services to which these payment rates would apply, we believe, it would be inefficient and too costly for HHS to operationalize other payment rates that could be applied to these covered services. We note that a facility or provider will be able to contact the federally-administered PCIP directly to determine the plan allowance for one of these covered services before providing the service to a federally-administered PCIP enrollee. Below, we discuss the specific covered services for which payment will be 50 percent of billed charges or a rate generated using a relative value scale pricing methodology.
To the extent to which these covered services are non-pharmaceutical services, the payment rate will be calculated using a the relative value scale payment methodology that uses a relative value scale generally based on the difficulty, time, work, risk and resources of the service. For pharmaceutical services other than those administered under the current Plan prescription drug benefit, the relative value scale payment methodology is similar to the pricing methodology used for Medicare Part B drugs based on published acquisition costs or average wholesale price for pharmaceuticals as published in the Red Book by RJ Health Systems, Thomson Reuters. In these cases the plan allowance will be based on the above described relative value scale pricing methodology and subject to the prohibition on balance billing (discussed below). If no Medicare payment rate or relative value scale pricing methodology is available, the federally-administered PCIP will apply the 50 percent of billed charges payment rate. In these cases, the plan allowance is also subject to the prohibition on balance billing (discussed below).
Other instances where covered services will be paid at 50 percent of billed charges are—(1) Professional services where there are no comparable CPT codes; (2) facility based services where the facility does not participate in Medicare and therefore has no Medicare ID; (3) facility-based services where Medicare rates are not yet available or not yet incorporated into the payment software; (4) facility-based services provided in a free-standing facility for skilled nursing facilities, long-term acute care facilities, rehabilitation facilities, mental health and substance abuse facilities; (5) facility-based services where all data elements required to calculate the Medicare payment rate are not provided; (6) facility-based services for home health providers (UB billers only); and (7) covered services that are not covered by Medicare. In these cases the plan allowance will be based on 50 percent of billed charges and subject to the prohibition on balance billing (discussed below). Enrollees will, however, remain responsible for paying any applicable cost-sharing amounts, as calculated by the Plan.
We are adopting these new payment rates for the federally-administered PCIP based on current enrollment projections and the current rate of claims payment. If these enrollment and claims projections change after this interim final rule goes into effect, HHS may opt, through future rulemaking, to change the payment rate.
Given the changes we have already made to the prescription drug benefit in the federally-administered PCIP as previously discussed, we believe that establishing new payment rates for prescription drugs is not administratively feasible or cost effective. Therefore, the current plan allowances that apply to the prescription drug benefit in the federally-administered PCIP will not be affected by this interim final rule and will continue to apply. Similarly, we will not apply the new payment rates to covered services furnished under the organ/tissue transplant benefit to ensure that enrollees continue to have access to the federally-administered PCIP's network of transplant centers of excellence, which we believe will lead to fewer complications, shorter lengths of stay, fewer readmissions, better health outcomes, and lower costs. Accordingly, the current plan allowances for covered services furnished under the organ/tissue transplant benefit will remain the same. Also, we will not apply a new payment rate to the dialysis services provided under the diagnostic and treatment services benefit because we are unable to operationalize a Medicare payment rate. We believe that the current negotiated rates with dialysis providers result in payments that are likely to be less than 50 percent of billed charges. Therefore, we believe maintaining our current in-network payment rate for this service is more competitive than if we were to implement a new payment rate at 50 percent of the billed charge. Finally, we will not apply the new payment rates to covered services furnished under the durable medical equipment benefit, which currently is provided to enrollees in the federally-
This interim final rule establishes new payment rates for most covered services furnished in the federally-administered PCIP. The federally-administered PCIP is administered directly by HHS. We note that HHS can implement this interim final rule quickly and efficiently. The state-based PCIPs have previously indicated to HHS that they are unable to implement new facility and provider rates quickly. Therefore, we have taken the contracting strategy outlined herein with state-based PCIPs.
Section 1101(c)(2)(D) of the Affordable Care Act requires that a PCIP program established under this section meet “any other requirements determined appropriate” by the Secretary. We are using this authority to adopt a new requirement for the federally-administered PCIP that conditions a facility or provider's acceptance of the new payment rates discussed above for most covered services on the facility or provider's agreement not to balance bill the enrollee for an amount greater than the cost-sharing amount calculated by the Plan.
Balance billing is a term generally used to describe the practice of billing a patient for the difference between the plan allowance for a covered service and the amount that the facility or provider would otherwise charge for the service. Although the federally-administered PCIP currently contracts with a network of facilities and providers that have agreed not to balance bill, it may not be able to sustain that contractual arrangement as it currently exists, or otherwise enter into new contracts with networks that will accept as payment in full the payment rates we are adopting in this interim final rule. Thus, the federally-administered PCIP may operate without a network for most covered services, and the corresponding protection against balance billing that has, to date, been available to enrollees who choose to use network facilities and providers.
Without such protection, enrollees in the federally-administered PCIP could become liable to pay significant out-of-pocket costs for many covered services. We understand that facility and provider charges will often be higher than the rates we are setting in this interim final rule. Allowing this financial liability to transfer to the enrollee could leave federally-administered PCIP enrollees no better off than they would have been if they had no PCIP coverage, and runs counter to the entire PCIP concept, which is to provide affordable health insurance coverage to those who need it most. Also, we believe that the payment rates we are setting in this interim final rule are still better than the alternative, which is leaving facilities and providers with the possibility of having to decide whether to furnish uncompensated care.
Accordingly, to safeguard federally-administered PCIP enrollees from experiencing potentially significant increases in their out-of-pocket costs due to balance billing, we are adding a new § 152.21(c) to our regulations. Beginning with June 15, 2013 dates of service, this new section requires all facilities and providers that accept payment from the federally-administered PCIP for furnishing a covered service to an enrollee (with the exception of covered services furnished under the prescription drug, organ/tissue transplant, dialysis and durable medical equipment benefits) to accept as payment in full the plan allowance for the covered service, which includes the cost-sharing amount calculated by the Plan for the covered service. With respect to these covered services, facilities or providers may not bill the enrollee for an amount greater than the amount determined by the Plan to be the enrollee's cost-sharing amount for the covered service.
The prohibition on balance billing will not apply to covered services furnished under the prescription drug, organ/tissue transplant, dialysis and durable medical equipment benefits because, as explained above, covered services furnished under these benefits will continued to be paid at the existing in-network payment rates. We do not apply the balance billing prohibition to these covered services because it is our desire to encourage federally-administered enrollees to continue to seek treatment for these covered services from in network facilities and providers for the cost-containment reasons described above.
Because of the large number of public comments we normally receive on
Under the Administrative Procedure Act (APA) (5 U.S.C. 551, et seq.), a notice of proposed rulemaking and an opportunity for public comment are generally required before promulgation of a regulation. We also ordinarily provide a 60-day delay in the effective date of the provisions of a rule in accordance with the APA (5 U.S.C. 553(d)), which requires a 30-day delayed effective date and the Congressional Review Act (5 U.S.C. 801(a)(3)), which requires a 60-day delayed effective date for major rules.
However, this procedure can be waived if the agency, for good cause, finds that notice and public comment and delay in effective date are impracticable, unnecessary, or contrary to the public interest and incorporates a statement of the finding and its reasons in the rule issued. 5 U.S.C. 553(d)(3); 5 U.S.C. 808(2).
HHS has determined that issuing this regulation in proposed form, such that it would not become effective until after public comments are submitted, considered, and responded to in a final rule, would be impracticable and contrary to the public interest. The PCIP program is intended to provide benefits to eligible uninsured individuals with pre-existing conditions until 2014. However, the funding available to pay claims against, and the administrative costs of, the PCIP program is limited by statute, and HHS estimates that, at the current rate of expenditure, the aggregate amount needed for the payment of program expenses may be greater than the amount of remaining funding appropriated by the Congress to pay such expenses. Moreover, for individuals with pre-existing conditions enrolled in the PCIP program, the program may be their only available source of health coverage before prohibitions on discrimination by health insurance issuers based on pre-existing conditions go into effect in January 2014. It is critical to the continued sustainability of the program that the new payment rates go into effect as soon as operationally possible. A delay in the implementation of the new reimbursement rates beyond June 15, 2013 would risk program funds being exhausted prior to 2014.
We also believe that it would be impracticable and contrary to the public interest to delay the implementation of a policy that prohibits facilities and providers from billing federally-
For the foregoing reasons, we find good cause to waive the notice of proposed rulemaking and 60-day delay in the effective date and to issue this final rule on an interim basis.
We are providing a 60-day public comment period, and this regulation will be effective on June 15, 2013.
Under the Paperwork Reduction Act of 1995, we are required to provide 60-day notice in the
We are not soliciting public comment on these issues addressed in this interim final rule because we are not making changes to the information collections associated with this program, which are covered under OMB Control Number OMB–0938–1100.
Section 1101 of Title I of the Affordable Care Act requires that the Secretary establish, either directly or through contracts with states or nonprofit private entities, a temporary high risk pool program to provide affordable health insurance benefits to eligible uninsured individuals with pre-existing conditions. The Affordable Care Act envisions that this program will provide coverage to eligible uninsured individuals with preexisting conditions until 2014, when these individuals will begin to have access to a broader range of affordable health coverage options, including qualified health plans offered through new Health Insurance Exchanges established under sections 1311 or 1321 of the Affordable Care Act. An interim final rule published July 10, 2010 (75 FR 45014) set forth and addressed key issues regarding administration of the program, eligibility and enrollment, benefits, premiums, funding, appeals rules, and enforcement provisions related to anti-dumping and fraud, waste, and abuse. This interim final rule sets forth new payment rates that apply to most covered services with dates of service beginning June 15, 2013, in the federally-administered PCIP. Payment rates for covered services—with the exception of covered services furnished under the prescription drug, organ/tissue transplant, dialysis and durable medical equipment benefits will be—(1) 100 percent of Medicare payment rates; or (2) where Medicare payment rates cannot be implemented by the federally-administered PCIP, 50 percent of billed charges or a rate generated using a relative value scale pricing methodology. This interim final rule is an exercise of our authority to make program changes that we have determined are prudent and necessary to ensure that there is sufficient funding to pay for program expenses until 2014.
Additionally, to protect federally-administered PCIP enrollees from potentially becoming financially liable to pay significant costs for covered services as an unintended consequence of this interim final rule, we are adopting a policy that prohibits facilities and providers from billing an enrollee for the difference between the plan allowance for a covered service (with the exception of covered services furnished under the prescription drug, organ/tissue transplant, dialysis and durable medical equipment benefits) and the amount that they would otherwise charge for the covered service. In other words, facilities and providers that furnish covered services to federally-administered PCIP enrollees must accept, as payment in full, the plan allowance for most of those covered services (as determined by the Plan) and not bill the enrollee for an amount greater than the cost-sharing amount that the federally-administered PCIP has calculated for the covered service.
Executive Order 12866 explicitly requires agencies to take account of “distributive impacts” and “equity.” Setting the federally-administered PCIP payment rates applicable to most covered services with dates of service beginning on June 15, 2013, is prudent and necessary to ensure the PCIP program continues to provide benefits to enrolled individuals with pre-existing conditions who cannot obtain health coverage in the existing insurance market until 2014, when these individuals will begin to have access to a broader range of coverage options, including qualified health plans offered through new health insurance marketplaces established under sections 1311 or 1321 of the Affordable Care Act. Based on enrollment and claims data, current HHS estimates indicate that the aggregate amount needed to pay for PCIP expenses may be greater than the remaining funding appropriated by Congress to pay for such expenses until coverage under the program ends in 2014. Therefore, it is critical that we set the new payment rates and prohibit balance billing under the federally-administered PCIP as soon as operationally possible so that we can ensure that funding remains available to provide benefits to PCIP enrollees until 2014 and enrollees are protected from potentially significant out-of-pocket costs.
Under Executive Order 12866 (58 FR 51735), a “significant” regulatory action is subject to review by the Office of Management and Budget (OMB). Section 3(f) of the Executive Order defines a “significant regulatory action” as an action that is likely to result in a rule— (1) having an annual effect on the economy of $100 million or more in any one year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as “economically significant”); (2) creating
HHS provides an assessment of the potential costs, benefits, and transfers associated with this interim final regulation, summarized in the following table.
This interim final rule sets new payment rates for most covered services in the federally-administered Pre-Existing Condition Insurance Plan (PCIP) furnished beginning on June 15, 2013. It also prohibits a facility or provider from balance billing a federally-administered PCIP enrollee in most circumstances.
Only facilities and providers furnishing covered services to federally-administered PCIP enrollees will be affected by the new payment rates and prohibition on balance billing. Although payment rates will be reduced, facilities and providers choosing to continue to furnish covered services to PCIP enrollees will continue to receive payment, whereas in the absence of PCIP, they might not be able to continue treating the individuals unless they furnish uncompensated care. Although the federally-administered PCIP currently includes an in-network benefit, enrollees are also able to receive treatment out-of-network, thereby making it difficult to quantify the number of facilities and providers that will be affected by this interim final rule.
A key premise for the establishment of the PCIP program was that those who are unable to purchase private health insurance coverage due to a pre-existing condition are potentially disadvantaged as a result of both poor health and loss of income. We expect that this interim final regulation will help more than 100,000 current enrollees continue to receive coverage until 2014. According to the 2009 report entitled “Financial and Health Burden of Chronic Conditions Grow,” released by the Center for Studying Health System Change, about 60 percent of the uninsured who have chronic conditions delay care or did not fill a prescription due to cost. Lack of health coverage often leads to significant medical debt, and uncompensated and expensive care at sites such as emergency rooms, shifting these costs in the health system to people with insurance coverage to offset the cost of this uncompensated care. Given these potential consequences of PCIP enrollees losing coverage and becoming uninsured prior to the coverage protections that will go into effect in 2014, this interim final regulation could generate significant benefits to enrolled individuals, for whom it will be possible to continue to be enrolled in the PCIP program. Absent this interim final rule, the PCIP program could exhaust its $5 billion in appropriated funding before the end of the program in 2014.
The Regulatory Impact Analysis included in the preamble to the 2010 PCIP interim final regulation included a discussion of the PCIP program's benefit to program-eligible individuals, as compared to the absence of the program. This interim final rule better ensures the continued existence of the program until 2014, as an alternative to the absence of the program during that time period. Therefore, we refer readers to the discussion of the benefits to program-eligible individuals that appears in the Regulatory Impact Analysis of the July 30, 2010 interim final regulation (75 FR 45026). These benefits could take the form of reductions in mortality and morbidity, reductions in medical expenditure risk, and increases in worker productivity. Each of these effects is described in that Regulatory Impact Analysis.
Under Section 1101 of the Affordable Care Act, HHS is authorized to disperse $5 billion to pay claims and the administrative costs of the PCIP program that are in excess of premiums collected from enrollees.
There will be administrative costs associated with this interim final rule. The federally-administered PCIP claims processing contractor will incur minimal administrative costs to implement the payment rates required by this regulation to ensure that its systems are properly coded to pay the payment rates established under this interim final rule. This cost will be minimal because the claims processing contractor has an existing system in place to adjust its payment rates to reduce the payment rates to the amount specified.
This interim final rule will not increase or decrease costs to the federal government. The Congress appropriated $5 billion for the PCIP program, and HHS intends to spend that $5 billion for PCIP-related costs, although this regulation will change how a portion of the remaining $5 billion is distributed by spreading funding for the maximum period of time by setting new payment rates in the federally-administered PCIP.
With respect to other parties, we lack data with which to quantify costs associated with this regulation. Setting new payment rates for most covered services under the federally-administered PCIP program gives facilities and providers two choices. One choice is to continue to treat federally-administered PCIP enrollees and accept the payment rates set by this regulation as payment in full. We acknowledge that facilities and providers would, in general, be paid less to treat PCIP enrollees but we believe such cost is minimal (relative to facilities and providers' annual revenues). In the absence of this regulation, funding for the PCIP program may be exhausted prior to 2014, causing enrollees to seek from the same facilities and providers uncompensated and expensive care. Facilities and providers who furnish covered services to individuals enrolled in the federally-administered PCIP, the anticipated reduction in PCIP revenue per claim will not, in the aggregate, eliminate their overall PCIP revenue.
Under section 1101 of the Affordable Care Act, HHS is authorized to spend $5 billion for the purpose of funding the PCIP program. Implementing this interim final regulation, through which HHS is setting payment rates for most covered services under the federally-administered PCIP program to 100 percent of Medicare payment rates, may not impose any substantial financial costs on any parties.
For facilities and providers, the anticipated reduction in PCIP revenue per claim will likely be offset by the cost of uncompensated care in the absence of the PCIP program, a cost that facilities and providers would frequently incur if the PCIP program terminated earlier than 2014, due to funds being exhausted. Therefore, this interim final regulation has, in aggregate, minimal cost to such facilities and providers. By ensuing that coverage continues through the end of the year, when new options become available, the payment rates set forth in this interim final regulation will likely have a significant, positive financial impact on individuals enrolled in the program.
We anticipate that PCIP enrollees, who might otherwise lose their PCIP coverage will benefit from this interim final rule because they will be able to maintain their PCIP coverage. We also anticipate that ensuring the PCIP program's existence through 2014 will reduce the burden on local and state governments to pay health care facilities and providers for uncompensated care and prevent shifting of uncompensated care costs in the health system to people with insurance coverage to offset the cost of such uncompensated care.
Under the Executive Order, we must consider alternatives to issuing regulations and alternative regulatory approaches. This interim final rule sets payment rates for covered services in the federally-administered PCIP with dates of service beginning June 15, 2013 to reduce the rate of expenditures in order to eliminate the potential funding deficit estimated to occur in calendar year 2013. While other program modifications, as previously summarized, have been implemented to contain program costs, no other viable alternatives were identified that could substitute for the changes included in this interim final rule.
The Regulatory Flexibility Act (RFA) requires agencies that issue a regulation to analyze options for regulatory relief of small businesses if a rule has a significant impact on a substantial number of small entities. The RFA generally defines a “small entity” as—(1) A proprietary firm meeting the size standards of the Small Business Administration (SBA); (2) a nonprofit organization that is not dominant in its field; or (3) a small government jurisdiction with a population of less than 50,000. States and individuals are not included in the definition of “small entity.” The Secretary certifies that this interim final rule will not have significant impact on a substantial number of small entities.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates would require certain spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2013, that threshold is approximately $141 million.
UMRA does not address the total cost of a rule. Rather, it focuses on certain categories of cost, mainly those “federal mandate” costs resulting from—(1) Imposing enforceable duties on state, local, or tribal governments, or on the private sector; or (2) increasing the stringency of conditions in, or decreasing the funding of, state, local, or tribal governments under entitlement programs.
Under the Affordable Care Act, states (or their designated nonprofit, private entities) chose to contract with HHS to administer PCIP and receive federal funding for doing so. If they did not choose to administer a PCIP, HHS established a PCIP in the state. Thus, this interim final rule does not impose an unfunded mandate on states.
Enrolled individuals have to pay a premium and other out-of-pocket expenses to maintain their enrollment in a PCIP. However, individuals are free to disenroll based on their evaluation of the costs and benefits of remaining in the program. There is no automatic enrollment and no requirement to enroll or remain enrolled in a PCIP. Thus, this interim final rule does not impose an unfunded mandate on the private sector.
Under the specific provisions of the Affordable Care Act, States or State-delegated non-profit entities are contractors of the HHS in the implementation of the PCIP program. HHS has given those contractors flexibility within the parameters provided by the Affordable Care Act and within the budgetary capacity of the program.
This proposed regulation is subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq) and has been transmitted to the Congress and Comptroller General for review.
This interim final rule is adopted pursuant to the authority contained in section 1101 of the Patient Protection and Affordable Care Act (Pub. L. 111–148).
Administrative practice and procedure, Health care, Health insurance, Penalties, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Department of Health and Human Services amends 45 CFR subtitle A, subchapter B, part 152 as set forth below:
Sec. 1101 of the Patient Protection and Affordable Care Act (Pub. L. 111–148).
(c)
(c)
(2) With respect to all other covered services, the payment rates will be—
(i) 100 percent of Medicare payment rates; or
(ii) Where Medicare payment rates cannot be implemented by the federally-administered PCIP, 50 percent of billed charges or a rate using a relative value scale pricing methodology.
Federal Communications Commission.
Final rule.
In this document, the Commission adopts rules to implement section 718 of the Communications Act of 1934 (the Act), as amended, which was added to the Act by the Twenty-First Century Communications and Video Accessibility Act of 2010 (CVAA). Section 718 of the Act requires Internet browsers built into mobile phones to be accessible to individuals who are blind or visually impaired. In this document, the Commission also affirms that section 716 of the Act requires certain Internet browsers used for advanced communications services to be accessible to people with disabilities.
Effective October 8, 2013.
Eliot Greenwald, Consumer and Governmental Affairs Bureau, Disability Rights Office, at (202) 418–2235 or email
This is a summary of the Commission's Second Report Order, document FCC 13–57, adopted on April 26, 2013, and released on April 29, 2013, in CG Docket No. 10–213, WT Docket No. 96–198, and CG Docket No. 10–145. The full text of document FCC 13–57 will be available for public inspection and copying via ECFS, and during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street SW., Room CY–A257, Washington, DC 20554. It also may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street SW., Room CY–B402, Washington, DC 20554, telephone: (800) 378–3160, fax: (202) 488–5563, or Internet:
Document FCC 13–57 does not contain new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104–13. In addition, therefore, it does not contain any new or modified 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, 44 U.S.C. 3506(c)(4).
1. In document FCC 13–57, the Commission implements section 718 of the Act, which was added by section 104 of the CVAA to ensure that people with disabilities have access to emerging and innovative advanced communications technologies. Section 718 of the Act requires mobile phone manufacturers and mobile service providers that include or arrange for the inclusion of an Internet browser on mobile phones to ensure that the functions of the included browser are accessible to and usable by individuals who are blind or have a visual impairment, unless doing so is not achievable. In addition, in document FCC 13–57, the Commission affirms its previous conclusions regarding the coverage of Internet browsers used for ACS under section 716 of the Act, and retains the recordkeeping requirements and deadlines for entities covered under section 718 of the Act.
2. On October 7, 2011, the Commission adopted rules, published at 76 FR 82353, December 30, 2011, implementing section 716 of the Act (also added by the CVAA), which requires advanced communications services (ACS) and equipment used for ACS to be accessible to and usable by individuals with disabilities, unless doing so is not achievable. 47 U.S.C. 617; 47 CFR 14.1—14.21 of the Commission's rules. The Commission also adopted rules to implement section 717, which establishes recordkeeping and enforcement requirements for entities covered under sections 255, 716, and 718 of the Act. 47 U.S.C. 618; 47 CFR 14.30—14.52 of the Commission's rules. In addition, the Commission adopted a Further Notice of
3. In document FCC 13–57, the Commission affirms its previous conclusion that equipment with manufacturer-installed or included Internet browsers used for ACS are encompassed within the term “equipment used for ACS” subject to section 716 of the Act. Likewise, the Commission affirms that an ACS provider is responsible for the accessibility of the underlying components of its service, including any software, such as an Internet browser, that it provides. Among other things, this means that the functions of an Internet browser—to enable users, for example, to input a uniform resource locator (URL) into the address bar; to identify and activate home, back, forward, refresh, reload, and stop buttons; to view status information; and to activate zooming or other features that are used for ACS—must be accessible to individuals with disabilities, unless doing so is not achievable.
4. In document FCC 13–57, the Commission concludes that Internet browsers do not “pass through” information to independent downstream devices, software, or applications, as that term is used in section 14.20(c) of the Commission's rules. Nevertheless, the Commission notes that covered entities are not relieved of their obligations to ensure the accessibility of browsers included by manufacturers or service providers under section 716 of the Act. For example, if a covered entity installs or directs the installation of an Internet browser, and the browser supports a specific web standard, approved standards recommendations, or technology that includes the capabilities to support accessibility features and capabilities, it must ensure that the Internet browser can use such capabilities contained in those standards or technologies to support the intended accessibility features and capabilities in the ACS web application retrieved and displayed by the browser, unless doing so is not achievable. To the extent that an included Internet browser does not support a particular technology that is needed to make web-based information available to the general public, the Commission declines to require covered entities to ensure that such browsers support the technology solely for the purpose of achieving accessibility.
5. In document FCC 13–57, the Commission finds that, with respect to individuals with disabilities generally, section 716(a) of the Act covers manufacturers of all equipment (including mobile phones) that include an Internet browser used for ACS, and section 716(b) of the Act covers ACS providers (including mobile service providers that provide ACS) that provide or require the installation and use of an Internet browser as an underlying component of their ACS. The Commission further finds that, specifically with respect to individuals who are blind or visually impaired, section 718 of the Act covers manufacturers of mobile phones that include an Internet browser used for any purpose, as well as mobile service providers who arrange for the inclusion of an Internet browser used for any purpose.
6. Except as otherwise noted, in document FCC 13–57, the Commission adopts rules for section 718 of the Act that are analogous to the Commission's Part 14 rules implementing section 716. Specifically, the rules adopted define the terms “accessible” and “usable” as the Commission previously defined these terms when implementing sections 716(a)(1) and (b)(1) and sections 255(b) and (c) of the Act. The Commission also adopts key requirements similar to those in its section 255 and section 716 rules regarding product design, development, and evaluation. Entities subject to section 718 of the Act must consider performance objectives at the design stage as early as possible and identify barriers to accessibility and usability as part of their evaluation when considering implementation of the accessibility performance objectives. 47 CFR 14.20(a) and (b) of the Commission's rules. Entities subject to section 718 of the Act must also ensure that information and documentation that they provide to customers are accessible, if achievable. 47 CFR 14.20(d) of the Commission's rules.
7. The Commission declines to apply the information pass-through requirement in section 14.20(c) of the Commission's rules to entities covered under section 718 of the Act. Nevertheless, the Commission notes that covered entities are not relieved of their obligations under section 718 of the Act. A covered entity that installs or directs the installation of an Internet browser that supports a specific web standard, approved standards recommendations, or technology that includes the capabilities to support accessibility features and capabilities, must ensure that the Internet browser can use such capabilities contained in those standards or technologies to support the intended accessibility features and capabilities in the web application retrieved and displayed by the browser, unless doing so is not achievable. To the extent that an included Internet browser does not support a particular technology that is needed to make web-based information available to the general public, the Commission declines to require covered entities to ensure that such browsers support the technology solely for the purpose of achieving accessibility.
8. Section 716(g) of the Act defines the term “achievable” for the purposes of both section 716 and section 718 to mean “with reasonable effort or expense, as determined by the Commission” and requires consideration of four specific factors when making such determinations. In document FCC 13–57, the Commission defines and applies the term “achievable” to entities covered under section 718(a) of the Act in the same manner as this term is defined in section 716(g) of the Act and as it is applied to entities covered under sections 716(a)(1) and (b)(1) of the Act.
9. In document FCC 13–57, the Commission defines and applies the industry flexibility provisions contained in section 718(b) of the Act in the same manner as these provisions are defined and applied in sections 716(a)(2) and (b)(2) of the Act. These provisions allow industry the flexibility to satisfy their respective accessibility requirements with or without the use of third party applications, peripheral devices, software, hardware, or customer premises equipment that are available to consumers at nominal cost and that individuals with disabilities can access.
10. The Commission does not apply the compatibility provision contained in section 716(c) of the Act—requiring that, if compliance with the accessibility
11. The Commission also does not apply the provisions in section 716 of the Act governing exemptions from the accessibility requirements for customized equipment or services, and waivers for small entities and multipurpose services and equipment to section 718 of the Act, because section 718 contains no parallel exemption or waiver provisions. Nevertheless, the Commission notes that an entity covered by section 718 of the Act may petition for a waiver of the Commission's rules implementing section 718 pursuant to the Commission's general waiver provisions contained at 47 CFR 1.3 of the Commission's rules.
12. An API is software that an application program uses to request and carry out lower-level services performed by the operating system of a computer or telephone. An accessibility API, in turn, is a specialized interface developed by a platform owner which can be used to communicate accessibility information about user interfaces to assistive technologies. Because there are various methods to achieve compliance with the section 718 of the Act requirements, and there is a need to afford covered entities flexibility on how to comply, the Commission, at this time, does not mandate that covered entities include accessibility APIs in mobile phones. Further, at this time, the Commission declines to establish the inclusion of an accessibility API in a mobile phone as a safe harbor for compliance with section 718 of the Act.
13. Section 717(a)(5)(A) of the Act requires, beginning January 30, 2013, each manufacturer and service provider subject to sections 255, 716, and 718 of the Act to maintain records of its efforts to implement sections 255, 716, and 718, including the following: information about its efforts to consult with individuals with disabilities; descriptions of the accessibility features of its products and services; and information about the compatibility of its products and services with equipment commonly used by individuals with disabilities to achieve access. In October 2011, the Commission adopted recordkeeping requirements implementing this statutory requirement. In the
14. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), 5 U.S.C. 603, an Initial Regulatory Flexibility Analysis (IRFA) was included in the
15. In document FCC 13–57, the Commission adopts rules to implement section 718 of the Act, which was added by the CVAA. Specifically, section 718(a) of the Act requires a mobile phone manufacturer that includes an Internet browser or a mobile phone service provider that arranges for an Internet browser to be included on a mobile phone to ensure that the browser functions are accessible to and usable by individuals who are blind or have a visual impairment, unless doing so is not achievable. Under section 718(b) of the Act, mobile phone manufacturers or service providers may achieve compliance with or without the use of third party applications, peripheral devices, software, hardware, or customer premises equipment. Congress provided that the effective date for these requirements is three years after the enactment of the CVAA, which is October 8, 2013.
16. In document FCC 13–57, the Commission finds that sections 716 and 718 of the Act, which were both adopted by the CVAA, have overlapping requirements. Specifically, section 716 of the Act applies to all Internet browsers that are built into equipment and used for ACS or that may be required to be installed by ACS equipment manufacturers or providers. Section 718 of the Act applies only to the discrete category of Internet browsers built into mobile phones used for any purpose (not just to access ACS) by a discrete group of individuals with disabilities, that is, people who are blind or have a visual impairment.
17. In document FCC 13–57, the Commission adopts rules for section 718 of the Act that are consistent with the Commission's rules implementing section 716 of the Act. 47 CFR 14.1–14.21 of the Commission's rules. For the purpose of applying section 718(a) of the Act, the terms “accessible” and “usable” are defined in the same manner as these terms are applied to entities covered under sections 716(a)(1) and (b)(1) of the Act. Because section 716(g) of the Act defines “achievable” for purposes of both sections 716 and 718, the Commission defines and applies the term “achievable” to entities covered under section 718 of the Act in the same manner as entities covered under section 716 of the Act. Because sections 716(a)(2) and (b)(2) of the Act are virtually identical to section 718(b) of the Act, the Commission defines and applies the industry flexibility provisions contained in section 718(b) of the Act in the same manner as these provisions are defined and applied in section 716 of the Act.
18. Section 716 of the Act includes specific exemptions for customized equipment or services, and gives the Commission authority to waive accessibility requirements for small entities and multipurpose services and equipment. Because section 718 of the Act contains no parallel exemption or waiver provisions, the Commission finds insufficient basis to establish similar exemptions and waiver provisions specific to the requirements of section 718 of the Act. Nevertheless, an entity covered by section 718 of the Act could petition for a waiver of the Commission's rules implementing section 718 pursuant to the Commission's general waiver provisions requiring petitioners to show good cause to waive the rules, and a showing that the particular facts of the petitioner's circumstances make compliance
19. In document FCC 13–57, the Commission also declines to require accessibility APIs because there are various methods to achieve compliance with the section 718 of the Act requirements, and there is a need to afford covered entities flexibility on how to comply. Lastly, in document FCC 13–57, the Commission retains the recordkeeping requirements previously adopted for manufacturers and service providers covered under section 718 of the Act. 47 CFR 14.31 of the Commission's rules.
20. No party filing comments in this proceeding responded to the IRFA in regard to implementation of section 718 of the Act, and no party filing comments in this proceeding otherwise addressed whether the policies and rules proposed in this proceeding regarding implementation of section 718 of the Act would have a significant economic impact on a substantial number of small entities.
21. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that face possible significant economic impact by the adoption of proposed rules. 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 that (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. Nationwide, there are a total of approximately 27.9 million small businesses, according to the SBA.
22. The following entities have been identified as entities in which a majority of businesses in each category are estimated to be small. NAICS codes are provided where applicable.
23.
24.
25.
26. The RFA requires an agency to describe any significant alternatives it considered in developing its approach, which may include the following four alternatives, among others: “(1) The establishment of differing compliance or certification requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and certification requirements under the rule for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.”
27. In document FCC 13–57, the Commission continues and preserves the steps taken previously to minimize adverse economic impact on small entities. Specifically, in document FCC 13–57, the Commission continues to promote flexibility for all entities in several ways. The rules require covered entities to ensure that Internet browsers included in mobile phones are accessible, unless not achievable. This is a statutory requirement; therefore no alternatives were considered. However, this requirement has built-in flexibility. All entities, including small entities, may build accessibility features into the product or may rely on third party applications, peripheral devices, software, hardware, or customer
28. The rules adopted in document FCC 13–57 require covered entities to consider performance objectives at the design stage as early and consistently as possible. This requirement is necessary to ensure that accessibility is considered at the point where it is logically best to incorporate accessibility. The CVAA and document FCC 13–57 are performance-driven and avoid mandating particular designs. Instead, they focus on an entity's compliance with the accessibility requirements through whatever means the entity finds necessary to make its product or service accessible, unless not achievable. This provides flexibility by allowing each entity, including small entities, to individually meet its obligations through what works best for that given entity (given the accessibility needs of the consumers being served), instead of mandating a rigid requirement that applies to all covered entities.
29. In document FCC 13–57, the Commission also leaves unchanged the requirements adopted previously that allow covered entities to keep records in any format they wish, because this flexibility affords small entities the greatest flexibility to choose and maintain the recordkeeping system that best suits their resources and their needs. The Commission found that this approach takes into account the variances in covered entities (
30. Although section 718 of the Act contains no exemption or waiver provisions comparable to those in section 716 of the Act, in document FCC 13–57, the Commission notes that an entity covered by section 718 of the Act may petition for a waiver of the Commission's rules implementing section 718 pursuant to the general waiver provisions in section 1.3 of the Commission's rules, which requires a showing of good cause to waive the rules, as well as a showing that particular facts make compliance inconsistent with the public interest. Section 1.3 of the Commission's rules therefore affords small entities additional compliance flexibility.
31. Section 255(e) of the Act, as amended, directs the Architectural and Transportation Barriers Compliance Board (Access Board) to develop equipment accessibility guidelines “in conjunction with” the Commission, and periodically to review and update those guidelines. The Commission views the Access Board's current guidelines as well as its proposed guidelines as starting points for our interpretation and implementation of sections 716, 717, and 718 of the Act, as well as section 255 of the Act. As such, our rules do not overlap, duplicate, or conflict with either existing or proposed Access Board guidelines on section 255 of the Act.
32. The Commission will send a copy of document FCC 13–57 in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act. 5 U.S.C. 801(a)(1)(A).
33. Pursuant to sections 4(i), 303(r), 716, 717, and 718 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), 617, 618, and 619, document FCC 13–57 is hereby
Advanced communications services equipment, Individuals with disabilities, Manufacturers of equipment used for advanced communications services, Providers of advanced communications services, Recordkeeping and enforcement requirements.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 14 as follows:
47 U.S.C. 151–154, 255, 303, 403, 503, 617, 618, 619 unless otherwise noted.
(a) This subpart E shall apply to a manufacturer of a telephone used with public mobile services (as such term is defined in 47 U.S.C. 710(b)(4)(B)) that includes an Internet browser in such telephone that is offered for sale or otherwise distributed in interstate commerce, or a provider of mobile services that arranges for the inclusion of a browser in telephones to sell or otherwise distribute to customers in interstate commerce.
(b) Only the following enumerated provisions contained in this part 14 shall apply to this subpart E.
(1) The limitations contained in § 14.2 shall apply to this subpart E.
(2) The definitions contained in § 14.10 shall apply to this subpart E.
(3) The product design, development and evaluation provisions contained in § 14.20(b) shall apply to this subpart E.
(4) The information, documentation, and training provisions contained in § 14.20(d) shall apply to this subpart E.
(5) The performance objectives provisions contained in § 14.21(a), (b)(1)(i), (b)(1)(ii), (b)(1)(iii), (b)(2)(i), (b)(2)(ii), (b)(2)(iii), (b)(2)(vii), and (c) shall apply to this subpart E.
(6) All of subpart D shall apply to this subpart E.
(a)
(1) To make accessible or usable any Internet browser other than a browser that such manufacturer or provider includes or arranges to include in the telephone; or
(2) To make Internet content, applications, or services accessible or usable (other than enabling individuals with disabilities to use an included browser to access such content, applications, or services).
(b)
(1) Ensuring that the telephone or services that such manufacturer or provider offers is accessible to and usable by individuals with disabilities without the use of third-party applications, peripheral devices, software, hardware, or customer premises equipment; or
(2) Using third-party applications, peripheral devices, software, hardware, or customer premises equipment that is available to the consumer at nominal cost and that individuals with disabilities can access.
Defense Acquisition Regulations System, Department of Defense (DoD).
Final rule.
DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update instructions for assigning basic and supplementary procurement instrument identification numbers.
Fernell Warren, telephone 571–372–6089.
DoD published a proposed rule in the
DoD reviewed the public comments in the development of the final rule. A discussion of the comments is provided.
There were no changes made from the proposed rule as a result of the comments.
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.
DoD does not expect this final rule to have a significant economic impact on a substantial number of small entities because it applies to a narrowly limited population of procurement actions however, a final regulatory flexibility analysis has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., and is summarized as follows:
This rule will clarify which contracts are to be coded with an “F” in the 9th position of the PIIN. It is not anticipated that the rule will impact small entities as it only impacts the internal operating procedures of the Government by specifying how the assigned PIIN is constructed for certain procurement actions. This change limits the use of “F” in the 9th position to task and delivery orders and calls issued under a non-DoD issued contract or agreement. As a result of the rule, new awards under the AbilityOne program and the FPI programs will no longer reflect an “F” in the 9th position of the in the PIIN. DoD uses other data elements, such as specific DUNS numbers and validations from the Ability One Program, as indicators for awards to Federal Prison Industries and Ability One vendors.
The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).
Government procurement.
Therefore, DoD amends 48 CRF part 204 as follows:
41 U.S.C. 1303 and 48 CFR Chapter 1.
(a) * * *
(3) * * *
(iii) Contracts of all types except indefinite-delivery contracts, sales contracts, and short form research contracts. Do not use this code for contracts or agreements with provisions for orders or calls.—C
(vi) Calls against blanket purchase agreements and orders under contracts (including Federal Supply Schedules, Governmentwide acquisition contracts, and multi-agency contracts) and basic ordering agreements issued by departments or agencies outside DoD. Do not use the `F' designation on DoD-issued purchase orders, contracts, agreements, or orders placed under DoD-issued contracts or agreements.—F
(d) * * *
(2) * * *
(ii) If an office is placing calls against non-DoD blanket purchase agreements or orders under non-DoD issued contracts (including Federal Supply Schedules, Governmentwide acquisition contracts, and multi-agency contracts), or basic ordering agreements, the office shall identify the instrument with a 13 position supplementary PII number using an F in the 9th position. Do not use the same supplementary PII number with an F in the 9th position on more than one order. Modifications to these calls or orders shall be numbered in accordance with paragraph (c) of this section.
Defense Acquisition Regulations System, Department of Defense (DoD).
Final rule.
DoD is making technical amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) to provide needed editorial changes.
Mr. Manuel Quinones, Defense Acquisition Regulations System, OUSD(AT&L)DPAP(DARS), Room 3B855, 3060 Defense Pentagon, Washington, DC 20301–3060. Telephone 571–372–6088; facsimile 571–372–6094.
This final rule amends the DFARS to correct typographical error at 204.1105 and to correct the clause date at 252.204–7004, 252.204–7007, 252.232–7006, 252.232–7011, and 252.245–7004.
Government procurement.
Therefore, 48 CFR parts 252 is amended as follows:
41 U.S.C. 1303 and 48 CFR chapter 1.
Defense Acquisition Regulations System, Department of Defense (DoD).
Final rule.
DoD has adopted as final, with changes, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2010 that provides authority for certain types of Government support contractors to have access to proprietary technical data belonging to prime contractors and other third parties, provided that the technical data owner may require the support contractor to execute a non-disclosure agreement having certain restrictions and remedies.
Mr. Mark Gomersall, 571–372–6099.
DoD published an interim rule in the
The DFARS scheme for acquiring rights in technical data is based on 10 U.S.C. 2320 and 2321. Section 2320 establishes the basic allocation of rights in technical data, and provides, among other things, that a private party is entitled to restrict the Government's rights to release or disclose privately developed technical data outside the Government. This restriction is implemented in the DFARS as the “limited rights” license, which essentially limits the Government's use of such data only for in-house use and which does not include release to Government support contractors.
Historically, the statutorily based scheme has included only two categorical exceptions to the basic nondisclosure requirements for such privately developed data:
• A “type” exception, in which the Government is granted unlimited rights in certain types of “top-level” data that are not treated as proprietary (e.g., form, fit, and function data; data necessary for operation, maintenance, installation, or training; publicly available data) (2320(a)(2)(C)); and
• A “special needs” exception for certain important Government activities that are considered critical to Government operations (e.g., emergency repair and overhaul; evaluation by a foreign government), and are allowed only when the recipient of the data is made subject to strict nondisclosure restrictions on any further release of the data. (2320(a)(2)(D))
Section 821 amends 10 U.S.C. 2320 to add a third statutory exception to the prohibition on release of privately developed data outside the Government, allowing a covered Government support contractor access to and use of any technical data delivered under a contract for the sole purpose of furnishing independent and impartial advice or technical assistance directly to the Government in support of the Government's management and oversight of the program or effort to which such technical data relates. The statute also provides a definition of “covered Government support contractor.”
Four respondents submitted public comments in response to the interim rule.
DoD reviewed the public comments in the development of the final rule. A discussion of the comments and the changes made to the rule as a result of those comments are provided as follows:
1. DoD has revised DFARS 227.7104(b) and the definition of “Small Business Innovation Research (SBIR) data rights” to clarify the Government's limited rights in technical data and restricted rights in computer software under the SBIR data rights license obtained under the clause at 252.227–7018.
2. DoD has deleted the requirement that the covered Government support contractor provide copies of any non-disclosure agreements (NDAs) executed with proprietary information owners, upon request of the Contracting Officer (see 209.505–4, 252.227–7013(b)(3)(iv)(E), 252.227–7014(b)(3)(iii)(E), 252.227–7015(b)(3)(v), 252.227–7018(b)(8)(v), 252.227–7025(b)(1)(ii)(E), and 252.227–7025(b)(4)(ii)(E)). This is not a statutory requirement, and the benefit to the Government in collecting these copies is outweighed by the administrative burden.
One respondent also noted that an example of a restriction that is not included in the clause at 252.227–7025 but that is “particularly important for enforcement” of the proprietary information owner's rights, would be a requirement for the covered Government support contractor to have its employees sign individual NDAs containing materially similar terms.
DoD agrees with the respondent's suggestion that it is important to require the covered Government support contractor to ensure that its employees are subject to appropriate non-disclosure obligations, and observes that the obligations on the recipient contractor in the clause at 252.227–7025 do, in fact, create an obligation for that contractor to ensure that it implements the use and nondisclosure restrictions appropriately in the performance of its contractual duties, which would necessarily include ensuring that its employees who will have access or use of the proprietary information are subject to the applicable use and nondisclosure restrictions. However, to the extent that this may be viewed as an implicit obligation of the clause at 252.227–7025, and thus potentially could be overlooked or less than fully understood, such ambiguity must be eliminated. Accordingly, DoD has added a new paragraph (d) to 252.227–7025 to explicitly require the recipient contractor to ensure that its employees are subject to use and non-disclosure obligations prior to the employees being provided access to or use of the proprietary information.
DoD has added at 252.227–7025(b)(5)(iii) a requirement to provide a thirty (30) day period within which the covered Government support contractor must notify the Contractor of the release or disclosure of the
The recommended annual notification requirement would place an onerous administrative burden on the covered Government support contractor. Accordingly, the final rule does not require an annual notification.
However, DoD has clarified the definitions of “limited rights” and “restricted rights” to specify that the Government's authorized release to a covered Government support contractor is in the performance of a covered Government support contract (which necessarily contains the clause at 252.227–7025). Thus no further revisions are necessary. This structure was used to include the substance of the applicable use and release conditions within the clause that serves to apply the restrictions to the covered Government support contractors.
One respondent commented that the interim rule seemed to conflict with DoD guidance regarding organizational conflicts of interest, observing that one part of a large defense contractor might provide Government support contracting services thus creating opportunities for that contractor to obtain proprietary data of competitors. The respondent stated that only in limited circumstances on a case-by-case basis should support contractors be looking at proprietary information from other contractors and noted that a more appropriate solution might be to reduce DoD dependence on contractors.
The rule implements the statutory prohibition against covered Government support contractors having affiliations with the prime and first-tier subs, or any direct competitor of the prime or such first-tier sub and reflects the policy determinations inherent in the statute. Alteration of DoD policy regarding the extent of DoD reliance on contractors is beyond the scope of rulemaking for this statutory implementation.
1. Conforming changes are made to paragraphs (b)(20), (b)(21), (c)(2) and (c)(3) of the clause at 252.212–7001, “Contract Terms and Conditions Required to Implement Statutes or Executive Orders Applicable to Defense Acquisitions of Commercial Items,” to update the cross-references to the clauses modified by this final rule.
2. 252.227–7025(b)(1)(ii) and 252.227–7025(b)(4)(ii) now reference a new paragraph (b)(5), to avoid repetition of the restrictions in each location. The restrictions regarding GFI marked with limited or restricted rights legends and GFI marked with commercial restrictive legends respectively are revised for clarity.
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review by the Office of Information and Regulatory Affairs under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.
DoD has prepared a final regulatory flexibility analysis consistent with 5 U.S.C. 603. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows:
This rule amends the Defense Federal Acquisition Regulation Supplement DFARS) to implement section 821 of the National Defense Authorization Act for Fiscal Year 2010. Section 821 provides authority for certain types of Government support contractors to have access to proprietary technical data belonging to prime contractors and other third parties, provided that the technical data owner may require the support contractor to execute a non-disclosure agreement having certain restrictions and remedies.
No public comments were received in response to the initial regulatory flexibility analysis.
No comments were received from the Chief Counsel for Advocacy of the Small Business Administration in response to the rule. The rule affects small businesses that are Government support contractors that need access to proprietary technical data or computer software belonging to prime contractors and other third parties. It will also affect any small business that is the owner of “limited rights” technical data or restricted rights computer software in the possession of the Government to which the support contractor will require access.
The rule imposes no reporting, recordkeeping, or other information collection requirements. However, the statute provides that the support contractor must be willing to sign a nondisclosure agreement with the owner of the data. The rule has implemented this requirement in a way that preserves maximum flexibility for the private parties to reach mutual agreement without unnecessary interference from the Government. To reduce burdens, the rule permits the owner of the data to waive the requirement for a nondisclosure agreement, since the Government clauses already adequately deal with non-disclosure. Further, the rule provides that the support contractors cannot be required to agree to any conditions not required by statute. In the final rule, DoD has deleted the requirement to provide a copy of the non-disclosure agreement or waiver to the contracting officer, upon request.
Other than the alternatives already addressed, there are no known significant alternatives to the rule that would meet the requirements of the statute and minimize any significant economic impact of the rule on small entities. The impact of this rule on small business is not expected to be significant because the execution of a non-disclosure agreement is not likely to have a significant cost or administrative impact.
The rule imposes no new reporting, recordkeeping, or other information collection requirements. DFARS clauses 252.227–7013, 252.227–7014, 252.227–7015, and 252.227–7025 contain reporting or recordkeeping requirements that require the approval of the Office of Management and Budget under 44 U.S.C. chapter 35. However, these clauses are already covered by an approved OMB control number 0704–0369 in the amount of approximately 1.76 million hours.
Government procurement.
Therefore, DoD amends 48 CFR parts 209, 227, and 252 as follows:
41 U.S.C. 1303 and 48 CFR Chapter 1.
(b) For contractors accessing third party proprietary technical data or computer software, non-disclosure requirements are addressed at 227.7103–7(b), through use of the clause at 252.227–7025 as prescribed at 227.7103–6(c) and 227.7203–6(d). Pursuant to that clause, covered Government support contractors may be required to enter into non-disclosure agreements directly with the third party asserting restrictions on limited rights technical data, commercial technical data, or restricted rights computer software. The contracting officer is not required to obtain copies of these agreements or to ensure that they are properly executed.
(a) * * *
(b) Under the clause at 252.227–7018, the Government obtains SBIR data rights in technical data and computer software generated under the contract and marked with the SBIR data rights legend. SBIR data rights provide the Government limited rights in such technical data and restricted rights in such computer software during the SBIR data protection period commencing with contract award and ending five years after completion of the project under which the data were generated. Upon expiration of the five-year restrictive license, the Government has unlimited rights in the SBIR technical data and computer software.
(c) During the SBIR data protection period, the Government may not release or disclose SBIR technical data or computer software to any person except as authorized for limited rights technical data or restricted rights computer software, respectively.
(a) * * *
(14) * * *
(i) * * *
(B) A release or disclosure to—
(
(b) * * *
(3) * * *
(iv) The Contractor acknowledges that—
(A) Limited rights data are authorized to be released or disclosed to covered Government support contractors;
(B) The Contractor will be notified of such release or disclosure;
(C) The Contractor (or the party asserting restrictions as identified in the limited rights legend) may require each such covered Government support contractor to enter into a non-disclosure agreement directly with the Contractor (or the party asserting restrictions) regarding the covered Government support contractor's use of such data, or alternatively, that the Contractor (or party asserting restrictions) may waive in writing the requirement for a non-disclosure agreement; and
(D) Any such non-disclosure agreement shall address the restrictions on the covered Government support contractor's use of the limited rights data as set forth in the clause at 252.227–7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends. The non-disclosure agreement shall not include any additional terms and conditions unless mutually agreed to by the parties to the non-disclosure agreement.
(a) * * *
(15) “Restricted rights” apply only to noncommercial computer software and mean the Government's rights to—
(i) Use a computer program with one computer at one time. The program may not be accessed by more than one terminal or central processing unit or time shared unless otherwise permitted by this contract;
(ii) Transfer a computer program to another Government agency without the further permission of the Contractor if the transferor destroys all copies of the program and related computer software documentation in its possession and notifies the licensor of the transfer. Transferred programs remain subject to the provisions of this clause;
(iii) Make the minimum number of copies of the computer software required for safekeeping (archive), backup, or modification purposes;
(iv) Modify computer software provided that the Government may—
(A) Use the modified software only as provided in paragraphs (a)(15)(i) and (iii) of this clause; and
(B) Not release or disclose the modified software except as provided in paragraphs (a)(15)(ii), (v), (vi) and (vii) of this clause;
(v) Permit contractors or subcontractors performing service contracts (see 37.101 of the Federal Acquisition Regulation) in support of
(A) The Government notifies the party which has granted restricted rights that a release or disclosure to particular contractors or subcontractors was made;
(B) Such contractors or subcontractors are subject to the use and non-disclosure agreement at 227.7103–7 of the Defense Federal Acquisition Regulation Supplement (DFARS) or are Government contractors receiving access to the software for performance of a Government contract that contains the clause at DFARS 252.227–7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends;
(C) The Government shall not permit the recipient to decompile, disassemble, or reverse engineer the software, or use software decompiled, disassembled, or reverse engineered by the Government pursuant to paragraph (a)(15)(iv) of this clause, for any other purpose; and
(D) Such use is subject to the limitations in paragraphs (a)(15)(i) through (iii) of this clause;
(vi) Permit contractors or subcontractors performing emergency repairs or overhaul of items or components of items procured under this or a related contract to use the computer software when necessary to perform the repairs or overhaul, or to modify the computer software to reflect the repairs or overhaul made, provided that—
(A) The intended recipient is subject to the use and non-disclosure agreement at DFARS 227.7103–7 or is a Government contractor receiving access to the software for performance of a Government contract that contains the clause at DFARS 252.227–7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends;
(B) The Government shall not permit the recipient to decompile, disassemble, or reverse engineer the software, or use software decompiled, disassembled, or reverse engineered by the Government pursuant to paragraph (a)(15)(iv) of this clause, for any other purpose; and
(C) Such use is subject to the limitations in paragraphs (a)(15)(i) through (iii) of this clause; and
(vii) Permit covered Government support contractors in the performance of covered Government support contracts that contain the clause at 252.227–7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends, to use, modify, reproduce, perform, display, or release or disclose the computer software to a person authorized to receive restricted rights computer software, provided that—
(A) The Government shall not permit the covered Government support contractor to decompile, disassemble, or reverse engineer the software, or use software decompiled, disassembled, or reverse engineered by the Government pursuant to paragraph (a)(15)(iv) of this clause, for any other purpose; and
(B) Such use is subject to the limitations in paragraphs (a)(15)(i) through (iv) of this clause.
(16) * * *
(b) * * *
(3) * * *
(iii) The Contractor acknowledges that—
(A) Restricted rights computer software is authorized to be released or disclosed to covered Government support contractors;
(B) The Contractor will be notified of such release or disclosure;
(C) The Contractor (or the party asserting restrictions, as identified in the restricted rights legend) may require each such covered Government support contractor to enter into a non-disclosure agreement directly with the Contractor (or the party asserting restrictions) regarding the covered Government support contractor's use of such software, or alternatively, that the Contractor (or party asserting restrictions) may waive in writing the requirement for a non-disclosure agreement; and
(D) Any such non-disclosure agreement shall address the restrictions on the covered Government support contractor's use of the restricted rights software as set forth in the clause at 252.227–7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends. The non-disclosure agreement shall not include any additional terms and conditions unless mutually agreed to by the parties to the non-disclosure agreement.
(b) * * *
(3) The Contractor acknowledges that—
(i) Technical data covered by paragraph (b)(2) of this clause are authorized to be released or disclosed to covered Government support contractors;
(ii) The Contractor will be notified of such release or disclosure;
(iii) The Contractor (or the party asserting restrictions as identified in a restrictive legend) may require each such covered Government support contractor to enter into a non-disclosure agreement directly with the Contractor (or the party asserting restrictions) regarding the covered Government support contractor's use of such data, or alternatively, that the Contractor (or party asserting restrictions) may waive in writing the requirement for a
(iv) Any such non-disclosure agreement shall address the restrictions on the covered Government support contractor's use of the data as set forth in the clause at 252.227–7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends. The non-disclosure agreement shall not include any additional terms and conditions unless mutually agreed to by the parties to the non-disclosure agreement.
(a) * * *
(15) “Limited rights” means the rights to use, modify, reproduce, release, perform, display, or disclose technical data, in whole or in part, within the Government. The Government may not, without the written permission of the party asserting limited rights, release or disclose the technical data outside the Government, use the technical data for manufacture, or authorize the technical data to be used by another party, except that the Government may reproduce, release, or disclose such data or authorize the use or reproduction of the data by persons outside the Government if—
(i) The reproduction, release, disclosure, or use is—
(A) Necessary for emergency repair and overhaul; or
(B) A release or disclosure to—
(
(
(ii) The recipient of the technical data is subject to a prohibition on the further reproduction, release, disclosure, or use of the technical data; and
(iii) The contractor or subcontractor asserting the restriction is notified of such reproduction, release, disclosure, or use.
(18) “Restricted rights” apply only to noncommercial computer software and mean the Government's rights to—
(i) Use a computer program with one computer at one time. The program may not be accessed by more than one terminal or central processing unit or time shared unless otherwise permitted by this contract;
(ii) Transfer a computer program to another Government agency without the further permission of the Contractor if the transferor destroys all copies of the program and related computer software documentation in its possession and notifies the licensor of the transfer. Transferred programs remain subject to the provisions of this clause;
(iii) Make the minimum number of copies of the computer software required for safekeeping (archive), backup, or modification purposes;
(iv) Modify computer software provided that the Government may—
(A) Use the modified software only as provided in paragraphs (a)(18)(i) and (iii) of this clause; and
(B) Not release or disclose the modified software except as provided in paragraphs (a)(18)(ii), (v), (vi), and (vii) of this clause;
(v) Permit contractors or subcontractors performing service contracts (see 37.101 of the Federal Acquisition Regulation) in support of this or a related contract to use computer software to diagnose and correct deficiencies in a computer program, to modify computer software to enable a computer program to be combined with, adapted to, or merged with other computer programs or when necessary to respond to urgent tactical situations, provided that—
(A) The Government notifies the party which has granted restricted rights that a release or disclosure to particular contractors or subcontractors was made;
(B) Such contractors or subcontractors are subject to the non-disclosure agreement at 227.7103–7 of the Defense Federal Acquisition Regulation Supplement or are Government contractors receiving access to the software for performance of a Government contract that contains the clause at 252.227–7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends;
(C) The Government shall not permit the recipient to decompile, disassemble, or reverse engineer the software, or use software decompiled, disassembled, or reverse engineered by the Government pursuant to paragraph (a)(18)(iv) of this clause, for any other purpose; and
(D) Such use is subject to the limitations in paragraphs (a)(18)(i) through (iii) of this clause;
(vi) Permit contractors or subcontractors performing emergency repairs or overhaul of items or components of items procured under this or a related contract to use the computer software when necessary to perform the repairs or overhaul, or to modify the computer software to reflect the repairs or overhaul made, provided that—
(A) The intended recipient is subject to the non-disclosure agreement at 227.7103–7 or is a Government contractor receiving access to the software for performance of a Government contract that contains the clause at 252.227–7025, Limitations on the Use or Disclosure of Government Furnished Information Marked with Restrictive Legends;
(B) The Government shall not permit the recipient to decompile, disassemble, or reverse engineer the software, or use software decompiled, disassembled, or reverse engineered by the Government pursuant to paragraph (a)(18)(iv) of this clause, for any other purpose; and
(C) Such use is subject to the limitations in paragraphs (a)(18)(i) through (iii) of this clause; and
(vii) Permit covered Government support contractors in the performance of Government contracts that contain the clause at 252.227–7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends, to use, modify, reproduce, perform, display, or release or disclose the computer software to a person authorized to receive restricted rights computer software, provided that—
(A) The Government shall not permit the covered Government support contractor to decompile, disassemble, or reverse engineer the software, or use software decompiled, disassembled, or reverse engineered by the Government pursuant to paragraph (a)(18)(iv) of this clause, for any other purpose; and
(B) Such use is subject to the limitations in paragraphs (a)(18)(i) through (iv) of this clause.
(19) “SBIR data rights” means the Government's rights during the SBIR data protection period (specified in paragraph (b)(4) of this clause) to use, modify, reproduce, release, perform, display, or disclose technical data or computer software generated a SBIR award as follows:
(i) Limited rights in such SBIR technical data; and
(ii) Restricted rights in such SBIR computer software.
(b) * * *
(4)
(5) Specifically negotiated license rights. The standard license rights granted to the Government under paragraphs (b)(1) through (b)(4) of this clause may be modified by mutual agreement to provide such rights as the parties consider appropriate but shall not provide the Government lesser rights in technical data, including computer software documentation, than are enumerated in paragraph (a)(15) of this clause or lesser rights in computer software than are enumerated in paragraph (a)(18) of this clause. Any rights so negotiated shall be identified in a license agreement made part of this contract.
(6) * * *
(7) * * *
(8)
(i) Limited rights technical data and restricted rights computer software are authorized to be released or disclosed to covered Government support contractors;
(ii) The Contractor will be notified of such release or disclosure;
(iii) The Contractor may require each such covered Government support contractor to enter into a non-disclosure agreement directly with the Contractor (or the party asserting restrictions as identified in a restrictive legend) regarding the covered Government support contractor's use of such data or software, or alternatively that the Contractor (or party asserting restrictions) may waive in writing the requirement for a non-disclosure agreement; and
(iv) Any such non-disclosure agreement shall address the restrictions on the covered Government support contractor's use of the data or software as set forth in the clause at 252.227–7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends. The non-disclosure agreement shall not include any additional terms and conditions unless mutually agreed to by the parties to the non-disclosure agreement.
As prescribed in 227.7103–6(c), 227.7104(f)(1), or 227.7203–6(d), use the following clause:
(a)(1) For contracts in which the Government will furnish the Contractor with technical data, the terms “covered Government support contractor,” “limited rights,” and “Government purpose rights” are defined in the clause at 252.227–7013, Rights in Technical Data–Noncommercial Items.
(2) For contracts in which the Government will furnish the Contractor with computer software or computer software documentation, the terms “covered Government support contractor,” “government purpose rights,” and “restricted rights” are defined in the clause at 252.227–7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation.
(3) For Small Business Innovation Research program contracts, the terms “covered Government support contractor,” “limited rights,” “restricted rights,” and “SBIR data rights” are defined in the clause at 252.227–7018, Rights in Noncommercial Technical Data and Computer Software—Small Business Innovation Research (SBIR) Program.
(b) Technical data or computer software provided to the Contractor as Government-furnished information (GFI) under this contract may be subject to restrictions on use, modification, reproduction, release, performance, display, or further disclosure.
(1)
(i) The Contractor shall use, modify, reproduce, perform, or display technical data received from the Government with limited rights legends, computer software received with restricted rights legends, or SBIR technical data or computer software received with SBIR data rights legends (during the SBIR data protection period) only in the performance of this contract. The Contractor shall not, without the express written permission of the party whose name appears in the legend, release or disclose such data or software to any unauthorized person.
(ii) If the Contractor is a covered Government support contractor, the Contractor is also subject to the additional terms and conditions at paragraph (b)(5) of this clause
(2)
(3)
(i) The Contractor shall use, modify, reproduce, release, perform, or display technical data or computer software received from the Government with specially negotiated license legends only as permitted in the license. Such data or software may not be released or disclosed to other persons unless permitted by the license and, prior to release or disclosure, the intended recipient has completed the non-disclosure agreement at 227.7103–7. The Contractor shall modify paragraph (1)(c) of the non-disclosure agreement to reflect the recipient's obligations regarding use, modification, reproduction, release, performance, display, and disclosure of the data or software.
(ii) If the Contractor is a covered Government support contractor, the Contractor may also be subject to some or all of the additional terms and conditions at paragraph (b)(5) of this clause, to the extent such terms and conditions are required by the specially negotiated license.
(4)
(i) The Contractor shall use, modify, reproduce, perform, or display technical data that is or pertains to a commercial item and is received from the Government with a commercial restrictive legend (i.e., marked to indicate that such data are subject to use, modification, reproduction, release, performance, display, or disclosure restrictions) only in the performance of this contract. The Contractor shall not, without the express written permission of the party whose name appears in the legend, use the technical data to manufacture additional quantities of the commercial items, or release or disclose such data to any unauthorized person.
(ii) If the Contractor is a covered Government support contractor, the Contractor is also subject to the additional terms and conditions at paragraph (b)(5) of this clause
(5)
(i) The technical data or computer software will be accessed and used for the sole purpose of furnishing independent and impartial advice or technical assistance directly to the Government in support of the Government's management and oversight of the program or effort to which such technical data or computer software relates, as stated in this contract, and shall not be used to compete for any Government or non-Government contract;
(ii) The Contractor will take all reasonable steps to protect the technical data or computer software against any unauthorized release or disclosure;
(iii) The Contractor will ensure that the party whose name appears in the legend is notified of the access or use within thirty (30) days of the Contractor's access or use of such data or software;
(iv) The Contractor will enter into a non-disclosure agreement with the party whose name appears in the legend, if required to do so by that party, and that any such non-disclosure agreement will implement the restrictions on the Contractor's use of such data or software as set forth in this clause. The non-disclosure agreement shall not include any additional terms and conditions unless mutually agreed to by the parties to the non-disclosure agreement; and
(v) That a breach of these obligations or restrictions may subject the Contractor to—
(A) Criminal, civil, administrative, and contractual actions in law and equity for penalties, damages, and other appropriate remedies by the United States; and
(B) Civil actions for damages and other appropriate remedies by the party whose name appears in the legend.
(c)
(1) To indemnify and hold harmless the Government, its agents, and employees from every claim or liability, including attorneys fees, court costs, and expenses, arising out of, or in any way related to, the misuse or unauthorized modification, reproduction, release, performance, display, or disclosure
(2) That the party whose name appears on the restrictive legend, in addition to any other rights it may have, is a third party beneficiary who has the right of direct action against the Contractor, or any person to whom the Contractor has released or disclosed such data or software, for the unauthorized duplication, release, or disclosure of technical data or computer software subject to restrictive legends.
(d) The Contractor shall ensure that its employees are subject to use and non-disclosure obligations consistent with this clause prior to the employees being provided access to or use of any GFI covered by this clause.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS is prohibiting directed fishing for species that comprise the deep-water species fishery by vessels using trawl gear in the Gulf of Alaska (GOA). This action is necessary because the second seasonal apportionment of the Pacific halibut bycatch allowance specified for the deep-water species fishery in the GOA has been reached.
Effective 1200 hours, Alaska local time (A.l.t.), May 18, 2013, through 1200 hours, A.l.t., July 1, 2013.
Obren Davis, 907–586–7228.
NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.
The second seasonal apportionment of the Pacific halibut bycatch allowance specified for the deep-water species fishery in the GOA is 296 metric tons as established by the final 2013 and 2014 harvest specifications for groundfish of the GOA (78 FR 13162, February 26, 2013), for the period 1200 hours, A.l.t., April 1, 2013, through 1200 hours, A.l.t., July 1, 2013.
In accordance with § 679.21(d)(7)(i), the Administrator, Alaska Region, NMFS, has determined that the second seasonal apportionment of the Pacific halibut bycatch allowance specified for the trawl deep-water species fishery in the GOA has been reached. Consequently, NMFS is prohibiting directed fishing for the deep-water species fishery by vessels using trawl gear in the GOA. The species and species groups that comprise the deep-water species fishery include sablefish, rockfish, deep-water flatfish, rex sole, and arrowtooth flounder. This closure does not apply to fishing by vessels participating in the cooperative fishery in the Rockfish Program for the Central GOA.
After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.
This action responds to the best available information recently obtained from the fishery. The Acting Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of the deep-water species fishery by vessels using trawl gear in the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of May 16, 2013.
The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.
This action is required by § 679.21 and is exempt from review under Executive Order 12866.
16 U.S.C. 1801
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for all Eclipse Aerospace, Inc. Model EA500 airplanes equipped with Avio, Avio with ETT, or Avio NG 1.0 avionics suites. This proposed AD was prompted by a report of potential aircraft hardware failure in the autopilot control panel and the center switch panel. This proposed AD would require either incorporating updates to the aircraft computer system or incorporating a temporary revision to the aircraft flight manual. We are proposing this AD to correct the unsafe condition on these products.
We must receive comments on this proposed AD by July 8, 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 Eclipse Aerospace, Inc. 26 East Palatine Road, Wheeling, Illinois 60090; telephone: (877) 373–7978; Internet:
You may examine the AD docket on the Internet at
Scott Fohrman, Aerospace Engineer, FAA, Chicago Aircraft Certification Office, 2300 East Devon Avenue, Room 107, Des Plaines, Illinois 60018; phone: (847) 294–7136; fax: (847) 294–7834; 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 have received a report from Eclipse Aviation, Inc. that there is a potential problem with the hardware/software combination within the autopilot control panel and/or center switch panel on all Model EA500 airplanes equipped with Avio, Avio with ETT, or Avio NG 1.0 avionics suites that could result in uncommanded fire suppression system activation and simultaneous shutdown of both engines.
This condition, if not corrected, could cause dual engine failure and result in loss of control.
We reviewed Eclipse Aerospace, Inc. Mandatory Service Bulletin Number SB 500–31–014, Rev. A, dated February 15, 2011, and Eclipse Aerospace, Inc. Mandatory Service Bulletin Number SB 500–31–019, Rev B, dated March 13, 2013. These service bulletins describe procedures for updating the aircraft computer system for all affected airplanes. We have also reviewed Eclipse Aerospace, Inc. Mandatory Service Bulletin Number SB 500–31–026, Rev. A, dated November 6, 2012. This service bulletin described procedures for updating the aircraft flight manual (AFM) for affected airplanes equipped with NG 1.0 avionics suites.
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, except as discussed under “Differences Between the Proposed AD and the Service Information.”
Eclipse Aerospace, Inc. Mandatory Service Bulletin Number SB 500–31–026, Rev. A, dated November 6, 2012, which applies only to airplanes equipped with NG 1.0 avionics suites, requires incorporating a temporary revision into the AFM and incorporating an update to the aircraft computer system (ACS) hardware with monthly data uploads to Eclipse Aerospace, Inc. until the ACS software is updated.
This proposed AD would allow doing either the AFM revision or the ACS software update.
We estimate that this proposed AD affects 81 airplanes of U.S. registry. There are 38 of the affected airplanes equipped with Avio or Avio ETT avionics suites and 43 of the affected airplanes equipped with NG 1.0 avionics suites.
We estimate the following costs to comply with this proposed AD. Airplanes equipped with NG 1.0 avionics suites would be allowed do either the AFM update or the ACS update:
Incorporating the flight manual update represents a terminating action for AD compliance without imposing any limitations on aircraft operations. It is the operator's choice to incorporate either the flight manual update or the software update.
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 July 8, 2013.
None.
This AD applies to the following Eclipse Aerospace, Inc. Model EA500 airplanes, all serial numbers, that are certificated in any category, and are equipped with:
(1) Avio avionics suites; or
(2) Avio with ETT avionics suites; or
(3) Avio NG 1.0 avionics suites.
Joint Aircraft System Component (JASC)/Air Transport Association (ATA) of America Code, Code 23: Communications.
This AD was prompted by a report of potential aircraft hardware failure in the autopilot control panel and the center switch panel. We are issuing this AD to prevent failure of the hardware/software combination within the autopilot control panel and/or center switch panel, which could result in uncommanded fire suppression system activation and simultaneous shutdown of both engines.
Comply with this AD within the compliance times specified, unless already done.
(1)
(2)
(i) Insert airplane flight manual Temporary Revision (TR) 016 into the Limitations section of the airplane flight manual following paragraph 3.B.(1)(a) of the Accomplishment Instructions in Eclipse Aerospace, Inc. Mandatory Service Bulletin Number SB 500–31–026, Rev. A, dated November 6, 2012; or
(ii) Update the ACS following paragraphs 3.A. through 3.C. of the Accomplishment Instructions in Eclipse Aerospace, Inc. Mandatory Service Bulletin Number SB 500–31–019, Rev. B, dated March 13, 2013.
(1) The Manager, Chicago 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.
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(1) For more information about this AD, contact Scott Fohrman, Aerospace Engineer, FAA, Chicago Aircraft Certification Office, 2300 East Devon Avenue, Room 107, Des Plaines, Illinois 60018; phone: (847) 294–7136; fax: (847) 294–7834; email:
(2) For service information identified in this AD, contact Eclipse Aerospace, Inc., 26 East Palatine Road, Wheeling, Illinois 60090; telephone: (877) 373–7978; Internet:
Federal Energy Regulatory Commission, DOE.
Notice of proposed rulemaking.
Under section 215 of the Federal Power Act, the Federal Energy Regulatory Commission (Commission) proposes to remand the proposed interpretation of Reliability Standard BAL–002–1, Disturbance Control Performance, Requirements R4 and R5, submitted to the Commission for approval by the North American Electric Reliability Corporation, the Commission-certified Electric Reliability Organization. Specifically, the interpretation addresses whether Balancing Authorities and Reserve Sharing Groups are subject to enforcement actions for failing to restore Area Control Error within the 15-minute Disturbance Recovery Period for Reportable Disturbances that exceed the most severe single Contingency. The Commission proposes to remand the proposed interpretation because it changes a requirement of the Reliability Standard, thereby exceeding the permissible scope for interpretations.
Comments are due July 8, 2013.
You may submit comments, identified by docket number by any of the following methods:
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1. Under section 215 of the Federal Power Act (FPA), the Commission proposes to remand the proposed interpretation of Reliability Standard BAL–002–1, Disturbance Control Performance, Requirements R4 and R5 submitted to the Commission for approval by the North American Electric Reliability Corporation (NERC), the Commission-certified Electric Reliability Organization (ERO). Specifically, the interpretation addresses whether Balancing Authorities and Reserve Sharing Groups are subject to compliance enforcement actions for failing to restore Area Control Error (ACE) within the 15-minute Disturbance Recovery Period for Reportable Disturbances that exceed the most severe single Contingency (MSSC). For the reasons explained below, the Commission proposes to remand the proposed interpretation because it changes the requirements of the Reliability Standard, thereby exceeding the permissible scope for interpretations. The Commission seeks comments on its proposal.
2. Section 215 of the FPA requires a Commission-certified ERO to develop mandatory and enforceable Reliability Standards, subject to Commission review and approval. Specifically, the Commission may approve, by rule or order, a proposed Reliability Standard or modification to a Reliability Standard if it determines that the Standard is just, reasonable, not unduly discriminatory or preferential, and in the public
3. In March 2007, the Commission issued Order No. 693, evaluating 107 Reliability Standards, including the Disturbance Control Performance (BAL–002–0) Reliability Standard.
4. NERC's Rules of Procedure provide that all persons “directly and materially affected” by Bulk-Power System reliability may request an interpretation of a Reliability Standard.
5. Further, NERC's Rules of Procedure state that “[a] valid interpretation response provides additional clarity about one or more Requirements, but does not expand on any Requirement and does not explain how to comply with any Requirement.”
6. The stated purpose of BAL–002–1 is to “ensure the Balancing Authority is able to utilize its Contingency Reserve to balance resources and demand and return Interconnection frequency within defined limits following a Reportable Disturbance.” The
7. Reliability Standard BAL–002–1 has six Requirements. Most relevant to the proposed interpretation, Requirements R3 and R4 provide:
R3. Each Balancing Authority or Reserve Sharing Group shall activate sufficient Contingency Reserve to comply with the DCS.
R3.1. As a minimum, the Balancing Authority or Reserve Sharing Group shall carry at least enough Contingency Reserve to cover the most severe single contingency. All Balancing Authorities and Reserve Sharing Groups shall review, no less frequently than annually, their probable contingencies to determine their prospective most severe single contingencies.
R4. A Balancing Authority or Reserve Sharing Group shall meet the Disturbance Recovery Criterion within the Disturbance Recovery Period for 100% of Reportable Disturbances. The Disturbance Recovery Criterion is:
R4.1. A Balancing Authority shall return its ACE to zero if its ACE just prior to the Reportable Disturbance was positive or equal to zero. For negative initial ACE values just prior to the Disturbance, the Balancing Authority shall return ACE to its pre-Disturbance value.
R4.2. The default Disturbance Recovery Period is 15 minutes after the start of a Reportable Disturbance.
Also relevant to the proceeding is the Additional Compliance Information language in Part D of BAL–002–1, which includes:
Reportable Disturbances—Reportable Disturbances are contingencies that are greater than or equal to 80% of the most severe single Contingency . . .
Simultaneous Contingencies—Multiple Contingencies occurring within one minute or less of each other shall be treated as a single Contingency. If the combined magnitude of the multiple Contingencies exceeds the most severe single Contingency, the loss shall be reported, but excluded from compliance evaluation.
8. On February 12, 2013, NERC filed a petition (Petition) seeking approval of the proposed interpretation of BAL–002–1, developed in response to an interpretation request submitted on September 2, 2009 by the Northwest Power Pool Reserve Sharing Group (NWPP). NERC explains that NWPP requested clarification on the following matters:
(1) although a Disturbance that exceeds the most severe single Contingency must be reported by the Balancing Authority or Reserve Sharing Group (as applicable), is the Disturbance excluded from compliance evaluation for the applicable Balancing Authority or Reserve Sharing Group;
(2) with respect to either simultaneous Contingencies or non-simultaneous multiple Contingencies affecting a Reserve Sharing Group, the exclusion from compliance evaluation for Disturbances exceeding the most severe single Contingency applies both when
(a) all Contingencies occur within a single Balancing Authority member of the Reserve Sharing Group, and
(b) different Balancing Authorities within the Reserve Sharing Group experience separate Contingencies that occur simultaneously, or non-simultaneously but before the end of the Disturbance Recovery Period following the first Reportable Disturbance; and
(3) the meaning of the phrase “excluded from compliance evaluation” as used in Section 1.4 (“Additional Compliance Information”) of Part D of BAL–002–0 and for purposes of the preceding statements is that, with respect to Disturbances that exceed the most severe single Contingency for a Balancing Authority or Reserve Sharing Group (as applicable), a violation of BAL–002–0 does not occur even if ACE is not recovered within the Disturbance Recovery Period (15 minutes unless adjusted pursuant to BAL–002–0, R4.2).
9. A proposed interpretation was first balloted in February 2010, but failed to achieve a two-third approval from the ballot body.
10. ISO/RTO Council appealed this decision, challenging the BAL–002–1 interpretation process. In a March 2012 letter responding to ISO/RTO Council, NERC staff stated: “Given the difficulty in interpreting the existing language of the standard, NERC recommends to the [ISO/RTO Council] and NWPP that they consider developing and submitting a Standard Authorization Request (SAR) to the Standards Committee to address their concern.”
11. At its May 2012 meeting, the NERC Board Standards Oversight and Technology Committee (SOTC) concluded that “strict construction for the purposes of interpretation was never meant to limit the materials considered in developing the interpretation solely to the contents of the requirements in a standard, but can include any language in the standard, including compliance related sections.”
12. In its Petition, NERC states that, in response to NWPP's first question, the proposed interpretation clarifies that Balancing Authorities and Reserve Sharing Groups are not subject to the 15-minute Disturbance Recovery Period for Disturbances that exceed the MSSC.
13. With regard to the second question, NERC explained that the proposed interpretation provides that:
[t]he standard was written to provide pre-acknowledged RSG's the same considerations as a single BA for purposes of exclusions from DCS compliance evaluation . . . [T]his applies to both multiple contingencies occurring within one minute or less of each other being treated as a single Contingency or Contingencies that occur after one minute of the start of a Reportable Disturbance but before the end of the Disturbance Recovery Period.
The standard, while recognizing dynamically allocated RSGs, does NOT provide the members of dynamically allocated RSGs exclusions from DCS compliance evaluation on an RSG basis. For members of dynamically allocated RSGs, the exclusions are provided only on a member BA by member BA basis.
14. In response to NWPP's third question regarding the exclusion language in the Additional Compliance Information provision of the standard, the drafting team responded:
The Additional Compliance Information section clearly states: “Simultaneous contingencies—Multiple contingencies occurring within one minute or less of each other shall be treated as a single Contingency. If the combined magnitude of the multiple Contingencies exceeds the Most Severe Single Contingency, the loss shall be reported, but excluded from compliance evaluation.”
Although Requirement R3 does mandate that a BA or RSG activate sufficient Contingency Reserves to comply with DCS for every Reportable Disturbance, there is no requirement to comply with or even report disturbances that are below the Reportable Disturbance level. The averaging obligation does incent calculation and reporting of such lesser events. If a Balancing Authority were to experience a Disturbance five times greater than its most severe single Contingency, it would be required to report this Disturbance, but would not be required to recover ACE within 15 minutes following a Disturbance of this magnitude.
An excludable disturbance is a disturbance whose magnitude was greater than the magnitude of the most severe single contingency. Any other proposed interpretation would result in treating BAL–002–0 as if it required Balancing Authorities and Reserve Sharing Groups to recover ACE (to zero or pre-Disturbance levels, as applicable) within the 15-minute Disturbance Recovery Period without regard to Disturbance magnitude. This is inconsistent with (a) the reserve requirement specified in R3.1 of BAL–002–0, (b) the text of Section 1.4 of Part D of BAL–002–0, and (c) the documented history of the development of BAL–002–0 . . .
15. NERC contends that BAL–002–1 is intended to be read as “an integrated whole” and therefore uses the phrase “excluded from compliance evaluation” that appears in Part D, Section 1.5 (“Additional Compliance Information”) as support for concluding that the 15-minute Disturbance Recovery Period contained in Requirement R4 of BAL–002–1 does not apply to Disturbances that exceed the MSSC.
16. NERC asserts that “the proposed interpretation is necessary to prevent Registered Entities from shedding load to avoid possible violations of BAL–002, a result that is inconsistent with reliability principles.”
17. NERC asserts that the proposed interpretation “neither expands on any Requirement nor explains how to comply with a Requirement.”
18. We propose to remand NERC's interpretation of BAL–002–1 because it fails to comport with the Commission-approved requirement that interpretations can only clarify, not change, a Reliability Standard.
19. NERC's proposal interprets the phrase “excluded from compliance
20. Stated differently, while the term “Reportable Disturbance” is defined by NERC as “contingencies that are greater than or equal to 80% of the most severe single contingency,” the NERC interpretation changes the term to mean contingencies that are greater than or equal to 80 percent of the most severe single contingency but no greater than 100 percent of the most severe single contingency.
21. As mentioned above, NERC's proposed interpretation focuses on the following provision in Part D, Section 1.5 (“Additional Compliance Information”) of BAL–002–1:
Simultaneous Contingencies—Multiple Contingencies occurring within one minute or less of each other shall be treated as a single Contingency. If the combined magnitude of the multiple Contingencies exceeds the most severe single Contingency, the loss shall be reported, but excluded from compliance evaluation.
NERC's proposal, however, is not adequately supported. NERC interprets the exclusion language in the Additional Compliance Information section as relieving Balancing Authorities or Reserve Sharing Groups from having to comply with the ACE restoration obligation in Requirement R4 for certain Disturbances. However, this understanding is not supported by Requirement R4 or the Additional Compliance Information section. Furthermore, NERC does not explain how the proposed interpretation naturally flows from the existing provision.
22. A more natural reading of the standard is that the exclusion language in the Additional Compliance Information section applies to the Levels of Non-Compliance section contained in BAL–002–1, Part D, Section 2, which provides that:
Each Balancing Authority or Reserve Sharing Group not meeting the DCS during a calendar quarter shall increase its Contingency Reserve obligation for the calendar quarter…following the evaluation by the NERC or Compliance Monitor… The increase shall be directly proportional to the non-compliance with the DCS in the preceding quarter. This adjustment … is an additional percentage of reserve needed beyond the most severe single Contingency.”
This language indicates that each Balancing Authority or Reserve Sharing Group is subject to a
23. Accordingly, we propose to remand NERC's proposed interpretation as an impermissible change to BAL–002–1 outside the formal standards development process.
24. The Office of Management and Budget (OMB) regulations require that OMB approve certain reporting and recordkeeping (collections of information) imposed by an agency.
25. As stated above, the Commission previously approved, in letter order RD10–15, the Reliability Standard that is the subject of the current rulemaking. This proposed rulemaking proposes to remand the Interpretation of BAL–002–1. Accordingly, the proposed Commission action would not affect the information reporting burden.
26. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment.
27. The Regulatory Flexibility Act of 1980 (RFA)
28. The Commission invites interested persons to submit comments on the matters and issues proposed in this notice to be adopted, including any related matters or alternative proposals that commenters may wish to discuss. Comments are due July 8, 2013. Comments must refer to Docket No. RM13–6–000, and must include the commenter's name, the organization they represent, if applicable, and their address in their comments.
29. The Commission encourages comments to be filed electronically via the eFiling link on the Commission's Web site at
30. Commenters that are not able to file comments electronically must send an original and 14 copies of their comments to: Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street NE., Washington, DC 20426.
31. All comments will be placed in the Commission's public files and may be viewed, printed, or downloaded remotely as described in the Document Availability section below. Commenters on this proposal are not required to serve copies of their comments on other commenters.
32. In addition to publishing the full text of this document in the
33. From the Commission's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.
34. User assistance is available for eLibrary and the Commission's Web site during normal business hours from the Commission's Online Support at (202) 502–6652 (toll free at 1–866–208–3676) or email at
By direction of the Commission.
Social Security Administration.
Notice of proposed rulemaking.
Several body systems in our Listing of Impairments (listings) contain listings for children based on impairment of linear growth or weight loss. We propose to replace those listings with new listings, add a listing to the genitourinary body system for children, and provide new introductory text for each listing explaining how to apply the new criteria. The proposed revisions to our listings reflect our program experience, advances in medical knowledge, comments we received from medical experts and the public at an outreach policy conference, and comments we received in response to a notice of intent to issue regulations and request for comments (request for comments) and an advance notice of proposed rulemaking (ANPRM). We are also proposing conforming changes in our regulations for title XVI of the Social Security Act (Act).
To ensure that your comments are considered, we must receive them by no later than July 22, 2013.
You may submit comments by any one of three methods—Internet, fax, or mail. Do not submit the same comments multiple times or by more than one method. Regardless of which method you choose, please state that your comments refer to Docket No. SSA–2011–0081 so that we may associate your comments with the correct regulation.
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Comments are available for public viewing on the Federal eRulemaking portal at
Cheryl A. Williams, Office of Medical Listings Improvement, Social Security Administration, 6401 Security Boulevard, Baltimore, Maryland 21235–6401, (410) 965–1020. For information on eligibility or filing for benefits, call our national toll-free number, 1–800–772–1213, or TTY 1–800–325–0778, or visit our Internet site, Social Security Online, at
We propose to:
• Comprehensively revise 100.00, the Growth Impairment body system for children. We would apply the new listings in the body system only to infants who were born with low birth weight and to children who have not attained age 3 who fail to grow at the expected rate and have developmental delay (failure to thrive or FTT) as a listing level condition. We would no longer have impairment listings for linear growth alone.
• Revise listing 105.08 in the Digestive System. We would replace references to measurements on the latest versions of the Centers for Disease Control and Prevention's (CDC) growth charts with weight-for-length growth tables that we currently use for children from birth to attainment of age 2, and the body mass index (BMI)-for-age growth tables that we currently use for children age 2 to attainment of age 18. We would also provide more detailed listing criteria and guidance for applying the revised listing.
• Revise listings in the respiratory, cardiovascular, and immune systems that refer to the CDC's or other growth charts to incorporate the tables and other criteria we are proposing for listing 105.08. We would also refer to the tables in proposed listing 105.08 in one of the listings we are proposing for growth failure in children. In addition, we propose to add a listing in the Genitourinary Impairments body system similar to the listings in the other body systems.
• Revise the introductory text and listings to use the term “growth failure” for the body systems with growth listings. Our program experience shows that we are more likely to see the term “growth failure” in medical evidence than other terms now in our listings. The term “growth failure” includes impairment of linear and weight growth.
We propose these revisions to reflect medical advances and our program experience. We last published final rules making comprehensive revisions to the growth section for children (people under age 18), section 100.00, on December 6, 1985.
In developing these proposed revisions, we considered public comments received in response to the request for comments and the ANPRM we published in the
We also considered information from a variety of sources, including:
• Individual medical experts in the field of growth and development, experts in related fields, representatives from advocacy groups for people with growth and developmental disorders, and people with growth and developmental disorders;
• People who make and review disability determinations and decisions for us in State agencies, in our Office of Quality Performance, and in our Office of Disability Adjudication and Review; and
• The published sources we list in the References section at the end of this preamble.
We propose to change the name of this section to “Low Birth Weight and Failure to Thrive” to reflect the proposed changes to the listings. We also propose to revise the introductory text to reflect that we no longer use linear growth alone in the proposed listings. The proposed introductory text explains the conditions we evaluate in this section and provides guidance on how to apply the proposed listings.
Additionally, we propose to explain in section 100.00C.2.d that under listing 100.05A for growth failure, any measurements taken before the child attains age 2 can be used to evaluate the impairment under the appropriate listing for the child's age. These measurements must be taken within a 12-month period and be at least 60 days apart. A child who attains age 3 could no longer be evaluated under these listings. However, the measurements could be used to evaluate the child's impairment under the most affected body system.
We propose to delete these listings because they are based on linear (height) growth alone. Our adjudicative experience has shown that a declining linear growth rate is not always indicative of a disabling condition and that short stature in itself is not disabling.
We currently find low birth weight (LBW) infants disabled until the attainment of age 1 under examples 6 and 7 in our functional equivalence rule.
We also propose to provide a table of gestational ages and birth weights that will help adjudicators determine when an infant's birth weight, in combination with his or her gestational age, meets the criteria for LBW under the proposed listing.
We would explain in proposed 100.00B that, for impairments that meet the requirements in proposed listing 100.04A or 100.04B, we would follow the guidance in our regulations for considering LBW claims for medical reviews.
We currently provide guidance in our operating instructions for adjudicators to evaluate failure to thrive (FTT) in children from birth to attainment of age 2 under 105.08, the listing for malnutrition due to a digestive disorder.
Under our program rules, FTT can be a medically determinable impairment because it results from anatomical, physiological, or psychological abnormalities shown by medically acceptable clinical and laboratory diagnostic techniques. There is, however, no single definition or description of FTT. Medical sources reference various growth charts and growth percentiles for establishing FTT. Some medical sources establish a diagnosis of FTT based on the child's growth failure and various degrees of developmental delay. Others establish FTT based on growth failure alone. In proposed 100.05, we would require documentation of both growth failure and developmental delay to establish FTT as a listing-level condition because our program experience has shown that growth failure alone is not disabling.
In proposed 100.05A, we would evaluate growth failure by using the appropriate table(s) under proposed 105.08B in the digestive system to determine whether a child's growth is less than the third percentile. We would require three weight-for-length measurements for children from birth to attainment of age 2 or three body mass index (BMI)-for-age measurements for children age 2 to attainment of age 3 that are within a consecutive 12-month period and at least 60 days apart. If a child attains age 2 during the adjudication period, measurements taken before the child attains age 2 can be used to evaluate the impairment under the appropriate listing for the child's age, if the measurements were obtained within a 12-month period and are at least 60 days apart. We believe this number and interval of measurements over a consecutive 12-month period would establish that an infant's or a toddler's rate of growth reflects actual growth failure and not a short-term delay in rate of growth. This guidance on growth measurements apply to all affected body systems. The child does not have to have a digestive disorder for the purposes of proposed 100.05.
In proposed 100.05B, we would require a report from an acceptable medical source that establishes the appropriate level of delay in a child's development. Acceptable medical sources or early intervention specialists, physical or occupational therapists, and other sources may conduct standardized developmental assessments and developmental screenings.
In proposed 100.05C, we would require developmental delay established by an acceptable medical source and documented by findings from two narrative developmental reports dated at least 120 days apart that indicate development not more than two-thirds of the level typically expected for a child's age. We would require the narrative report to include the child's developmental history, physical examination findings, and an overall assessment of the child's development (that is, more than one or two isolated skills) by the acceptable medical source. Abnormal findings noted on repeated examinations, and information in narrative developmental reports, that may include the results of developmental screening tests, can identify a child who is not developing or achieving skills within expected timeframes.
Our current operating instructions limit evaluation of FTT to children from birth to attainment of age 2. We would extend the age limit in the proposed listing because our adjudicative experience indicates that FTT may continue to attainment of age 3. Our adjudicative experience has been that, by age 3, most children who develop or continue to experience growth failure will have an identifiable cause for their growth failure, which we evaluate under the affected body system.
We propose to add 103.06, under the respiratory body system, for evaluating growth failure in children with chronic respiratory disorders because growth failure is a common complication of chronic respiratory disorders in children. We would add the same growth failure criteria as proposed in 105.08B. We would also provide guidance in the introductory text to adjudicators on how to evaluate growth failure under the proposed listing.
We propose to revise 104.02C, under the cardiovascular body system, to conform to criteria we are proposing to growth listings in other body systems. We also propose to change the current title of the listing from
We propose to revise the title of listing 105.08, under the digestive body system, to change
We propose to revise the current criteria in 105.08A. We would require two laboratory values at least 60 days apart within a consecutive 12-month period instead of a consecutive 6-month period to be consistent with pediatric standards of care for evaluating growth over time. We would remove the phrase “despite continuing treatment as prescribed” because we address the issue of following prescribed treatment elsewhere in our rules.
We would change the title of 105.08B from
In proposed 105.08B, we would add the weight-for-length growth tables that we currently use for children from birth to attainment of age 2, and the body mass index (BMI)-for-age growth tables that we use for children age 2 to attainment of age 18, both of which are in our current operating instructions for determining growth failure.
The third percentile BMI-for-age tables we propose to add to listing 105.08B for children age 2 to attainment of age 18 are based on CDC's current BMI-for-age growth charts. We propose adding the third percentile tables in 105.08B instead of growth charts because, in our adjudicative experience, we have found that plotted growth charts are not always included in a child's medical records whereas weight and length or weight measurements are. It is also simpler for our adjudicators to apply the measurements to the third percentile tables rather than plotting measurements themselves on a growth chart. Using weight-for-length measurements also means that adjudicators do not need to adjust for prematurity.
We believe that it remains programmatically correct for us to continue to determine growth failure for children from birth to attainment of age 18 using the tables currently in our operating instructions. We believe that children who have growth measurements that are less than the third percentile, and have another impairment with marked limitations as described in each of the proposed listings containing growth criteria, are disabled.
We propose to add 106.08, under the genitourinary body system, for evaluating growth failure in children with chronic renal disease because growth failure is a common complication of chronic renal disease in children. The kidneys regulate the amounts and interactions of nutrients, including proteins, minerals, and vitamins, necessary for growth. Impaired kidney function and the side effects of treatment may decrease a child's appetite and further limit the utilization of these nutrients, resulting in growth failure. We would add the same growth failure criteria as proposed in 105.08B. We would also provide guidance in the introductory text on how to evaluate growth failure under the proposed listing.
We propose to revise 114.08H, under the immune body system, for children with growth failure due to HIV-induced immune suppression to conform to criteria we are proposing for growth listings in other body systems. We would remove the current weight-loss criteria and add laboratory criteria and the same growth failure criteria as proposed in 105.08B. We propose to quantify the degree of HIV-induced immune suppression by specifying CD4 laboratory criteria for different ages, following accepted medical standards of care. We would also provide guidance in the introductory text on how to evaluate growth failure under the proposed listing.
We also propose the following conforming changes:
• Revise § 416.924b(b) to reflect the removal of listings 100.002 and 100.03 and the addition of 100.04;
• Revise § 416.926a(m) by removing examples 6 and 7 for children with low birth weight because we are providing listings with these specific criteria; and
• Revise § 416.934
Under the Act, we have full power and authority to make rules and regulations and to establish necessary and appropriate procedures to carry out such provisions. Sections 205(a), 702(a)(5), and 1631(d)(1).
If we publish these proposed rules as final rules, they will remain in effect for 5 years after the date they become effective unless we extend them or revise and issue them again.
Executive Order 12866, as supplemented by Executive Order 13563, requires each agency to write all rules in plain language. In addition to your substantive comments on these
For example:
• Would more, but shorter, sections be better?
• Are the requirements in the rules clearly stated?
• Have we organized the material to suit your needs?
• Could we improve clarity by adding tables, lists, or diagrams?
• What else could we do to make the rules easier to understand?
• Do the rules contain technical language or jargon that is not clear?
• Would a different format make the rules easier to understand, e.g., grouping and order of sections, use of headings, paragraphing?
We will not use these rules until we evaluate public comments and publish final rules in the
We consulted with the Office of Management and Budget (OMB) and determined that these proposed rules meet the criteria for a significant regulatory action under Executive Order 12866, as supplemented by Executive Order 13563. Therefore, OMB reviewed them.
We certify that these proposed rules would not have a significant economic impact on a substantial number of small entities because they affect individuals only. Therefore, a regulatory flexibility analysis is not required under the Regulatory Flexibility Act, as amended.
These proposed rules do not create any new or affect any existing collections and, therefore, do not require Office of Management and Budget approval under the Paperwork Reduction Act.
We consulted the following references when we developed these proposed rules:
Cole, C., Binney, G., Casey, P., Fiascone, J., Hagadorn, J., & Kim, C. (2002). Criteria for determining disability in infants and children: Low birth weight.
Council on Children with Disabilities, Section on Developmental Behavioral Pediatrics. (2006). Identifying infants and young children with developmental disorders in the medical home: An algorithm for developmental surveillance and screening.
Fattal-Valevski A., Leitner, Y., Kutai, M., Tal-Posener, E., Tomer, A., Lieberman, D., * * * Harel, S. (1999). Neurodevelopmental outcome in children with intrauterine growth retardation: A 3-year follow-up.
Ficicioglu, C., & Haack, K. (2009). Failure to thrive: When to suspect inborn errors of metabolism.
Gahagan, S. (2006). Failure to thrive: A consequence of undernutrition.
Gayle, H., Dibley, M., Marks, J., & Trowbridge, F. (1987). Malnutrition in the first two years of life: The contribution of low birth weight to population estimates in the United States.
Grummer-Strawn, L.M., Krebs, N.F., & Reinhold, C. (2010). Use of world health organization and CDC growth charts for children aged 0–59 months in the United States.
Institute of Medicine. (2010).
Krugman, S.D., & Dubowitz, H. (2003). Failure to thrive.
Lipkin, P.H. (2009, November). Identifying developmental problems early: New methods, new initiatives.
Maggioni, A., & Lifshitz, F. (1995). Nutritional management of failure to thrive.
National Kidney Foundation. (2009). KDOQI Clinical Practice Guideline for Nutrition in Children with CKD: 2008 Update.
Olsen, E.M. (2006). Failure to thrive: Still a problem of definition.
Olsen, E.M., Petersen, J., Skovgaard, A.M., Weile, B., Jørgensen, T., & Wright, C.M. (2006). Failure to thrive: The prevalence and concurrence of anthropometric criteria in a general infant population.
Rabinowitz, S., Madhavi, K., & Rogers, G. (2010, May 4). Nutritional consideration in failure to thrive. Retrieved from
Schwartz, I.D. (2000). Failure to thrive: An old nemesis in the new millennium.
Shackelford, J. (2006). State and jurisdictional eligibility definitions for infants and toddlers with disabilities under IDEA.
Simpson, G.A., Colpe, L., & Greenspan, S. (2003). Measuring functional developmental delay in infants and young children: Prevalence rates from the NHIS–D.
Social Security Administration. (2005).
Social Security Administration. (2005).
Zenel, J.A. (1997). Failure to thrive: A general pediatrician's perspective.
We will make these references available to you for inspection if you are interested in reading them. Please make arrangements with the contact person shown in this preamble if you would like to review any reference materials.
Administrative practice and procedure; Blind, Disability benefits; Old-Age, Survivors, and Disability Insurance; Reporting and recordkeeping requirements; Social Security.
Administrative practice and procedure; Aged, Blind, Disability benefits; Public assistance programs; Reporting and recordkeeping requirements; Supplemental Security Income (SSI).
For the reasons set out in the preamble, we propose to amend 20 CFR part 404 subpart P and part 416 subpart I as set forth below:
Secs. 202, 205(a)–(b) and (d)–(h), 216(i), 221(a), (i), and (j), 222(c), 223, 225, and 702(a)(5) of the Social Security Act (42 U.S.C. 402, 405(a)–(b) and (d)–(h), 416(i), 421(a), (i), and (j), 422(c), 423, 425, and 902(a)(5)); sec. 211(b), Pub. L. 104–193, 110 Stat. 2105, 2189; sec. 202, Pub. L. 108–203, 118 Stat. 509 (42 U.S.C. 902 note).
The revisions and additions read as follows:
1. Low Birth Weight and Failure To Thrive (100.00): [DATE 5 YEARS FROM THE EFFECTIVE DATE OF THE FINAL RULE].
Part B
100.00 Low Birth Weight and Failure To Thrive.
A.
B.
C.
1.
2.
a. For children from birth to attainment of age 2, we use the weight-for-length table corresponding to the child's gender (Table I or Table II).
b. For children age 2 to attainment of age 3, we use the body mass index (BMI)-for-age table corresponding to the child's gender (Table III or Table IV).
c. BMI is the ratio of a child's weight to the square of his or her height. We calculate BMI using the formulas in 105.00G2c.
d.
3.
a. Under 100.05B and C, we use reports from acceptable medical sources to establish delay in a child's development.
b. Under 100.05B, we document the severity of developmental delay with results from a standardized developmental assessment, which compares a child's level of development to the level typically expected for his or her chronological age. If the child was born prematurely, we may use the corrected chronological age (CCA) for comparison. (See § 416.924b(b) of this chapter.) CCA is the chronological age adjusted by a period of gestational prematurity. CCA = (chronological age)−(number of weeks premature). Acceptable medical sources or early intervention specialists, physical or occupational therapist, and other sources may conduct standardized developmental assessments and developmental screenings. The results of these tests and screenings must be accompanied by a statement or records from an acceptable medical source who established the child has a developmental delay.
c. Under 100.05C, when there are no results from a standardized developmental assessment in the case record, we need narrative developmental reports from the child's medical sources in sufficient detail to assess the severity of his or her developmental delay. A narrative developmental report is based on clinical observations, progress notes, and well-baby check-ups. To meet the requirements for 100.05C, the report must include: the child's developmental history; examination findings (with abnormal findings noted on repeated examinations); and an overall assessment of the child's development (that is, more than one or two isolated skills) by the medical source. Some narrative developmental reports may include results from developmental screening tests, which can identify a child who is not developing or achieving skills within expected timeframes. Although medical sources may refer to screening test results as supporting evidence in the narrative developmental report, screening test results alone cannot establish a diagnosis or the severity of developmental delay.
D.
1. We may find infants disabled due to other disorders when their birth weights are greater than 1200 grams but less than 2000 grams and their weight and gestational age do not meet 100.04. The most common disorders of prematurity and LBW include retinopathy of prematurity (ROP), chronic lung disease of infancy (CLD, previously known as bronchopulmonary dysplasia, or BPD), intraventricular hemorrhage (IVH), necrotizing enterocolitis (NEC), and periventricular leukomalacia (PVL). Other disorders include poor nutrition and growth failure, hearing disorders, seizure disorders, cerebral palsy, and developmental disorders. We evaluate these disorders under the affected body systems.
2. We may evaluate infants and toddlers with growth failure that is associated with a known medical disorder under the body system of that medical disorder, for example, the respiratory or digestive body systems.
3. If an infant or toddler has a severe medically determinable impairment(s) that does not meet the criteria of any listing, we must also consider whether the child has an impairment(s) that medically equals a listing (see § 416.926 of this chapter). If the child's impairment(s) does not meet or medically equal a listing, we will determine whether the child's impairment(s) functionally equals the listings (see § 416.926a of this chapter) considering the factors in § 416.924a of this chapter. We use the rules in section § 416.994a of this chapter when we decide whether a child continues to be disabled.
100.01
100.04
A. Birth weight (see 100.00B) of less than 1200 grams.
OR
B. The following gestational age and birth weight:
100.05
A. Growth failure as required in 1 or 2:
1.
a. Within a consecutive 12-month period; and
b. At least 60 days apart; and
c. Less than the third percentile on the appropriate weight-for-length table in listing 105.08B1; or
2.
a. Within a consecutive 12-month period; and
b. At least 60 days apart; and
c. Less than the third percentile on the appropriate BMI-for-age table in listing 105.08B2.
AND
B. Developmental delay (see 100.00C1 and C3), established by an acceptable medical source and documented by findings from one report of a standardized developmental assessment (see 100.00C3b) that:
1. Shows development not more than two-thirds of the level typically expected for the child's age; or
2. Results in a valid score that is at least two standard deviations below the mean.
OR
C. Developmental delay (see 100.00C3), established by an acceptable medical source and documented by findings from two narrative developmental reports (see 100.00C3c) that:
1. Are dated at least 120 days apart (see 100.00C1); and
2. Indicate development not more than two-thirds of the level typically expected for the child's age.
F.
1. To evaluate growth failure due to any chronic respiratory disorder, we require documentation of the oxygen supplementation described in 103.06A and the growth measurements in 103.06B within the same consecutive 12-month period. The dates of oxygen supplementation may be different from the dates of growth measurements.
2. Under 103.06B, we use the appropriate table(s) under 105.08B in the digestive system to determine whether a child's growth is less than the third percentile.
a. For children from birth to attainment of age 2, we use the weight-for-length table corresponding to the child's gender (Table I or Table II).
b. For children age 2 to attainment of age 18, we use the body mass index (BMI)-for-age table corresponding to the child's gender (Table III or Table IV).
c. BMI is the ratio of a child's weight to the square of his or her height. We calculate BMI using the formulas in 105.00G2c.
103.06
A. Hypoxemia with the need for at least 1.0 L/min of oxygen supplementation for at least 4 hours per day and for at least 90 consecutive days.
B. Growth failure as required in 1 or 2:
1.
a. Within a consecutive 12-month period; and
b. At least 60 days apart; and
c. Less than the third percentile on the appropriate weight-for-length table under 105.08B1; or
2.
a. Within a consecutive 12-month period; and
b. At least 60 days apart; and
c. Less than the third percentile on the appropriate BMI-for-age table under 105.08B2.
C.
2.
b. To establish that you have
(ii) During infancy, other manifestations of chronic heart failure may include repeated lower respiratory tract infections.
3.
a. To evaluate growth failure due to CHF, we require documentation of the clinical findings of CHF described in 104.00C2 and the growth measurements in 104.02C within the same consecutive 12-month period. The dates of clinical findings may be different from the dates of growth measurements.
b. Under 104.02C, we use the appropriate table(s) under 105.08B in the digestive system to determine whether a child's growth is less than the third percentile.
(i) For children from birth to attainment of age 2, we use the weight-for-length table corresponding to the child's gender (Table I or Table II).
(ii) For children age 2 to attainment of age 18, we use the body mass index (BMI)-for-age table corresponding to the child's gender (Table III or Table IV).
(iii) BMI is the ratio of a child's weight to the square of his or her height. We calculate BMI using the formulas in 105.00G2c.
104.02
C. Growth failure as required in 1 or 2:
1.
a. Within a consecutive 12-month period; and
b. At least 60 days apart; and
c. Less than the third percentile on the appropriate weight-for-length table under 105.08B1; or
2.
a. Within a consecutive 12-month period; and
b. At least 60 days apart; and
c. Less than the third percentile on the appropriate BMI-for-age table under 105.08B2.
G.
1. To evaluate growth failure due to any digestive disorder, we require documentation of the laboratory findings of chronic nutritional deficiency described in 105.08A and the growth measurements in 105.08B within the same consecutive 12-month period. The dates of laboratory findings may be different from the dates of growth measurements.
2. Under 105.08B, we evaluate a child's growth failure by using the appropriate table for age and gender.
a. For children from birth to attainment of age 2, we use the weight-for-length table (see Table I or Table II).
b. For children age 2 to attainment of age 18, we use the body mass index (BMI)-for-age table (see Tables III or IV).
c. BMI is the ratio of a child's weight to the square of the child's height. We calculate BMI using one of the following formulas:
105.08
A. Chronic nutritional deficiency present on at least two evaluations at least 60 days apart within a consecutive 12-month period documented by one of the following:
1. Anemia with hemoglobin less than 10.0 g/dL; or
2. Serum albumin of 3.0 g/dL or less;
B. Growth failure as required in 1 or 2:
1.
a. Within a 12-month period; and
b. At least 60 days apart; and
c. Less than the third percentile on Table I or Table II; or
2.
a. Within a consecutive 12-month period; and
b. At least 60 days apart; and
c. Less than the third percentile on Table III or Table IV.
E.
5.
a. To evaluate growth failure due to any chronic renal disease, we require documentation of the laboratory findings described in 106.08A and the growth measurements in 106.08B within the same consecutive 12-month period. The dates of laboratory findings may be different from the dates of growth measurements.
b. Under 106.08B, we use the appropriate table(s) under 105.08B in the digestive system to determine whether a child's growth is less than the third percentile.
(i) For children from birth to attainment of age 2, we use the weight-for-length table corresponding to the child's gender (Table I or Table II).
(ii) For children age 2 to attainment of age 18, we use the body mass index (BMI)-for-age table corresponding to the child's gender (Table III or Table IV).
(iii) BMI is the ratio of a child's weight to the square of his or her height. We calculate BMI using the formulas in 105.00G2c.
106.08
A. Serum creatinine of 2 mg/dL or greater, documented at least two times within a consecutive 12-month period with at least 60 days between measurements.
B. Growth failure as required in 1 or 2:
1.
a. Within a consecutive 12-month period; and
b. At least 60 days apart; and
c. Less than the third percentile on the appropriate weight-for-length table under 105.08B1; or
2.
a. Within a consecutive 12-month period; and
b. At least 60 days apart; and
c. Less than the third percentile on the appropriate BMI-for-age table under 105.08B2.
F.
4.
d.
(i) To evaluate growth failure due to HIV immune suppression, we require documentation of the laboratory values described in 114.08H1 and the growth measurements in 114.08H2 or 114.08H3 within the same consecutive 12-month period. The dates of laboratory findings may be different from the dates of growth measurements.
(ii) Under 114.08H2 and 114.08H3, we use the appropriate table under 105.08B in the digestive system to determine whether a child's growth is less than the third percentile.
A. For children from birth to attainment of age 2, we use the weight-for-length table corresponding to the child's gender (Table I or Table II).
B. For children age 2 to attainment of age 18, we use the body mass index (BMI)-for-age table corresponding to the child's gender (Table III or Table IV).
C. BMI is the ratio of a child's weight to the square of his or her height. We calculate BMI using the formulas in 105.00G2c.
114.08
H.
1. CD4 measurement:
a.
b.
2.
a. Within a consecutive 12-month period; and
b. At least 60 days apart; and
c. Less than the third percentile on the appropriate weight-for-length table under 105.08B1; or
3.
a. Within a consecutive 12-month period; and
b. At least 60 days apart; and
c. Less than the third percentile on the appropriate BMI-for-age table under 105.08B2.
Secs. 221(m), 702(a)(5), 1611, 1614, 1619, 1631(a), (c), (d)(1), and (p), and 1633 of the Social Security Act (42 U.S.C. 421(m), 902(a)(5), 1382, 1382c, 1382h, 1383(a), (c), (d)(1), and (p), and 1383b); secs. 4(c) and 5, 6(c)-(e), 14(a), and 15, Pub. L. 98–460, 98 Stat. 1794, 1801, 1802, and 1808 (42 U.S.C. 421 note, 423 note, and 1382h note).
(b)
(1) We compute your CCA by subtracting the number of weeks of prematurity (the difference between 40 weeks of full-term gestation and the number of actual weeks of gestation) from your chronological age. For example, if your chronological age is 20 weeks but you were born at 32 weeks gestation (8 weeks premature), then your CCA is 12 weeks.
(2) We evaluate developmental delay in a premature child until the child's prematurity is no longer a relevant factor, generally no later than about chronological age 2.
(i) If you have not attained age 1 and were born prematurely, we will assess your development using your CCA.
(ii) If you are over age 1 and have a developmental delay, and prematurity is still a relevant factor, we will decide whether to correct your chronological age. We will base our decision on our judgment and all the facts in your case. If we decide to correct your chronological age, we may correct it by subtracting the full number of weeks of prematurity or a lesser number of weeks. If your developmental delay is the result of your medically determinable impairment(s) and is not attributable to your prematurity, we will decide not to correct your chronological age.
(3) Notwithstanding the provisions in paragraph (b)(1) of this section, we will not compute a CCA if the medical evidence shows that your treating source or other medical source has already taken your prematurity into consideration in his or her assessment of your development. We will not compute a CCA when we find you disabled under listing 100.04 of the Listing of Impairments.
(j) Infants weighing less than 1200 grams at birth, until attainment of 1 year of age.
(k) Infants weighing at least 1200 but less than 2000 grams at birth, and who are small for gestational age, until attainment of 1 year of age. (Small for gestational age means a birth weight that is at or more than 2 standard deviations below the mean or that is less than the 3rd growth percentile for the gestational age of the infant.)
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
Notice of proposed rulemaking (NPRM).
PHMSA is proposing to address certain matters identified in the Hazardous Materials Transportation Safety Act of 2012 related to the Department's enhanced inspection, investigation, and enforcement authority. Specifically, we are proposing to amend the opening of packages provision to include requirements for perishable hazardous material; add a new notification section; and add a new equipment section to the Department's procedural regulations. For the mandates to address certain matters related to the Department's enhanced inspection, investigation, and enforcement authority, we are proposing no additional regulatory changes. We believe that the Department's current
Comments must be received by July 22, 2013. To the extent possible, PHMSA will consider late-filed comments as a final rule is developed.
You may submit comments by identification of the docket number (PHMSA–2012–0259 (HM–258B)) by any of the following methods:
•
•
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Vincent Lopez or Shawn Wolsey, Office of Chief Counsel, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590, at (202) 366–4400.
On July 6, 2012, the President signed the Moving Ahead for Progress in the 21st Century Act, or the MAP–21, which included the Hazardous Materials Transportation Safety Improvement Act of 2012 (HMTSIA) as Title III of the statute. Public Law 112–141, 126 Stat. 405, July 6, 2012. Section 33009 of HMTSIA revised 49 U.S.C. 5121 to include a notification requirement. Congress also directed the Department to address certain hazmat transportation matters through rulemaking:
• The safe and expeditious resumption of transportation of perishable hazardous material, including radiopharmaceuticals and other medical products that may require timely delivery due to life-threatening situations;
• The means by which non-compliant packages that present an imminent hazard are placed out-of-service until the condition is corrected;
• The means by which non-compliant packages that do not present a hazard are moved to their final destination;
• Appropriate training and equipment for inspectors; and
• The proper closure of packaging in accordance with the hazardous material regulations.
We are proposing in this rulemaking, as described further below, to clarify the Department's position with respect to perishable hazardous material, by amending the opening of packages provision of the Department's hazardous materials procedural regulations for the opening of packages, emergency orders, and emergency recalls. The amendment recognizes the special characteristics and handling requirements of perishable hazardous material by clarifying that an agent will stop or open a package containing a perishable hazardous material only after the agent has utilized appropriate alternatives. We are also proposing to codify the statutory notification requirement in HMTSIA by incorporating into the regulations the Department's current notification procedures from the operations manual. Finally, we are proposing to add a new provision to address appropriate equipment for inspectors. For the remaining mandates to address certain matters related to the Department's enhanced inspection, investigation, and enforcement authority, we are proposing no additional regulatory changes. We believe that the Department's current rules that were previously established through notice and comment rulemaking and existing policies and operating procedures thoroughly address the hazmat transportation matters identified by Congress as requiring additional regulations. For instance, in a prior rulemaking, the Department established, in Part 109, procedural regulations for opening packages, removing packages from transportation, and closing packages. These regulations include the definition of key terms, including perishable hazardous material. The regulations address how the Department's agents will handle non-compliant packages that present an imminent hazard and those that do not. Moreover, the rules address when and how the Department's agents will open a package. And, if an agent opens a package, there are procedural rules for closing the package and ensuring its safe resumption of transportation, if applicable. In addition, the Department developed an internal operations manual for training and use by its hazmat inspectors and investigators across all modes of transportation. The operations manual's guidance is intended to target and manage the use of the enhanced inspection and enforcement authority in a uniform and consistent manner within the Department. At this time, we do not have any data or other information that indicate the rules, policies, and operating procedures currently in place are inadequate or that additional regulations are necessary.
On March 2, 2011, we issued a final rule under Docket No. PHMSA–2005–22356 (PHM–7), “Hazardous Materials: Enhanced Enforcement Procedures.” 76 FR 11570. The final rule became effective on May 2, 2011. The rule implemented enhanced inspection, investigation, and enforcement authority conferred on the Secretary of Transportation (Secretary) by the
On July 6, 2012, the President signed the Moving Ahead for Progress in the 21st Century Act, or the MAP–21, which included the Hazardous Materials Transportation Safety Improvement Act of 2012 (HMTSIA) as Title III of the statute. Public Law 112–141, 126 Stat. 405, July 6, 2012. Section 33008 of HMTSIA created a mandate for the Department to develop uniform performance standards for hazmat inspectors and investigators:
(a) In General—Not later than 18 months after the date of enactment of this Act, the Secretary shall develop uniform performance standards for training hazardous material inspectors and investigators on—
(1) how to collect, analyze, and publish findings from inspections and investigations of accidents or incidents involving the transportation of hazardous material; and
(2) how to identify noncompliance with regulations issued under chapter 51 of title 49, United States Code, and take appropriate enforcement action.
(b) Standards and Guidelines—The Secretary may develop—
(1) guidelines for hazardous material inspector and investigator qualifications;
(2) best practices and standards for hazardous material inspector and investigator training programs; and
(3) standard protocols to coordinate investigation efforts among Federal, State, and local jurisdictions on accidents or incidents involving the transportation of hazardous material.
(c) Availability—The standards, protocols, and guidelines established under this section—
(1) shall be mandatory for—
(A) the Department of Transportation's multimodal personnel conducting hazardous material enforcement inspections or investigations; and
(B) State employees who conduct federally funded compliance reviews, inspections, or investigations; and
(2) shall be made available to Federal, State, and local hazardous material safety enforcement personnel.
Section 33009 of HMTSIA revised 49 U.S.C. 5121, to include a notification requirement. Congress also directed the Department to address certain hazmat transportation matters through rulemaking:
(a) Notice of Enforcement Measures—Section 5121(c)(1) is amended—
(1) in subparagraph (E), by striking “and” at the end;
(2) in subparagraph (F), by striking the period at the end and inserting “; and”; and
(3) by adding at the end the following:
“(G) shall provide to the affected offeror, carrier, packaging manufacturer or tester, or other person responsible for the package reasonable notice of—
“(i) his or her decision to exercise his or her authority under paragraph (1);
“(ii) any findings made; and
“(iii) any actions being taken as a result of a finding of noncompliance.”.
(b) Regulations—
(1) Matters To Be Addressed—Section 5121(e) is amended by adding at the end the following:
“(3) Matters To Be Addressed—The regulations issued under this subsection shall address—
“(A) the safe and expeditious resumption of transportation of perishable hazardous material, including radiopharmaceuticals and other medical products, that may require timely delivery due to life-threatening situations;
“(B) the means by which—
“(i) noncompliant packages that present an imminent hazard are placed out-of-service until the condition is corrected; and
“(ii) noncompliant packages that do not present a hazard are moved to their final destination;
“(C) appropriate training and equipment for inspectors; and
“(D) the proper closure of packaging in accordance with the hazardous material regulations.”.
(2) Finalizing Regulations—In accordance with section 5103(b)(2) of title 49, United States Code, not later than 1 year after the date of enactment of this Act, the Secretary shall take all actions necessary to finalize a regulation under paragraph (1) of this subsection.
As described further below, we believe that the Department's current rules that were previously established through notice and comment rulemaking and existing policies and operating procedures thoroughly address the congressional mandates to address certain hazmat transportation matters. In PHM–7, the Department established procedural regulations for opening packages, removing packages from transportation, and closing packages. These regulations include the definition of key terms, including perishable hazardous material. The regulations address how the Department's agents will handle non-compliant packages that present an imminent hazard and those that do not. Moreover, the rules address when and how the Department's agents will open a package. And, if an agent opens a package, there are procedural rules for closing the package and ensuring its safe resumption of transportation, if applicable. In addition, the Department developed an internal operations manual for training and use by its hazmat inspectors and investigators across all modes of transportation. The operations manual's guidance is intended to target and manage the use of the enhanced inspection and enforcement authority in a uniform and consistent manner within the Department. At this time, we do not have any data or other information that indicate the rules, policies, and
In MAP–21 Congress directed the Secretary to address certain transportation matters related to the Department's enhanced inspection, investigation, and enforcement authority. The relevant MAP–21 mandates for this rulemaking are:
• Notice of enforcement measures;
• The safe and expeditious resumption of transportation of perishable hazardous material, including radiopharmaceuticals and other medical products that may require timely delivery due to life-threatening situations;
• The means by which non-compliant packages that present an imminent hazard are placed out-of- service until the condition is corrected;
• The means by which non-compliant packages that do not present a hazard are moved to their final destination;
• Appropriate training and equipment for inspectors; and
• The proper closure of packaging in accordance with the hazardous material regulations.
We are proposing in this rulemaking, as described further below, to clarify the Department's position with respect to perishable hazardous material, by amending the opening of packages provision of the Department's hazardous materials procedural regulations for the opening of packages, emergency orders, and emergency recalls. The amendment recognizes the special characteristics and handling requirements of perishable hazardous material by clarifying that an agent will stop or open a package containing a perishable hazardous material only after the agent has utilized appropriate alternatives. We are also proposing to codify the statutory notification requirement in HMTSIA by incorporating into the regulations the Department's current notification procedures from the operations manual that was developed in conjunction with the PHM–7 final rule. Finally, we are proposing to add a new provision to address appropriate equipment for inspectors.
For the remaining mandates to address certain matters related to the Department's enhanced inspection, investigation, and enforcement authority, we are proposing no additional regulatory changes. We believe that the Department's current rules that were previously established through notice and comment rulemaking and existing policies and operating procedures thoroughly address the hazmat transportation matters identified by Congress. For instance, in a prior rulemaking, the Department established, in Part 109, procedural regulations for opening packages, removing packages from transportation, and closing packages. These regulations include the definition of key terms, including perishable hazardous material. The regulations address how the Department's agents will handle non-compliant packages that present an imminent hazard and those that do not. Moreover, the rules address when and how the Department's agents will open a package. And, if an agent opens a package, there are procedural rules for closing the package and ensuring its safe resumption of transportation, if applicable. In addition, the Department developed an internal operations manual for training and use by its hazmat inspectors and investigators across all modes of transportation. The operations manual's guidance is intended to target and manage within the Department the use of the enhanced inspection and enforcement authority in a uniform and consistent manner. At this time, we do not have any data or other information that indicate the rules, policies, and operating procedures currently in place are inadequate or that additional rulemaking is necessary.
In PHM–7, we established procedures to implement the enhanced inspection, investigation, and enforcement authority conferred on the Secretary through HMTSSRA. In the NPRM for that rule, in response to commenters' concerns about notifying offerors and consignees about a possible delay in arrival, we agreed that all parties responsible for a shipment that is opened or removed from transportation need to be notified of the action taken. We said that “DOT inspectors will be required to communicate the findings made and enforcement measures taken to the appropriate offeror, recipient, and carrier of the package . . .”. 73 FR 57288. In the final rule, we outlined how we would notify affected parties when an agent exercises one of the new authorities. 76 FR 11580. In the preamble to the final rule, we explained that the notification procedures would be incorporated into the Department's joint operations manual. Id. The notification procedures that we developed for the joint operations manual address situations where an agent may exercise a 49 CFR Part 109 authority for a package that is in transit. In this case, the person in possession of the package, such as a carrier, may not be the person responsible for the package, i.e. the offeror. Therefore, we set out separate procedures for immediately notifying the person in possession and the original offeror. Generally, the agent will verbally notify the person in possession. If the person in possession is not the original offeror, the agent will also take reasonable measures to notify the original offeror.
In MAP–21 Congress added a notification requirement to the Department's inspection and investigation authority. Specifically, Section 5121(c)(1) was amended to include new subparagraph (G). Section 5121(c)(1) now reads:
“(c) Inspections and investigations.—
(1) In general.—A designated officer, employee, or agent of the Secretary—
(G) shall provide to the affected offeror, carrier, packaging manufacturer or tester, other person responsible for the package reasonable notice of—
(i) his or her decision to exercise his or her authority under paragraph (1);
(ii) any findings made; and
(iii) any actions being taken as a result of a finding of noncompliance.
We are proposing in this rulemaking to codify this statutory notification requirement by incorporating into the regulations the Department's current notification procedures from the joint operations manual. As discussed above, the joint operations manual includes procedures and guidance to agents for providing notice of enforcement measures taken under 49 CFR part 109. The procedures in the manual are comprehensive and comport with the statutory mandate. As such, under this proposal, a new notification section will be added to part 109, subpart B of 49 CFR. It will require that an agent, after exercising a 49 CFR part 109 inspection or investigation authority, immediately take reasonable measures to notify the appropriate person of the reason for the action being taken, the results of any preliminary investigation including apparent violations of the HMR, and any further action that may be warranted.
We addressed the opening, reclosing, and resumption of transportation of perishable hazardous material in a previous rulemaking. In PHM–7, we defined “perishable hazardous material” as “a hazardous material that is subject to significant risk of speedy decay, deterioration, or spoilage, or
We believe the definition of perishable hazardous material and the rules, current procedures, and guidance already developed for reclosing packages, sufficiently address Congress' concern and the need for expeditious treatment of these types of materials. We also note that in the Department's joint operations manual, we have significantly restricted an agent's ability to handle or open a package containing perishable hazardous material. For example, an agent must have been trained in the handling of the specific material and may only open a perishable hazardous material package in a designated facility, if required, and have all safety equipment, handling equipment, and materials to properly close the package. Notwithstanding, in order to clarify the Department's position with respect to perishable hazardous material, we are proposing to amend the opening of packages provision of the Department's hazardous materials procedural regulations for the opening of packages, emergency orders, and emergency recalls. The amendment recognizes the special characteristics and handling requirements of perishable hazardous material by clarifying that an agent will stop or open a package containing a perishable hazardous material only after the agent has utilized appropriate alternatives.
In consideration of the special characteristics and handling requirements of perishable hazardous material, we are proposing to establish a Department policy that its agents will not intentionally open packages containing perishable hazardous material unless a compelling safety need exists. However, in accordance with our current procedures, an agent may stop, remove, or have a package containing these types of materials transported to a facility for further examination and analysis. We solicit comments from the public whether excluding these types of materials is appropriate.
In MAP–21 Congress mandated that the Department take all actions necessary to finalize a regulation addressing the means by which non-compliant packages are processed when an agent exercises an authority under Part 109. Specifically, Section 5121(e) was amended to include new paragraph (3). The relevant amendment to Section 5121(e) includes the following language:
(3) Matters to be addressed.—The regulations issued under this subsection shall address—
(B) the means by which—
(i) noncompliant packages that present an imminent hazard are placed out-of-service until the condition is corrected; and
(ii) noncompliant packages that do not present a hazard are moved to their final destination.
The Department's procedural rules for opening of packages, emergency orders, and emergency recalls are in 49 CFR part 109. These procedures address the means by which a non-compliant package that is found to be an imminent hazard is placed out-of-service. Specifically, in § 109.13, if an imminent hazard is found to exist after an agent opens a package, the operating administration's authorized official may issue an out-of-service order prohibiting the movement of the package. 49 CFR 109.13(b). The package must be removed from transportation until it is brought into compliance. Id. An out-of-service order is a type of emergency order. In 49 CFR, subpart C of part 109 contains the procedural regulations for issuing an out-of-service emergency order, including procedures for administrative review, reconsideration, and appellate review of an emergency order. Furthermore, the joint operations manual provides inspection personnel with step-by-step procedures and additional guidance for issuing an out-of-service order. For example, at least two levels of review and consultation with the operating administration's legal office is required before an emergency order can be issued. Moreover, the operations manual addresses documentation requirements, notification, service, publication, and termination requirements.
Regarding non-compliant packages that do not present a hazard, it is important to note that a non-compliant package may not continue in transportation until all identified non-compliant issues are resolved. 49 CFR 109.13(d). In the PHM–7 final rule where we established the enhanced enforcement procedures, we stated that for a non-compliant package, the agent would not close the package and that there is no obligation to bring that package into compliance. 76 FR 11587. Further, we stated, “[t]he Department's operating administrations will not be responsible for bringing an otherwise non-compliant package into compliance and resuming its movement in commerce.” Id. We reasoned that if the package does not conform to the HMR at the time of inspection, the act that a DOT official opened it in the course of an inspection or investigation will not make DOT or its agent responsible for bringing the package into compliance. Id.
In light of the above, we have already fulfilled the applicable mandate for the handling of non-compliant packages and no further action is required.
Congress recognized that “[t]here is currently no uniform training standard for hazardous materials (‘hazmat') inspectors and investigators.” H. Conf. Rep. No. 112–557 at 610 (2012). To address this problem, it mandated in MAP–21 that the Secretary establish uniform performance standards for training hazmat inspectors and investigators no later than eighteen months from the date of enactment of the Act. 126 Stat. at 836. The mandate authorizes the development of guidelines for hazmat inspector and investigator qualifications; best practices and standards for hazmat inspector and investigator training programs; and standard protocols to coordinate investigation efforts among Federal, State, and local jurisdictions on accidents or incidents involving the transportation of hazardous material. In order to achieve a uniform hazmat training standard, Congress required that the standards, protocols, and guidelines developed would be mandatory to the Department's multimodal personnel conducting hazmat enforcement inspections and investigations.
Additionally, Congress mandated that the Department take all actions necessary to finalize a regulation, no later than one year from the date of enactment of the Act, addressing appropriate training and equipment for inspectors when exercising an authority under 49 CFR Part 109. Specifically, Section 5121(e) was amended to include new paragraph (3). The relevant
(3) Matters to be addressed.—The regulations issued under this subsection shall address—
(C) appropriate training and equipment for inspectors; and
Although the MAP–21 mandates here are training related, it is evident that the development of a uniform training scheme is essential because it will establish the foundation upon which future training for hazmat inspectors and investigators is expected to follow. As such, it is premature to require the Department to promulgate enforcement procedural regulations for hazmat training and equipment before the Department has had the opportunity to develop uniform performance training standards. This approach does not appear to be the best way to meet Congress' objective to ensure that all hazmat inspectors and investigations receive uniform and standardized training. It would be more appropriate for the Department to establish the uniform performance training standards, best practices, and protocols before it develops additional training regulations for its hazmat personnel. This would ensure that new training rules are consistent with the uniform training scheme.
Notwithstanding, we understand that proper training of inspectors and investigators is essential to ensure that the enhanced enforcement authority is used effectively and judiciously. In the NPRM for PHM–7, we explained that the operating administrations responsible for enforcement of the HMR—PHMSA, FMCSA, FAA, and FRA—worked together to develop the rule and a joint operations manual. 73 FR 57285. We further explained that the proposed regulations set out a framework for the procedures the operating administrations will employ when conducting inspections or investigations, thus ensuring consistency in approaches and enforcement measures among modes of transportation. Moreover, we stated that the final rule, implemented with the guidance of an operational manual, would ensure that this authority was properly used. Id. We expressed our confidence in this approach because with the cooperation of the operating administrations in the development of the rule, and the accompanying operations manual, it meant that all Department inspectors and investigators would have the same general training and modal specific instruction. 73 FR 57288.
Regarding equipment, we are proposing to add a new provision to address appropriate equipment for inspectors when they exercise a Part 109 authority. Under this proposal, a new equipment section will be added to new Subpart D—Equipment, requiring an agent to use the appropriate safety, handling, and other equipment authorized by his or her operating administration's equipment requirements for hazardous material inspectors and investigators.
Consequently, we do not believe that we should develop rules for appropriate training in this rulemaking. Instead, we advocate addressing any performance standards as part of the larger hazardous materials performance standard development activity currently underway. In the meantime, we believe the existing rules in 49 CFR Part 109 and the attendant operational procedures in the joint operations manual, as well as each operating administration's specific guidance for its enforcement staff, sufficiently address the training concern identified by Congress in the MAP–21 directive. Therefore, PHMSA does not believe that further action is necessary at this time.
In MAP–21 Congress mandated that the Department take all actions necessary to finalize a regulation addressing “the proper closure of packaging in accordance with the hazardous material regulations.” 126 Stat. at 837.
In PHM–7 we addressed reclosing of packages opened under the enhanced inspection, investigation, and enforcement authority. In several of the comments that we received about that rulemaking, the regulated community raised concerns about how we were going to reclose packages after they have been opened under the new authority. In the NPRM, we responded by stating that the Department was developing internal operational procedures and guidance to address the proper closure of packaging in accordance with the HMR. We also solicited further comment from the public on the factors that should be considered in the development of these procedures and guidance. 73 FR 57286. However, we also stated that an agent's obligation to reclose a package only arose if, after opening the package, an imminent hazard was found not to exist and the package otherwise complied with the HMR. 76 FR 11587. More importantly, we also said that the Department's operating administrations would not be responsible for bringing an otherwise non-specification or non-compliant package into compliance and resuming its movement in commerce. Id. If the package did not comply with the HMR the fact that a DOT official opened it in the course of an inspection or investigation would not make DOT or its inspector responsible for bringing the package into compliance. Id. In the final rule, we significantly revised the new rule for closing packages to cover each possible re-closure scenario: no imminent hazard found; imminent hazard found; package does not contain a hazardous material; and package contains a hazardous material not in compliance with the HMR. Id. Further, we stated that the inspector would only be required to reclose a package in accordance with the packaging manufacturer's closure instructions or other appropriate method when a package was opened and no imminent hazard was found. Id. In the joint operations manual we developed procedures for properly closing a package. These procedures include steps for reclosing a package. It also includes additional requirements and procedures to complete the re-closure process, including methods to thoroughly document the activities performed.
In light of the above, we believe the existing requirements in 49 CFR Part 109 for closing opened packages (Section 109.13) and the attendant operational procedures in the joint operations manual sufficiently address the matter identified by Congress in the MAP–21 directive. Therefore, no further action is necessary.
We are proposing to amend the opening of packages provision of the Department's hazardous materials procedural regulations for the opening of packages, emergency orders, and emergency recalls. The amendment recognizes the special characteristics and handling requirements of perishable hazardous material by clarifying that an agent will stop or open a package containing a perishable hazardous material only after the agent has utilized appropriate alternatives. We are also proposing to add a notification provision to 49 CFR under Part 109 Subpart B—Inspections and Investigations. The provision will provide for the immediate and reasonable notification of enforcement action taken by an inspector or
This notice of proposed rulemaking (NPRM) is published under the authority of the Federal Hazardous Materials Transportation Law, 49 U.S.C. § 5101
This NPRM is not considered a significant regulatory action under section 3(f) Executive Order 12866 and, therefore, was not reviewed by the Office of Management and Budget (OMB). The proposed rule is not considered a significant rule under the Regulatory Policies and Procedures order issued by the U.S. Department of Transportation (44 FR 11034).
Executive Order 13563 is supplemental to and reaffirms the principles, structures, and definitions governing regulatory review that were established in Executive Order 12866 Regulatory Planning and Review of September 30, 1993. Executive Order 13563, issued January 18, 2011, notes that our nation's current regulatory system must not only protect public health, welfare, safety, and our environment but also promote economic growth, innovation, competitiveness, and job creation.
Executive Order 13610, issued May 10, 2012, urges agencies to conduct retrospective analyses of existing rules to examine whether they remain justified and whether they should be modified or streamlined in light of changed circumstances, including the rise of new technologies.
By building off of each other, these three Executive Orders require agencies to regulate in the “most cost-effective manner,” to make a “reasoned determination that the benefits of the intended regulation justify its costs,” and to develop regulations that “impose the least burden on society.”
This proposed rule revises 49 CFR part 109, which contains regulations on DOT inspection and investigation procedures. These regulations are not part of the HMR, which govern the transportation of hazmat, thus they do not carry any additional compliance requirements or costs for entities that must comply with the HMR. It is possible, however, that some carriers or shippers, who in the absence of this rule would have refused to open a package when requested, may experience delays that they would not have otherwise faced. DOT is not aware of any cases of shippers or carriers refusing to open packages and so anticipates that these costs will be minimal.
This proposed rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13132 (“Federalism”). 49 U.S.C. 5125(h) provides that the preemption provisions in Federal hazardous material transportation law do “not apply to any procedure . . . utilized by a State, political subdivision of a State, or Indian tribe to enforce a requirement applicable to the transportation of hazardous material.” Accordingly, this proposed rule has no preemptive effect on State, local, or Indian tribe enforcement procedures and penalties, and preparation of a federalism assessment is not warranted.
This NPRM has been analyzed in accordance with the principles and criteria contained in Executive Order 13175 (“Consultation and Coordination with Indian Tribal Governments”). Because this NPRM does not significantly or uniquely affect the communities of the Indian tribal governments and does not impose substantial direct compliance costs, the funding and consultation requirements of Executive Order 13175 do not apply.
The Regulatory Flexibility Act (5 U.S.C. 601
PHMSA has analyzed this final rule in accordance with the Paperwork Reduction Act of 1995 (PRA). The PRA requires Federal agencies to minimize the paperwork burden imposed on the American public by ensuring maximum utility and quality of federal information, ensuring the use of information technology to improve government performance, and improving the federal government's accountability for managing information collection activities. This final rule contains no new information collection requirements subject to the PRA.
A regulation identifier number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN contained in the heading of this document can be used to cross-reference this action with the Unified Agenda.
This proposed rule does not impose unfunded mandates under the Unfunded Mandates Reform Act of 1995. It does not result in costs of $141.3 million or more to either state, local or tribal governments, in the aggregate, or to the private sector, and is the least burdensome alternative that achieves the objective of the rule.
The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321–4347), and implementing regulations by the Council on Environmental Quality (40 CFR part 1500) require Federal agencies to consider the consequences of Federal actions and prepare a detailed statement on actions that significantly affect the quality of the human environment.
The purpose of this rulemaking is to amend the Department's existing enforcement procedures to (1) to clarify the Department's position with respect to perishable hazardous material, by amending the opening of packages provision; (2) provide notice of enforcement measures to affected parties; and (3) address appropriate equipment for inspectors. Because this NPRM addresses Congressional mandates, we have limited latitude in defining alternative courses of action. The option of taking no action would be both inconsistent with Congress' direction and undesirable from the standpoint of safety and enforcement. These inspection and enforcement procedures will not change the current inspection procedures for DOT, but will augment DOT's existing enforcement procedures and allow the Department to respond immediately and effectively to conditions or practices that pose serious threat to life, property, or the environment. PHMSA has initially determined that the implementation of the proposed rule will not have any significant impact on the quality of the human environment. PHMSA, however, invites comments about environmental impacts that the proposed rule might pose.
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
Inspections and investigations. Equipment.
In consideration of the foregoing, 49 CFR Chapter I is proposed to be amended as follows:
49 U.S.C. 5101–5128, 44701; Pub. L. 101–410 § 4 (28 U.S.C. 2461 note); Pub. L. 104–121 §§ 212–213; Pub. L. 104–134 § 31001; 49 CFR 1.81, 1.97.
(b)
In addition to the notification requirements in § 109.7, an agent, after exercising an authority under this
When an agent exercises an authority under Subpart B, the agent shall use the appropriate safety, handling, and other equipment authorized by his or her operating administration's equipment requirements for hazardous material inspectors and investigators.
United States Agency for International Development.
Notice of cancellation of meeting.
Pursuant to the Federal Advisory Committee Act, notice is hereby given of cancellation of the meeting of the President's Global Development Council (GDC) on Friday, May 17, 2013 in the Eisenhower Executive Office Building, South Court Auditorium, Pennsylvania Avenue and 17th Street NW., which was published in the
This notice is being cancelled due to exceptional circumstances of coordinating high-level schedules. A new meeting date and time will be forthcoming.
Jayne Thomisee, 202–712–5506.
United States Agency for International Development.
Notice of meeting.
Pursuant to the Federal Advisory Committee Act, notice is hereby given of a meeting of the Advisory Committee on Voluntary Foreign Aid (ACVFA).
USAID Administrator Rajiv Shah will make opening remarks, followed by a panel discussion on the creation of a Feed the Future Civil Society Action Plan, and an opportunity for public comment. A draft agenda will be forthcoming on the ACVFA Web site at
The meeting is free and open to the public. Persons wishing to attend should register online at
Sandy Stonesifer, 202–712–4372.
Forest Service, USDA.
Notice of meetings.
The Humboldt Resource Advisory Committee (RAC) will meet in Eureka, California. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (Pub.L. 112–141) (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with the title II of the Act. The meetings are open to the public. The purpose of the meetings are to review prior year project's progress. Should the Secure Rural Schools Act be reauthorized, the purpose of the meetings will also be to review and recommend project proposals.
The meetings will be held June 10, 2013; July 8, 2013 and July 22, 2013. All meetings will begin at 5:00 p.m.
The meetings will be held at the Six Rivers National Forest Office, 1330 Bayshore Way, Eureka, California 95501. Written comments may be submitted as described under Supplementary Information. All comments, including names and addresses when provided, are placed in the record and are available for public inspection and copying. The public may inspect comments received at Six Rivers National Forest Supervisor's Office, 1330 Bayshore Way, Eureka, CA. 95501. Please call ahead to 707–442–1721 to facilitate entry into the building to view comments.
Lynn Wright, Committee Coordinator, 707–441–3562; email
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1–800–877–8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The following business will be conducted: Review prior year project's progress. Should the Secure Rural Schools Act is reauthorized, the purpose of the meetings will also be to review and recommend project proposals.
Contact Committee Coordinator listed above for meeting agenda information. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by 5 days prior to meeting date to be scheduled on the agenda. Written comments and requests for time for oral comments must be sent to RAC Committee Coordinator, 1330 Bayshore Way, Eureka, CA. 95501 or by email to
Forest Service, USDA.
Notice of meetings.
The Del Norte County Resource Advisory Committee (RAC) will meet in Crescent City, California. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (Pub. L. 112–141) (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with the title II of the Act. The meetings are open to the public. The purpose of the meetings are to review prior year project's progress. Should the Secure Rural Schools Act be reauthorized, the purpose of the meetings will also be to review and recommend project proposals.
The meetings will be held June 5, 2013; July 16, 2013; and July 22, 2013. All meetings will begin at 6:00 p.m.
The meetings will be held at the Del Norte County Unified School District, Redwood Room, 301 West Washington Boulevard, Crescent City CA 95531. Written comments may be submitted as described under Supplementary Information. All comments, including names and addresses when provided, are placed in the record and are available for public inspection and copying. The public may inspect comments received at Six Rivers National Forest Supervisor's Office, 1330 Bayshore Way, Eureka, CA. 95501. Please call ahead to 707–442–1721 to facilitate entry into the building to view comments.
Lynn Wright, Committee Coordinator, 707–441–3562; email
The purpose of the meetings are to review prior year project's progress. If the Secure Rural Schools Act is reauthorized, the purpose of the meetings will also be to review and recommend project proposals. Contact Committee Coordinator listed above for meeting agenda information. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by 5 days prior to meeting date to be scheduled on the agenda. A summary of the meeting will be posted at
Rural Utilities Service, USDA.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended), the Rural Utilities Service (RUS) invites comments on this information collection for which RUS intends to request approval from the Office of Management and Budget (OMB).
Comments on this notice must be received by July 22, 2013.
Michele Brooks, Director, Program Development and Regulatory Analysis, Rural Utilities Service, 1400 Independence Ave. SW., STOP 1522, Room 5162 South Building, Washington, DC 20250–1522.
The Office of Management and Budget's (OMB) regulation (5 CFR 1320) implementing provisions of the Paperwork Reduction Act of 1995 (Pub. L. 104–13) requires that interested members of the public and affected agencies have an opportunity to comment on information collection and recordkeeping activities (see 5 CFR 1320.8(d)). This notice identifies an information collection that RUS is submitting to OMB for extension.
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 will 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 those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments may be sent to: Michele Brooks, Program Development and Regulatory Analysis, Rural Utilities Service, U.S. Department of Agriculture, STOP 1522, Room 5162, South Building, 1400 Independence Ave. SW., Washington, DC 20250–1522. FAX: (202) 720–4120.
Copies of this information collection can be obtained from MaryPat Daskal, Program Development and Regulatory Analysis, at (202) 720–7853, FAX: (202) 720–4120. Email:
All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
Bureau of the Census, Department of Commerce.
Notice of Public Meeting.
The Bureau of the Census (U.S. Census Bureau) is giving notice of a meeting of the Federal Economic Statistics Advisory Committee (FESAC). The Committee will advise the Directors of the Economics and Statistics Administration's (ESA) two statistical agencies, the Bureau of Economic Analysis (BEA) and the Census Bureau, and the Commissioner of the Department of Labor's Bureau of Labor Statistics (BLS) on statistical methodology and other technical matters related to the collection, tabulation, and analysis of federal economic statistics. Last minute changes to the agenda are possible, which could prevent giving advance public notice of schedule adjustments.
June 14, 2013. The meeting will begin at approximately 9:00 a.m. and adjourn at approximately 4:30 p.m.
The meeting will be held at the U.S. Census Bureau Conference Center, 4600 Silver Hill Road, Suitland, MD 20746.
Barbara K. Atrostic, Designated Federal Official, Department of Commerce, U.S. Census Bureau, Research and Methodology Directorate, Room 2K267, 4600 Silver Hill Road, Washington, DC 20233, telephone 301–763–6442, email:
Members of the FESAC are appointed by the Secretary of Commerce. The Committee advises the Directors of the BEA, the Census Bureau, and the Commissioner of the Department of Labor's BLS, on statistical methodology and other technical matters related to the collection, tabulation, and analysis of federal economic statistics. The Committee is established in accordance with the Federal Advisory Committee Act (Title 5, United States Code, Appendix 2).
The meeting is open to the public, and a brief period is set aside for public comments and questions. Persons with extensive questions or statements must submit them in writing at least three days before the meeting to the Designated Federal Official named above. If you plan to attend the meeting, please register by Monday, June 10, 2013. You may access the online registration form with the following link:
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should also be directed to the Designated Federal Official as soon as known, and preferably two weeks prior to the meeting.
Due to increased security and for access to the meeting, please call 301–763–9906 upon arrival at the Census Bureau on the day of the meeting. A photo ID must be presented in order to receive your visitor's badge. Visitors are not allowed beyond the first floor.
On January 17, 2013, the Port of Bellingham, grantee of FTZ 129, submitted a notification of proposed production activity to the Foreign-Trade Zones (FTZ) Board on behalf of T.C. Trading Company, Inc., within Subzone 129B, in Blaine Washington.
The notification was processed in accordance with the regulations of the FTZ Board (15 CFR part 400), including notice in the
The Puerto Rico Trade and Export Company, grantee of FTZ 61, submitted a notification of proposed production activity to the FTZ Board on behalf of Janssen Ortho LLC (Janssen), located in Gurabo, Puerto Rico. The notification conforming to the requirements of the regulations of the FTZ Board (15 CFR 400.22) was received on April 29, 2013.
A separate application for subzone status at the Janssen facility was submitted and will be processed under Section 400.31 of the FTZ Board's regulations. The facility is used for the production of various prescription and over-the-counter pharmaceutical products. Pursuant to 15 CFR 400.14(b), FTZ activity would be limited to the specific foreign-status materials and components and specific finished products listed in the submitted notification (as described below) and subsequently authorized by the FTZ Board.
Production under FTZ procedures could exempt Janssen from customs duty payments on the foreign status components used in export production. On its domestic sales, Janssen would be able to choose the duty rates during customs entry procedures that apply to various prescription and over-the-counter pharmaceutical products, including: Anti-cancer; anti-diabetic and immunosuppressive medicaments; analgesics; antipyretic and anti-inflammatory agents; and, cough and cold preparations (duty free) for the foreign status inputs noted below. Customs duties also could possibly be deferred or reduced on foreign status production equipment.
The components and materials sourced from abroad include: Splenda sucralose; cobicistate silicon dioxide; metformin; canagliflozin; and darunavir ethanolate API (duty rates range from 86.2 cents/kg to 6.5%).
Public comment is invited from interested parties. Submissions shall be addressed to the FTZ Board's Executive Secretary at the address below. The closing period for their receipt is July 1, 2013.
A copy of the notification will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230–0002, and in the “Reading Room” section of the FTZ Board's Web site, which is accessible via
Diane Finver at
An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Erie-Western Pennsylvania Port Authority, grantee of FTZ 247, requesting special-purpose subzone status for the facility of GE Transportation, located in Lawrence Park Township, Pennsylvania. The application was submitted pursuant to the provisions of the Foreign-Trade Zones Act, as amended (19 U.S.C. 81a–81u), and the regulations of the Board (15 CFR part 400). It was formally docketed on May 16, 2013.
The proposed subzone (350 acres) is located at 2901 East Lake Road, Lawrence Park Township, Erie County, Pennsylvania. No production activity has been requested at this time, but the company has indicated that a notification of proposed production activity will be submitted. Any such notifications will be published separately for public comment. The proposed subzone would be subject to the existing activation limit of FTZ 247.
In accordance with the Board's regulations, Elizabeth Whiteman of the FTZ Staff is designated examiner to review the application and make recommendations to the Executive Secretary.
Public comment is invited from interested parties. Submissions shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is July 1, 2013. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to July 16, 2013.
A copy of the application will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230–0002, and in the “Reading Room” section of the Board's Web site, which is accessible via
For further information, contact Elizabeth Whiteman at
An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Erie-Western Pennsylvania Port Authority, grantee of FTZ 247, requesting special-purpose subzone status for the facility of GE Transportation, located in Grove City, Pennsylvania. The application was submitted pursuant to the provisions of the Foreign-Trade Zones Act, as amended (19 U.S.C. 81a–81u), and the regulations of the Board (15 CFR part 400). It was formally docketed on May 16, 2013.
The proposed subzone (49 acres) is located at 1503 West Main Street Ext., Grove City, Mercer County, Pennsylvania. No production activity has been requested at this time, but the
In accordance with the Board's regulations, Elizabeth Whiteman of the FTZ Staff is designated examiner to review the application and make recommendations to the Executive Secretary.
Public comment is invited from interested parties. Submissions shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is July 1, 2013. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to July 16, 2013.
A copy of the application will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230–0002, and in the “Reading Room” section of the Board's Web site, which is accessible via
For further information, contact Elizabeth Whiteman at
Import Administration, International Trade Administration, Department of Commerce.
On September 7, 2012, the United States Court of Appeals for the Federal Circuit (CAFC) issued a decision not in harmony with the final determination of the Department of Commerce (the Department) that stainless steel plate in coils (SSPC) from Belgium, South Africa, and Taiwan with a nominal thickness of 4.75 millimeters (mm), but an actual thickness of less than 4.75 mm, is subject to the
James Terpstra, 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) 482–3965.
Having received a scope inquiry request from ArcelorMittal Stainless Belgium N.V. (AMS Belgium),
Following a request for a voluntary remand, the CIT remanded the Final Scope Ruling to the Department to reconsider whether SSPC with a nominal thickness of 4.75 mm, but an actual thickness of less than 4.75 mm, is subject to the
On remand, the Department re-examined the language of the scope and, based in part upon interpreting the language in the context of the SSPC industry, determined it to be ambiguous as to whether it covers SSPC with a nominal thickness of 4.75 mm, but an actual thickness of less than 4.75 mm.
On July 12, 2011, the CIT sustained the Department's First Remand Redetermination.
On September 7, 2012, the CAFC reversed the CIT's judgment. The CAFC concluded that substantial evidence did not support the Department's determination that the language of the SSPC orders is ambiguous and held that “the plain meaning of the orders regarding the 4.75 mm thickness is a reference to actual thickness of products subject to the orders.”
On January 4, 2013, the CIT issued a remand order directing the Department to take action in accordance with the CAFC's decision in
In its decision in
Because there is now a final court decision with respect to SSPC with an actual thickness of less than 4.75 mm, the Department amends its Final Scope Ruling and now finds that the scope of the
This notice is issued and published in accordance with section 516A(c)(1) of the Act.
Import Administration, International Trade Administration, Department of Commerce.
Kate Johnson or Rebecca Trainor, AD/CVD Operations, Office 2, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–4929 or (202) 482–4007, respectively.
On February 1, 2013, the Department of Commerce (the Department) published in the
The Department stated in its initiation of this review that it intended to rely on U.S. Customs and Border Protection (CBP) data to select respondents.
On April 4, 2013, we sent a “No Shipments Inquiry” to CBP to confirm that there were no shipments or entries of subject merchandise during the POR from the companies subject to review. We received no information from CBP to contradict the results of our data query.
On April 29, 2013, we stated that because information from CBP indicates that there were no entries of subject merchandise during the POR from the companies covered by this review, we intend to rescind this review.
Section 351.213(d)(3) of the Department's regulations stipulates that the Secretary may rescind an administrative review if there were no entries, exports, or sales of the subject merchandise during the POR. As there were no entries, exports, or sales of the subject merchandise during the POR, we are rescinding this review of the antidumping duty order on certain frozen warmwater shrimp from Brazil pursuant to 19 CFR 351.213(d)(3). We intend to issue assessment instructions to CBP 15 days after the date of publication of this notice of rescission of administrative review.
This notice is published in accordance with section 751 of the Tariff Act of 1930, as amended, and 19 CFR 351.213(d)(4).
Notice of Application to Amend the Export Trade Certificate of Review Issued to Northwest Fruit Exporters, Application no. 84–24A12.
The Office of Competition and Economic Analysis (“OCEA”) of the International Trade Administration, Department of Commerce, has received an application to amend an Export Trade Certificate of Review (“Certificate”). This notice summarizes the proposed amendment and requests comments relevant to whether the amended Certificate should be issued.
Joseph Flynn, Director, Office of Competition and Economic Analysis, International Trade Administration, (202) 482–5131 (this is not a toll-free number) or email at
Title III of the Export Trading Company Act of 1982 (15 U.S.C. 4001–21) authorizes the Secretary of Commerce to issue Export Trade Certificates of Review. An Export Trade Certificate of Review protects the holder and the members identified in the Certificate from State and Federal government antitrust actions and from private treble damage antitrust actions for the export conduct specified in the Certificate and carried out in compliance with its terms and conditions. Section 302(b)(1) of the Export Trading Company Act of 1982 and 15 CFR 325.6(a) require the Secretary to publish a notice in the
Interested parties may submit written comments relevant to the determination whether an amended Certificate should be issued. If the comments include any privileged or confidential business information, it must be clearly marked and a nonconfidential version of the comments (identified as such) should be included. Any comments not marked as privileged or confidential business information will be deemed to be nonconfidential.
An original and five (5) copies, plus two (2) copies of the nonconfidential version, should be submitted no later than 20 days after the date of this notice to: Export Trading Company Affairs, International Trade Administration, U.S. Department of Commerce, Room 7025X, Washington, DC 20230.
Information submitted by any person is exempt from disclosure under the Freedom of Information Act (5 U.S.C. 552). However, nonconfidential versions of the comments will be made available to the applicant if necessary for determining whether or not to issue the Certificate. Comments should refer to this application as “Export Trade Certificate of Review, application number 84–24A12.”
The Northwest Fruit Exporters' (“NWF”) original Certificate was issued on June 11, 1984 (49 FR 24581, June 14, 1984), and last amended on January 3, 2013 (78 FR 1837, January 9, 2013). A summary of the current application for an amendment follows.
1. Add the following companies as new Members of the Certificate within the meaning of section 325.2(l) of the Regulations (15 CFR 325.2(l)): Phillippi Fruit Company, Inc. (Wenatchee, WA); Quincy Fresh Fruit Co. (Quincy, WA); Western Sweet Cherry Group, LLC (Yakima, WA); and Whitby Farms, Inc. dba: Farm Boy Fruit Snacks LLC (Mesa, WA); and
2. Remove the following companies as Members of NWF's Certificate: Andrus & Roberts Produce Co. (Sunnyside, WA); Crown Packing, LLC (Wenatchee, WA), Garrett Ranches Packing (Wilder, ID); IM EX Trading Company (Yakima, WA); and Orondo Fruit Co., Inc. (Ornondo, WA); and
3. Change the name of the following member: Broetje Orchards of Prescott, WA is now Broetje Orchards LLC; and Nuchief Sales Inc. of Wenatchee, WA is now Honey Bear Tree Fruit Co., LLC.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; proposed incidental harassment authorization; request for comments.
NMFS has received an application from the U.S. Navy (Navy) for an Incidental Harassment Authorization (IHA) to take marine mammals, by harassment, incidental to construction activities as part of a barge mooring project. Pursuant to the Marine Mammal Protection Act (MMPA), NMFS is requesting comments on its proposal to issue an IHA to the Navy to take, by Level B Harassment only, four species of marine mammals during the specified activity.
Comments and information must be received no later than June 21, 2013.
Comments on the application should be addressed to Michael Payne, Chief, Permits and Conservation Division, Office of Protected Resources, National Marine Fisheries Service, 1315 East-West Highway, Silver Spring, MD 20910. The mailbox address for providing email comments is
A copy of the application as well as a list of the references used in this document may be obtained by writing to the address specified above, telephoning
Ben Laws, Office of Protected Resources, NMFS, (301) 427–8401.
Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
Authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s), will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant), and if the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such takings are set forth. NMFS has defined “negligible impact” in 50 CFR 216.103 as “. . . an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.”
Section 101(a)(5)(D) of the MMPA established an expedited process by which citizens of the U.S. can apply for an authorization to incidentally take small numbers of marine mammals by harassment. Section 101(a)(5)(D) establishes a 45-day time limit for NMFS review of an application followed by a 30-day public notice and comment period on any proposed authorizations for the incidental harassment of marine mammals. Within 45 days of the close of the comment period, NMFS must either issue or deny the authorization. Except with respect to certain activities not pertinent here, the MMPA defines “harassment” as “any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild [Level A harassment]; or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering [Level B harassment].”
We received an application on February 6, 2013, from the Navy for the taking of marine mammals incidental to pile driving and removal in association with a barge mooring project in the Hood Canal at Naval Base Kitsap in Bangor, WA (NBKB). The Navy submitted a revised version of the application on April 8, 2013, which we deemed adequate and complete. The barge mooring project is expected to require approximately eight weeks and would occur between July 16 and September 30, 2013. Four species of marine mammals are expected to be affected by the specified activities: California sea lion (
NBKB provides berthing and support services to Navy submarines and other fleet assets. Commander Submarine Development Squadron Five (CSDS–5) is a tenant command on NBKB and is the working repository for deep ocean technology and operational, at-sea application of that technology. CSDS–5 currently moors and operates a research barge at the Service Pier on NBKB and is proposing to install mooring for a new larger research barge equipped with upgraded technology necessary for continuing the Navy mission. CSDS–5 currently conducts research equipment operations from an existing 115-ft by 35-ft barge with a 4-ft draft that was constructed in 1940 and cannot accommodate the new research equipment. A new larger barge measuring 260 ft by 85 ft with a 10-ft draft would replace the existing barge. Activities associated with the project include the removal of an existing mooring dolphin, the relocation and addition of floating pier sections, and the installation of up to twenty steel piles to support the barge, electrical transformer platform, and relocated pier sections (see Figures 1–2 and 1–3 in the Navy's application). All steel piles would be driven with a vibratory hammer for their initial embedment depths and may be finished with an impact hammer for proofing, as necessary. Proofing involves striking a driven pile with an impact hammer to verify that it provides the required load-bearing capacity, as indicated by the number of hammer blows per foot of pile advancement. Sound attenuation measures (i.e., bubble curtain) would be used during all impact hammer operations.
For pile driving activities, the Navy used thresholds recommended by NMFS for assessing project impacts, outlined later in this document. The Navy assumed practical spreading loss and used empirically-measured source levels from a similar project conducted at NBKB to estimate potential marine mammal exposures. Predicted exposures are outlined later in this document. The calculations predict that only Level B harassments would occur associated with pile driving or construction activities.
NBKB is located on the Hood Canal approximately twenty miles (32 km) west of Seattle, Washington (see Figures 1–1 and 2–1 in the Navy's application). The proposed actions with the potential to cause harassment of marine mammals within the waterways adjacent to NBKB, under the MMPA, are vibratory and impact pile driving and removal of piles via vibratory driver associated with the barge mooring project. All in-water construction activities within the Hood Canal are only permitted during July 16–February 15 in order to protect spawning fish populations; however, the entire barge mooring project is scheduled to be completed by September 30, 2013.
The Hood Canal is a long, narrow fjord-like basin of the western Puget Sound. Throughout its 67-mile length, the width of the canal varies from one to two miles and exhibits strong depth/elevation gradients and irregular seafloor topography in many areas. Although no official boundaries exist along the waterway, the northeastern section of the canal extending from the mouth of the canal at Admiralty Inlet to the southern tip of Toandos Peninsula is referred to as the northern Hood Canal. NBKB is located within this region (see Figures 2–1 and 2–2 of the Navy's application). Please see Section 2 of the Navy's application for more information about the specific geographic region, including physical and oceanographic characteristics.
The project consists of three components: The relocation and addition to the Port Operations pier, the removal of existing infrastructure, and the installation of the CSDS–5 research barge mooring piles. Each element is described below. The barge mooring project is expected to require approximately forty work days and would occur between July 16 and September 30, 2013. Please see Figures 2–2 and 2–3 for details of the proposed project area and site plan.
In order to accommodate the new, larger CSDS–5 research barge, some portions of the Port Operations floating pier would be relocated to the south side of the Service Pier trestle. Several floating pier sections/modules would be relocated and seven new modules would be installed to complete the Port Operations infrastructure. Anchoring of the relocated and new floating pier modules would require the installation of three 24-in diameter hollow steel pipe piles. Additionally, four 20-in diameter piles would be installed to support a 12-ft by 16-ft electrical transformer platform.
Existing infrastructure must be removed in order to accommodate the new barge, including the existing mooring dolphin and concrete pile cap located north of the proposed relocated floating pier modules. Multiple steel piles would be removed, including six 24-in diameter steel batter piles and two 30-in diameter steel vertical piles. However, only one 24-inch steel pile would be removed with the use of vibratory pile driving equipment. The remaining piles would be removed by cutting them down at the mudline with hydraulic shears or by a diver utilizing a thermal lance, and lifting them out of the water for proper disposal.
The new research barge will be located at the east side of the Service Pier, and will be moored by five 36-in diameter and up to eight 48-in diameter hollow steel pipe piles. It is more likely that only four 48-in diameter piles would be needed, but this is a conservative estimate in order to ensure some flexibility is maintained for the final design.
In summary, the following is the maximum scenario for project pile driving/removal:
• Four 20-in diameter steel pipe piles approximately 100 ft long will be driven to depth of 55 ft,
• Three 24-in diameter steel pipe piles approximately 60 ft long will be driven to depth of 34 ft,
• Five 36-in diameter steel pipe piles approximately 100 ft long will be driven to depth of 55 ft,
• As many as eight 48-in diameter steel pipe piles approximately 115 ft long may be driven to depth of 70 ft, and
• One 24-in diameter steel pipe will be removed using vibratory pile driving equipment.
It is anticipated that a maximum of four piles can be driven per day, although this total is unlikely to be reached due to various delays that may be expected during construction work. The total number of days for both extraction and installation are not likely to exceed twenty workdays. Piles will be installed using mainly vibratory pile driving, which involves use of hydraulic-powered weights to vibrate a pile until the surrounding sediment liquefies, enabling the weight of the pile plus the pile driver to push the pile into the ground. For some piles, impact driving may be required to ensure load bearing capacity (proofing) or if substrate conditions do not allow the pile to reach the specified tip elevation with a vibratory driver. An impact hammer uses a rising and falling piston to repeatedly strike a pile and drive it into the ground. When the impact driver is required, it is expected that 500 strikes will be necessary per pile, resulting in approximately 2,000 strikes per day under the maximum scenario. All piles driven with an impact hammer will be surrounded by a bubble curtain or other sound attenuation device over the full water column to minimize in-water noise.
Sound travels in waves, the basic components of which are frequency, wavelength, velocity, and amplitude. Frequency is the number of pressure waves that pass by a reference point per unit of time and is measured in Hz or cycles per second. Wavelength is the distance between two peaks of a sound wave; lower frequency sounds have longer wavelengths than higher frequency sounds and attenuate more rapidly in shallower water. Amplitude is the height of the sound pressure wave or the `loudness' of a sound and is typically measured using the decibel (dB) scale. A dB is the ratio between a measured pressure (with sound) and a reference pressure (sound at a constant pressure, established by scientific standards). It is a logarithmic unit that accounts for large variations in amplitude; therefore, relatively small changes in dB ratings correspond to large changes in sound pressure. When referring to SPLs (SPLs; the sound force per unit area), sound is referenced in the context of underwater sound pressure to 1 microPascal (μPa). One pascal is the pressure resulting from a force of one newton exerted over an area of one square meter. The source level represents the sound level at a distance of 1 m from the source (referenced to 1 μPa). The received level is the sound level at the listener's position.
Root mean square (rms) is the quadratic mean sound pressure over the duration of an impulse. Rms is calculated by squaring all of the sound amplitudes, averaging the squares, and then taking the square root of the average (Urick, 1983). Rms accounts for both positive and negative values; squaring the pressures makes all values positive so that they may be accounted for in the summation of pressure levels (Hastings and Popper, 2005). This measurement is often used in the context of discussing behavioral effects, in part because behavioral effects, which often result from auditory cues, may be better expressed through averaged units than by peak pressures.
When underwater objects vibrate or activity occurs, sound-pressure waves are created. These waves alternately compress and decompress the water as the sound wave travels. Underwater sound waves radiate in all directions away from the source (similar to ripples on the surface of a pond), except in cases where the source is directional. The compressions and decompressions associated with sound waves are detected as changes in pressure by aquatic life and man-made sound receptors such as hydrophones. Underwater sound levels (`ambient sound') are comprised of multiple sources, including physical (e.g., waves, earthquakes, ice, atmospheric sound), biological (e.g., sounds produced by marine mammals, fish, and invertebrates), and anthropogenic sound (e.g., vessels, dredging, aircraft, construction). Even in the absence of anthropogenic sound, the sea is typically a loud environment. A number of sources of sound are likely to occur within Hood Canal, including the following (Richardson
• Wind and waves: The complex interactions between wind and water surface, including processes such as breaking waves and wave-induced bubble oscillations and cavitation, are a main source of naturally occurring ambient noise for frequencies between 200 Hz and 50 kHz (Mitson, 1995). In
• Precipitation noise: Noise from rain and hail impacting the water surface can become an important component of total noise at frequencies above 500 Hz, and possibly down to 100 Hz during quiet times.
• Biological noise: Marine mammals can contribute significantly to ambient noise levels, as can some fish and shrimp. The frequency band for biological contributions is from approximately 12 Hz to over 100 kHz.
• Anthropogenic noise: Sources of ambient noise related to human activity include transportation (surface vessels and aircraft), dredging and construction, oil and gas drilling and production, seismic surveys, sonar, explosions, and ocean acoustic studies (Richardson
In-water construction activities associated with the project would include impact pile driving, vibratory pile driving and removal, and possibly pneumatic chipping. The sounds produced by these activities fall into one of two sound types: pulsed and non-pulsed (defined in next paragraph). The distinction between these two general sound types is important because they have differing potential to cause physical effects, particularly with regard to hearing (e.g., Ward, 1997 in Southall
Pulsed sounds (e.g., explosions, gunshots, sonic booms, and impact pile driving) are brief, broadband, atonal transients (ANSI, 1986; Harris, 1998) and occur either as isolated events or repeated in some succession. Pulsed sounds are all characterized by a relatively rapid rise from ambient pressure to a maximal pressure value followed by a decay period that may include a period of diminishing, oscillating maximal and minimal pressures. Pulsed sounds generally have an increased capacity to induce physical injury as compared with sounds that lack these features.
Non-pulse (intermittent or continuous sounds) can be tonal, broadband, or both. Some of these non-pulse sounds can be transient signals of short duration but without the essential properties of pulses (e.g., rapid rise time). Examples of non-pulse sounds include those produced by vessels, aircraft, machinery operations such as drilling or dredging, vibratory pile driving, and active sonar systems. The duration of such sounds, as received at a distance, can be greatly extended in a highly reverberant environment.
Impact hammers operate by repeatedly dropping a heavy piston onto a pile to drive the pile into the substrate. Sound generated by impact hammers is characterized by rapid rise times and high peak levels, a potentially injurious combination (Hastings and Popper, 2005). Vibratory hammers install piles by vibrating them and allowing the weight of the hammer to push them into the sediment. Vibratory hammers produce significantly less sound than impact hammers. Peak SPLs may be 180 dB or greater, but are generally 10 to 20 dB lower than SPLs generated during impact pile driving of the same-sized pile (Oestman
The underwater acoustic environment consists of ambient sound, defined as environmental background sound levels lacking a single source or point (Richardson
Underwater ambient noise was measured at approximately 113 dB re 1μPa rms between 50 Hz and 20 kHz during the recent Test Pile Program (TPP) project, approximately 1.85 mi from the project area (Illingworth & Rodkin, Inc., 2012). In 2009, the average broadband ambient underwater noise levels were measured at 114 dB re 1μPa between 100 Hz and 20 kHz (Slater, 2009). Peak spectral noise from industrial activity was noted below the 300 Hz frequency, with maximum levels of 110 dB re 1μPa noted in the 125 Hz band. In the 300 Hz to 5 kHz range, average levels ranged between 83 and 99 dB re 1μPa. Wind-driven wave noise dominated the background noise environment at approximately 5 kHz and above, and ambient noise levels flattened above 10 kHz.
Sound levels can be greatly reduced during impact pile driving using sound attenuation devices. There are several
A confined bubble curtain contains the air bubbles within a flexible or rigid sleeve made from plastic, cloth, or pipe. Confined bubble curtains generally offer higher attenuation levels than unconfined curtains because they may physically block sound waves and they prevent air bubbles from migrating away from the pile. For this reason, the confined bubble curtain is commonly used in areas with high current velocity (Oestman
Both environmental conditions and the characteristics of the sound attenuation device may influence the effectiveness of the device. According to Oestman
• In general, confined bubble curtains attain better sound attenuation levels in areas of high current than unconfined bubble curtains. If an unconfined device is used, high current velocity may sweep bubbles away from the pile, resulting in reduced levels of sound attenuation.
• Softer substrates may allow for a better seal for the device, preventing leakage of air bubbles and escape of sound waves. This increases the effectiveness of the device. Softer substrates also provide additional attenuation of sound traveling through the substrate.
• Flat bottom topography provides a better seal, enhancing effectiveness of the sound attenuation device, whereas sloped or undulating terrain reduces or eliminates its effectiveness.
• Air bubbles must be close to the pile; otherwise, sound may propagate into the water, reducing the effectiveness of the device.
• Harder substrates may transmit ground-borne sound and propagate it into the water column.
The literature presents a wide array of observed attenuation results for bubble curtains (e.g., Oestman
NMFS uses generic sound exposure thresholds to determine when an activity that produces sound might result in impacts to a marine mammal such that a take by harassment might occur. To date, no studies have been conducted that examine impacts to marine mammals from pile driving sounds from which empirical sound thresholds have been established. Current NMFS practice (in relation to the MMPA) regarding exposure of marine mammals to sound is that cetaceans and pinnipeds exposed to impulsive sounds of 180 and 190 dB rms or above, respectively, are considered to have been taken by Level A (i.e., injurious) harassment. Behavioral harassment (Level B) is considered to have occurred when marine mammals are exposed to sounds at or above 160 dB rms for impulse sounds (e.g., impact pile driving) and 120 dB rms for continuous sound (e.g., vibratory pile driving), but below injurious thresholds. For airborne sound, pinniped disturbance from haul-outs has been documented at 100 dB (unweighted) for pinnipeds in general, and at 90 dB (unweighted) for harbor seals. NMFS uses these levels as guidelines to estimate when harassment may occur.
Because it is unknown what size pile may be driven on any given day, the Navy uses the most conservative values (i.e., 196 dB for impact driving and 172 dB for vibratory driving), and practical spreading loss, to estimate distances to relevant thresholds and associated areas of ensonification (presented in Table 3). Predicted distances to thresholds for different sources are shown in Figures 6–1 and 6–2 of the Navy's application. The predicted area exceeding the threshold assumes a field free of obstruction, which is unrealistic due to land masses or bends in the canal. The actual distance to the behavioral disturbance thresholds for pile driving may be shorter than the calculated distance due to the irregular contour of the waterfront, the narrowness of the canal, and the maximum fetch (furthest distance sound waves travel without obstruction [i.e., line of site]) at the project area.
As was discussed for underwater sound from pile driving, the intensity of pile driving sounds is greatly influenced by factors such as the type of piles, hammers, and the physical environment in which the activity takes place. As before, measured values from the TPP were used to determine reasonable airborne SPLs and their associated effects on marine mammals that are likely to result from pile driving at NBKB. During the TPP, vibratory driving was measured at 102 dB re 20 μPa rms at 15 m and impact driving at 109 dB re 20 μPa rms at 15 m.
Based on these values and the assumption of spherical spreading loss, distances to relevant thresholds and associated areas of ensonification are presented in Table 4; these areas are depicted in Tables 6–3 and 6–4 of the Navy's application. There are no haul-out locations within these zones, which are encompassed by the zones estimated for underwater sound. Protective measures would be in place out to the distances calculated for the underwater thresholds, and the distances for the airborne thresholds would be covered fully by mitigation and monitoring measures in place for underwater sound thresholds. We recognize that pinnipeds in water that are within the area of ensonification for airborne sound could be incidentally taken by either underwater or airborne sound or both. We consider these incidences of harassment to be accounted for in the take estimates for underwater sound.
There are seven marine mammal species, four cetaceans and three pinnipeds, which may inhabit or transit through the waters nearby NBKB in the Hood Canal. These include the transient killer whale, harbor porpoise, Dall's porpoise (
This section summarizes the population status and abundance of these species. We have reviewed the Navy's detailed species descriptions, including life history information, for accuracy and completeness and refer the reader to Sections 3 and 4 of the Navy's application instead of reprinting the information here. Table 5 lists the marine mammal species with expected potential for occurrence in the vicinity of NBKB during the project timeframe. The following information is summarized largely from NMFS Stock Assessment Reports.
Harbor seals inhabit coastal and estuarine waters and shoreline areas of the northern hemisphere from temperate to polar regions. The eastern North Pacific subspecies is found from Baja California north to the Aleutian Islands and into the Bering Sea. Multiple lines of evidence support the existence of geographic structure among harbor seal populations from California to Alaska (Carretta
Washington inland waters harbor seals are not protected under the ESA or listed as depleted under the MMPA. Because there is no current abundance estimate for this stock, there is no current estimate of potential biological removal (PBR). However, because annual human-caused mortality (13) is significantly less than the previously calculated PBR (771) the stock is not considered strategic under the MMPA. The stock is considered to be within its optimum sustainable population (OSP) level.
The best abundance estimate of the Washington inland waters stock of harbor seals is 14,612 (CV = 0.15) and the minimum population size of this stock is 12,884 individuals (Carretta
Historical levels of harbor seal abundance in Washington are unknown. The population was apparently greatly reduced during the 1940s and 1950s due to a state-financed bounty program and
Harbor seals are the most abundant marine mammal in Hood Canal, where they can occur anywhere year-round, and are the only pinniped that breeds in inland Washington waters and the only species of marine mammal that is considered resident in the Hood Canal (Jeffries
Harbor seals were consistently sighted during Navy surveys and were found in all marine habitats including nearshore waters and deeper water, and have been observed hauled out on manmade objects such as buoys. Harbor seals were commonly observed in the water during monitoring conducted for other projects at NBKB in 2011. During most of the year, all age and sex classes (except newborn pups) could occur in the project area throughout the period of construction activity. Since there are no known pupping sites in the vicinity of the project area, harbor seal neonates would not generally be expected to be present during pile driving. Otherwise, during most of the year, all age and sex classes could occur in the project area throughout the period of construction activity. Harbor seal numbers increase from January through April and then decrease from May through August as the harbor seals move to adjacent bays on the outer coast of Washington for the pupping season. From April through mid-July, female harbor seals haul out on the outer coast of Washington at pupping sites to give birth. The main haul-out locations for harbor seals in Hood Canal are located on river delta and tidal exposed areas, with the closest haul-out to the project area being approximately ten miles (16 km) southwest of NBKB at Dosewallips River mouth, outside the potential area of effect for this project (London, 2006; see Figure 4–1 of the Navy's application).
California sea lions range from the Gulf of California north to the Gulf of Alaska, with breeding areas located in the Gulf of California, western Baja California, and southern California. Five genetically distinct geographic populations have been identified: (1) Pacific Temperate, (2) Pacific Subtropical, (3) Southern Gulf of California, (4) Central Gulf of California and (5) Northern Gulf of California (Schramm
California sea lions are not protected under the ESA or listed as depleted under the MMPA. Total annual human-caused mortality (at least 431) is substantially less than the potential biological removal (PBR, estimated at 9,200 per year); therefore, California sea lions are not considered a strategic stock under the MMPA. There are indications that the California sea lion may have reached or is approaching carrying capacity, although more data are needed to confirm that leveling in growth persists (Carretta
The best abundance estimate of the U.S. stock of California sea lions is 296,750 and the minimum population size of this stock is 153,337 individuals (Carretta
Trends in pup counts from 1975 through 2008 have been assessed for four rookeries in southern California and for haul-outs in central and northern California. During this time period counts of pups increased at an annual rate of 5.4 percent, excluding six El Niño years when pup production declined dramatically before quickly rebounding (Carretta
Historic exploitation of California sea lions include harvest for food by Native Americans in pre-historic times and for oil and hides in the mid-1800s, as well as exploitation for a variety of reasons more recently (Carretta
An estimated 3,000 to 5,000 California sea lions migrate northward along the coast to central and northern California, Oregon, Washington, and Vancouver Island during the non-breeding season from September to May (Jeffries
California sea lions are present in Hood Canal during much of the year with the exception of mid-June through August, and occur regularly at NBKB, as observed during Navy waterfront surveys conducted from April 2008 through June 2010 (Navy, 2010). They are known to utilize a diversity of man-made structures for hauling out (Riedman, 1990) and, although there are no regular California sea lion haul-outs known within the Hood Canal (Jeffries
Killer whales are one of the most cosmopolitan marine mammals, found in all oceans with no apparent restrictions on temperature or depth, although they do occur at higher densities in colder, more productive waters at high latitudes and are more common in nearshore waters (Leatherwood and Dahlheim, 1978; Forney and Wade, 2006; Allen and Angliss, 2011). Killer whales are found throughout the North Pacific, including the entire Alaska coast, in British Columbia and Washington inland waterways, and along the outer coasts of Washington, Oregon, and California. On the basis of differences in morphology, ecology, genetics, and behavior, populations of killer whales have largely been classified as “resident”, “transient”, or “offshore” (e.g., Dahlheim
The resident and transient populations have been divided further into different subpopulations on the basis of genetic analyses, distribution, and other factors. Recognized stocks in the North Pacific include Alaska Residents, Northern Residents, Southern Residents, Gulf of Alaska, Aleutian Islands, and Bering Sea Transients, and West Coast Transients, along with a single offshore stock. West Coast Transient killer whales, which occur from California through southeastern Alaska, are the only type expected to potentially occur in the project area.
West Coast Transient killer whales are not protected under the ESA or listed as depleted under the MMPA. The estimated annual level of human-caused mortality (0) does not exceed the calculated PBR (3.5); therefore, West Coast Transient killer whales are not considered a strategic stock under the MMPA. It is thought that the stock grew rapidly from the mid-1970s to mid-1990s as a result of a combination of high birth rate, survival, as well as greater immigration of animals into the nearshore study area (DFO, 2009). The rapid growth of the population during this period coincided with a dramatic increase in the abundance of the whales' primary prey, harbor seals, in nearshore waters. Population growth began slowing in the mid-1990s and has continued to slow in recent years (DFO, 2009). Population trends and status of this stock relative to its OSP level are currently unknown, as is the actual maximum productivity rate. Analyses in DFO (2009) estimated a rate of increase of about six percent per year from 1975 to 2006, but this included recruitment of non-calf whales into the population. The default maximum net growth rate for cetaceans (4 percent) is considered appropriate pending additional information (Carretta
The West Coast transient stock is a trans-boundary stock, with minimum counts for the population of transient killer whales coming from various photographic datasets. Combining these counts of cataloged transient whales gives an abundance estimate of 354 individuals for the West Coast transient stock (Allen and Angliss, 2011). Although this direct count of individually identifiable animals does not necessarily represent the number of live animals, it is considered a conservative minimum estimate (Allen and Angliss, 2011). However, the number in Washington waters at any one time is probably fewer than twenty individuals (Wiles, 2004). The West Coast transient killer whale stock is not designated as depleted under the MMPA or listed under the ESA. The estimated annual level of human-caused mortality and serious injury does not exceed the PBR. Therefore, the West Coast Transient stock of killer whales is not classified as a strategic stock.
The estimated minimum mortality rate incidental to U.S. commercial fisheries is zero animals per year (Allen and Angliss, 2011). However, this could represent an underestimate as regards total fisheries-related mortality due to a lack of data concerning marine mammal interactions in Canadian commercial fisheries known to have potential for interaction with killer whales. Any such interactions are thought to be few in number (Allen and Angliss, 2011). Other mortality, as a result of shootings or ship strikes, has been of concern in the past. However, no ship strikes have been reported for this stock, and shooting of transients is thought to be minimal because their diet is based on marine mammals rather than fish. There are no reports of a subsistence harvest of killer whales in Alaska or Canada.
Transient occurrence in inland waters appears to peak during August and September which is the peak time for harbor seal pupping, weaning, and post-
Dall's porpoises are endemic to temperate waters of the North Pacific, typically in deeper waters between 30–62°N, and are found from northern Baja California to the northern Bering Sea. Stock structure for Dall's porpoises is not well known; because there are no cooperative management agreements with Mexico or Canada for fisheries which may take this species, Dall's porpoises are divided for management purposes into two discrete, noncontiguous areas: (1) Waters off California, Oregon, and Washington, and (2) Alaskan waters (Carretta
Dall's porpoises are not protected under the ESA or listed as depleted under the MMPA. The minimum estimate of annual human-caused mortality (0.4) is substantially less than the calculated PBR (257); therefore, Dall's porpoises are not considered a strategic stock under the MMPA. The status of Dall's porpoises in California, Oregon and Washington relative to OSP is not known (Carretta
Dall's porpoise distribution on the U.S. west coast is highly variable between years and appears to be affected by oceanographic conditions (Forney and Barlow, 1998); animals may spend more or less time outside of U.S. waters as oceanographic conditions change. Therefore, a multi-year average of 2005 and 2008 summer/autumn vessel-based line transect surveys of California, Oregon, and Washington waters was used to estimate a best abundance of 42,000 (CV = 0.33) animals (Forney, 2007; Barlow, 2010). The minimum population is considered to be 32,106 animals. Dall's porpoises also occur in the inland waters of Washington, but the most recent estimate was obtained in 1996 (900 animals; CV = 0.40; Calambokidis
Data from 2002–08, from all fisheries for which mortality data are available, indicate that a minimum of 0.4 animals are killed per year (Carretta
In Washington, Dall's porpoises are most abundant in offshore waters where they are year-round residents, although interannual distribution is highly variable (Green
Harbor porpoises are found primarily in inshore and relatively shallow coastal waters (< 100 m) from Point Barrow to Point Conception. Various genetic analyses and investigation of pollutant loads indicate a low mixing rate for harbor porpoise along the west coast of North America and likely fine-scale geographic structure along an almost continuous distribution from California to Alaska (e.g., Calambokidis and Barlow, 1991; Osmek
Harbor porpoises of Washington inland waters are not protected under the ESA or listed as depleted under the MMPA. Because there is no current abundance estimate for this stock, there is no current estimate of PBR. However, because annual human-caused mortality (2.6) is less than the previously calculated PBR (63) the stock is not considered strategic under the MMPA. The status of harbor porpoises in Washington inland waters relative to OSP is not known (Carretta
The best estimate of abundance for this stock is derived from aerial surveys of the inland waters of Washington and southern British Columbia conducted during August of 2002 and 2003. When corrected for availability and perception bias, the average of the 2002–03 estimates of abundance for U.S. waters resulted in an estimated abundance for the Washington Inland Waters stock of harbor porpoise of 10,682 (CV = 0.38) animals (Laake
Although long-term harbor porpoise sightings in southern Puget Sound declined from the 1940s through the 1990s, sightings and strandings have increased in Puget Sound and northern Hood Canal in recent years and harbor porpoise are now considered to regularly occur year-round in these waters (Carretta
Data from 2005–09 indicate that a minimum of 2.2 Washington inland waters harbor seals are killed annually in U.S. commercial fisheries (Carretta
Prior to recent construction projects conducted by the Navy at NBKB, harbor porpoises were considered to have only occasional occurrence in the project area. A single harbor porpoise had been sighted in deeper water at NBKB during 2010 field observations (Tannenbaum
We have determined that pile driving and removal (depending on technique used), as outlined in the project description, has the potential to result in behavioral harassment of marine mammals present in the project area. Pinnipeds spend much of their time in the water with heads held above the surface and therefore are not subject to underwater noise to the same degree as cetaceans (although they are correspondingly more susceptible to exposure to airborne sound). For purposes of this assessment, however, pinnipeds are conservatively assumed to be available to be exposed to underwater sound 100 percent of the time that they are in the water.
The primary effect on marine mammals anticipated from the specified activities would result from exposure of animals to underwater sound. Exposure to sound can affect marine mammal hearing. When considering the influence of various kinds of sound on the marine environment, it is necessary to understand that different kinds of marine life are sensitive to different frequencies of sound. Based on available behavioral data, audiograms derived using auditory evoked potential techniques, anatomical modeling, and other data, Southall
• Low frequency cetaceans (thirteen species of mysticetes): Functional hearing is estimated to occur between approximately 7 Hz and 22 kHz;
• Mid-frequency cetaceans (32 species of dolphins, six species of larger toothed whales, and nineteen species of beaked and bottlenose whales): Functional hearing is estimated to occur between approximately 150 Hz and 160 kHz;
• High frequency cetaceans (six species of true porpoises, four species of river dolphins, two members of the genus
• Pinnipeds in water: Functional hearing is estimated to occur between approximately 75 Hz and 75 kHz, with the greatest sensitivity between approximately 700 Hz and 20 kHz.
Two pinniped and three cetacean species could potentially occur in the proposed project area during the project timeframe. Of the cetacean species that may occur in the project area, the killer whale is classified as a mid-frequency cetacean, and the two porpoises are classified as high-frequency cetaceans (Southall
In the absence of mitigation, impacts to marine species would be expected to result from physiological and behavioral responses to both the type and strength of the acoustic signature (Viada
Several aspects of the planned monitoring and mitigation measures for this project (see the “Proposed Mitigation” and “Proposed Monitoring and Reporting” sections later in this document) are designed to detect marine mammals occurring near the pile driving to avoid exposing them to sound pulses that might, in theory, cause hearing impairment. In addition, many cetaceans are likely to show some avoidance of the area where received levels of pile driving sound are high enough that hearing impairment could potentially occur. In those cases, the avoidance responses of the animals themselves would reduce or (most likely) avoid any possibility of hearing impairment. Non-auditory physical effects may also occur in marine mammals exposed to strong underwater pulsed sound. It is especially unlikely that any effects of these types would occur during the present project given the brief duration of exposure for any given individual and the planned monitoring and mitigation measures. The following subsections discuss in somewhat more detail the possibilities of TTS, PTS, and non-auditory physical effects.
Given the available data, the received level of a single pulse (with no frequency weighting) might need to be approximately 186 dB re 1 μPa
The above TTS information for odontocetes is derived from studies on the bottlenose dolphin (
Relationships between TTS and PTS thresholds have not been studied in marine mammals but are assumed to be similar to those in humans and other terrestrial mammals. PTS might occur at a received sound level at least several decibels above that inducing mild TTS if the animal were exposed to strong sound pulses with rapid rise time. Based on data from terrestrial mammals, a precautionary assumption is that the PTS threshold for impulse sounds (such as pile driving pulses as received close to the source) is at least 6 dB higher than the TTS threshold on a peak-pressure basis and probably greater than 6 dB (Southall
Measured source levels from impact pile driving can be as high as 214 dB re 1 μPa at 1 m (3.3 ft). Although no marine mammals have been shown to experience TTS or PTS as a result of being exposed to pile driving activities, captive bottlenose dolphins and beluga whales exhibited changes in behavior when exposed to strong pulsed sounds (Finneran
Disturbance includes a variety of effects, including subtle changes in behavior, more conspicuous changes in activities, and displacement. Behavioral responses to sound are highly variable and context-specific and reactions, if any, depend on species, state of maturity, experience, current activity, reproductive state, auditory sensitivity, time of day, and many other factors (Richardson
Habituation can occur when an animal's response to a stimulus wanes with repeated exposure, usually in the absence of unpleasant associated events (Wartzok
Controlled experiments with captive marine mammals showed pronounced behavioral reactions, including avoidance of loud sound sources (Ridgway
With both types of pile driving, it is likely that the onset of pile driving could result in temporary, short term changes in an animal's typical behavior and/or avoidance of the affected area. These behavioral changes may include (Richardson
The biological significance of many of these behavioral disturbances is difficult to predict, especially if the detected disturbances appear minor. However, the consequences of behavioral modification could be expected to be biologically significant if the change affects growth, survival, or reproduction. Significant behavioral modifications that could potentially lead to effects on growth, survival, or reproduction include:
• Drastic changes in diving/surfacing patterns (such as those thought to be causing beaked whale stranding due to exposure to military mid-frequency tactical sonar);
• Habitat abandonment due to loss of desirable acoustic environment; and
• Cessation of feeding or social interaction.
The onset of behavioral disturbance from anthropogenic sound depends on both external factors (characteristics of sound sources and their paths) and the specific characteristics of the receiving animals (hearing, motivation, experience, demography) and is difficult to predict (Southall
Natural and artificial sounds can disrupt behavior by masking, or interfering with, a marine mammal's ability to hear other sounds. Masking occurs when the receipt of a sound is interfered with by another coincident sound at similar frequencies and at similar or higher levels. Chronic exposure to excessive, though not high-intensity, sound could cause masking at particular frequencies for marine mammals that utilize sound for vital biological functions. Masking can interfere with detection of acoustic signals such as communication calls, echolocation sounds, and environmental sounds important to marine mammals. Therefore, under certain circumstances, marine mammals whose acoustical sensors or environment are being severely masked could also be impaired from maximizing their performance fitness in survival and reproduction. If the coincident (masking) sound were man-made, it could be potentially harassing if it disrupted hearing-related behavior. It is important to distinguish TTS and PTS, which persist after the sound exposure, from masking, which occurs during the sound exposure. Because masking (without resulting in TS) is not associated with abnormal physiological function, it is not considered a physiological effect, but rather a potential behavioral effect.
The frequency range of the potentially masking sound is important in determining any potential behavioral impacts. Because sound generated from in-water pile driving is mostly concentrated at low frequency ranges, it may have less effect on high frequency echolocation sounds made by porpoises. However, lower frequency man-made sounds are more likely to affect detection of communication calls and other potentially important natural sounds such as surf and prey sound. It may also affect communication signals when they occur near the sound band and thus reduce the communication space of animals (e.g., Clark
Masking has the potential to impact species at population, community, or even ecosystem levels, as well as at individual levels. Masking affects both senders and receivers of the signals and can potentially have long-term chronic
The most intense underwater sounds in the proposed action are those produced by impact pile driving. Given that the energy distribution of pile driving covers a broad frequency spectrum, sound from these sources would likely be within the audible range of marine mammals present in the project area. Impact pile driving activity is relatively short-term, with rapid pulses occurring for approximately fifteen minutes per pile. The probability for impact pile driving resulting from this proposed action masking acoustic signals important to the behavior and survival of marine mammal species is likely to be negligible. Vibratory pile driving is also relatively short-term, with rapid oscillations occurring for approximately one and a half hours per pile. It is possible that vibratory pile driving resulting from this proposed action may mask acoustic signals important to the behavior and survival of marine mammal species, but the short-term duration and limited affected area would result in insignificant impacts from masking. Any masking event that could possibly rise to Level B harassment under the MMPA would occur concurrently within the zones of behavioral harassment already estimated for vibratory and impact pile driving, and which have already been taken into account in the exposure analysis.
Marine mammals that occur in the project area could be exposed to airborne sounds associated with pile driving that have the potential to cause harassment, depending on their distance from pile driving activities. Airborne pile driving sound would have less impact on cetaceans than pinnipeds because sound from atmospheric sources does not transmit well underwater (Richardson
The proposed activities at NBKB would not result in permanent impacts to habitats used directly by marine mammals, such as haul-out sites, but may have potential short-term impacts to food sources such as forage fish and salmonids. There are no rookeries or major haul-out sites within 10 km, foraging hotspots, or other ocean bottom structure of significant biological importance to marine mammals that may be present in the marine waters in the vicinity of the project area. Therefore, the main impact issue associated with the proposed activity would be temporarily elevated sound levels and the associated direct effects on marine mammals, as discussed previously in this document. The most likely impact to marine mammal habitat occurs from pile driving effects on likely marine mammal prey (i.e., fish) near NBKB and minor impacts to the immediate substrate during installation and removal of piles during the wharf construction project.
Construction activities would produce both pulsed (i.e., impact pile driving) and continuous (i.e., vibratory pile driving) sounds. Fish react to sounds which are especially strong and/or intermittent low-frequency sounds. Short duration, sharp sounds can cause overt or subtle changes in fish behavior and local distribution. Hastings and Popper (2005, 2009) identified several studies that suggest fish may relocate to avoid certain areas of sound energy. Additional studies have documented effects of pile driving (or other types of continuous sounds) on fish, although several are based on studies in support of large, multiyear bridge construction projects (e.g., Scholik and Yan, 2001, 2002; Popper and Hastings, 2009). Sound pulses at received levels of 160 dB re 1 μPa may cause subtle changes in fish behavior. SPLs of 180 dB may cause noticeable changes in behavior (Pearson
The area likely impacted by the project is relatively small compared to the available habitat in the Hood Canal. Avoidance by potential prey (i.e., fish) of the immediate area due to the temporary loss of this foraging habitat is also possible. The duration of fish avoidance of this area after pile driving stops is unknown, but a rapid return to normal recruitment, distribution and behavior is anticipated. Any behavioral avoidance by fish of the disturbed area would still leave significantly large areas of fish and marine mammal foraging habitat in the Hood Canal and nearby vicinity.
Given the short daily duration of sound associated with individual pile driving events and the relatively small areas being affected, pile driving activities associated with the proposed action are not likely to have a permanent, adverse effect on any fish habitat, or populations of fish species. Therefore, pile driving is not likely to have a permanent, adverse effect on marine mammal foraging habitat at the project area.
In order to issue an incidental take authorization (ITA) under Section 101(a)(5)(D) of the MMPA, we must, where applicable, set forth the permissible methods of taking pursuant to such activity, and other means of
Measurements from similar pile driving elsewhere at NBKB were coupled with practical spreading loss to estimate zones of influence (ZOIs; see “Estimated Take by Incidental Harassment”); these values were used to develop mitigation measures for pile driving activities at NBKB. The ZOIs effectively represent the mitigation zone that would be established around each pile to prevent Level A harassment to marine mammals, while providing estimates of the areas within which Level B harassment might occur. In addition to the measures described later in this section, the Navy would employ the following standard mitigation measures:
(a) Conduct briefings between construction supervisors and crews, marine mammal monitoring team, acoustical monitoring team, and Navy staff prior to the start of all pile driving activity, and when new personnel join the work, in order to explain responsibilities, communication procedures, marine mammal monitoring protocol, and operational procedures.
(b) Comply with applicable equipment sound standards and ensure that all construction equipment has sound control devices no less effective than those provided on the original equipment.
(c) For in-water heavy machinery work other than pile driving (using, e.g., standard barges, tug boats, barge-mounted excavators, or clamshell equipment used to place or remove material), if a marine mammal comes within 10 m, operations shall cease and vessels shall reduce speed to the minimum level required to maintain steerage and safe working conditions. This type of work could include the following activities: (1) Movement of the barge to the pile location; (2) positioning of the pile on the substrate via a crane (i.e., stabbing the pile); (3) removal of the pile from the water column/substrate via a crane (i.e., deadpull); or (4) the placement of sound attenuation devices around the piles. For these activities, monitoring would take place from 15 minutes prior to initiation until the action is complete.
The following measures would apply to the Navy's mitigation through shutdown and disturbance zones:
In order to document observed incidences of harassment, monitors record all marine mammal observations, regardless of location. The observer's location, as well as the location of the pile being driven, is known from a GPS. The location of the animal is estimated as a distance from the observer, which is then compared to the location from the pile. If acoustic monitoring is being conducted for that pile, a received SPL may be estimated, or the received level may be estimated on the basis of past or subsequent acoustic monitoring. It may then be determined whether the animal was exposed to sound levels constituting incidental harassment in post-processing of observational and acoustic data, and a precise accounting of observed incidences of harassment created. Therefore, although the predicted distances to behavioral harassment thresholds are useful for estimating incidental harassment for purposes of authorizing levels of incidental take, actual take may be determined in part through the use of empirical data. That information may then be used to extrapolate observed takes to reach an approximate understanding of actual total takes.
The following additional measures apply to visual monitoring:
(1) Monitoring will be conducted by qualified observers, who will be placed at the best vantage point(s) practicable to monitor for marine mammals and implement shutdown/delay procedures when applicable by calling for the shutdown to the hammer operator. Qualified observers are trained biologists, with the following minimum qualifications:
• Visual acuity in both eyes (correction is permissible) sufficient for discernment of moving targets at the water's surface with ability to estimate target size and distance; use of binoculars may be necessary to correctly identify the target;
• Advanced education in biological science, wildlife management,
• Experience and ability to conduct field observations and collect data according to assigned protocols (this may include academic experience);
• Experience or training in the field identification of marine mammals, including the identification of behaviors;
• Sufficient training, orientation, or experience with the construction operation to provide for personal safety during observations;
• Writing skills sufficient to prepare a report of observations including but not limited to the number and species of marine mammals observed; dates and times when in-water construction activities were conducted; dates and times when in-water construction activities were suspended to avoid potential incidental injury from construction sound of marine mammals observed within a defined shutdown zone; and marine mammal behavior; and
• Ability to communicate orally, by radio or in person, with project personnel to provide real-time information on marine mammals observed in the area as necessary.
(2) Prior to the start of pile driving activity, the shutdown zone will be monitored for 15 minutes to ensure that it is clear of marine mammals. Pile driving will only commence once observers have declared the shutdown zone clear of marine mammals; animals will be allowed to remain in the shutdown zone (i.e., must leave of their own volition) and their behavior will be monitored and documented. The shutdown zone may only be declared clear, and pile driving started, when the entire shutdown zone is visible (i.e., when not obscured by dark, rain, fog, etc.). In addition, if such conditions should arise during impact pile driving that is already underway, the activity would be halted.
(3) If a marine mammal approaches or enters the shutdown zone during the course of pile driving operations, activity will be halted and delayed until either the animal has voluntarily left and been visually confirmed beyond the shutdown zone or 15 minutes have passed without re-detection of the animal. Monitoring will be conducted throughout the time required to drive a pile.
Bubble curtains shall be used during all impact pile driving. The device will distribute air bubbles around 100 percent of the piling perimeter for the full depth of the water column, and the lowest bubble ring shall be in contact with the mudline for the full circumference of the ring. Testing of the device by comparing attenuated and unattenuated strikes is not possible because of requirements in place to protect marbled murrelets (an ESA-listed bird species under the jurisdiction of the USFWS). However, in order to avoid loss of attenuation from design and implementation errors in the absence of such testing, a performance test of the device shall be conducted prior to initial use. The performance test shall confirm the calculated pressures and flow rates at each manifold ring. In addition, the contractor shall also train personnel in the proper balancing of air flow to the bubblers and shall submit an inspection/performance report to the Navy within 72 hours following the performance test.
In Hood Canal, designated exist timing restrictions for pile driving activities to avoid in-water work when salmonids and other spawning forage fish are likely to be present. The in-water work window is July 16-February 15. The barge mooring project would occur during a portion of that period, from July 16-September 30. During the majority of this timeframe, impact pile driving will only occur starting two hours after sunrise and ending two hours before sunset due to marbled murrelet nesting season. After September 23, in-water construction activities will occur during daylight hours (sunrise to sunset).
The use of a soft-start procedure is believed to provide additional protection to marine mammals by warning or providing a chance to leave the area prior to the hammer operating at full capacity, and typically involves a requirement to initiate sound from vibratory hammers for fifteen seconds at reduced energy followed by a 30-second waiting period. This procedure is repeated two additional times. However, implementation of soft start for vibratory pile driving during previous pile driving work at NBKB has led to equipment failure and serious human safety concerns. Project staff have reported that, during power down from the soft start, the energy from the hammer is transferred to the crane boom and block via the load fall cables and rigging resulting in unexpected damage to both the crane block and crane boom. This differs from what occurs when the hammer is powered down after a pile is driven to refusal in that the rigging and load fall cables are able to be slacked prior to powering down the hammer, and the vibrations are transferred into the substrate via the pile rather than into the equipment via the rigging. One dangerous incident of equipment failure has already occurred, with a portion of the equipment shearing from the crane and falling to the deck. Subsequently, the crane manufacturer has inspected the crane booms and discovered structural fatigue in the boom lacing and main structural components, which will ultimately result in a collapse of the crane boom. All cranes were new at the beginning of the job. In addition, the vibratory hammer manufacturer has attempted to install dampers to mitigate the problem, without success. As a result of this dangerous situation, the measure will not be required for this project. This information was provided to us after the Navy submitted their request for authorization and is not reflected in that document.
For impact driving, soft start will be required, and contractors will provide an initial set of three strikes from the impact hammer at 40 percent energy, followed by a 30-second waiting period, then two subsequent three strike sets.
We have carefully evaluated the applicant's proposed mitigation measures and considered a range of other measures in the context of ensuring that we prescribe the means of effecting the least practicable impact on the affected marine mammal species and stocks and their habitat. Our evaluation of potential measures included consideration of the following factors in relation to one another: (1) The manner in which, and the degree to which, the successful implementation of the measure is expected to minimize adverse impacts to marine mammals; (2) the proven or likely efficacy of the specific measure to minimize adverse impacts as planned; and (3) the practicability of the measure for applicant implementation, including consideration of personnel safety, and practicality of implementation.
Based on our evaluation of the applicant's proposed measures, as well as other measures considered, we have preliminarily determined that the proposed mitigation measures provide the means of effecting the least practicable impact on marine mammal species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.
In order to issue an ITA for an activity, section 101(a)(5)(D) of the MMPA states that we must, where applicable, set forth “requirements
The Navy will collect sighting data and behavioral responses to construction for marine mammal species observed in the region of activity during the period of activity. All observers will be trained in marine mammal identification and behaviors and are required to have no other construction-related tasks while conducting monitoring. The Navy will monitor the shutdown zone and disturbance zone before, during, and after pile driving, with observers located at the best practicable vantage points. Based on our requirements, the Navy would implement the following procedures for pile driving:
• MMOs would be located at the best vantage point(s) in order to properly see the entire shutdown zone and as much of the disturbance zone as possible.
• During all observation periods, observers will use binoculars and the naked eye to search continuously for marine mammals.
• If the shutdown zones are obscured by fog or poor lighting conditions, pile driving at that location will not be initiated until that zone is visible. Should such conditions arise while impact driving is underway, the activity would be halted.
• The shutdown and disturbance zones around the pile will be monitored for the presence of marine mammals before, during, and after any pile driving or removal activity.
Individuals implementing the monitoring protocol will assess its effectiveness using an adaptive approach. Monitoring biologists will use their best professional judgment throughout implementation and seek improvements to these methods when deemed appropriate. Any modifications to protocol will be coordinated between NMFS and the Navy.
We require that observers use approved data forms. Among other pieces of information, the Navy will record detailed information about any implementation of shutdowns, including the distance of animals to the pile and description of specific actions that ensued and resulting behavior of the animal, if any. In addition, the Navy will attempt to distinguish between the number of individual animals taken and the number of incidences of take. We require that, at a minimum, the following information be collected on the sighting forms:
• Date and time that monitored activity begins or ends;
• Construction activities occurring during each observation period;
• Weather parameters (e.g., percent cover, visibility);
• Water conditions (e.g., sea state, tide state);
• Species, numbers, and, if possible, sex and age class of marine mammals;
• Description of any observable marine mammal behavior patterns, including bearing and direction of travel, and if possible, the correlation to SPLs;
• Distance from pile driving activities to marine mammals and distance from the marine mammals to the observation point;
• Locations of all marine mammal observations; and
• Other human activity in the area.
A draft report would be submitted to NMFS within 90 working days of the completion of marine mammal monitoring. The report will include marine mammal observations pre-activity, during-activity, and post-activity during pile driving days, and will also provide descriptions of any adverse responses to construction activities by marine mammals and a complete description of all mitigation shutdowns and the results of those actions and a refined take estimate based on the number of marine mammals observed during the course of construction. A final report would be prepared and submitted within 30 days following resolution of comments on the draft report.
With respect to the activities described here, the MMPA defines “harassment” as: “Any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild [Level A harassment]; or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering [Level B harassment].”
All anticipated takes would be by Level B harassment, involving temporary changes in behavior. The proposed mitigation and monitoring measures are expected to minimize the possibility of injurious or lethal takes such that take by Level A harassment, serious injury or mortality is considered discountable. However, as noted earlier, it is unlikely that injurious or lethal takes would occur even in the absence of the planned mitigation and monitoring measures.
If a marine mammal responds to an underwater sound by changing its behavior (e.g., through relatively minor changes in locomotion direction/speed or vocalization behavior), the response may or may not constitute taking at the individual level, and is unlikely to affect the stock or the species as a whole. However, if a sound source displaces marine mammals from an important feeding or breeding area for a prolonged period, impacts on animals or on the stock or species could potentially be significant (Lusseau and Bejder, 2007; Weilgart, 2007). Given the many uncertainties in predicting the quantity and types of impacts of sound on marine mammals, it is common practice to estimate how many animals are likely to be present within a particular distance of a given activity, or exposed to a particular level of sound. This practice potentially overestimates the numbers of marine mammals actually subject to disturbance that would correctly be considered a take under the MMPA. For example, during the past ten years, transient killer whales have been observed within the project area twice. On the basis of that information, an estimated amount of potential takes for killer whales is presented here. However, while a pod of killer whales could potentially visit again during the project timeframe, and thus be taken, it is more likely that they would not. Although incidental take of killer whales and Dall's porpoises was authorized for 2011–12 activities at NBKB on the basis of past observations of these species, no such takes were recorded and no individuals of these species were observed. Similarly, estimated actual take levels (observed takes extrapolated to the remainder of unobserved but ensonified area) were significantly less than authorized levels of take for the remaining species.
The project area is not believed to be particularly important habitat for marine mammals, nor is it considered an area frequented by marine mammals, although harbor seals are year-round residents of Hood Canal and sea lions are known to haul-out on submarines and other man-made objects at the
The Navy has requested authorization for the incidental taking of small numbers of California sea lions, harbor seals, transient killer whales, and harbor porpoises in the Hood Canal that may result from pile driving during construction activities associated with the barge mooring project described previously in this document.
The humpback whale is not expected to occur in the project area, and Steller sea lions are not expected to occur during the project timeframe. The earliest documented occurrence of Steller sea lions at NBKB occurred on September 30, 2010, when five individuals were observed at Delta Pier during daily surveys. During monitoring associated with the 2011 TPP, Steller sea lions were documented as arriving on October 8, but had not previously been regularly observed prior to November.
The takes requested are expected to have no more than a minor effect on individual animals and no effect at the population level for these species. Any effects experienced by individual marine mammals are anticipated to be limited to short-term disturbance of normal behavior or temporary displacement of animals near the source of the sound.
For all species, the best scientific information available was used to derive density estimates and the maximum appropriate density value for each species for each site was used in the marine mammal take assessment calculation. These values were derived or confirmed by experts convened to develop such information for use in Navy environmental compliance efforts in the Pacific Northwest (Navy, 2013). For harbor seals, this involved published literature describing harbor seal research conducted in Washington and Oregon as well as more specific counts conducted in Hood Canal (Huber
Beginning in April 2008, Navy personnel have recorded sightings of marine mammals occurring at known haul-outs along the NBKB waterfront, including docked submarines or other structures associated with NBKB docks and piers and the nearshore pontoons of the floating security fence. Sightings of marine mammals within the waters adjoining these locations were also recorded. Sightings were attempted whenever possible during a typical work week (i.e., Monday through Friday), but inclement weather, holidays, or security constraints often precluded surveys. These sightings took place frequently, although without a formal survey protocol. During the surveys, staff visited each of the above-mentioned locations and recorded observations of marine mammals. Surveys were conducted using binoculars and the naked eye from shoreline locations or the piers/wharves themselves. Because these surveys consist of opportunistic sighting data from shore-based observers, largely of hauled-out animals, there is no associated survey area appropriate for use in calculating a density from the abundance data. Data were compiled for the period from April 2008 through November 2011 for analysis in this proposed IHA, and these data provide the basis for take estimation for California sea lions. Other information, including sightings data from other Navy survey efforts at NBKB, is available for this species, but these data provide the most conservative (i.e., highest) local abundance estimates (and thus the highest estimates of potential take).
In addition, vessel-based marine wildlife surveys were conducted according to established survey protocols during July through September 2008 and November through May 2009–10 (Tannenbaum
The Navy also conducted vessel-based line transect surveys in Hood Canal on non-construction days during the 2011 TPP in order to collect additional data for species present in Hood Canal. These surveys were primarily detected three marine mammal species (harbor seal, California sea lion, and harbor porpoise), and included surveys conducted in both the main body of Hood Canal, near the project area, and baseline surveys conducted for comparison in Dabob Bay, an area of Hood Canal that is not affected by sound from Navy actions at the NBKB waterfront. The surveys operated along pre-determined transects that followed a double saw-tooth pattern to achieve uniform coverage of the entire NBKB waterfront. The vessel traveled at a speed of approximately 5 kn when transiting along the transect lines. Two observers recorded sightings of marine mammals both in the water and hauled out, including the date, time, species, number of individuals, and behavior (swimming, diving, etc.). Positions of marine mammals were obtained by recording the distance and bearing to the animal(s), noting the concurrent location of the boat with GPS, and subsequently analyzing these data to produce coordinates of the locations of all animals detected. Sighting information for harbor porpoises was corrected for detectability (g(0) = 0.54; Barlow, 1988; Calambokidis
The cetaceans, as well as the harbor seal, appear to range throughout Hood Canal; therefore, the analysis in this proposed IHA assumes that harbor seal, transient killer whale, harbor porpoise, and Dall's porpoise are uniformly distributed in the project area. However, it should be noted that there have been no observations of cetaceans within the floating security barriers at NBKB; these barriers thus appear to effectively prevent cetaceans from approaching the shutdown zones. Although the Navy will implement a precautionary shutdown zone for cetaceans, anecdotal evidence suggests that cetaceans are not at risk of Level A harassment at NBKB
The take calculations presented here rely on the best data currently available for marine mammal populations in the Hood Canal. The formula was developed for calculating take due to pile driving activity and applied to each group-specific sound impact threshold. The formula is founded on the following assumptions:
• Mitigation measures (e.g., bubble curtain) would be utilized, as discussed previously;
• All marine mammal individuals potentially available are assumed to be present within the relevant area, and thus incidentally taken;
• An individual can only be taken once during a 24-h period; and,
• There were will be twenty total days of activity.
• Exposures to sound levels above the relevant thresholds equate to take, as defined by the MMPA.
The calculation for marine mammal takes is estimated by:
n * ZOI produces an estimate of the abundance of animals that could be present in the area for exposure, and is rounded to the nearest whole number before multiplying by days of total activity.
The ZOI impact area is the estimated range of impact to the sound criteria. The distances specified in Table 3 were used to calculate ZOIs around each pile. All impact pile driving take calculations were based on the estimated threshold ranges assuming attenuation of 8 dB from use of a bubble curtain. The ZOI impact area took into consideration the possible affected area of the Hood Canal from the pile driving site furthest from shore with attenuation due to land shadowing from bends in the canal. Because of the close proximity of some of the piles to the shore, the narrowness of the canal at the project area, and the maximum fetch, the ZOIs for each threshold are not necessarily spherical and may be truncated.
While pile driving can occur any day throughout the in-water work window, and the analysis is conducted on a per day basis, only a fraction of that time (typically a matter of hours on any given day) is actually spent pile driving. Acoustic monitoring conducted as part of the TPP demonstrated that Level B harassment zones for vibratory pile driving are likely to be significantly smaller than the zones estimated through modeling based on measured source levels and practical spreading loss. Also of note is the fact that the effectiveness of mitigation measures in reducing takes is typically not quantified in the take estimation process. Here, we do explicitly account for an assumed level of efficacy for use of the bubble curtain, but not for the soft start associated with impact driving. In addition, equating exposure with response (i.e., a behavioral response meeting the definition of take under the MMPA) is simplistic and conservative assumption. For these reasons, these take estimates are likely to be conservative.
We recognize that pinnipeds in the water could be exposed to airborne sound that may result in behavioral harassment when looking with heads above water. However, these animals would previously have been `taken' as a result of exposure to underwater sound above the behavioral harassment thresholds, which are in all cases larger than those associated with airborne sound. Thus, the behavioral harassment of these animals is already accounted for in these estimates of potential take. Multiple incidents of exposure to sound above NMFS' thresholds for behavioral harassment are not believed to result in increased behavioral disturbance, in either nature or intensity of disturbance reaction. Therefore, we do not believe that authorization of incidental take resulting from airborne sound for pinnipeds is warranted.
California sea lion density for Hood Canal was calculated to be 0.28 animals/km
We recognize that over the course of the day, while the proportion of animals in the water may not vary significantly, different individuals may enter and exit the water. However, fine-scale data on harbor seal movements within the project area on time durations of less than a day are not available. Previous monitoring experience from Navy actions conducted from in the same project area has indicated that this density provides an appropriate estimate of potential exposures. However, the density of harbor seals calculated in this manner (1.06 animals/km
The density value derived for the Navy Marine Species Density Database is 0.0019 animals/km
Dall's porpoises may be present in the Hood Canal year-round and could occur as far south as the project site. Their use of inland Washington waters, however,
During vessel-based line transect surveys on non-construction days during the TPP, harbor porpoises were frequently sighted within several kilometers of the base, mostly to the north or south of the project area, but occasionally directly across from the Bangor waterfront on the far side of Toandos Peninsula. Harbor porpoise presence in the immediate vicinity of the base (i.e., within 1 km) remained low. These data were used to generate a density for Hood Canal. Based on guidance from other line transect surveys conducted for harbor porpoises using similar monitoring parameters (e.g., boat speed, number of observers) (Barlow, 1988; Calambokidis
Potential takes could occur if individuals of these species move through the area on foraging trips when pile driving is occurring. Individuals that are taken could exhibit behavioral changes such as increased swimming speeds, increased surfacing time, or decreased foraging. Most likely, individuals may move away from the sound source and be temporarily displaced from the areas of pile driving. Potential takes by disturbance would likely have a negligible short-term effect on individuals and not result in population-level impacts.
NMFS has defined “negligible impact” in 50 CFR 216.103 as “. . . an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.” In making a negligible impact determination, we considers a variety of factors, including but not limited to: (1) The number of anticipated mortalities; (2) the number and nature of anticipated injuries; (3) the number, nature, intensity, and duration of Level B harassment; and (4) the context in which the take occurs.
Pile driving activities associated with the barge mooring project, as outlined previously, have the potential to disturb or displace marine mammals. Specifically, the proposed activities may result in take, in the form of Level B harassment (behavioral disturbance) only, from airborne or underwater sounds generated from pile driving. No mortality, serious injury, or Level A harassment is anticipated given the methods of installation and measures designed to minimize the possibility of injury to marine mammals and Level B harassment would be reduced to the level of least practicable adverse impact. Specifically, vibratory hammers, which do not have significant potential to cause injury to marine mammals due to the relatively low source levels (less than 190 dB), would be the primary method of installation. Also, no impact pile driving will occur without the use of a sound attenuation system (e.g., bubble curtain), and pile driving will either not start or be halted if marine mammals approach the shutdown zone. The pile driving activities analyzed here are similar to other similar construction activities, including recent projects conducted by the Navy in the Hood Canal as well as work conducted in 2005 for the Hood Canal Bridge (SR–104) by the Washington Department of Transportation, which have taken place with no reported injuries or mortality to marine mammals.
The proposed numbers of animals authorized to be taken for California sea lions, harbor seals, and harbor porpoise would be considered small relative to the relevant stocks or populations (each less than five percent) even if each estimated taking occurred to a new individual—an extremely unlikely scenario. For transient killer whales, we estimate take based on an assumption that a single pod of whales, comprising six individuals, is present in the vicinity of the project area for the entire duration of the project. These six individuals represent a small number of transient killer whales. For pinnipeds, no rookeries are present in the project area, there are no haul-outs other than those provided opportunistically by man-made objects, and the project area is not known to provide foraging habitat of any special importance.
Repeated exposures of individuals to levels of sound that may cause Level B harassment are unlikely to result in hearing impairment or to significantly disrupt foraging behavior. Thus, even repeated Level B harassment of some small subset of the overall stock is unlikely to result in any significant realized decrease in viability, and thus would not result in any adverse impact to the stock as a whole in terms of adverse effects on rates of recruitment or survival. The potential for multiple exposures of a small portion of the overall stock to levels associated with Level B harassment in this area is expected to have a negligible impact on the affected stocks.
We have preliminarily determined that the impact of the previously described project may result, at worst, in a temporary modification in behavior (Level B harassment) of small numbers of marine mammals. No mortality or injuries are anticipated as a result of the specified activity, and none are proposed to be authorized. Additionally, animals in the area are not expected to incur hearing impairment (i.e., TTS or PTS) or non-auditory physiological effects. For pinnipeds, the absence of any major rookeries and only a few isolated and opportunistic haul-out areas near or adjacent to the project site means that potential takes by disturbance would have an insignificant short-term effect on individuals and would not result in population-level impacts. Similarly, for cetacean species the absence of any known regular occurrence adjacent to the project site means that potential takes by disturbance would have an insignificant short-term effect on individuals and would not result in population-level impacts. Due to the nature, degree, and context of behavioral harassment anticipated, the activity is not expected to impact rates of recruitment or survival.
For reasons stated previously in this document, the negligible impact determination is also supported by the likelihood that marine mammals are expected to move away from a sound source that is annoying prior to its becoming potentially injurious, and the likelihood that marine mammal detection ability by trained observers is high under the environmental conditions described for Hood Canal, enabling the implementation of shutdowns to avoid injury, serious injury, or mortality. As a result, no take by injury or death is anticipated, and the potential for temporary or permanent hearing impairment is very low and would be avoided through the incorporation of the proposed mitigation measures.
While the numbers of marine mammals potentially incidentally harassed would depend on the distribution and abundance of marine mammals in the vicinity of the survey activity, the numbers are estimated to be small relative to the affected species or population stock sizes, and have been mitigated to the lowest level practicable through incorporation of the proposed mitigation and monitoring measures mentioned previously in this document. This activity is expected to result in a negligible impact on the affected species or stocks. No species for which take authorization is requested are either ESA-listed or considered depleted under the MMPA. No take would be authorized for humpback whales, Steller sea lions, southern resident killer whales, or Dall's porpoises, and the Navy would take appropriate action to avoid unauthorized incidental take should one of these species be observed in the project area.
Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the mitigation and monitoring measures, we preliminarily find that the proposed barge mooring project would result in the incidental take of small numbers of marine mammals, by Level B harassment only, and that the total taking from the activity would have a negligible impact on the affected species or stocks.
No tribal subsistence hunts are held in the vicinity of the project area; thus, temporary behavioral impacts to individual animals will not affect any subsistence activity. Further, no population or stock level impacts to marine mammals are anticipated or authorized. As a result, no impacts to the availability of the species or stock to the Pacific Northwest treaty tribes are expected as a result of the activities. Therefore, no relevant subsistence uses of marine mammals are implicated by this action.
There are no ESA-listed marine mammals expected to occur in the action area during the proposed action timeframe; therefore, no consultation under the ESA is required for such species.
The Navy has prepared a draft EA, which has been posted on the NMFS Web site (see
As a result of these preliminary determinations, we propose to authorize the take of marine mammals incidental to the Navy's barge mooring project, provided the previously mentioned mitigation, monitoring, and reporting requirements are incorporated.
The United States Patent and Trademark Office (USPTO) will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act (44 U.S.C. Chapter 35).
Once submitted, the request will be publicly available in electronic format through the Information Collection Review page at
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Office of Fossil Energy, Department of Energy (DOE).
Notice of orders.
The Office of Fossil Energy (FE) of the Department of Energy gives notice that during March 2013, it issued orders granting authority to import and export natural gas and liquefied natural gas and vacating prior authority. These orders are summarized in the attached appendix and may be found on the FE Web site at
The Commission's regulations include a methodology for oil pipelines to change their rates through use of an index system that establishes ceiling levels for such rates. The Commission bases the index system, found at 18 CFR 342.3, on the annual change in the Producer Price Index for Finished Goods (PPI–FG), plus two point six five percent (PPI–FG + 2.65). The Commission determined in an “Order Establishing Index For Oil Price Change Ceiling Levels” issued December 16, 2010, that PPI–FG + 2.65 is the appropriate oil pricing index factor for pipelines to use for the five-year period commencing July 1, 2011.
The regulations provide that the Commission will publish annually, an index figure reflecting the final change in the PPI–FG, after the Bureau of Labor Statistics publishes the final PPI–FG in May of each calendar year. The annual average PPI–FG index figures were 190.5 for 2011 and 194.2 for 2012.
In addition to publishing the full text of this Notice in the
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Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:
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h.
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All documents may be filed electronically via the Internet. See, 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web site at
The Commission's Rules of Practice and Procedure require all intervenors filing documents with the Commission to serve a copy of that document on each person whose name appears on the official service list for the project. Further, if an intervenor files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency.
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Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
All documents may be filed electronically via the Internet. See, 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web site at
The Commission's Rules of Practice and Procedure require all intervenors filing documents with the Commission to serve a copy of that document on each person whose name appears on the official service list for the project. Further, if an intervenor files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency.
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Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
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Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that on May 14, 2013, pursuant to Rule 207(a)(2) of the Commission's Rules of Practices and Procedure, 18 CFR 385.207(a)(2)(2012), Enterprise TE Products Pipeline Company LLC filed a petition seeking a declaratory order approving priority service, the tariff rate structure, and service request allocation methodology for its proposed Seymour Lateral Extension Project, as more fully described in its petition.
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Environmental Protection Agency (EPA).
Notice.
In compliance with the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Comments must be submitted on or before July 22, 2013.
Submit your comments, identified by Docket ID No. EPA–HQ–OAR–2010–0050, by one of the following methods:
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For further information, contact Mrs. Laurie Trinca, Air Quality Assessment Division, Office of Air Quality Planning and Standards, U.S. Environmental Protection Agency, Mail Code C304–06, Research Triangle Park, NC 27711; telephone: 919–541–0520; fax: 919–541–1903; email:
The EPA has established a public docket for this ICR under Docket ID No. EPA–HQ–OAR–2010–0050 which is available for on-line viewing at
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Pursuant to section 3506(c)(2)(A) of the PRA, the EPA specifically solicits comments and information to enable it to:
(i) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility;
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(i) Explain your views as clearly as possible and provide specific examples.
(ii) Describe any assumptions that you used.
(iii) Provide copies of any technical information and/or data you used that support your views.
(iv) If you estimate potential burden or costs, explain how you arrived at the estimate that you provide.
(v) Offer alternative ways to improve the collection activity.
(vi) Make sure to submit your comments by the deadline identified under
(vii) To ensure proper receipt by the EPA, be sure to identify the docket ID number assigned to this action in the subject line on the first page of your response. You may also provide the name, date, and
The EPA Ambient Air Quality Monitoring Program's quality assurance requirements in 40 CFR part 58, Appendix A, require: “2.6 Gaseous and Flow Rate Audit Standards. Gaseous pollutant concentration standards (permeation devices or cylinders of compressed gas) used to obtain test concentrations for CO, SO
These requirements give assurance to end users that all specialty gas producers selling EPA Protocol Gases are participants in a program that provides an independent assessment of the accuracy of their gases' certified concentrations. In 2010, the EPA developed an Ambient Air Protocol Gas Verification Program (AA–PGVP) that provides end users with information about participating producers and verification results.
Each year, the EPA will attempt to compare gas cylinders from every specialty gas producer being used by ambient air monitoring organizations. The EPA's Regions 2 and 7 have agreed to provide analytical services for verification of 40 cylinders/lab or 80 cylinders total/year. Cylinders will be
In order to make the appropriate selection, the EPA needs to know what specialty gas producers are being used by the monitoring organizations. Therefore, the EPA needs to survey each primary quality assurance organization every year to collect information on specialty gas producers being used and whether the monitoring organization would like to participate in the verification for the upcoming calendar year.
The annual public reporting and recordkeeping burden for this collection of information is estimated to average 20 minutes per response with a cost of $22.15 per year. The total number of respondents is assumed to be 211.
The ICR provides a detailed explanation of the agency's estimate, which is only briefly summarized here:
The EPA will consider the comments received and amend the ICR as appropriate. The final ICR package will then be submitted to OMB for review and approval pursuant to 5 CFR 1320.12. At that time, the EPA will issue another
The Commission hereby gives notice of the filing of the following agreements under the Shipping Act of 1984. Interested parties may submit comments on the agreements to the Secretary, Federal Maritime Commission, Washington, DC 20573, within ten days of the date this notice appears in the
By Order of the Federal Maritime Commission.
The companies listed in this notice have given notice under section 4 of the Bank Holding Company Act (12 U.S.C. 1843) (BHC Act) and Regulation Y, (12 CFR part 225) to engage
Each notice is available for inspection at the Federal Reserve Bank indicated. The notice also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the question whether the proposal complies with the standards of section 4 of the BHC Act.
Unless otherwise noted, comments regarding the applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than June 7, 2013.
A. Federal Reserve Bank of Minneapolis (Jacqueline G. King, Community Affairs Officer) 90 Hennepin Avenue, Minneapolis, Minnesota 55480–0291:
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Contact Center Services, Federal Citizen Information Center, Office of Citizen Services and Innovative Technologies, General Services Administration.
Notice of request for comments regarding an extension to an existing OMB clearance.
Under the provisions of the Paperwork Reduction Act, the General Services Administration will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a previously approved information collection requirement regarding the National Contact Center customer evaluation surveys. In this request, the previously approved surveys have been supplemented with surveys that will temporarily replace those existing surveys for one period of several months. These temporary surveys will allow the National Contact Center to compare its customer service levels to those of private industry contact centers. A notice was published in the
Tonya Beres, Federal Information Specialist, Office of Citizen Services and Communications, at telephone (202) 501–1803 or via email to
Submit comments identified by Information Collection 3090–0278, National Contact Center Evaluation Survey, by any of the following methods:
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This information collection will be used to assess the public's satisfaction with the National Contact Center service, to assist in increasing the efficiency in responding to the public's need for Federal information, and to assess the effectiveness of marketing efforts.
Public comments are particularly invited on: Whether this collection of information is necessary and whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate and based on valid assumptions and methodology; and ways to enhance the quality, utility, and clarity of the information to be collected.
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice of request for comments regarding an extension to an existing OMB clearance.
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a previously approved information collection requirement concerning patents.
Submit comments on or before July 22, 2013.
Submit comments identified by Information Collection 9000–0096, Patents, by any of the following methods:
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Ms. Marissa Petrusek, Procurement Analyst, Governmentwide Acquisition Policy Division, GSA (202) 501–0136 or email
The patent coverage in FAR subpart 27.2 requires the contractor to report each notice of a claim of patent or copyright infringement that came to the contractor's attention in connection with performing a Government contract (sections 27.202–1 and 52.227–2).
The contractor is also required to report all royalties anticipated or paid in excess of $250 for the use of patented inventions by furnishing the name and address of licensor, date of license agreement, patent number, brief description of item or component, percentage or dollar rate of royalty per unit, unit price of contract item, and number of units (sections 27.202–5, 52.227–6, and 52.227–9).
Public comments are particularly invited on: Whether this collection of information is necessary for the proper performance of functions of the Federal Acquisition Regulations (FAR), and whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology.
The information collection requirement in the FAR remains unchanged for the estimated number of respondents and responses received annually. There is no centralized database in the Federal Government that maintains information regarding notice or claim of patent or copyright infringement, when a response to a solicitation contains costs or charges to royalties or when a contractor submits a statement of royalties paid or required to be paid. Subject matter experts in intellectual property law were consulted to obtain additional information that could result in revised estimates for the public burden. These inquiries yielded no additional information in regards to the respondents or responses on a yearly basis. No public comments were received in prior years that have challenged the validity of the Government's estimates.
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice of request for public comments regarding an extension to an existing OMB clearance.
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a previously approved information collection requirement concerning pollution prevention and right-to-know information. A notice was published in the
Submit comments on or before June 21, 2013.
Submit comments identified by Information Collection 9000–0147, Pollution Prevention and Right-to-Know Information by any of the following methods:
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Marissa Petrusek, Procurement Analyst, Office of Acquisition Policy, GSA, (202) 501–0136 or email
As implemented in Federal Acquisition Regulation (FAR) Subpart 23.10, Executive Order 13514, Federal Leadership in Environmental, Energy, and Economic Performance, signed on October 5, 2009 (74 FR 52117, October 8, 2009) and Executive Order 13423, Strengthening Federal Environmental, Energy, and Transportation Management, signed on January 24, 2007 (72 FR 3919, January 26, 2007), mandates compliance with right-to-know laws and pollution prevention requirements; implementation of an Environmental Management System (EMSs); and completion of Facility Compliance Audits (FCAs).
This information collection will be accomplished by means of FAR clause 52.223–5. This clause requires that Federal facilities comply with the planning and reporting requirements of the Pollution Prevention Act (PPA) of 1990 (42 U.S.C. 13101–13109) and the Emergency Planning and Community Right-to-Know Act (EPCRA) of 1986 (42 U.S.C. 11001–11050). Additionally, this clause requires contractors to provide information necessary so that agencies can implement EMSs and complete FCAs at certain Federal facilities.
Public comments are particularly invited on: Whether this collection of information is necessary for the proper performance of functions of the Federal Acquisition Regulations (FAR), and whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology.
The estimated annual reporting burden is slightly decreased since it was originally published in the
Office of Executive Councils, U.S. General Services Administration (GSA).
Notice.
The President's Management Advisory Board (PMAB), a Federal Advisory Committee established in accordance with the Federal Advisory Committee Act (FACA), 5 U.S.C., App., and Executive Order 13538, will hold a public meeting on Friday, June 7, 2013.
The meeting will be held on Friday, June 7, 2013, beginning at 9 a.m. eastern time, ending no later than 1:30 p.m.
Mr. Scott Winslow, Designated Federal Officer, President's Management Advisory Board, Office of Executive Councils, General Services Administration, 1776 G Street NW., Washington, DC 20006, at
The public is invited to submit written statements for this meeting until 12:30 p.m. eastern time on Thursday, June 6, 2013, by either of the following methods:
The 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 public meeting.
The National Institute for Occupational Safety and Health (NIOSH) of the Centers for Disease Control and Prevention (CDC) announces the following public meeting: “Partnerships to Advance the National Occupational Research Agenda (NORA)”.
This meeting will include updates from NIOSH leadership on NORA and on plans for evaluating the second decade of NORA. Brief written updates will be available from approximately half of the NORA Sector Councils on their progress, priorities, and implementation plans to date, likely including the NORA Construction; Manufacturing; Public Safety; Services and Wholesale and Retail Trade Councils. There will be time to ask questions and discuss partnership opportunities.
Since 2006, NORA has been structured according to industrial sectors. Ten major sector groups have been defined using the North American Industrial Classification System (NAICS). After receiving public input through the Web and town hall meetings, ten NORA Sector Councils defined sector-specific strategic plans for conducting research and moving the results into widespread practice. To view the National Sector Agendas, see
Sidney C. Soderholm, Ph.D., NORA Coordinator, Email
Part C (Centers for Disease Control and Prevention) of the Statement of Organization Functions, and Delegations of Authority of the Department of Health and Human Services (45 FR 67772–76, dated October 14, 1980, and corrected at 45 FR 69296, October 20, 1980, as amended most recently at 78 FR 25743–25746, dated May 2, 2013) is amended to reflect the reorganization of the National Center for HIV/AIDS, Viral Hepatitis, STD and TB Prevention.
Section C–B, Organization and Functions, is hereby amended as follows:
Revise the functional statement for the Office of the Associate Director for Science (CVJ12), as follows:
Office of the Associate Director for Science (CVJ12). (1) Ensures process consistency for science across the CIOs; (2) facilitates cross-center decision-making regarding science; (3) facilitates communication regarding scientific and programmatic services across the Office of Infectious Diseases (OID); (4) conducts necessary regulatory and ethical reviews for activities involving human participants, including determining whether an activity includes research, includes human subjects, is exempt or requires Institutional Review Board approval, and whether an exception is needed to the Public Health Service HIV policy; (5) reviews funded activities for application of human research regulations; (6) reviews, approves, and tracks research protocols, clinical investigations, and the Food and Drug Administration regulated response activities intended for submission to CDC Human Research Protections Office; (7) coordinates and tracks Office of Management and Budget clearance under the Paperwork Reduction Act; (8) serves as the focal point for the OID for implementing policies and guidelines for the conduct of the peer review of infectious disease extramural research grant proposals and subsequent grant administration; (9) coordinates and conducts in-depth external peer review, objective review including special emphasis panel (SEP) process, and secondary program relevance review of extramural research applications by use of consultant expert panels; (10) makes recommendations to the appropriate infectious disease center director on award selections and staff members serve as the program officials in conjunction with CDC grants management and policy officials to implement and monitor the scientific, technical, and administrative aspects of awards; (11) facilitates scientific collaborations between external and internal investigators; and (12) disseminates and evaluates extramural research progress, findings, and impact.
Delete in its entirety the title and functional statement for the Extramural Research Program Office (CVJ14).
Revise the functional statement for the Office of Management and Program Support (CVJ15), as follows:
Office of Management and Program Support (CVJ15). (1) Helps implement and enforce management and operations policies and guidelines developed by federal agencies, DHHS, and Staff Service Offices (SSO); (2) plans, develops, implements, and provides oversight and quality control for center-wide policies, procedures, and practices for administrative management and acquisition and assistance mechanisms, including contracts, memoranda of agreement, and cooperative agreements; (3) provides management and coordination of NCHHSTP-occupied space and facilities; (4) supplies technical guidance and expertise regarding occupancy and facilities management to emergency situations; (5) provides oversight and management of the distribution, accountability, and maintenance of CDC property and equipment; (6) provides oversight, quality control, and management of NCHHSTP records; (7) serves as lead and primary contact and liaison with relevant SSO on all matters pertaining to the center's procurement needs, policies, and activities; (8) develops, reviews, and implements policies, methods and procedures for NCHHSTP non-research extramural assistance programs; (9) interprets general policy directives, proposed legislation, and appropriation language for implications on management and execution of center's programs; (10) provides consultation and technical assistance to NCHHSTP program officials in the planning, implementation, and administration of assistance programs; (11) develops, coordinates and implements objective review processes, including the SEP process for funding of CDC infectious disease non-research grants and cooperative agreements. (12) oversees the formulation of the NCHHSTP budget and responds to inquiries related to the budget; (13) provides technical information services to facilitate dissemination of relevant public health information and facilitates collaboration with national health activities, CDC components, other agencies and organizations, and foreign governments on international health activities; (14) provides oversight for the programmatic coordination of HIV, STD, viral hepatitis, and TB activities between NCHHSTP and other CIOs; develops recommendations to the CDC Director as the lead CIO for these programs for the distribution of HIV, STD, viral hepatitis, and TB funds CDC-wide; (15) provides guidance and coordination to divisions on cross-divisional negotiated agreements; (16) facilitates state and local cross-divisional issues identification and solutions; (17) in coordination with the Office of Program Planning and Policy Coordination, responds to Congress as needed; (18) serves as NCHHSTP liaison to relevant SSOs for all matters related to financial management; (19) serves as focal point for emergency operations and deployment; (20) manages and coordinates workforce development and succession planning activities within NCHHSTP in collaboration with internal and external partners, and coordinates the recruitment, assignment, technical supervision, and career development of staff with emphasis on developing and supporting diversity initiatives and equal opportunity goals; (21) facilitates the assignment of field staff in accordance with CDC and NCHHSTP priorities and objectives and reassesses the role of NCHHSTP field staff assignees to state and local health jurisdictions; and (22) provides center-wide training to supervisors, managers and team leaders.
Part C (Centers for Disease Control and Prevention) of the Statement of Organization, Functions, and Delegations of Authority of the Department of Health and Human Services (45 FR 67772–76, dated October 14, 1980, and corrected at 45 FR 69296, October 20, 1980, as amended most recently at 78 FR 27398–27399,
Section C–B, Organization and Functions, is hereby amended as follows: Delete in its entirety the titles and functional statements for Procurement and Grants Office (CAJH) insert the following:
Procurement and Grants Office (CAJH). (1) Advises the Director, Centers for Disease Control and Prevention (CDC), the Administrator, Agency for Toxic Substances and Disease Registry (ATSDR), and their staff, and provides leadership and direction for CDC acquisition and assistance activities to improve the public's health; (2) plans and develops CDC-wide policies, procedures, and practices in acquisition and assistance areas to support public health science and programs; (3) obtains research and development, services, equipment, supplies, and construction in support of CDC's public health mission through acquisition processes; (4) awards, administers, and terminates contracts, purchase orders, grants, and cooperative agreements essential to improve public health; (5) maintains a continuing program of reviews, evaluations, inquiries, and oversight activities of CDC-wide acquisitions and assistance to ensure adherence to laws, policies, procedures, regulations, and alignment to CDC's public health goals; and (6) maintains liaison with the Department of Health and Human Services (DHHS), General Services Administration (GSA), Government Accountability Office (GAO), and other federal agencies on acquisition and assistance policies, procedures, and operating matters.
Office of the Director (CAJH1). (1) Provides overall leadership, guidance and coordination in all areas of acquisitions and grants activities on behalf of the CDC; (2) provides overall leadership, guidance and coordination in all areas of the Procurement and Grants Office (PGO) activities in order to support CDC's public health mission; (3) provides leadership, supervision, and management of staff necessary to fully manage the performance of PGO; (4) ensures PGO's policies, processes, requests for information and procedures adhere to all rules and regulations and are in alignment with CDC's public health goals; (5) develops and implements organizational strategic planning goals and objectives that support CDC's public health goals; (6) provides overall budgetary and human resource management, and administrative support; (7) directs and coordinates activities in support of the department's Equal Employment Opportunity Program and employee development; (8) develops, implements, and manages professional development strategy and plan for PGO; (9) develops, implements, and manages recruiting, hiring, retention, and succession strategies; (10) coordinates creation and implementation of operating standards/procedures and processes, and monitors compliance; (11) provides and oversees the delivery of PGO-wide administrative management and support services in the areas of fiscal management, personnel, travel, records management, internal controls, and other administrative services; (12) develops and implements administrative policies, procedures, and operations, as appropriate, for PGO, and prepares special reports and studies, as required, in the administrative management areas; (13) serves as PGO's point of contact on all matters concerning facilities management and space utilization; (14) serves as PGO's coordinator of continuity of operations activities; (15) prepares annual budget formulation and budget justifications; (16) manages PGO's internal acquisition processes; (17) maintains liaison with DIMS, GSA, GAO, and other federal agencies on acquisition and assistance compliance activities; (18) maintains a continuing program of evaluation of PGO-wide internal procedures to ensure adherence to laws, policies, procedures, and regulations and make recommendations for ongoing improvement; (19) coordinates Inspector General and General Accounting Office audit activities; (20) coordinates financial audits and reviews and prioritizes resolution using risk-based approaches; (21) provides professional advice on accounting and cost principles in resolving audit exceptions as they relate to the acquisition and assistance processes; (22) develops an Annual Quality Assurance Plan; (23) provides technical and managerial direction for the development, implementation, and maintenance of grants and contracts systems; (24) manages HHS grants and administrative systems; (25) manages activities related to information security; and (26) ensures implementation of data standards across PGO.
Office of Policy, Performance, and Communications (CAJH13). (1) Provides technical and managerial direction for the development of PGO and CDC-wide policies in the acquisition and assistance areas to support CDC's public health science and programs; (2) participates with senior management in program planning, policy determinations, evaluations, and decisions concerning escalation points for acquisition and assistance; (3) provides leadership, coordination, and collaboration on issues management and triaging, and ensures the process of ongoing issues identification, management, and resolution; (4) conducts policy analysis (including regulatory, legal, economic) and identifies and tracks legislation; (5) provides policy review and clearance of materials; (6) manages and responds to Congressional inquiries (e.g., prepare briefings and hearings, facilitate reports to Congress); (7) identifies and assesses policy best practices and helps diffuse and replicate those practices; (8) identifies emerging or cross-cutting policy issues and serves as a catalyst in advancing action; (9) serves as the focal point for the policy analysis, technical review and final clearance of executive correspondence and policy documents that require approval from the CDC Director, CDC Leadership Team, or officials within DHHS; (10) maintains relations with key organizations and individuals working on grants and contract policies or related legislation; (11) coordinates and manages PGO annual planning activities with the Office of Acquisition Services and the Office of Grants Services; (12) conducts continuing studies and analysis of division activities and provides recommendations on workload efficiency and resource utilization; (13) manages and analyzes complex data, develops queries, reports, and analytic tools; (14) develops and implements PGO organizational performance and provides recommendations on performance improvement; (15) conducts ongoing environmental scans of data systems to evaluate PGO performance; (16) designs studies and conducts analysis to streamline grant and contract business processes and improve data consistency, availability, and accuracy; (17) creates PGO data standards; (18) manages activities and reporting for the CDC Director's Quarterly Performance Review initiative; (19) provides communications support to PGO Director and Deputy Director (e.g., presentations, emails, All Hands meetings); (20) manages the flow of any decision documents and correspondence for signature by PGO and CDC Directors; (21) ensures accurate and consistent information dissemination, including Freedom Of Information Act requests and Executive Secretariat controlled correspondence; (22) ensures consistent application of CDC correspondence standards and
Office of Acquisition Services (CAJHK). The Office of Acquisition Services (OAS) provides leadership for operations and policies relating to agency-level acquisition functions, directs OAS staff development, and oversees acquisition activity analysis and business decision-making processes in support of the agency's public health mission.
Office of the Director (CAJHK1). (1) Provides overall leadership, guidance and coordination in all areas related to acquisitions; (2) provides leadership, supervision, and management of acquisitions staff; (3) ensures policies, processes, and procedures adhere to all rules and regulations and are in alignment with CDC's public health goals; (4) develops and implements organizational strategic planning goals and objectives; (5) provides budgetary and human resource management and administrative support; (6) develops procedures and guidance to implement CDC or office policies, HHS policies, and rules and regulations; (7) leads the development of contracts policy agendas with federal agencies and organizations; (8) provides cost advisory support to acquisitions activities with responsibility for initiating requests for audits and evaluations and providing recommendations to contracting officer, as required; (9) conducts continuing studies and analysis of acquisition activities; (10) provides technical and managerial direction for the development, implementation, and maintenance of acquisition systems; (11) maintains a continuing program of reviews, evaluations, inquiries and oversight activities of CDC-wide acquisitions to ensure adherence to laws, policies, procedures and regulations and alignment with CDC's public health goals; (12) provides technical and managerial direction for functions related to interagency agreement management and VISA purchase card management; (13) operates CDC's Small and Disadvantaged Business Program, and provides direction and support to various other socioeconomic programs encompassing acquisition and assistance activities; (14) develops formal training in procurement for awardees and CDC staff; (15) develops, implements and manages professional development related to required certifications; and (16) plans and directs all activities related to contract closeout.
Acquisition Branch 1 (CAJHKB). This branch supports one or more centers, and/or offices by performing the following: (1) Plans, directs, and conducts the acquisition of services, supplies, equipment, research and development, studies, and data collection for CDC through a variety of contractual mechanisms (competitive and noncompetitive) to support CDC's national and international public health operations, utilizing a wide variety of contract types and pricing arrangements; (2) establishes branch goals, objectives, and priorities, and assures their consistency and coordination with the overall objectives of PGO and CDC; (3) participates with top program management in program planning, policy determination, evaluation, and direction concerning acquisition strategies and execution; (4) provides leadership and guidance to CDC project officers and public health program officials; (5) maintains a close working relationship with CDC program office components in carrying out their public health missions; (6) provides leadership, direction, procurement options, and approaches in developing specifications/statements of work and contract awards; (7) reviews statements of work from a management point of view for conformity to laws, regulations, and policies and alignment to CDC's public health goals, and negotiates and issues contracts; (8) directs and controls acquisition planning activities to assure total program needs are addressed and procurements are conducted in a logical, appropriate, and timely sequence; (9) provides continuing surveillance of financial and administrative aspects of acquisition-supported activities to assure compliance with appropriate DHHS and CDC policies and application to public health activities; (10) provides technical assistance, where indicated, to improve the management of acquisition-supported activities, and responds to requests for management information from the Office of the Director, headquarters, regional staffs, CDC program offices and the public; (11) performs contract and purchasing administrative activities including coordination and negotiation of contract modifications, reviewing and approving contractor billings, resolving audit findings, and performing close-out/termination activities; (12) assures that contractor performance is in accordance with contractual commitments; (13) maintains branch's official contract files; (14) identifies and mitigates risks associated with contracts and purchase orders; and (15) provides innovative problem-solving methods in the coordination of international procurement for a wide range plan with public health partners in virtually all major domestic and international health agencies dealing with health priorities/issues, to include resolution of matters with the Department of State.
Acquisition Branch 2 (CAJHKC). This branch supports one or more centers, and/or offices by performing the following: (1) Plans, directs, and conducts the acquisition of services, supplies, equipment, research and development, studies, and data collection for CDC through a variety of contractual mechanisms (competitive and noncompetitive) to support CDC's national and international public health operations, utilizing a wide variety of contract types and pricing arrangements; (2) establishes branch goals, objectives, and priorities, and assures their consistency and coordination with the overall objectives of PGO and CDC; (3) participates with top program management in program planning, policy determination, evaluation, and directions concerning acquisition strategies and execution; (4) provides leadership and guidance to CDC project officers and public health program officials; (5) maintains a close working relationship with CDC program office components in carrying out their public health missions; (6) provides leadership, direction, procurement options, and approaches in developing specifications/statements of work and contract awards; (7) reviews statements of work from a management point of view for conformity to laws, regulations, and policies and alignment to CDC's public health goals and negotiates and issues contracts; (8) directs and controls acquisition planning activities to assure total program needs are addressed and procurements are conducted in a logical, appropriate, and timely sequence; (9) provides continuing surveillance of financial and administrative aspects of acquisition-supported activities to assure compliance with appropriate DHHS and CDC policies and application to public
Acquisition Branch 3 (CAJHKD). This branch supports one or more centers, and/or offices by performing the following: (1) Plans, directs, and conducts the acquisition of services, supplies, equipment, research and development, studies, and data collection for CDC through a variety of contractual mechanisms (competitive and noncompetitive) to support CDC's national and international public health operations, utilizing a wide variety of contract types and pricing arrangements; (2) establishes branch goals, objectives, and priorities, and assures their consistency and coordination with the overall objectives of PGO and CDC; (3) participates with top program management in program planning, policy determination, evaluation, and directions concerning acquisition strategies and execution; (4) provides leadership and guidance to CDC project officers and public health program officials; (5) maintains a close working relationship with CDC program office components in carrying out their public health missions; (6) provides leadership, direction, procurement options, and approaches in developing specifications/statements of work and contract awards; (7) reviews statements of work from a management point of view for conformity to laws, regulations, and policies and alignment to CDC's public health goals, and negotiates and issues contracts; (8) directs and controls acquisition planning activities to assure total program needs are addressed and procurements are conducted in a logical, appropriate, and timely sequence; (9) provides continuing surveillance of financial and administrative aspects of acquisition-supported activities to assure compliance with appropriate DHHS and CDC policies and application to public health activities; (10) gives technical assistance, where indicated, to improve the management of acquisition-supported activities, and responds to requests for management information from the Office of the Director, headquarters, regional staffs, CDC program offices and the public; (11) performs contract and purchasing administrative activities including coordination and negotiation of contract modifications, reviewing and approving contractor billings, resolving audit findings, and performing close-out/termination activities; (12) assures that contractor performance is in accordance with contractual commitments; (13) maintains branch's official contract files; (14) identifies and mitigates risks associated with contracts and purchase orders; and (15) plans, directs, and conducts the acquisition of services, institutional support services, architect-engineering services, construction of new buildings, alterations, renovations, commodities, and equipment in support of CDC/ATSDR facilities, utilizing a wide variety of contract types and pricing arrangements.
Acquisition Branch 4 (CAJHKE). This branch supports one or more centers, and/or offices by performing the following: (1) Plans, directs, and conducts the acquisition of services, supplies, equipment, research and development, studies, and data collection for CDC through a variety of contractual mechanisms (competitive and non-competitive) to support CDC's national and international public health operations, utilizing a wide variety of contract types and pricing arrangements; (2) establishes branch goals, objectives, and priorities, and assures their consistency and coordination with the overall objectives of PGO and CDC; (3) participates with top program management in program planning, policy determination, evaluation, and directions concerning acquisition strategies and execution; (4) provides leadership and guidance to CDC project officers and public health program officials; (5) maintains a close working relationship with CDC program office components in carrying out their public health missions; (6) provides leadership, direction, procurement options, and approaches in developing specifications/statements of work and contract awards; (7) reviews statements of work from a management point of view for conformity to laws, regulations, and policies and alignment to CDC's public health goals, and negotiates and issues contracts; (8) directs and controls acquisition planning activities to assure total program needs are addressed and procurements are conducted in a logical, appropriate, and timely sequence; (9) provides continuing surveillance of financial and administrative aspects of acquisition-supported activities to assure compliance with appropriate DHHS and CDC policies and application to public health activities; (10) gives technical assistance, where indicated, to improve the management of acquisition-supported activities, and responds to requests for management information from the Office of the Director, headquarters, regional staffs, CDC program offices and the public; (11) performs contract and purchasing administrative activities including coordination and negotiation of contract modifications, reviewing and approving contractor billings, resolving audit findings, and performing close-out/termination activities; (12) assures that contractor performance is in accordance with contractual commitments; (13) maintains branch's official contract files; (14) identifies and mitigates risks associated with contracts and purchase orders; (15) assures the acquisition functions in support of the center are accomplished with field office locations; and (16) plans and directs all activities related to interagency agreements.
Office of Grants Services (CAJHL). The Office of Grants Services (OGS) provides leadership for operations and policies relating to agency-level grants functions, directs OGS staff development, and oversees grants activity analysis and business decision-making processes in support of the agency's public health mission.
Office of the Director (CAJHL1). (1) Provides overall leadership, guidance and coordination in all areas related to grants; (2) provides leadership, supervision, and management of grants staff; (3) ensures policies, processes, and procedures adhere to all rules and regulations and are in alignment with CDC's public health goals; (4) develops and implements organizational strategic planning goals and objectives; (5) provides budgetary, human resource management and administrative support; (6) develops procedures and guidance to implement CDC, HHS and office policies and rules and regulations; (7) leads the development of grants policy agendas with federal agencies and organizations; (8) provides cost advisory support to assistance activities with responsibility for initiating requests for audits and evaluations, and providing recommendations to grants management officer, as required; (9) conducts continuing studies and analysis of grant activities; (10) provides
Infectious Disease Services Branch (CAJHLB). This branch supports one or more centers, and/or offices by performing the following: (1) Plans, directs, and conducts assistance management activities for CDC through the awards of grants and cooperative agreements (competitive and non-competitive) across the public health system; (2) plans, directs, coordinates, and conducts the grants managements functions and processes in support of public health assistance awards; (3) establishes branch goals, objectives, and priorities, and assures their consistency and coordination with the overall objectives of PGO and CDC; (4) provides leadership, direction, and approaches in developing grants announcements; (5) participates with leadership in program planning, policy determination, evaluation, and directions concerning assistance strategies and execution; (6) provides leadership and guidance to CDC project officers and public health program officials related to grants activities; (7) maintains a close working relationship with CDC program office components in carrying out their public health missions; (8) reviews assistance applications from a management point of view for conformity to laws, regulations, and policies and alignment to CDC's public health goals, and issues grants and cooperative agreements; (9) provides continuing surveillance of financial and administrative aspects of assistance-supported activities to assure compliance with appropriate DHHS and CDC policies and application to public health activities; (10) gives technical assistance, where indicated, to improve the management of assistance-supported activities, and responds to requests for management information from the Office of the Director, headquarters, regional staffs, CDC office and the public; (11) assures that grantee performance is in accordance with assistance requirements; (12) provides for the collection and reporting of business management and public health programmatic data, and analyzes and monitors business management data on grants and cooperative agreements; and (13) maintains branch's official assistance files.
Chronic Disease and Birth Defects Services Branch (CAJHLC). This branch supports one or more centers, and/or offices by performing the following: (1) Plans, directs, and conducts assistance management activities for CDC through the awards of grants and cooperative agreements (competitive and non-competitive) across the public health system; (2) plans, directs, coordinates, and conducts the grants managements functions and processes in support of public health assistance awards; (3) establishes branch goals, objectives, and priorities, and assures their consistency and coordination with the overall objectives of PGO and CDC; (4) provides leadership, direction, and approaches in developing grants announcements; (5) participates with leadership in program planning, policy determination, evaluation, and directions concerning assistance strategies and execution; (6) provides leadership and guidance to CDC project officers and public health program officials related to grants activities; (7) maintains a close working relationship with CDC program office components in carrying out their public health missions; (8) reviews assistance applications from a management point of view for conformity to laws, regulations, and policies and alignment to CDC's public health goals, and issues grants and cooperative agreements; (9) provides continuing surveillance of financial and administrative aspects of assistance-supported activities to assure compliance with appropriate DHHS and CDC policies and application to public health activities; (10) gives technical assistance, where indicated, to improve the management of assistance-supported activities, and responds to requests for management information from the Office of the Director, headquarters, regional staffs, CDC office and the public; (11) assures that grantee performance is in accordance with assistance requirements; (12) provides for the collection and reporting of business management and public health programmatic data, and analyzes and monitors business management data on grants and cooperative agreements; and (13) maintains branch's official assistance files.
OD, Environmental, Occupational Health and Injury Prevention Services Branch (CAJHLD). This branch supports one or more centers, and/or offices by performing the following: (1) Plans, directs, and conducts assistance management activities for CDC through the awards of grants and cooperative agreements (competitive and noncompetitive) across the public health system; (2) plans, directs, coordinates, and conducts the grants managements functions and processes in support of public health assistance awards; (3) establishes branch goals, objectives, and priorities, and assures their consistency and coordination with the overall objectives of PGO and CDC; (4) provides leadership, direction, and approaches in developing grants announcements; (5) participates with leadership in program planning, policy determination, evaluation, and directions concerning assistance strategies and execution; (6) provides leadership and guidance to CDC project officers and public health program officials related to grants activities; (7) maintains a close working relationship with CDC program office components in carrying out their public health missions; (8) reviews assistance applications from a management point of view for conformity to laws, regulations, and policies and alignment to CDC's public health goals, and issues grants and cooperative agreements; (9) provides continuing surveillance of financial and administrative aspects of assistance-supported activities to assure compliance with appropriate DHHS and CDC policies and application to public health activities; (10) gives technical assistance, where indicated, to improve the management of assistance-supported activities, and responds to requests for management information from the Office of the Director, headquarters, regional staffs, CDC office and the public; (11) assures that grantee performance is in accordance with assistance requirements; (12) provides for the collection and reporting of business management and public health programmatic data, and analyzes and monitors business management data on grants and cooperative agreements; (13) maintains branch's official assistance files; and (14) assures public health assistance functions are accomplished with field office locations.
Global Health Services Branch (CAJHLE). This branch supports one or more centers, and/or offices by
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (the PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by July 22, 2013.
Submit electronic comments on the collection of information to
Daniel Gittleson, Office of Information Management, Food and Drug Administration, 1350 Piccard Dr., PI50–400B, Rockville, MD 20850, 301–796–5156,
Under the PRA (44 U.S.C. 3501–3520), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
A guidance document entitled “Guidance for Administrative Procedures for CLIA Categorization” was released on May 7, 2008. The document describes procedures FDA uses to assign the complexity category to a device. Typically, FDA assigns complexity categorizations to devices at the time of clearance or approval of the device. In this way, no additional burden is incurred by the manufacturer because the labeling (including operating instructions) is included in the premarket notification (510(k)) or premarket approval application (PMA). In some cases, however, a manufacturer may request CLIA categorization even if FDA is not simultaneously reviewing a 510(k) or PMA. One example is when a manufacturer requests that FDA assign CLIA categorization to a previously cleared device that has changed names since the original CLIA categorization. Another example is when a device is exempt from premarket review. In such cases, the guidance recommends that manufacturers provide FDA with a copy of the package insert for the device and a cover letter indicating why the manufacturer is requesting a categorization (e.g. name change, exempt from 510(k) review). The guidance recommends that in the
FDA estimates the burden of this collection of information as follows:
The number of respondents is approximately 60. On average, each respondent will request categorizations (independent of a 510(k) or PMA) 15 times per year. The cost, not including personnel, is estimated at $52 per hour (52 × 900), totaling $46,800. This includes the cost of copying and mailing copies of package inserts and a cover letter, which includes a statement of the reason for the request and reference to the original 510(k) numbers, including regulation numbers and product codes. The burden hours are based on FDA familiarity with the types of documentation typically included in a sponsor's categorization requests, and costs for basic office supplies (e.g. paper).
Food and Drug Administration, HHS.
Notice of public meeting; request for comments.
The Food and Drug Administration (FDA) is announcing a 2-day public meeting to obtain input on issues and challenges associated with the standardization and assessment of risk evaluation and mitigation strategies (REMS) for drug and biological products. As part of the reauthorization of the Prescription Drug User Fee Act (PDUFA), FDA has committed to standardizing REMS to better integrate them into, and reduce their burden to, the existing and evolving health care system. As part of the PDUFA commitments, FDA will also seek to develop evidence-based methodologies for assessing the effectiveness of REMS.
To obtain input from stakeholders about REMS standardization and evaluation, FDA will hold a public meeting to give stakeholders, including health care providers, prescribers, patients, pharmacists, distributors, drug manufacturers, vendors, researchers, standards development organizations, and the public an opportunity to provide input on ways to standardize and assess REMS.
The meeting will be held on July 25 and 26, 2013, from 8:30 a.m. to 4:30 p.m. Individuals who wish to present at the meeting must register by July 10, 2013. See section IV of this document for information on how to register to speak at the meeting.
The public meeting will be held at FDA's White Oak Campus, 10903 New Hampshire Ave., Building 31 Conference Center, the Great Room (Rm. 1503), Silver Spring, MD 20993. Submit electronic comments to
Adam Kroetsch, Food and Drug Administration, Center for Drug Evaluation and Research, 10903 New Hampshire Ave., Bldg. 51, Rm. 1192, Silver Spring, MD 20993, 301–796–3842, FAX: 301–847–8443, email:
This meeting builds upon prior stakeholder feedback on and input into the design, implementation, and assessment of REMS. In July 2010, FDA held a public meeting to obtain input on issues associated with the development and implementation of REMS. In June 2012, FDA held a public workshop to discuss survey methodologies and instruments that can be used to evaluate patients' and health care providers' knowledge about the risks of drugs marketed with an approved REMS. In addition, the Food and Drug Administration Amendments Act of 2007 (Pub. L. 110–85) requires FDA to bring, at least annually, one or more drugs with REMS with elements to assure safe use (ETASU) before the Drug Safety and Risk Management Advisory Committee. FDA also regularly discusses both pre- and postapproval REMS with ETASUs with various FDA advisory committees in the context of specific applications.
This meeting also builds on FDA's internal efforts to improve the design, implementation and assessment of REMS. In 2011, FDA created the REMS Integration Initiative, designed to evaluate and improve its implementation of REMS authorities. More information about the REMS Integration Initiative can be found at (
This public meeting is intended to meet performance goals included in the fifth reauthorization of the Prescription Drug User Fee Act (PDUFA V). This reauthorization, part of the Food and Drug Administration Safety and Innovation Act (FDASIA) (Pub. L. 112–144) signed by the President on July 9, 2012, includes a number of performance goals and procedures that are documented in the PDUFA V
FDA developed the performance goals and procedures for PDUFA V in consultation with drug industry representatives, patient and consumer advocates, health care professionals, and other public stakeholders from July 2010 through May 2011. Title XI of the letter, “Enhancement and Modernization of the FDA Drug Safety System,” states that FDA user fees will be used to enhance REMS by measuring the effectiveness of REMS and evaluating, with stakeholder input, appropriate ways to better integrate them into the existing and evolving health care system. (See “PDUFA Reauthorization Performance Goals and Procedures Fiscal Years 2013 through 2017” at
Toward that end, the PDUFA V Commitment Letter identified a number of specific goals, including holding one or more public meetings to explore strategies to standardize REMS and reduce the burden of implementing REMS on practitioners, patients, and others in various health care settings and on methodologies for assessing whether REMS are mitigating the risks they purport to mitigate and for assessing the effectiveness and impact of REMS, including methods for assessing the effect on patient access, individual practitioners, and the overall burden on the health care delivery system. FDA also committed to issuing a report of its findings regarding standardizing REMS; the report will identify priority projects in four areas (pharmacy systems, prescriber education, providing benefit/risk information to patients, and practice settings). FDA also committed to issuing guidance on methodologies for assessing REMS, specifically, methodologies for determining whether a specific REMS with ETASU is commensurate with the specific serious risk listed in the labeling of the drug and considering the observed risk, not unduly burdensome on patient access to the drug. For details on specific FDA commitments, see the PDUFA Reauthorization Performance Goals and Procedures Fiscal Years 2013 Through 2017, Section XI, “Enhancement and Modernization of the FDA Drug Safety System,” Parts A2, A3, which is available at
The purpose of this public meeting is to obtain feedback from stakeholders on: (1) Issues and challenges associated with standardizing and assessing REMS for drug and biological products and (2) identifying potential projects that will help standardize REMS and integrate them into the health care delivery system. FDA is seeking information and comments from a broad range of stakeholders, including interested health care providers, prescribers, patients, pharmacists, distributors, drug manufacturers, vendors, researchers, standards development organizations, and the public.
To promote greater standardization and improved assessment of REMS, FDA is seeking feedback on how to reduce any unnecessary variation in REMS and, in the process, to make REMS elements and associated tools less burdensome to stakeholders, better integrated into the health care system, more effective, and easier to assess. FDA recognizes that the REMS elements and associated tools found in existing REMS programs have varied. In some cases, these variations are appropriate, because REMS are designed to address specific risks posed by particular drugs in a wide range of patient populations and health care settings. However, FDA may be able to establish standards to reduce unnecessary variation and to make REMS more predictable and simpler to understand, implement, and measure. The establishment of standards also presents the opportunity to improve upon the design of REMS elements and associated tools and assessment methodologies in the future.
After this meeting, FDA will issue a report to the public that identifies REMS standardization projects in the four areas specified in the PDUFA V commitment letter: Prescriber education, pharmacy systems, practice settings, and providing benefit/risk information to patients. FDA welcomes stakeholder input to help identify high-quality projects that could offer FDA and stakeholders the opportunity to develop, test, and implement new approaches to standardizing REMS and integrating them into the health care system. The scope of such projects might include research studies, demonstration projects, and the development of new REMS tools using, for example, emerging information technologies or existing controls in the health care system. These projects might be carried out by FDA alone or in collaboration with stakeholders and outside experts.
FDA is particularly interested in obtaining information and public comment on the following areas:
REMS programs use a number of tools to educate prescribers and/or ensure that they carry out REMS requirements, including screening, monitoring, and counseling patients. These tools have included risk communications to prescribers, prescriber training, and instruments to help prescribers prescribe the drug safely—for example, counseling guides and checklists.
1. Many REMS with elements to assure safe use provide for prescriber training on the risks of the drug and how to use the drug safely. In some REMS, the completion of this training is required before a person can become a certified prescriber of the drug. Sponsors provide REMS training in a variety of formats, including in-person, online, and through printed materials. FDA is interested in input on which formats and training approaches are most effective for prescriber training; how frequently prescribers should be asked to take REMS training and whether a single training is sufficient; what additional tools could be used to reinforce what prescribers learn during the training and help them apply what they have learned; and how REMS training could be incorporated into continuing medical education programs.
2. Prescriber training often includes knowledge assessments that prescribers must successfully complete as part of the training. These knowledge assessments, which typically take the form of multiple-choice questions, are designed to ensure that the prescriber understands the training material; they also serve to reinforce key messages from the training. (Knowledge assessments should not be confused with the surveys of knowledge that drug manufacturers may conduct as part of their REMS assessments.) FDA is interested in input on when knowledge assessments should be included in REMS and whether they should be included in all REMS that include prescriber training. In addition, FDA requests input on how knowledge assessments can be designed to ensure accurate measurement of prescribers' knowledge and how knowledge assessments can be designed to measure or predict prescribers' ability to apply what they have learned in their practice.
3. Once prescribers have met all requirements for certification under the
4. What else can be done to improve the effectiveness of existing prescriber-directed REMS tools, to standardize them, to reduce their burden, and/or to better integrate them into the health care delivery system?
5. What tools and technologies not currently used in REMS could be incorporated into REMS to help educate prescribers and ensure that they carry out REMS requirements? What evidence exists to support the effectiveness of these tools and technologies?
6. What projects could be carried out to standardize the provision of prescriber education in REMS?
7. What projects could be carried out to better integrate REMS into prescriber practice settings?
8. What methodologies exist or might be developed to assess the effectiveness of prescriber-directed REMS tools, the tools' burden on the health care delivery system, and the effect of these tools on patient access?
REMS programs may use a number of tools to educate and counsel patients, provide patients with information about the risks of the drug, and help to ensure that patients use the drug safely. These tools may include patient enrollment in the REMS, patient monitoring, counseling by health care professionals, Medication Guides, and other patient-directed educational materials.
1. REMS use a range of written materials to help educate and counsel patients, including Medication Guides. In some cases, health care practitioners give these materials to patients to read on their own, and in other cases health care providers are asked to review these materials with patients and use them in patient counseling.
2. In REMS that include patient education, what would make written educational materials more effective? What other materials, tools, and technologies, (e.g., reference materials, checklists, smartphone applications) might be used to help educate patients and reinforce what they have learned?
3. How could the provision of information to patients be standardized, and what are the most efficient ways of providing information to patients given the variety of patient information needs and learning styles?
4. In many REMS, patients receive counseling that may include a discussion of the benefits and risks of the drug as well as instructions on how to use the drug safely. In the majority of such REMS, prescribers are called upon to counsel patients, but other health care practitioners, including pharmacists and nurses, may also play a role in counseling patients. What are ways to improve current REMS approach to counseling patients? How should the timing and frequency of patient counseling be determined? Under what circumstances is it appropriate for prescribers to provide patient counseling in a REMS, when should other providers play a role in counseling patients in a REMS, and how can patient counseling in REMS be integrated into pharmacists' existing medication therapy management practices?
5. Many REMS with elements to assure safe use include prescriber-patient agreements. These agreements are used to document that an informed discussion of the drug's benefits and risks took place and that the patient understood the risks. Prescriber-patient agreements may also support patient counseling by providing information for prescribers to review with patients. Some REMS require that these agreements be signed by the prescriber and patient and submitted to the drug manufacturer. Are the information and agreements included in prescriber-patient agreements presented in a way that is easy for patients to understand and act upon? What, if anything, should be done to standardize, simplify, or streamline prescriber-patient agreement forms and the overall agreement process?
6. What else can be done to improve the effectiveness of existing patient-directed tools, to standardize them, to reduce their burden, and/or to better integrate them into the existing and evolving health care delivery system?
7. What tools and technologies not currently used in REMS could be incorporated into REMS to help counsel patients, to provide them with information on the risks of the drug, and to ensure that they use the drug safely? What evidence exists to support the effectiveness of these tools and technologies?
8. What projects could be carried out to standardize the provision of benefit-risk information to patients?
9. What methodologies exist or might be developed to assess the effectiveness of patient-directed REMS tools, the tools' burden on the health care delivery system, and the effect of these tools on patient access?
Drug dispensing settings, such as prescribers' offices, hospitals, pharmacies (e.g., specialty, retail, and mail-order), integrated health care delivery systems, and infusion centers, often play a significant role in REMS. This is a challenging area to address because of the wide range of health care settings involved and because dispensers are frequently called upon to coordinate care across a range of health care settings and practitioners and to reinforce the tools that have been used by other health care practitioners. Specific dispensing settings may be required to obtain certification under a REMS, and, like prescribers, the health care practitioners who dispense a drug (authorized dispensers) may be required to complete training, counsel patients, and provide patients with educational materials, including Medication Guides. In addition, dispensers may be required to document that certain safe-use conditions are met before dispensing (e.g., by ordering/checking lab tests or completing a form or checklist).
Many REMS with elements to assure safe use require that specific health care settings be certified to be able to dispense the drug. To certify the health care setting, REMS typically require a representative of that health care setting to agree that the health care setting will meet all REMS requirements, including the completion of any necessary training.
1. Under what circumstances should individual practitioners within a health care setting (e.g., pharmacists, as opposed to pharmacies) be certified, instead of the health care setting? How could this effectively be accomplished while minimizing the burden on the health care system?
2. In most REMS that include dispenser certification, each dispensing site is certified individually. Under what circumstances would it be appropriate to use a single certification for a health care setting with multiple dispensing sites such as a pharmacy
3. In what ways can the implementation of REMS tools in different dispensing settings be standardized, and under what circumstances might the implementation approach need to vary to accommodate the different types of dispensing settings that can be part of a REMS?
4. What obstacles have made it difficult for authorized dispensers to obtain drugs under existing REMS, and how can these be overcome?
5. How can REMS be made more compatible with existing systems for the procurement and distribution of drugs? How can REMS be integrated into any future electronic track and trace systems?
6. What else can be done to improve the effectiveness of existing REMS tools in drug dispensing settings, to standardize them, to reduce their burden, and/or to better integrate them into the existing and evolving health care delivery system?
7. What tools and technologies not currently used in REMS could be incorporated into REMS to help train and certify authorized dispensers, ensure that only certified dispensers can obtain the drug, and ensure that any safe-use conditions are met before a drug is dispensed? What evidence exists to support the effectiveness of these tools and technologies?
8. What projects could be carried out to integrate REMS tools into pharmacy systems?
9. What projects could be carried out to integrate REMS tools into other drug dispensing settings, such as hospitals, pharmacies, long-term care facilities, and integrated health care delivery systems?
10. What methodologies exist or might be developed to assess the effectiveness of REMS tools across the range of dispensing settings, the tools' burden on the health care delivery system, and the effect of these tools on patient access?
Many stakeholders have asked FDA to standardize specific REMS tools like stakeholder enrollments, Web sites, and educational materials. Standardizing REMS tools will require ongoing collaboration among FDA, drug manufacturers, stakeholders, scientific experts, and others. To ensure that standardized tools are effective and minimally burdensome, they should be developed in an open and inclusive process that incorporates the feedback of all relevant stakeholders as well as the latest science and best practices from across the health care system. To ensure the continued success of these tools, they must be updated regularly as best practices evolve.
1. What opportunities and barriers exist for the development and implementation of standardized REMS tools? What are some ways that FDA can collaborate with third parties such as standards development organizations, industry groups, professional societies, and accreditation organizations to develop standardized REMS tools and ensure their adoption?
2. How might health information technologies such as electronic health records, pharmacy management systems and electronic prescribing systems be used to integrate REMS into existing health care settings? What role might health information technologies play in REMS in the future? How can these technologies be used to inform practitioners and patients about REMS, monitor patients, and document that any safe-use conditions are met? Could the integration of REMS into health information systems ever reduce or eliminate the need for other REMS tools, such as provider education?
3. Many stakeholders have suggested that a single Web portal should be established to act as a repository for standardized REMS tools and materials and to serve as a central information or reference source for REMS stakeholders. What barriers exist for the development of a single REMS Web portal? Who would be responsible for developing and maintaining the Web portal, and what role would FDA play?
Drug manufacturers are required to submit assessments of their REMS on a regular basis. To date, these assessments have tried to evaluate the effectiveness of the REMS by measuring the frequency of adverse outcomes of interest, the knowledge of stakeholders, and the compliance of stakeholders with certain REMS requirements. To accomplish this, drug manufacturers have relied on spontaneous adverse event reporting, knowledge surveys, and systems that track stakeholder completion of certain activities, such as enrollment and documentation of safe use conditions. To improve how REMS are assessed, FDA is considering additional areas for measurement and additional methods to measure the impact of REMS.
1. Should FDA routinely ask sponsors to assess the overall impact of their REMS on prescriber, dispenser, and patient burden, and/or access to the drug? If so, how could drug manufacturers assess the REMS impact on access and burden?
2. What methods might be used to separate the impact of a REMS program from that of other related risk management activities? Without having a control group, how should FDA interpret and act on REMS assessment information?
3. It is possible to interpret evidence of sustained REMS effectiveness to mean that the REMS should be maintained indefinitely, but such evidence may also suggest that safe use of the drug is now ingrained in the health care system and that the REMS can be modified or eliminated. What evidence could help FDA determine whether a drug would continue to be used safely if the REMS were modified or released?
The FDA Conference Center at the White Oak location is a federal facility with security procedures and limited seating. Attendance is free and will be on a first come, first served basis. Individuals who wish to present at the public meeting must register on or before July 10, 2013, through
If you need special accommodations because of disability, please contact Adam Kroetsch (see
A live Web cast of this meeting will be viewable at
Interested persons may submit either electronic comments regarding this document to
Please be advised that as soon as a transcript is available, it will be accessible at
Food and Drug Administration, HHS.
Notice.
This notice announces a forthcoming meeting of a public advisory committee of the Food and Drug Administration (FDA). The meeting will be open to the public.
FDA intends to make background material available to the public no later than 2 business days before the meeting. If FDA is unable to post the background material on its Web site prior to the meeting, the background material will be made publicly available at the location of the advisory committee meeting, and the background material will be posted on FDA's Web site after the meeting. Background material is available at
Persons attending FDA's advisory committee meetings are advised that the Agency is not responsible for providing access to electrical outlets.
FDA welcomes the attendance of the public at its advisory committee meetings and will make every effort to accommodate persons with physical disabilities or special needs. If you require special accommodations due to a disability, please contact Martha Monser, at least 7 days in advance of the meeting.
FDA is committed to the orderly conduct of its advisory committee meetings. Please visit our Web site at
Notice of this meeting is given under the Federal Advisory Committee Act (5 U.S.C. app. 2).
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 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.
Transportation Security Administration, DHS.
60-day notice.
The Transportation Security Administration (TSA) invites public comment on one currently approved Information Collection Request (ICR), Office of Management and Budget (OMB) control number 1652–0005, abstracted below that we will submit to OMB for renewal in compliance with the Paperwork Reduction Act (PRA). The ICR describes the nature of the information collection and its expected
Send your comments by July 22, 2013.
Comments may be emailed to
Susan L. Perkins at the above address, or by telephone (571) 227–3398.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
(1) Evaluate whether the proposed information requirement 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;
(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 using appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
The information TSA collects includes identifying information on foreign air carriers' flight crews and passengers. Specifically, TSA requires foreign air carriers to submit the following information: (1) A master crew list of all flight and cabin crew members flying to and from the United States; (2) the flight crew list on a flight-by-flight basis; (3) passenger information on a flight-by-flight basis; and (4) total amount of cargo screened. Foreign air carriers are required to provide this information via electronic means. Foreign air carriers with limited electronic systems may need to modify their current systems or develop a new computer system in order to submit the requested information.
Additionally, foreign air carriers must maintain these records, as well as training records for crew members and individuals performing security-related functions, and make them available to TSA for inspection upon request. TSA will continue to collect information to determine foreign air carrier compliance with other requirements of 49 CFR part 1546. TSA estimates that there will be approximately 170 respondents to the information collection, with an annual burden estimate of 1,029,010 hours.
30-Day Notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995. The information collection notice was previously published in the
The purpose of this notice is to allow an additional 30 days for public comments. Comments are encouraged and will be accepted until June 21, 2013. This process is conducted in accordance with 5 CFR 1320.10.
Written comments and/or suggestions regarding the item(s) contained in this notice, especially regarding the estimated public burden and associated response time, must be directed to the OMB USCIS Desk Officer via email at
The address listed in this notice should only be used to submit comments concerning this information collection. Please do not submit requests for individual case status inquiries to this address. If you are seeking information about the status of your individual case, please check “My Case Status” online at:
Written comments and suggestions from the public and affected agencies should address one or more of the following four points:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information,
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
(1)
(2)
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If you need a copy of the information collection instrument with supplementary documents, or need additional information, please visit
U.S. Customs and Border Protection, Department of Homeland Security.
Notice of accreditation and approval of Camin Cargo Control, Inc., as a commercial gauger and laboratory.
Notice is hereby given, pursuant to CBP regulations, that Camin Cargo Control, Inc., has been approved to gauge and accredited to test petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes for the next three years as of February 21, 2013.
Approved Gauger and Accredited Laboratories Manager, Laboratories and Scientific Services, U.S. Customs and Border Protection, 1300 Pennsylvania Avenue NW., Suite 1500N, Washington, DC 20229, tel. 202–344–1060.
Notice is hereby given pursuant to 19 CFR 151.12 and 19 CFR 151.13, that Camin Cargo Control, Inc., 1550 Industrial Park Drive, Nederland, TX 77627, has been approved to gauge and accredited to test petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes, in accordance with the provisions of 19 CFR 151.12 and 19 CFR 151.13. Anyone wishing to employ this entity to conduct laboratory analyses and gauger services should request and receive written assurances from the entity that it is accredited or approved by the U.S. Customs and Border Protection to conduct the specific test or gauger service requested. Alternatively, inquiries regarding the specific test or gauger service this entity is accredited or approved to perform may be directed to the U.S. Customs and Border Protection by calling (202) 344–1060. The inquiry may also be sent to
U.S. Customs and Border Protection, Department of Homeland Security.
Notice of accreditation and approval of SGS North America, Inc., as a commercial gauger and laboratory.
Notice is hereby given, pursuant to CBP regulations, that SGS North America, Inc., has been approved to gauge and accredited to test petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes for the next three years as of October 17, 2012.
Approved Gauger and Accredited Laboratories Manager, Laboratories and Scientific Services, U.S. Customs and Border Protection, 1300 Pennsylvania Avenue NW., Suite 1500N, Washington, DC 20229, tel. 202–344–1060.
Notice is hereby given pursuant to 19 CFR 151.12 and 19 CFR 151.13, that SGS North America, Inc., 7315 S. 76th Ave., Bridgeview, IL 60455, has been approved to gauge and accredited to test petroleum and petroleum products, organic chemicals and vegetable oils for customs purposes, in accordance with the provisions of 19 CFR 151.12 and 19 CFR 151.13. Anyone wishing to employ this entity to conduct laboratory analyses and gauger services should request and receive written assurances from the entity that it is accredited or approved by the U.S. Customs and Border Protection to conduct the specific test or gauger service requested. Alternatively, inquiries regarding the specific test or gauger service this entity is accredited or approved to perform may be directed to the U.S. Customs and
Office of the Secretary, HUD.
Notice of Fiscal Year (FY) 2013 Annual Adjustment Factors (AAFs).
The United States Housing Act of 1937 requires that assistance contracts signed by owners participating in the Department's Section 8 housing assistance payment programs provide annual adjustments to monthly rentals for units covered by the contracts. This notice announces FY 2013 AAFs for adjustment of contract rents on assistance contract anniversaries. The factors are based on a formula using residential rent and utility cost changes from the most recent annual Bureau of Labor Statistics Consumer Price Index (CPI) survey. These factors are applied at Housing Assistance Payment (HAP) contract anniversaries for those calendar months commencing after the effective date of this notice. For FY 2011 and FY 2010, these AAFs were designated as “Contract Rent” AAFs, to differentiate them from “Renewal Funding” AAFs that were used exclusively for renewal funding of tenant-based rental assistance. Renewal Funding AAFs were replaced by an inflation factor established by the Secretary in FY 2012, so there is no need to differentiate the AAF by use. A separate
Contact Michael S. Dennis, Director, Housing Voucher Programs, Office of Public Housing and Voucher Programs, Office of Public and Indian Housing, 202–708–1380, for questions relating to the Project-Based Certificate and Moderate Rehabilitation programs (non-Single Room Occupancy); Ann Oliva, Director, Office of Special Needs Assistance Programs, Office of Community Planning and Development, 202–708–4300, for questions regarding the Single Room Occupancy (SRO) Moderate Rehabilitation program; Catherine Brennan, Director, Office of Housing Assistance and Grant Administration, Office of Housing, 202–708–3000, for questions relating to all other Section 8 programs; and Marie Lihn, Economist, Economic and Market Analysis Division, Office of Policy Development and Research, 202–402–5866, for technical information regarding the development of the schedules for specific areas or the methods used for calculating the AAFs. The mailing address for these individuals is: Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410. Hearing- or speech-impaired persons may contact the Federal Information Relay Service at 800–877–8339 (TTY). (Other than the “800” TTY number, the above-listed telephone numbers are not toll free.)
Tables showing AAFs will be available electronically from the HUD data information page at
AAFs established by this Notice are used to adjust contract rents for units assisted in certain Section 8 housing assistance payment programs during the initial (i.e., pre-renewal) term of the HAP contract and for all units in the Project-Based Certificate program. There are three categories of Section 8 programs that use the AAFs:
Category 1: The Section 8 New Construction, Substantial Rehabilitation, and Moderate Rehabilitation programs;
Category 2: The Section 8 Loan Management (LM) and Property Disposition (PD) programs; and
Category 3: The Section 8 Project-Based Certificate (PBC) program.
Each Section 8 program category uses the AAFs differently. The specific application of the AAFs is determined by the law, the HAP contract, and appropriate program regulations or requirements.
AAFs are not used in the following cases:
This section of the notice provides a broad description of procedures for adjusting the contract rent. Technical details and requirements are described in HUD notices H 2002–10 (Section 8 New Construction and Substantial Rehabilitation, Loan Management, and Property Disposition) and PIH 97–57 (Moderate Rehabilitation and Project-Based Certificates).
Because of statutory and structural distinctions among the various Section 8 programs, there are separate rent adjustment procedures for the three program categories:
In the Section 8 New Construction and Substantial Rehabilitation programs, the published AAF is applied to the pre-adjustment contract rent. In the Section 8 Moderate Rehabilitation program (both the regular program and the single room occupancy program), the published AAF is applied to the pre-adjustment base rent.
For Category 1 programs, the Table 1 AAF is applied before determining comparability (rent reasonableness). Comparability applies if the pre-adjustment gross rent (pre-adjustment contract rent plus any allowance for tenant-paid utilities) is above the published Fair Market Rent (FMR).
If the comparable rent level (plus any initial difference) is lower than the contract rent as adjusted by application of the Table 1 AAF, the contract rent will be the greater of the comparable rent level (plus any initial difference) or the pre-adjustment contract rent. The pre-adjustment contract rent will not be decreased by application of comparability.
In all other cases (i.e., unless the contract rent is restrained by comparability):
• The Table 1 AAF is used for a unit occupied by a new family since the last annual contract anniversary.
• The Table 2 AAF is used for a unit occupied by the same family as at the time of the last annual contract anniversary.
At this time Category 2 programs are not subject to comparability. (Comparability will again apply if HUD establishes regulations for conducting comparability studies under 42 U.S.C. 1437f(c)(2)(C).)
The applicable AAF is determined as follows:
• The Table 1 AAF is used for a unit occupied by a new family since the last annual contract anniversary.
• The Table 2 AAF is used for a unit occupied by the same family as at the time of the last annual contract anniversary.
The following procedures are used to adjust contract rent for outstanding HAP contracts in the Section 8 PBC program:
• The Table 2 AAF is always used. The Table 1 AAF is not used.
• The Table 2 AAF is always applied before determining comparability (rent reasonableness).
• Comparability always applies. If the comparable rent level is lower than the rent to owner (contract rent) as adjusted by application of the Table 2 AAF, the comparable rent level will be the new rent to owner.
• The new rent to owner will not be reduced below the contract rent on the effective date of the HAP contract.
In accordance with Section 8(c)(2)(A) of the United States Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(A)), the AAF is reduced by 0.01:
• For all tenancies assisted in the Section 8 Project-Based Certificate program.
• In other Section 8 programs, for a unit occupied by the same family at the time of the last annual rent adjustment (and where the rent is not reduced by application of comparability (rent reasonableness)).
The law provides that:
To implement the law, HUD publishes two separate AAF Tables, Tables 1 and 2. The difference between Table 1 and Table 2 is that each AAF in Table 2 is 0.01 less than the corresponding AAF in Table 1. Where an AAF in Table 1 would otherwise be less than 1.0, it is set at 1.0, as required by statute; the corresponding AAF in Table 2 will also be set at 1.0, as required by statute.
AAF Tables 1 and 2 are posted on the HUD User Web site at
The applicable AAF is selected as follows:
• Determine whether Table 1 or Table 2 is applicable. In Table 1 or Table 2, locate the AAF for the geographic area where the contract unit is located.
• Determine whether the highest cost utility is or is not included in contract rent for the contract unit.
• If highest cost utility is included, select the AAF from the column for “Highest Cost Utility Included.” If highest cost utility is not included, select the AAF from the column for “Highest Cost Utility Excluded.”
AAFs are rent inflation factors. Two types of rent inflation factors are calculated for AAFs: Gross rent factors and shelter rent factors. The gross rent factor accounts for inflation in the cost of both the rent of the residence and the utilities used by the unit; the shelter rent factor accounts for the inflation in the rent of the residence, but does not reflect any change in the cost of utilities. The gross rent inflation factor is designated as “Highest Cost Utility Included” and the shelter rent inflation factor is designated as “Highest Cost Utility Excluded.”
AAFs are calculated using CPI data on “rent of primary residence” and “fuels
The rent and fuel and utilities inflation factors for large metropolitan areas and Census regions are based on changes in the rent of primary residence and fuels and utilities CPI indices from 2010 to 2011. The CEX data used to decompose the contract rent inflation factor into gross rent and shelter rent inflation factors come from a special tabulation of 2010 CEX survey data produced for HUD for the purpose of computing AAFs. The utility-to-rent ratio used to produce AAFs comes from 2010 ACS median rent and utility costs.
AAFs are produced for all Class A CPI cities (CPI cities with a population of 1.5 million or more) and for the four Census Regions. They are applied to core-based statistical areas (CBSAs), as defined by the Office of Management and Budget (OMB), according to how much of the CBSA is covered by the CPI city-survey. If more than 75 percent of the CBSA is covered by the CPI city-survey, the AAF that is based on that CPI survey is applied to the whole CBSA and to any HUD-defined metropolitan area, called the “HUD Metro FMR Area” (HMFA), within that CBSA. If the CBSA is not covered by a CPI city-survey, the CBSA uses the relevant regional CPI factor. Almost all non-metropolitan counties use regional CPI factors.
Each metropolitan area that uses a local CPI update factor is listed alphabetically in the tables and each HMFA is listed alphabetically within its respective CBSA. Each AAF applies to a specific geographic area and to units of all bedroom sizes. AAFs are provided:
• For separate metropolitan areas, including HMFAs and counties that are currently designated as non-metropolitan, but are part of the metropolitan area defined in the local CPI survey.
• For the four Census Regions (to be used for those metropolitan and non-metropolitan areas that are not covered by a CPI city-survey).
AAFs use the same OMB metropolitan area definitions, as revised by HUD, that are used for the FY 2012 FMRs.
To make certain that they are using the correct AAFs, users should refer to the Area Definitions Table section at
Puerto Rico and the Virgin Islands use the South Region AAFs. All areas in Hawaii use the AAFs listed next to “Hawaii” in the Tables which are based on the CPI survey for the Honolulu metropolitan area. The Pacific Islands use the West Region AAFs.
Office of the Secretary, Interior.
Notice of meeting.
The Secretarial Commission on Indian Trust Administration and Reform (the Commission) will hold a public meeting on June 7, 2013. During the public meeting, the Commission will: Attend to operational activities of the Commission; receive an update on the leasing regulations/HEARTH Act implementation; gain insights and knowledge from invited speakers and attendees about the trust relationship, other trust models, and trust reform; review Commission action items; and gain insights and perspectives from members of the public.
The Commission's public meeting will begin at 8 a.m. and end at 12 p.m. on June 7, 2013. Members of the public who wish to attend should RSVP by June 3, 2013, to:
The public meeting will be held at the Courtyard by Marriott Downtown Oklahoma City, Two West Reno, Oklahoma City, OK 73102. We encourage you to RSVP to
The Designated Federal Official, Lizzie Marsters, Chief of Staff to the Deputy Secretary, Department of the Interior, 1849 C Street NW., Room 6118, Washington, DC 20240; or email to
The Secretarial Commission on Indian Trust Administration and Reform was established under Secretarial Order No. 3292, dated December 8, 2009. The Commission plays a key role in the Department's ongoing efforts to empower Indian nations and strengthen nation-to-nation relationships.
The Commission will complete a comprehensive evaluation of the
(1) Conduct a comprehensive evaluation of the Department's management and administration of the trust administration system;
(2) Review the Department's provision of services to trust beneficiaries;
(3) Review input from the public, interested parties, and trust beneficiaries, which should involve conducting a number of regional listening sessions;
(4) Consider the nature and scope of necessary audits of the Department's trust administration system;
(5) Recommend options to the Secretary to improve the Department's management and administration of the trust administration system based on information obtained from the Commission's activities, including whether any legislative or regulatory changes are necessary to permanently implement such improvements; and
(6) Consider the provisions of the American Indian Trust Fund Management Reform Act of 1994 providing for the termination of the Office of the Special Trustee for American Indians, and make recommendations to the Secretary regarding any such termination.
The Commission's purpose is to provide a thorough evaluation of the existing Indian trust management and trust administration system to support a reasoned and factually based set of options for potential management improvements. Grant Thornton LLP in partnership with Cherokee Services Group has been awarded a contract to perform a comprehensive evaluation of the Department's management of the trust administration system in support of the Commission's efforts.
This evaluation will depend on a nationwide information-gathering effort to produce meaningful recommendations. Over the next few months the management consultant will be contacting individuals, tribes, and Interior bureaus and offices to discuss current approaches to trust management and recommendations for improvement. The management consultant will also be assessing past trust reform efforts and capturing current initiatives already underway which contribute to a more effective trust management effort.
The management consultant will be attending the upcoming Indian Trust Commission's meeting in Oklahoma City and will be available to speak with if you wish to provide input and recommendations. The Commission encourages individuals to take the opportunity to provide Grant Thornton with your perspective on how the trust administration system currently operates. To contact Grant Thornton directly, you may send an email to
Members of the Commission have been asked to sit on a panel to discuss the Trust Commission's work and share any draft recommendations regarding trust management and administration, and invite feedback from attendees. Members of the public will need to register separately and pay appropriate registration fees by visiting the Sovereignty Symposium 2013 Web page at
On Friday, June 7, 2013, the Commission will hold a meeting open to the public. The following items will be on the agenda:
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, marine mammals, or both. With some exceptions, the Endangered Species Act (ESA) and [Marine Mammal Protection Act (MMPA) prohibit activities with listed species unless Federal authorization is acquired that allows such activities.
We must receive comments or requests for documents on or before June 21, 2013. We must receive requests for marine mammal permit public hearings, in writing, at the address shown in the
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 authorizing interstate and foreign commerce, export, and cull of excess barasingha (
The applicant requests a captive-bred wildlife registration under 50 CFR 17.21(g) for the barasingha (
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 a captive-bred wildlife registration under 50 CFR 17.21(g) for the radiated tortoise (
The applicant requests a permit for the export of bonobo (
The applicant requests renewal of the permit to take captive-held West Indian manatees (
Fish and Wildlife Service, Interior.
Notice of issuance of permits.
We, the U.S. Fish and Wildlife Service (Service), have issued the following permits to conduct certain activities with endangered species, marine mammals, or both. We issue these permits under the Endangered Species Act (ESA) and the Marine Mammal Protection Act (MMPA).
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);
On the dates below, as authorized by the provisions of the ESA (16 U.S.C. 1531
Documents and other information submitted with these applications are available for review, subject to the requirements of the Privacy Act and Freedom of Information Act, by any party who submits a written request for a copy of such documents to: Division of Management Authority, U.S. Fish and Wildlife Service, 4401 North Fairfax Drive, Room 212, Arlington, VA 22203; fax (703) 358–2280.
U.S. Geological Survey, Interior.
Notice of meeting.
The National Geospatial Advisory Committee (NGAC) will meet on June 11–12, 2013 at the South Interior Building Auditorium, 1951 Constitution Avenue NW., Washington, DC 20240. The meeting will be held in the first floor Auditorium. The NGAC, which is composed of representatives from governmental, private sector, non-profit, and academic organizations, was established to advise the Federal Geographic Data Committee on management of Federal geospatial programs, the development of the National Spatial Data Infrastructure (NSDI), and the implementation of Office of Management and Budget (OMB) Circular A–16. Topics to be addressed at the meeting include:
The meeting will include an opportunity for public comment on June 12. Comments may also be submitted to the NGAC in writing. Members of the public who wish to attend the meeting must register in advance. Please register by contacting Arista Maher at the U.S. Geological Survey (703–648–6283,
The meeting will be held from 8:30 a.m. to 5:30 p.m. on June 11 and from 8:30 a.m. to 4:00 p.m. on June 12.
John Mahoney, U.S. Geological Survey (206–220–4621).
Meetings of the National Geospatial Advisory Committee are open to the public. Additional information about the NGAC and the meeting is available at
United States International Trade Commission.
Notice of remand proceedings
The U.S. International Trade Commission (“Commission”) hereby gives notice of the court-ordered remand of its final determinations in Investigation Nos. 701–TA–476 and 731–TA–1179 (Final) concerning multilayered wood flooring (“MLWF”) from China. For further information concerning the conduct of these remand proceedings and rules of general application, consult the Commission's Rules of Practice and Procedure, part 201, subparts A through E (19 CFR part 201), and part 207, subpart A (19 CFR part 207).
Fred Ruggles, Office of Investigations, telephone 202–205–3187, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202–205–1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202–205–2000. General information concerning the Commission may also be obtained by accessing its internet server (
1. to analyze and reconsider “its decision not to investigate domestic producers of hardwood plywood used for flooring”
2. to “make findings on the issue of price suppression/price depression”
3. to further explain “the impact the subject imports had on the domestic industry in light of {the} collapse of the housing market during the period of investigation” and
4. to “re-evaluate whether the subject imports were the `but-for' cause of material injury to the domestic industry.”
Parties are advised to consult with the Commission's Rules of Practice and Procedure, part 201, subparts A through E (19 CFR part 201), and part 207, subpart A (19 CFR part 207) for provisions of general applicability concerning written submissions to the Commission. All written submissions, including those that contain BPI, must conform to the Commission's rules. Please be aware that the Commission's rules with respect to electronic filing have been amended. The amendments took effect on November 7, 2011.
Additional written submissions to the Commission, including requests pursuant to section 201.12 of the Commission's rules, shall not be accepted unless good cause is shown for accepting such submissions, or unless the submission is pursuant to a specific request by a Commissioner or Commission staff.
In accordance with sections 201.16(c) and 207.3 of the Commission's rules, each document filed by a party to the investigation must be served on all other parties to the investigation (as identified by either the public or BPI service list), and a certificate of service must be timely filed. The Secretary will not accept a document for filing without a certificate of service.
By order of the Commission.
Pursuant to 21 U.S.C. 958(i), the Attorney General shall, prior to issuing a registration under this Section to a bulk manufacturer of a controlled substance in schedule I or II, and prior to issuing a regulation under 21 U.S.C. 952(a)(2) authorizing the importation of such a substance, provide manufacturers holding registrations for the bulk manufacture of the substance an opportunity for a hearing.
Therefore, in accordance with 21 CFR § 1301.34(a), this is notice that on December 20, 2011, Wildlife Laboratories Inc., 1401 Duff Drive, Suite 400, Fort Collins, Colorado 80524, made application by letter to the Drug Enforcement Administration (DEA) to be registered as an importer of Etorphine (except HCl) (9056), a basic class of controlled substance listed in schedule I.
The company plans to manufacture the above listed controlled substance for sale to zoo and wildlife veterinarian zoos and, for use with other animal and wildlife applications.
Any bulk manufacturers who are presently, or are applying to be, registered with DEA to manufacture such basic class of controlled substance may file comments or objections to the issuance of the proposed registration and may, at the same time, file a written request for a hearing on such application pursuant to 21 CFR § 1301.43 and in such form as prescribed by 21 CFR § 1316.47.
Any such written comments or objections should be addressed, in quintuplicate, to the Drug Enforcement Administration, Office of Diversion Control,
This procedure is to be conducted simultaneously with, and independent of, the procedures described in 21 CFR § 1301.34(b), (c), (d), (e), and (f). As noted in a previous notice published in the
Pursuant to Title 21 Code of Federal Regulations 1301.34(a), this is notice that on March 28, 2013, Alltech Associates, Inc., 2051 Waukegan Road, Deerfield, Illinois 60015, made application by renewal to the Drug Enforcement Administration (DEA) to be registered as an importer of the following basic classes of controlled substances:
The company plans to import these controlled substances for the manufacture of reference standards.
Any bulk manufacturer who is presently, or is applying to be, registered with DEA to manufacture such basic classes of controlled substances listed in schedules I and II, which falls under the authority of section 1002(a)(2)(B) of the Act (21 U.S.C. 952(a)(2)(B)) may, in the circumstances set forth in 21 U.S.C. 958(i), file comments or objections to the issuance of the proposed registration and may, at the same time, file a written request for a hearing on such application pursuant to 21 CFR § 1301.43 and in such form as prescribed by 21 CFR § 1316.47.
Any such written comments or objections should be addressed, in quintuplicate, to the Drug Enforcement Administration, Office of Diversion Control,
This procedure is to be conducted simultaneously with, and independent of, the procedures described in 21 CFR § 1301.34(b), (c), (d), (e), and (f). As noted in a previous notice published in the
Pursuant to Title 21, Code of Federal Regulations 1301.34 (a), this is notice that on April 10, 2013, Arizona Department of Corrections, ASPC-Florence, 1305 E. Butte Avenue, Florence, Arizona 85132, made application by renewal to the Drug Enforcement Administration (DEA) to be registered as an importer of Pentobarbital (2270), a basic class of controlled substance listed in schedule II.
The facility intends to import the above listed controlled substance for legitimate use. Supplies of this particular controlled substance are inadequate and are not available in the form needed within the current domestic supply of the United States.
Any bulk manufacturer who is presently, or is applying to be, registered with DEA to manufacture such basic class of controlled substance listed in schedules I and II, which falls under the authority of section 1002(a)(2)(B) of the Act (21 U.S.C. 952(a)(2)(B)) may, in the circumstances set forth in 21 U.S.C. 958(i), file comments or objections to the issuance of the proposed registration and may, at the same time, file a written request for a hearing on such application pursuant to 21 CFR 1301.43 and in such form as prescribed by 21 CFR 1316.47.
Any such written comments or objections should be addressed, in quintuplicate, to the Drug Enforcement Administration, Office of Diversion Control, Federal Register Representative (ODL), 8701 Morrissette Drive, Springfield, Virginia 22152; and must be filed no later than June 21, 2013.
This procedure is to be conducted simultaneously with, and independent of, the procedures described in 21 CFR 1301.34(b), (c), (d), (e), and (f). As noted
By Notice dated March 7, 2012, and published in the
The company manufactures a product containing morphine in the United States. The company exports this product to customers around the world. The company has been asked to ensure that its product sold to European customers meets standards established by the European Pharmacopeia, which is administered by the Directorate of the Quality of Medicines (EDQM). In order to ensure that its product will meet European specifications, the company seeks to import morphine supplied by EDQM to use as reference standards. This is the sole purpose for which the company will be authorized by DEA to import morphine.
No comments or objections have been received. DEA has considered the factors in 21 U.S.C. 823(a) and 952(a), and determined that the registration of Meridian Medical Technologies to import the basic class of controlled substance is consistent with the public interest and with United States obligations under international treaties, conventions, or protocols in effect on May 1, 1971. DEA has investigated Meridian Medical Technologies to ensure that the company's registration is consistent with the public interest. The investigation has included inspection and testing of the company's physical security systems, verification of the company's compliance with state and local laws, and a review of the company's background and history.
Therefore, pursuant to 21 U.S.C. 952(a) and 958(a), and in accordance with 21 CFR § 1301.34, the above named company is granted registration as an importer of the basic class of controlled substance listed.
Pursuant to § 1301.33(a), Title 21 of the Code of Federal Regulations (CFR), this is notice that on March 28, 2013, Alltech Associates Inc., 2051 Waukegan Road, Deerfield, Illinois 60015, made application by renewal to the Drug Enforcement Administration (DEA) to be registered as a bulk manufacturer of the following basic classes of controlled substances:
The company plans to manufacture high purity drug standards used for analytical applications only in clinical, toxicological, and forensic laboratories.
Any other such applicant, and any person who is presently registered with DEA to manufacture such substances, may file comments or objections to the issuance of the proposed registration pursuant to 21 CFR § 1301.33(a).
Any such written comments or objections should be addressed, in quintuplicate, to the Drug Enforcement Administration, Office of Diversion Control,
Pursuant to § 1301.33(a), Title 21 of the Code of Federal Regulations (CFR), this is notice that on March 28, 2013, Austin Pharma, LLC., 811 Paloma Drive, Suite C, Round Rock, Texas 78665–2402, made application by renewal to the Drug Enforcement Administration (DEA) to be registered as a bulk manufacturer of Marihuana (7360), a basic class of controlled substance listed in schedule I.
The company plans to manufacture bulk active pharmaceutical ingredients (APIs) for distribution to its customers.
In reference to drug code 7360 (Marihuana), the company plans to bulk manufacture cannabidiol as a synthetic intermediate. No other activity for this drug code is authorized for this registration.
Any other such applicant, and any person who is presently registered with DEA to manufacture such substance, may file comments or objections to the issuance of the proposed registration pursuant to 21 CFR § 1301.33(a).
Any such written comments or objections should be addressed, in quintuplicate, to the Drug Enforcement Administration, Office of Diversion Control, Federal Register Representative (ODL), 8701 Morrissette Drive, Springfield, Virginia 22152; and must be filed no later than July 22, 2013.
Pursuant to § 1301.33(a), Title 21 of the Code of Federal Regulations (CFR), this is notice that on April 3, 2013, Lin Zhi International, Inc., 670 Almanor Avenue, Sunnyvale, California 94085, made application by renewal to the Drug Enforcement Administration (DEA) to be registered as a bulk manufacturer of the following basic classes of controlled substances:
The company plans to manufacture the listed controlled substances as bulk reagents for use in drug abuse testing.
Any other such applicant, and any person who is presently registered with DEA to manufacture such substances, may file comments or objections to the issuance of the proposed registration pursuant to 21 CFR § 1301.33(a).
Any such written comments or objections should be addressed, in quintuplicate, to the Drug Enforcement Administration, Office of Diversion Control, Federal Register Representative (ODL), 8701 Morrissette Drive, Springfield, Virginia 22152; and must be filed no later than July 22, 2013.
By Notice dated November 19, 2012, and published in the
The company plans to manufacture the listed controlled substances in bulk for distribution to its customers.
No comments or objections have been received. DEA has considered the factors in 21 U.S.C. 823(a) and determined that the registration of Siegfried (USA), LLC., to manufacture the listed basic classes of controlled substances is consistent with the public interest at this time. DEA has investigated Siegfried (USA), LLC., to ensure that the company's registration is consistent with the public interest. The investigation has included inspection and testing of the company's physical security systems, verification of the company's compliance with state and local laws, and a review of the company's background and history. Therefore, pursuant to 21 U.S.C. 823(a), and in accordance with 21 CFR § 1301.33, the above named company is granted registration as a bulk manufacturer of the basic classes of controlled substances listed.
Employee Benefits Security Administration, Department of Labor.
Notice.
The Department of Labor (the Department), in accordance with the Paperwork Reduction Act of 1995 (PRA 95) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed 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. The Employee Benefits Security Administration (EBSA) is soliciting comments on the proposed extension of the information collection requests (ICRs) contained in the documents described below. A copy of the ICRs may be obtained by contacting the office listed in the
Written comments must be submitted to the office shown in the
G. Christopher Cosby, Department of Labor, Employee Benefits Security Administration, 200 Constitution Avenue NW., Washington, DC 20210, (202) 693–8410, FAX (202) 693–4745 (these are not toll-free numbers).
This notice requests public comment on the Department's request for extension of the Office of Management and Budget's (OMB) approval of ICRs contained in the rules and prohibited transaction exemptions described below. The Department is not proposing any changes to the existing ICRs at this time. An agency may not conduct or sponsor, and a person is not required to respond to, an information collection unless it displays a valid OMB control number. A summary of the ICRs and the current burden estimates follows:
ERISA section 701(f)(3)(B)(i)(II) requires the Department of Labor to provide employers with model language for the Employer CHIP Notices to enable them to timely comply with this requirement. This ICR relates to the Model Employer CHIP Notice, which was approved by OMB under OMB Control Number 1210–0137 and currently scheduled to expire on September 30, 2013.
The Department's regulation at 29 CFR 2550.404c–1 describes the circumstances in which a participant or beneficiary will be considered to have exercised independent control over the assets in his or her individual account as contemplated in section 404(c). The regulation specifies information that must be made available to participants or beneficiaries in order for them to exercise independent control over the assets in their individual accounts. The regulation provides that the relief from fiduciary liability specified in section 404(c) is not available with respect to a transaction undertaken by a participant or beneficiary unless the specific information is provided to the participant or beneficiary. The ICR contained in this rule was approved by OMB under OMB Control Number 1210–0090, which is scheduled to expire on October 31, 2013.
The interim final regulations (29 CFR 2590.715–1251(a)(2)) also require a grandfathered health plan to include a statement in any plan material provided to participants or beneficiaries describing the benefits provided under the plan or health insurance coverage, that the plan or coverage believes it is a grandfathered health plan within the meaning of section 1251 of the Act, that being a grandfathered health plan means that the plan does not include certain consumer protections of the Act, and providing contact information for participants to direct questions regarding which protections apply and which protections do not apply to a grandfathered health plan and what might cause a plan to change from grandfathered health plan status and to file complaints. The ICR contained in this interim final rule was approved by OMB under OMB Control Number 1210–0140, which is currently scheduled to expire on November 30, 2013.
Among other conditions, PTE 92–6 requires that pension plans inform the insured participant of a proposed sale of a life insurance or annuity policy to the employer, a relative, another plan, an owner-employee, or a shareholder employee. This recordkeeping requirement constitutes an information collection within the meaning of the PRA, for which the Department has obtained approval from OMB under OMB Control No. 1210–0063. The OMB approval is currently scheduled to expire on December 31, 2013.
Among other conditions, the exemption requires certain information related to covered transactions in Coins to be disclosed by the authorized purchaser to persons who direct the transaction for the IRA. Currently, it is standard industry practice that most of this information is provided to persons directing investments in an IRA when transactions in Coins occur. The exemption also requires that the disqualified person maintain for a period of at least six years such records as are necessary to allow accredited persons, as defined in the exemption, to determine whether the conditions of the transaction have been met. Finally, an authorized purchaser must provide a confirmation statement with respect to each covered transaction to the person who directs the transaction for the IRA. The requirements constitute information collections within the meaning of the PRA, for which the Department has obtained approval from OMB under OMB Control No. 1210–0079. The OMB approval is currently scheduled to expire on December 31, 2013.
The Pension Protection Act (PPA), Public Law 109–280, amended ERISA section 404(c) by adding subparagraph (c)(5)(A). The new subparagraph says that a participant in an individual account plan who fails to make investment elections regarding his or her account assets will nevertheless be treated as having exercised control over those assets so long as the plan provides appropriate notice (as specified) and invests the assets “in accordance with regulations prescribed by the Secretary [of Labor].” Section 404(c)(5)(A) further requires the Department of Labor (Department) to issue corresponding final regulations within six months after enactment of the PPA. The PPA was signed into law on August 17, 2006.
The Department of Labor issued a final regulation under ERISA section 404(c)(5)(A) offering guidance on the types of investment vehicles that plans may choose as their “qualified default investment alternative”(QDIA). The regulation also outlines two information collections. First, it implements the statutory requirement that plans provide annual notices to participants and beneficiaries whose account assets could be invested in a QDIA. Second, the regulation requires plans to pass certain pertinent materials they receive relating to a QDIA to those participants and beneficiaries with assets invested in the QDIA as well to provide certain information on request. The ICRs are approved under OMB Control Number 1210–0132, which is scheduled to expire on December 31, 2013.
The Department is particularly interested in comments that:
• Evaluate whether the collections of information are 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 collections 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., by permitting electronic submissions of responses.
Employment and Training Administration, Labor.
Notice.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden, conducts a preclearance consultation program to provide the general 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); 3506(b)(1)(2)(3)]. This program helps to 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.
A copy of the proposed information collection request (ICR) can be obtained by contacting the office listed below in the addressee section of this notice.
Written comments must be submitted to the office listed in the addressee's section below on or before July 22, 2013.
Send comments to Stephanie Garcia, Office of Unemployment Insurance, Employment and Training Administration, U.S. Department of Labor, Room S–4524, 200 Constitution Avenue NW., Washington, DC 20210, telephone number (202) 693–3207 (
The ETA–5130, Benefit Appeals Report, contains information on the number of unemployment insurance appeals and the resultant decisions classified by program, appeals level, cases filed and disposed of (workflow), and decisions by level, appellant, and issue. The data on this report are used by the Department of Labor to monitor the benefit appeals process in the State Workforce Agencies (SWAs) and to develop any needed plans for remedial action. The data are also needed for workload forecasts and to determine administrative funding. If this information were not available, developing problems might not be discovered early enough to allow for timely solutions and avoidance of time consuming and costly corrective action.
Currently, the Employment and Training Administration is soliciting comments concerning the proposed extension collection of the ETA–5130 Benefit Appeals Report, which expires January 31, 2014. Comments are requested to:
* 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;
* 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 automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval of the ICR; they will also become a matter of public record.
Occupational Safety and Health Administration (OSHA), Labor.
Announcement of FACOSH meeting and member appointments.
The Federal Advisory Council on Occupational Safety and Health (FACOSH) will meet on June 6, 2013, in Washington, DC. This
OSHA will post comments, requests to speak, and speaker presentations, including any personal information provided, without change at
FACOSH will meet on June 6, 2013, in Washington, DC. Some FACOSH members may attend the meeting electronically. The meeting is open to the public.
The tentative agenda for the FACOSH meeting includes:
• Updates from FACOSH subcommittees; and
• OPM status report regarding changes to GS–0018 job series.
FACOSH is authorized by 5 U.S.C. 7902; section 19 of the Occupational Safety and Health Act of 1970 (OSH Act) (29 U.S.C. 668); and Executive Order 11612, as amended, to advise the Secretary of Labor (Secretary) on all matters relating to the occupational safety and health (OSH) of Federal employees. This includes providing advice on how to reduce and keep to a minimum the number of injuries and illnesses in the Federal workforce and how to encourage each Federal Executive Branch Department and agency to establish and maintain effective OSH programs.
OSHA transcribes and prepares detailed minutes of FACOSH meetings. The Agency puts transcripts, minutes, and other materials presented at the meeting in the public record of the FACOSH meeting, which is posted at
• The amount of time you request to speak;
• The interest you represent (e.g., organization name), if any; and,
• A brief outline of your presentation.
PowerPoint speaker presentations and other electronic materials must be compatible with Microsoft Office 2010 formats. The FACOSH chair may grant requests to address FACOSH at his discretion and as time and circumstances permits.
Because of security-related procedures, submitting comments, requests to speak, and speaker presentations by regular mail may cause a significant delay in their receipt. For information about security procedures concerning submissions by hand, express delivery, and messenger/courier service, please contact the OSHA Docket Office (see
OSHA also puts meeting transcripts, minutes, workgroup reports, and documents presented at the FACOSH meeting in the public record of the FACOSH meeting.
To read or download documents in the public record, go to Docket No. OSHA–2013–0013 at
Information on using the
Electronic copies of this
FACOSH membership is comprised of sixteen members; eight representing Federal agency management, and eight from labor organizations that represent Federal employees. Management members are typically their agency's Designated Agency Safety and Health Official. Labor members generally have responsibility for OSH-related matters within their organizations. In order to maintain the continuity of FACOSH, OSHA appoints members to staggered terms lasting up to three years. If a member becomes unable to serve, resigns, or is removed before his or her term expires, the Secretary may appoint a new member who represents the same interest (management or labor) to serve the remainder of the unexpired term. In making appointments, the Secretary may consider qualified individuals nominated in response to the
OSHA published a request for FACOSH nominations in the
• Mr. Curtis Bowling, U.S. Department of Defense (management representative);
• Mr. William Dougan, National Federation of Federal Employees (labor representative); and
• Ms. Deborah Kleinberg, Seafarers International Union/National Maritime Union (labor representative).
• Dr. Joe Hoagland, Tennessee Valley Authority (management representative);
• Dr. Gregory Parham, U.S. Department of Agriculture (management representative);
• Ms. Lola Ward, National Transportation Safety Board (management representative); and
• Ms. Irma Westmoreland, National Nurses United (labor representative).
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice under the authority granted by section 19 of the OSH Act (29 U.S.C. 668); 5 U.S.C. 7902; the Federal Advisory Committee Act (FACA) (5 U.S.C. App. 2); 41 CFR Part 102–3; section 1–5 of Executive Order 12196 (45 CFR 12629 (2/27/1980)); and Secretary of Labor's Order No. 1–2012 (77 FR 3912 (1/25/2012)).
Legal Services Corporation.
Notice.
The Legal Services Corporation (LSC) is the national organization charged with administering federal funds provided for civil legal services to low-income people.
This Request for Applications (RFA) announces the availability of grant funds and is soliciting grant applications from current LSC recipients that provide legal services in service areas that have been federally-declared as disaster areas resulting from Hurricane Sandy. The Disaster Relief Appropriations Act, 2013, Public Law 113–2, 127 Stat. 4, includes $1 million for LSC to provide assistance to low-
This RFA is available the week of May 20, 2013. Legal Services Corporation must receive all applications on or before June 21, 2013, 11:59 p.m., E.D.T. Complete applications for this grant program must be submitted using the online system at
Office of Program Performance, Legal Services Corporation, 3333 K Street NW., Third Floor, Washington, DC 20007–3522.
John Eidleman, Office of Program Performance, by email at
LSC will only accept applications from current LSC recipients that provide legal services in those states significantly affected by Hurricane Sandy and the designated disaster areas set out in the Major Disaster Declarations issued for the incident period of October 26, 2012 to November 8, 2012, which is available at
Legal Services Corporation.
Notice.
The Legal Services Corporation (LSC) is the national organization charged with administering federal funds provided for civil legal services to low-income Americans.
This Request for Applications (RFA) announces the availability of $250,000 in LSC emergency grant funds and is soliciting grant applications from current LSC recipients located in a federally-declared disaster area seeking financial assistance to mitigate damage sustained and who have experienced a surge in demand for legal services as the result of Hurricane Sandy. Applications for these funds must be made in tandem with applications for the Disaster Relief Appropriations Act, 2013, Public Law 113–2, 127 Stat. 4. The recipients should submit both applications at the same time and demonstrate how the activities described in each application complement the other.
The RFA is available the week of May 20, 2013. Legal Services Corporation must receive all applications on or before June 21, 2013, 11:59 p.m., E.D.T. Other key application and filing dates, including the dates for filing grant applications, are published at
Office of Program Performance, Legal Services Corporation, 3333 K Street NW., Third Floor, Washington, DC 20007–3522.
John Eidleman, Office of Program Performance, by email at
On occasion, LSC makes available special funding to help meet the emergency needs of programs in disaster areas. See
At this time, LSC is making available emergency grant funds for current LSC recipients in federally-declared disaster areas resulting from Hurricane Sandy. The application guidelines will be made available at
The Legal Services Corporation's Institutional Advancement Committee will meet telephonically on May 28, 2013. The meeting will commence at 4:00 p.m., EDT, and will continue until the conclusion of the Committee's agenda.
John N. Erlenborn Conference Room, Legal Services Corporation Headquarters, 3333 K Street NW., Washington, DC 20007.
Members of the public who are unable to attend in person but wish to listen to the public proceedings may do so by following the telephone call-in directions provided below.
• Call toll-free number: 1–866–451–4981;
• When prompted, enter the following numeric pass code: 5907707348
• When connected to the call, please immediately “MUTE” your telephone.
Open.
1. Approval of agenda
2. Discussion of fundraising policies
3. Public comment
4. Consider and act on other business
5. Consider and act on adjournment of meeting.
Katherine Ward, Executive Assistant to the Vice President & General Counsel, at (202) 295–1500. Questions may be sent by electronic mail to
LSC complies with the Americans with Disabilities Act and Section 504 of the 1973 Rehabilitation Act. Upon request, meeting notices and materials will be made available in alternative formats to accommodate individuals with disabilities. Individuals who need other accommodations due to disability in
National Archives and Records Administration (NARA).
Notice of availability of proposed records schedules; request for comments.
The National Archives and Records Administration (NARA) publishes notice at least once monthly of certain Federal agency requests for records disposition authority (records schedules). Once approved by NARA, records schedules provide mandatory instructions on what happens to records when no longer needed for current Government business. They authorize the preservation of records of continuing value in the National Archives of the United States and the destruction, after a specified period, of records lacking administrative, legal, research, or other value. Notice is published for records schedules in which agencies propose to destroy records not previously authorized for disposal or reduce the retention period of records already authorized for disposal. NARA invites public comments on such records schedules, as required by 44 U.S.C. 3303a(a).
Requests for copies must be received in writing on or before June 21, 2013. Once the appraisal of the records is completed, NARA will send a copy of the schedule. NARA staff usually prepare appraisal memorandums that contain additional information concerning the records covered by a proposed schedule. These, too, may be requested and will be provided once the appraisal is completed. Requesters will be given 30 days to submit comments.
You may request a copy of any records schedule identified in this notice by contacting Records Management Services (ACNR) using one of the following means:
Margaret Hawkins, Director, Records Management Services (ACNR), National Archives and Records Administration, 8601 Adelphi Road, College Park, MD 20740–6001. Telephone: 301–837–1799. Email:
Each year Federal agencies create billions of records on paper, film, magnetic tape, and other media. To control this accumulation, agency records managers prepare schedules proposing retention periods for records and submit these schedules for NARA's approval, using the Standard Form (SF) 115, Request for Records Disposition Authority. These schedules provide for the timely transfer into the National Archives of historically valuable records and authorize the disposal of all other records after the agency no longer needs them to conduct its business. Some schedules are comprehensive and cover all the records of an agency or one of its major subdivisions. Most schedules, however, cover records of only one office or program or a few series of records. Many of these update previously approved schedules, and some include records proposed as permanent.
The schedules listed in this notice are media neutral unless specified otherwise. An item in a schedule is media neutral when the disposition instructions may be applied to records regardless of the medium in which the records are created and maintained. Items included in schedules submitted to NARA on or after December 17, 2007, are media neutral unless the item is limited to a specific medium. (See 36 CFR 1225.12(e).)
No Federal records are authorized for destruction without the approval of the Archivist of the United States. This approval is granted only after a thorough consideration of their administrative use by the agency of origin, the rights of the Government and of private persons directly affected by the Government's activities, and whether or not they have historical or other value.
Besides identifying the Federal agencies and any subdivisions requesting disposition authority, this public notice lists the organizational unit(s) accumulating the records or indicates agency-wide applicability in the case of schedules that cover records that may be accumulated throughout an agency. This notice provides the control number assigned to each schedule, the total number of schedule items, and the number of temporary items (the records proposed for destruction). It also includes a brief description of the temporary records. The records schedule itself contains a full description of the records at the file unit level as well as their disposition. If NARA staff has prepared an appraisal memorandum for the schedule, it too includes information about the records. Further information about the disposition process is available on request.
1. Department of Agriculture, Farm Service Agency (N1–145–12–1, 3 items, 3 temporary items). Records related to the administration of the Government Performance and Results Act.
2. Department of the Army, Agency-wide (N1–AU–10–103, 20 items, 20 temporary items). Master files of several electronic information systems used to track procurement actions in support of force deployments.
3. Department of Commerce, Bureau of the Census (N1–29–11–1, 31 items, 27 temporary items). Records of the Foreign Trade Division such as foreign trade procedures memorandums, periodic division reports, and data processing records such as system processing files, import/export trade statistical operations production processing records, and final net level data files. Proposed for permanent retention are foreign trade data reports and products, research project planning files, and subject files maintained by the Division Chief and Deputy Division Chief.
4. Department of Defense, Defense Commissary Agency (N1–506–10–1, 5 items, 5 temporary items). Web content and management records related to the agency's internal and external Web sites.
5. Department of Defense, Defense Commissary Agency (N1–506–11–1, 13 items, 13 temporary items). Records relating to the agency's environmental management program. Included are records related to monitoring, compliance, management review, planning, procedures, organizational structure, and communications.
6. Department of Defense, Defense Contract Management Agency (N1–558–10–9, 27 items, 22 temporary items). Records related to corporate-level operations and mission-related programs. Included are management control plans, international program correspondence files, foreign visitor records, internal reviews, records of terminated audits, budget and procurement records, and non-mandatory agency instructions. Proposed for permanent retention are records of significant high-level decisions and actions, records of high-level oversight reviews, and mandatory mission-related agency instructions.
7. Department of Defense, Defense Finance and Accounting Service (DAA–0507–2013–0002, 1 item, 1 temporary item). Forms, rosters, agendas, handouts, and similar records pertaining to conference planning.
8. Department of Defense, Defense Logistics Agency (DAA–0361–2013–0002, 1 item, 1 temporary item). Master files of an electronic information system that manages reimbursements and other miscellaneous payments.
9. Department of Defense, Office of the Secretary of Defense (DAA–0330–2013–0005, 1 item, 1 temporary item). Master files of an electronic information system used to track sexual assault cases.
10. Department of Homeland Security, Agency-wide (DAA–0563–2013–0001, 11 items, 11 temporary items). Records of the department and its component agencies including biometric and limited biographic information used for national security, law enforcement, immigration, and other mission-related functions.
11. Department of Homeland Security, U.S. Coast Guard (DAA–0026–2013–0002, 3 items, 3 temporary items). Minutes, annual reports, and district office data for Harbor Safety Committees.
12. Department of Homeland Security, U.S. Coast Guard (DAA–0026–2013–0004, 4 items, 4 temporary items). Records of seamen licensing and certification examinations.
13. Department of Homeland Security, U.S. Coast Guard (DAA–0026–2013–0005, 4 items, 4 temporary items). Master files of an electronic information system supporting vessel security activities and operations planning and monitoring.
14. Department of Homeland Security, U.S. Coast Guard (DAA–0026–2013–0006, 2 items, 2 temporary items). Credentialing and training records related to health care administration.
15. Department of State, Bureau of Economic and Business Affairs (DAA–0059–2013–0001, 4 items, 2 temporary items). License and export recommendation case files. Proposed for permanent retention are policy files.
16. Department of State, Bureau of Educational and Cultural Affairs (DAA–0059–2012–0003, 5 items, 4 temporary items). Records of the Office of Global Educational Programs, including grant files, reference files, and informational publications. Proposed for permanent retention is the office's annual statistical publication.
17. Department of State, Bureau of Political-Military Affairs (N1–59–11–16, 9 items, 5 temporary items). Records of the Office of Weapons Removal and Abatement including background and reference materials, working files, grant files, and general correspondence. Proposed for permanent retention are publications, policy files, project files, and interagency working group files.
18. Consumer Financial Protection Bureau, Agency-wide (N1–587–12–13, 7 items, 5 temporary items). Records of the Legal Division including memorandums, hearing files, and administrative records. Proposed for permanent retention are historically significant memorandums and hearing files.
19. Environmental Protection Agency, Office of Water (DAA–0412–2013–0003, 2 items, 1 temporary item). Inputs of an electronic information system used for the regulation of wells. Proposed for permanent retention are the master files of the electronic information system.
20. Federal Reserve System, Agency-wide (DAA–0082–2013–0001, 2 items, 2 temporary items). Routine security surveillance and identification card records.
21. Office of the Director of National Intelligence, Office of the Program Manager of the Information Sharing Environment (N1–576–11–10, 11 items, 3 temporary items). Records include Web sites and non-substantive drafts and working papers. Proposed for permanent retention are implementation plans, final reports and sharing agreements, daily calendars, external speeches and briefings, records of boards and working groups, legislation recommendations to Congress, and substantive working papers.
National Mediation Board (NMB).
The Director, Office of Administration, invites comments on the proposed information collection requests as required by the Paperwork Reduction Act of 1995.
Interested persons are invited to submit comments within 30 days from the date of this publication.
Section 3506 of the Paperwork Reduction Act of 1995 (U.S.C. Chapter 35) requires that the Office of Management and Budget (OMB) provide interested Federal agencies and the public an early opportunity to comment on information collection requests. OMB may amend or waive the requirement for public consultation to the extent that public participation in the approval process would defeat the purpose of the information collection, violate State or Federal law, or substantially interfere with any agency's ability to perform its statutory obligations. The Director, Office of Administration, publishes that notice containing proposed information collection requests prior to submission of these requests to OMB. Each proposed information collection contains the following: (1) Type of review requested, e.g. new, revision extension, existing or reinstatement; (2) Title; (3) Summary of the collection; (4) Description of the need for, and proposed use of, the information; (5) Respondents and frequency of collection; and (6) Reporting and/or Record keeping burden. OMB invites public comment.
Currently, the National Mediation Board is soliciting comments concerning the proposed extension of the Application for Investigation of Representation Dispute and is interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the agency; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the agency enhance the quality, utility, and clarity of the information to be collected; and (5) how might the agency minimize the burden of this collection on the respondents, including through the use of information technology.
The extension of this form is necessary considering the information is used by the Board in determining such matters as how many staff will be required to conduct an investigation and what other resources must be mobilized to complete our statutory responsibilities. Without this information, the Board would have to delay the commencement of the investigation, which is contrary to the intent of the Railway Labor Act.
Requests for copies of the proposed information collection request may be accessed from
Comments regarding burden and/or the collection activity requirements should be directed to June D.W. King at 202–692–5010 or via internet address
In accordance with the Federal Advisory Committee Act (Pub. L. 92–463 as amended), the National Science Foundation announces the following meeting:
Nuclear Regulatory Commission.
Notice of Certificate renewal request and opportunity to comment.
By letter dated April 2, 2013, the United States Enrichment Corporation (USEC) submitted its Application for Renewal of its Certificate of Compliance (CoC) for the Paducah Gaseous Diffusion Plant (PGDP). The existing CoC (No. GDP–1) authorizes operation of a uranium enrichment facility in Paducah, Kentucky. The Certificate currently has an expiration date of December 31, 2013. The USEC requests that the U.S. Nuclear Regulatory Commission (NRC) renew the Certificate for a 5-year period, with an expiration date of December 31, 2018.
Submit comments by June 21, 2013. Comments received after this date will be considered, if it is practical to do so, but the NRC staff is able to ensure consideration only for comments received on or before this date.
You may submit comment by any of the following methods (unless this document describes a different method for submitting comments on a specific subject):
•
•
•
For additional direction on accessing information and submitting comments, see “Accessing Information and
Please refer to Docket ID NRC–2013–0099 when contacting the NRC about the availability of information regarding USEC's renewal request. You may access information related to this request, which the NRC possesses and is publicly-available, by the following methods:
•
•
•
Please include Docket ID NRC–2013–0099 in the subject line of your comment submission, in order to ensure that the NRC is able to make your comment submission available to the public in this docket.
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC posts all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment submissions into ADAMS.
Mr. Osiris Siurano-Perez, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001; telephone: 301–492–3117; email:
By letter dated April 2, 2013, USEC submitted its Application for Renewal of its, CoC for the PGDP, in accordance with Part 76 of Title 10 of the
The NRC issued the initial certificate of compliance for PGDP on November 26, 1996, and assumed regulatory oversight for the plant on March 3, 1997. The PGDP was last issued a renewed CoC on December 31, 2008, and, by its terms, this Certificate will expire on December 31, 2013. The USEC's renewal request is for a 5-year period, extending from the current expiration date of December 31, 2013, to December 31, 2018. The USEC's application for renewal is based on its previous Application (USEC–01), as revised through Revision 138 dated April 1, 2013. No additional changes to the application are requested.
If the NRC approves the request, the PGDP Certificate will be renewed for a 5-year period, with an expiration date of December 31, 2018. However, before approving the request, the NRC will need to make the findings required by the Atomic Energy Act of 1954, as amended (the Act), and the NRC's regulations. The required findings will be documented in a Compliance Evaluation Report.
In accordance with 10 CFR 76.39, the NRC will conduct a public meeting, in the vicinity of the PGDP, in July of 2013. Notice of the meeting will be posted on the NRC Web site,
Following evaluation of USEC's application for renewal and any public comments received, the NRC staff will issue a written Director's decision and publish a notice of the decision in the
Copies of USEC's Certificate renewal request (except for classified and proprietary portions which are withheld in accordance with 10 CFR 2.390, “Availability of Public Records”) are available for inspection at NRC's Public Electronic Reading Room at
For the Nuclear Regulatory Commission,
Nuclear Regulatory Commission.
Week of May 20, 2013.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public and Closed.
*The schedule for Commission meetings is subject to change on short notice. To verify the status of meetings, call (recording)—301–415–1292. Contact person for more information: Rochelle Bavol, 301–415–1651.
By a vote of 5–0 on May 17, 2013, the Commission determined pursuant to U.S.C. 552b(e) and § 9.107(a) of the Commission's rules that the above referenced Discussion of Management
The NRC Commission Meeting Schedule can be found on the Internet at:
The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings, or need this meeting notice or the transcript or other information from the public meetings in another format (e.g. braille, large print), please notify Kimberly Meyer, NRC Disability Program Manager, at 301–287–0727, or by email at
This notice is distributed electronically to subscribers. If you no longer wish to receive it, or would like to be added to the distribution, please contact the Office of the Secretary, Washington, DC 20555 (301–415–1969), or send an email to
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Elizabeth A. Reed, 202–268–3179.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on May 15, 2013, it filed with the Postal Regulatory Commission a
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 19d–1 prescribes the form and content of notices to be filed with the Commission by self-regulatory organizations (“SROs”) for which the Commission is the appropriate regulatory agency concerning the following final SRO actions: (1) Disciplinary actions with respect to any person; (2) denial, bar, prohibition, or limitation of membership, participation or association with a member or of access to services offered by an SRO or member thereof; (3) summarily suspending a member, participant, or person associated with a member, or summarily limiting or prohibiting any persons with respect to access to or services offered by the SRO or a member thereof; and (4) delisting a security.
The Rule enables the Commission to obtain reports from the SROs containing information regarding SRO determinations to delist a security, discipline members or associated persons of members, deny membership or participation or association with a member, and similar adjudicated findings. The Rule requires that such actions be promptly reported to the Commission. The Rule also requires that the reports and notices supply sufficient information regarding the background, factual basis and issues involved in the proceeding to enable the Commission: (1) To determine whether the matter should be called up for review on the Commission's own motion; and (2) to ascertain generally whether the SRO has adequately carried out its responsibilities under the Exchange Act.
It is estimated that approximately eighteen respondents will utilize this application procedure annually, with a total burden of approximately 2,250 hours, based upon past submissions. This figure is based on eighteen respondents, spending approximately 125 hours each per year. It is estimated that each respondent will submit approximately 250 responses. Commission staff estimates that the average number of hours necessary to comply with the requirements of Rule 19d–1 for each submission is 0.5 hours. The average cost per hour, per each submission is approximately $101. Therefore, it is estimated that the internal labor cost of compliance for all respondents is approximately $227,250. (18 respondents × 250 responses per respondent × 0.5 hours per response × $101 per hour).
The filing of notices pursuant to Rule 19d–1 is mandatory for the SROs, but does not involve the collection of confidential information. Rule 19d–1 does not have a record retention requirement.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following Web site,
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 15a–6 provides conditional exemptions from the requirement to register as a broker-dealer pursuant to Section 15 of the Exchange Act (15 U.S.C. 78o) for foreign broker-dealers that engage in certain specified activities involving U.S. persons. In particular, Rule 15a–6(a)(3) provides an exemption from broker-dealer registration for foreign broker-dealers that solicit and effect transactions with or for U.S. institutional investors or major U.S. institutional investors through a registered broker-dealer, provided that the U.S. broker-dealer, among other things, obtains certain information about, and consents to service of process from, the personnel of the foreign broker-dealer involved in such transactions, and maintains certain records in connection therewith.
These requirements are intended to ensure (a) that the registered broker-dealer will receive notice of the identity of, and has reviewed the background of, foreign personnel who will contact U.S. investors, (b) that the foreign broker-dealer and its personnel effectively may be served with process in the event enforcement action is necessary, and (c) that the Commission has ready access to information concerning these persons and their U.S. securities activities. Commission staff estimates that approximately 2,000 U.S. registered broker-dealers will spend an average of two hours of clerical staff time and one hour of managerial staff time per year obtaining the information required by the rule, resulting in a total aggregate burden of 6,000 hours per year for complying with the rule. Assuming an hourly cost of $63
In general, the records to be maintained under Rule 15a–6 must be kept for the applicable time periods as set forth in Rule 17a–4 (17 CFR 240.17a–4) under the Exchange Act or, with respect to the consents to service of process, for a period of not less than six years after the applicable person ceases engaging in U.S. securities activities. Reliance on the exemption set forth in Rule 15a–6 is voluntary, but if a foreign broker-dealer elects to rely on such exemption, the collection of information described therein is mandatory. The collection does not involve confidential information.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following Web site,
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 19d–3 prescribes the form and content of applications to the Commission by persons seeking Commission review of final disciplinary actions against them taken by self-regulatory organizations (“SROs”) for which the Commission is the appropriate regulatory agency. The Commission uses the information provided in the application filed pursuant to Rule 19d–3 to review final actions taken by SROs including: (1) Final disciplinary sanctions; (2) denial or conditioning of membership, participation or association; and (3) prohibitions or limitations of access to services offered by a SRO or member thereof.
It is estimated that approximately six respondents will utilize this application procedure annually, with a total burden of approximately 108 hours, for all respondents to complete all submissions. This figure is based upon past submissions. The Commission staff estimates that each respondent will submit approximately one response and the average number of hours necessary to comply with the requirements of Rule 19d–3 is approximately eighteen hours. The average cost per hour, to complete each submission, is approximately $101. Therefore, it is estimated the internal labor cost of compliance for all respondents is approximately $10,908 (6 submissions × 18 hours per response × $101 per hour).
The filing of an application pursuant to Rule 19d–3 is voluntary and does not involve the collection of confidential information. Rule 19d–3 does not have
Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503 or send an email to:
Notice is hereby given that, under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Form N–14 (17 CFR 239.23) is the form for registration under the Securities Act of 1933 (15 U.S.C. 77a
We estimate that approximately 139 funds each file one new registration statement on Form N–14 annually, and that 58 funds each file one amendment to a registration statement on Form N–14 annually. Based on conversations with fund representatives, we estimate that the reporting burden is approximately 620 hours per respondent for a new Form N–14 registration statement and 300 hours per respondent for amending the Form N–14 registration statement. This time is spent, for example, preparing and reviewing the registration statements. Accordingly, we calculate the total estimated annual internal burden of responding to Form N–14 to be approximately 103,580 hours. In addition to the burden hours, based on conversations with fund representatives, we estimate that the total cost burden of compliance with the information collection requirements of Form N–14 is approximately $27,500 for preparing and filing an initial registration statement on Form N–14 and approximately $16,000 for preparing and filing an amendment to a registration statement on Form N–14. This includes, for example, the cost of goods and services purchased to prepare and update registration statements on Form N–14, such as for the services of outside counsel. Accordingly, we calculate the total estimated annual cost burden of responding to Form N–14 to be approximately $4,750,500.
Estimates of the average burden hours are made solely for the purposes of the Paperwork Reduction Act and are not derived from a comprehensive or even representative survey or study of the costs of Commission rules and forms. The collection of information under Form N–14 is mandatory. The information provided under Form N–14 will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
The public may view the background documentation for this information collection at the following Web site:
Securities and Exchange Commission (“Commission”).
Notice of an application for an order under section 12(d)(1)(J) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 12(d)(1)(A) and (B) of the Act, under section 6(c) of the Act for an exemption from rule 12d1–2(a) under the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (2) of the Act.
Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. Applicants: Trust, 1290 Broadway, Suite 1100, Denver, Colorado 80203; Adviser, 3620 Fair Oaks Blvd., Suite 300, Sacramento, California 95684.
Courtney S. Thornton, Senior Counsel, at (202) 551–6812, or David P. Bartels, Branch Chief, at (202) 551–6821 (Division of Investment Management, Office of Investment Company Regulation).
The following is a summary of the application. The complete application may be obtained via the Commission's Web site by searching for the file number, or for an applicant using the Company name box, at
1. The Trust is an open-end management investment company registered under the Act and organized as a Delaware statutory trust. The Trust currently is comprised of multiple series, including the Hanson Funds, each of which pursues its own investment strategies.
2. The Adviser, a California corporation, is registered as an investment adviser under the Investment Advisers Act of 1940 (“Advisers Act”) and serves as investment adviser to the Hanson Funds and may serve as investment adviser to future Funds.
3. Applicants request an order to permit (a) a Fund that operates as a “fund of funds” (each a “Fund of Funds”) to acquire shares of (i) registered open-end management investment companies or series thereof that are not part of the same “group of investment companies,” within the meaning of section 12(d)(1)(G)(ii) of the Act, as the Fund of Funds (“Unaffiliated Investment Companies”) and UITs that are not part of the same group of investment companies as the Fund of Funds (“Unaffiliated Trusts,” together with the Unaffiliated Investment Companies, “Unaffiliated Funds”),
4. Applicants also request an exemption under section 6(c) from rule 12d1–2 under the Act to permit any existing or future Fund of Funds that relies on section 12(d)(1)(G) of the Act (“Same Group Fund of Funds”) and that otherwise complies with rule 12d1–2 to also invest, to the extent consistent with its investment objective, policies, strategies and limitations, in financial instruments that may not be securities within the meaning of section 2(a)(36) of the Act (“Other Investments”).
1. Section 12(d)(1)(A) of the Act, in relevant part, prohibits a registered investment company from acquiring shares of an investment company if the securities represent more than 3% of the total outstanding voting stock of the acquired company, more than 5% of the total assets of the acquiring company, or, together with the securities of any other investment companies, more than 10% of the total assets of the acquiring company. Section 12(d)(1)(B) of the Act prohibits a registered open-end investment company, its principal underwriter, and any broker or dealer from selling the investment company's shares to another investment company if the sale will cause the acquiring company to own more than 3% of the acquired company's voting stock, or if the sale will cause more than 10% of the acquired company's voting stock to be owned by investment companies generally.
2. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Applicants seek an exemption under section 12(d)(1)(J) of the Act to permit a Funds of Funds to acquire shares of the Underlying Funds in excess of the limits in section 12(d)(1)(A), and an Underlying Fund, any principal underwriter for an Underlying Fund, and any Broker to sell shares of an Underlying Fund to a Fund of Funds in excess of the limits in section 12(d)(1)(B) of the Act.
3. Applicants state that the terms and conditions of the proposed arrangement will not give rise to the policy concerns underlying sections 12(d)(1)(A) and (B), which include concerns about undue influence by a fund of funds over underlying funds, excessive layering of fees, and overly complex fund structures. Accordingly, applicants believe that the requested exemption is
4. Applicants submit that the proposed arrangement will not result in the exercise of undue influence by a Fund of Funds or a Fund of Funds Affiliate (as defined below) over the Unaffiliated Funds.
5. To further assure that an Unaffiliated Investment Company understands the implications of an investment by a Fund of Funds under the requested order, prior to a Fund of Funds' investment in the shares of an Unaffiliated Investment Company in excess of the limit in section 12(d)(1)(A)(i) of the Act, the Fund of Funds and the Unaffiliated Investment Company will execute an agreement stating, without limitation, that their boards of directors or trustees (for any entity, the “Board”) and their investment advisers understand the terms and conditions of the order and agree to fulfill their responsibilities under the order (“Participation Agreement”). Applicants note that an Unaffiliated Investment Company (other than an ETF whose shares are purchased by a Fund of Funds in the secondary market) will retain its right at all times to reject any investment by a Fund of Funds.
6. Applicants state that they do not believe that the proposed arrangement will involve excessive layering of fees. The Board of each Fund of Funds, including a majority of the directors or trustees who are not “interested persons” (within the meaning of section 2(a)(19) of the Act) (for any Board, the “Independent Trustees”), will find that the advisory fees charged under any investment advisory or management contract are based on services provided that will be in addition to, rather than duplicative of, the services provided under the advisory contract(s) of any Underlying Fund in which the Fund of Funds may invest. In addition, the Adviser will waive fees otherwise payable to it by the Fund of Funds in an amount at least equal to any compensation (including fees received pursuant to any plan adopted by an Unaffiliated Investment Company under rule 12b–1 under the Act) received from an Unaffiliated Fund by the Adviser or an affiliated person of the Adviser, other than any advisory fees paid to the Adviser or its affiliated person by an Unaffiliated Investment Company, in connection with the investment by the Fund of Funds in the Unaffiliated Fund. Any sales charges and/or service fees charged with respect to shares of a Fund of Funds will not exceed the limits applicable to a fund of funds as set forth in Rule 2830 of the Conduct Rules of the NASD (“NASD Conduct Rule 2830”).
7. Applicants submit that the proposed arrangement will not create an overly complex fund structure. Applicants note that no Underlying Fund will acquire securities of any investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act, except in certain circumstances identified in condition 11 below.
1. Section 17(a) of the Act generally prohibits sales or purchases of securities between a registered investment company and any affiliated person of the company. Section 2(a)(3) of the Act defines an “affiliated person” of another person to include (a) any person directly or indirectly owning, controlling, or holding with power to vote, 5% or more of the outstanding voting securities of the other person; (b) any person 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote by the other person; and (c) any person directly or indirectly controlling, controlled by, or under common control with the other person.
2. Applicants state that a Fund of Funds and the Affiliated Funds might be deemed to be under common control of the Adviser and therefore affiliated persons of one another. Applicants also state that a Fund of Funds and the Unaffiliated Funds might be deemed to be affiliated persons of one another if the Fund of Funds acquires 5% or more of an Unaffiliated Fund's outstanding voting securities. In light of these and other possible affiliations, section 17(a) could prevent an Underlying Fund from selling shares to and redeeming shares from a Fund of Funds.
3. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that (a) the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part of any person concerned; (b) the proposed transaction is consistent with the policies of each registered investment company involved; and (c) the proposed transaction is consistent with the general purposes of the Act. Section 6(c) of the Act permits the Commission to exempt any person or transactions from any provision of the Act if such exemption is necessary or
4. Applicants submit that the proposed transactions satisfy the standards for relief under sections 17(b) and 6(c) of the Act.
1. Section 12(d)(1)(G) of the Act provides that section 12(d)(1) will not apply to securities of an acquired company purchased by an acquiring company if: (i) the acquiring company and acquired company are part of the same group of investment companies; (ii) the acquiring company holds only securities of acquired companies that are part of the same group of investment companies, government securities, and short-term paper; (iii) the aggregate sales loads and distribution-related fees of the acquiring company and the acquired company are not excessive under rules adopted pursuant to section 22(b) or section 22(c) of the Act by a securities association registered under section 15A of the Exchange Act or by the Commission; and (iv) the acquired company has a policy that prohibits it from acquiring securities of registered open-end management investment companies or registered unit investment trusts in reliance on section 12(d)(1)(F) or (G) of the Act.
2. Rule 12d1–2 under the Act permits a registered open-end investment company or a registered unit investment trust that relies on section 12(d)(1)(G) of the Act to acquire, in addition to securities issued by another registered investment company in the same group of investment companies, government securities, and short-term paper: (1) securities issued by an investment company that is not in the same group of investment companies, when the acquisition is in reliance on section 12(d)(1)(A) or 12(d)(1)(F) of the Act; (2) securities (other than securities issued by an investment company); and (3) securities issued by a money market fund, when the investment is in reliance on rule 12d1–1 under the Act. For the purposes of rule 12d1–2, “securities” means any security as defined in section 2(a)(36) of the Act.
3. Applicants state that the proposed arrangement would comply with the provisions of rule 12d1–2 under the Act, but for the fact that a Same Group Fund of Funds may invest a portion of its assets in Other Investments. Applicants request an order under section 6(c) of the Act for an exemption from rule 12d1–2(a) to allow the Same Group Funds of Funds to invest in Other Investments. Applicants assert that permitting Same Group Funds of Funds to invest in Other Investments as described in the application would not raise any of the concerns that the requirements of section 12(d)(1) were designed to address.
4. Applicants represent that, consistent with its fiduciary obligations under the Act, the Board of each Same Group Fund of Funds will review the advisory fees charged by the Same Group Fund of Fund's investment adviser to ensure that they are based on services provided that are in addition to, rather than duplicative of, services provided pursuant to the advisory agreement of any investment company in which the Same Group Fund of Funds may invest.
Applicants agree that the relief to permit Funds of Funds to invest in Underlying Funds shall be subject to the following conditions:
1. The members of an Advisory Group will not control (individually or in the aggregate) an Unaffiliated Fund within the meaning of section 2(a)(9) of the Act. The members of a Subadvisory Group will not control (individually or in the aggregate) an Unaffiliated Fund within the meaning of section 2(a)(9) of the Act. If, as a result of a decrease in the outstanding voting securities of an Unaffiliated Fund, an Advisory Group or a Subadvisory Group, each in the aggregate, becomes a holder of more than 25 percent of the outstanding voting securities of the Unaffiliated Fund, then the Advisory Group or the Subadvisory Group will vote its shares of the Unaffiliated Fund in the same proportion as the vote of all other holders of the Unaffiliated Fund's shares. This condition will not apply to a Subadvisory Group with respect to an Unaffiliated Fund for which the Subadviser or a person controlling, controlled by, or under common control with the Subadviser acts as the investment adviser within the meaning of section 2(a)(20)(A) of the Act (in the case of an Unaffiliated Investment Company) or as the sponsor (in the case of an Unaffiliated Trust).
2. No Fund of Funds or Fund of Funds Affiliate will cause any existing or potential investment by the Fund of Funds in shares of an Unaffiliated Fund to influence the terms of any services or transactions between the Fund of Funds or a Fund of Funds Affiliate and the Unaffiliated Fund or an Unaffiliated Fund Affiliate.
3. The Board of each Fund of Funds, including a majority of the Independent Trustees, will adopt procedures reasonably designed to assure that its Adviser and any Subadviser(s) to the Fund of Funds are conducting the investment program of the Fund of Funds without taking into account any consideration received by the Fund of Funds or Fund of Funds Affiliate from an Unaffiliated Fund or an Unaffiliated Fund Affiliate in connection with any services or transactions.
4. Once an investment by a Fund of Funds in the securities of an Unaffiliated Investment Company exceeds the limit of section 12(d)(1)(A)(i) of the Act, the Board of the Unaffiliated Investment Company, including a majority of the Independent Trustees, will determine that any consideration paid by the Unaffiliated Investment Company to a Fund of Funds or a Fund of Funds Affiliate in connection with any services or transactions: (a) Is fair and reasonable in relation to the nature and quality of the services and benefits received by the Unaffiliated Investment Company; (b) is within the range of consideration that the Unaffiliated Investment Company would be required to pay to another unaffiliated entity in connection with
5. No Fund of Funds or Fund of Funds Affiliate (except to the extent it is acting in its capacity as an investment adviser to an Unaffiliated Investment Company or sponsor to an Unaffiliated Trust) will cause an Unaffiliated Fund to purchase a security in any Affiliated Underwriting.
6. The Board of an Unaffiliated Investment Company, including a majority of the Independent Trustees, will adopt procedures reasonably designed to monitor any purchases of securities by the Unaffiliated Investment Company in an Affiliated Underwriting once an investment by a Fund of Funds in the securities of the Unaffiliated Investment Company exceeds the limit of section 12(d)(1)(A)(i) of the Act, including any purchases made directly from an Underwriting Affiliate. The Board of the Unaffiliated Investment Company will review these purchases periodically, but no less frequently than annually, to determine whether the purchases were influenced by the investment by the Fund of Funds in the Unaffiliated Investment Company. The Board of the Unaffiliated Investment Company will consider, among other things, (a) whether the purchases were consistent with the investment objectives and policies of the Unaffiliated Investment Company; (b) how the performance of securities purchased in an Affiliated Underwriting compares to the performance of comparable securities purchased during a comparable period of time in underwritings other than Affiliated Underwritings or to a benchmark such as a comparable market index; and (c) whether the amount of securities purchased by the Unaffiliated Investment Company in Affiliated Underwritings and the amount purchased directly from an Underwriting Affiliate have changed significantly from prior years. The Board of the Unaffiliated Investment Company will take any appropriate actions based on its review, including, if appropriate, the institution of procedures designed to assure that purchases of securities in Affiliated Underwritings are in the best interests of shareholders.
7. Each Unaffiliated Investment Company shall maintain and preserve permanently in an easily accessible place a written copy of the procedures described in the preceding condition, and any modifications to such procedures, and shall maintain and preserve for a period not less than six years from the end of the fiscal year in which any purchase in an Affiliated Underwriting occurred, the first two years in an easily accessible place, a written record of each purchase of securities in an Affiliated Underwriting once an investment by a Fund of Funds in the securities of an Unaffiliated Investment Company exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth the: (a) Party from whom the securities were acquired, (b) identity of the underwriting syndicate's members, (c) terms of the purchase, and (d) information or materials upon which the determinations of the Board of the Unaffiliated Investment Company were made.
8. Prior to its investment in shares of an Unaffiliated Investment Company in excess of the limit in section 12(d)(1)(A)(i) of the Act, the Fund of Funds and the Unaffiliated Investment Company will execute a Participation Agreement stating, without limitation, that their Boards and their investment advisers understand the terms and conditions of the order and agree to fulfill their responsibilities under the order. At the time of its investment in shares of an Unaffiliated Investment Company in excess of the limit in section 12(d)(1)(A)(i), a Fund of Funds will notify the Unaffiliated Investment Company of the investment. At such time, the Fund of Funds will also transmit to the Unaffiliated Investment Company a list of the names of each Fund of Funds Affiliate and Underwriting Affiliate. The Fund of Funds will notify the Unaffiliated Investment Company of any changes to the list of the names as soon as reasonably practicable after a change occurs. The Unaffiliated Investment Company and the Fund of Funds will maintain and preserve a copy of the order, the Participation Agreement, and the list with any updated information for the duration of the investment and for a period of not less than six years thereafter, the first two years in an easily accessible place.
9. Before approving any advisory contract under section 15 of the Act, the Board of each Fund of Funds, including a majority of the Independent Trustees, shall find that the advisory fees charged under such advisory contract are based on services provided that are in addition to, rather than duplicative of, services provided under the advisory contract(s) of any Underlying Fund in which the Fund of Funds may invest. Such finding and the basis upon which the finding was made will be recorded fully in the minute books of the appropriate Fund of Funds.
10. The Adviser will waive fees otherwise payable to it by a Fund of Funds in an amount at least equal to any compensation (including fees received pursuant to any plan adopted by an Unaffiliated Investment Company under rule 12b–1 under the Act) received from an Unaffiliated Fund by the Adviser, or an affiliated person of the Adviser, other than any advisory fees paid to the Adviser or its affiliated person by an Unaffiliated Investment Company, in connection with the investment by the Fund of Funds in the Unaffiliated Fund. Any Subadviser will waive fees otherwise payable to the Subadviser, directly or indirectly, by the Fund of Funds in an amount at least equal to any compensation received by the Subadviser, or an affiliated person of the Subadviser, from an Unaffiliated Fund, other than any advisory fees paid to the Subadviser or its affiliated person by an Unaffiliated Investment Company, in connection with the investment by the Fund of Funds in the Unaffiliated Fund made at the direction of the Subadviser. In the event that the Subadviser waives fees, the benefit of the waiver will be passed through to the Fund of Funds.
11. No Underlying Fund will acquire securities of any other investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act, except to the extent that such Underlying Fund: (a) Receives securities of another investment company as a dividend or as a result of a plan of reorganization of a company (other than a plan devised for the purpose of evading section 12(d)(1) of the Act); or (b) acquires (or is deemed to have acquired) securities of another investment company pursuant to exemptive relief from the Commission permitting such Underlying Fund to (i) acquire securities of one or more investment companies for short-term cash management purposes, or (ii) engage in interfund borrowing and lending transactions.
12. Any sales charges and/or service fees charged with respect to shares of a Fund of Funds will not exceed the limits applicable to fund of funds set forth in NASD Conduct Rule 2830.
Applicants agree that the relief to permit Same Group Funds of Funds to invest in Other Investments shall be subject to the following condition:
13. Applicants will comply with all provisions of rule 12d1–2 under the Act, except for paragraph (a)(2), to the extent that it restricts any Same Group Fund of Funds from investing in Other Investments as described in the application.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Securities and Exchange Commission (“Commission”).
Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (“Act”) for an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c-1 under the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (2) of the Act, and under section 12(d)(1)(J) for an exemption from sections 12(d)(1)(A) and (B) of the Act.
An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. June 10, 2013, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary.
Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549; the Trust and the Adviser, 618 Church Street, Suite 220, Nashville, TN 37219; SEI, One Freedom Valley Drive, Oaks PA 19456.
Barry Pershkow, Senior Special Counsel at (202) 551–6877, or Janet M. Grossnickle, Assistant Director, at (202) 551–6821 (Division of Investment Management, Exemptive Applications Office).
The following is a summary of the application. The complete application may be obtained via the Commission's Web site by searching for the file number, or an applicant using the Company name box, at
1. The Trust is registered as an open-end management investment company under the Act and organized as a Delaware statutory trust. Applicants request that the order apply to the series of the Trust described in Appendix B to the application (“Initial Fund”) and any future series of the Trust and any other open-end management companies or series thereof created in the future (“Future Funds”) that tracks a specified securities index (an “Underlying Index”).
2. The Adviser will be registered as an investment adviser under the Investment Advisers Act of 1940 (“Advisers Act”) and will serve as investment adviser to the Funds. The Adviser may enter into sub-advisory agreements with one or more investment advisers to act as sub-advisers to a particular Fund (each, a “Sub-Adviser”). Each Sub-Adviser will be registered, or not subject to registration under the Advisers Act. The Trust will enter into a distribution agreement with one or more distributors that will be registered as a broker-dealer (“Broker”) under the Securities Exchange Act of 1934 (“Exchange Act”) and will serve as the principal underwriter and distributor (“Distributor”) for one or more Funds. The Distributor for the Initial Fund is SEI. A Distributor may be an affiliated person of, or an affiliated person of such affiliated person of, the Adviser and/or Sub-Advisers within the meaning of section 2(a)(3) of the Act.
3. Each Fund will consist of a portfolio of securities, other assets and/or positions (“Portfolio Positions”) selected to correspond to the performance of its Underlying Index. No entity that creates, compiles, sponsors or maintains an Underlying Index (“Index Provider”) is or will be an affiliated person, as defined in section 2(a)(3) of the Act, (“Affiliated Person”) or an affiliated person of an affiliated person (“Second-Tier Affiliate”) of the Trust, any Fund, the Adviser, any Sub-Adviser, or promoter of a Fund, or of any Distributor.
4. The Initial Fund's investment objective will be to seek to replicate as closely as possible, before fees and expenses, the price and yield performance of an index comprised of publicly traded U.S. companies that have corporate headquarters in the Nashville, Tennessee region and that meet certain requirements regarding capitalization, trading volume, and price levels (the “Nashville Index”). The investment objective of each Fund will be to provide investment returns that correspond, before fees and expenses, to
5. Creation Units will consist of specified large aggregations of Shares,
6. The Shares will be purchased and redeemed in Creation Units and generally on an in-kind basis. Except where the purchase or redemption will include cash under the limited circumstances specified below, purchasers will be required to purchase Creation Units by making an in-kind deposit of specified instruments (“Deposit Instruments”), and shareholders redeeming their Shares will receive an in-kind transfer of specified instruments (“Redemption Instruments”).
7. Purchases and redemptions of Creation Units may be made in whole or in part on a cash basis, rather than in kind, solely under the following circumstances: (a) To the extent there is a Balancing Amount, as described above; (b) if, on a given Business Day, a Fund announces before the open of trading that all purchases, all redemptions or all purchases and redemptions on that day will be made entirely in cash; (c) if, upon receiving a purchase or redemption order from an Authorized Participant, a Fund determines to require the purchase or redemption, as applicable, to be made entirely in cash;
8. Each Business Day, before the open of trading on a national securities exchange, as defined in section 2(a)(26) of the Act (“Exchange”) on which Shares are listed (“Listing Exchange”), each Fund will cause to be published through the NSCC the names and quantities of the instruments comprising the Deposit Instruments and the Redemption Instruments, as well as the estimated Balancing Amount (if any), for that day. The list of Deposit Instruments and the list of Redemption Instruments will apply until new lists are announced on the following Business Day, and there will be no intra-day changes to the lists except to correct errors in the published lists. Each Listing Exchange will disseminate, every 15 seconds during regular Exchange trading hours, through the facilities of the Consolidated Tape Association, an amount for each Fund stated on a per individual Share basis representing the sum of (i) the estimated Balancing Amount and (ii) the current value of the Deposit Instruments.
9. An investor purchasing or redeeming a Creation Unit from a Fund will be charged a fee (“Transaction Fee”) to prevent the dilution of the interests of shareholders resulting from costs in connection with the purchase or redemption of Creation Units.
10. Shares of the Initial Funds will be listed on the NYSE Arca, Inc. Exchange (“NYSE Arca”). Shares of each Future Fund will be listed and traded individually on an Exchange. It is expected that one or more Exchange liquidity providers or market makers (“Market Makers”) will be assigned to Shares and maintain a market for Shares trading on the Listing Exchange. The price of Shares trading on an Exchange will be based on a current bid-offer market. Transactions involving the sale of Shares on an Exchange may be subject to customary brokerage commissions and charges.
11. Applicants expect that purchasers of Creation Units will include institutional investors and arbitrageurs. Market Makers also may purchase or redeem Creation Units in connection with their market making activities. Applicants expect that secondary market purchasers of Shares will include both institutional and retail investors.
12. Shares will not be individually redeemable and owners of Shares may acquire those Shares from a Fund or tender such shares for redemption to the Fund, in Creation Units only. To redeem, an investor must accumulate enough Shares to constitute a Creation Unit. Redemption requests must be placed by or through an Authorized Participant.
13. Neither the Trust nor any Fund will be advertised or marketed or otherwise held out as a traditional open-end investment company or “mutual fund.” Instead, each Fund will be marketed as an “exchange-traded fund” or an “ETF.” All advertising materials that describe the features or method of obtaining, buying or selling Creation Units, or Shares traded on an Exchange, or refer to redeemability, will prominently disclose that Shares are not individually redeemable and that the owners of Shares may acquire or tender such Shares for redemption to the Fund in Creation Units only. The Funds will provide copies of their annual and semi-annual shareholder reports to DTC Participants for distribution to beneficial owners of Shares.
1. Applicants request an order under section 6(c) of the Act granting an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c–1 under the Act; and under sections 6(c) and 17(b) of the Act granting an exemption from sections 17(a)(1) and (2) of the Act, and under section 12(d)(1)(J) for an exemption from sections 12(d)(1)(A) and (B) of the Act.
2. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction, or any class of persons, securities or transactions, from any provision of the Act, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Section 17(b) of the Act authorizes the Commission to exempt a proposed transaction from section 17(a) of the Act if evidence establishes that the terms of the transaction, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned, and the proposed transaction is consistent with the policies of the registered investment company and the general provisions of the Act. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors.
3. Section 5(a)(1) of the Act defines an “open-end company” as a management investment company that is offering for sale or has outstanding any redeemable security of which it is the issuer. Section 2(a)(32) of the Act defines a redeemable security as any security, other than short-term paper, under the terms of which the holder, upon its presentation to the issuer, is entitled to receive approximately a proportionate share of the issuer's current net assets, or the cash equivalent. Because Shares will not be individually redeemable, applicants request an order that would permit the Trust and each Fund to redeem Shares in Creation Units only. Applicants state that investors may purchase Shares in Creation Units from each Fund and redeem Creation Units according to the provisions of the Act.
4. Section 22(d) of the Act, among other things, prohibits a dealer from selling a redeemable security that is currently being offered to the public by or through an underwriter, except at a current public offering price described in the prospectus. Rule 22c–1 under the Act generally requires that a dealer selling, redeeming, or repurchasing a redeemable security do so only at a price based on its NAV. Applicants state that secondary market trading in Shares will take place at negotiated prices, not at a current offering price described in a Fund's prospectus and not at a price based on NAV. Thus, purchases and sales of Shares in the secondary market will not comply with section 22(d) of the Act and rule 22c–1 under the Act. Applicants request an exemption under section 6(c) from these provisions.
5. Applicants assert that the concerns sought to be addressed by section 22(d) of the Act and rule 22c–1 under the Act with respect to pricing are equally satisfied by the proposed method of pricing Shares. Applicants maintain that, while there is little legislative history regarding section 22(d), its provisions, as well as those of rule 22c–1, appear to have been designed to (a) prevent dilution caused by certain riskless-trading schemes by principal underwriters and contract dealers, (b) prevent unjust discrimination or preferential treatment among buyers, and (c) ensure an orderly distribution system of investment company shares by eliminating price competition from non-contract dealers offering shares at less than the published sales price and repurchasing shares at more than the published redemption price.
6. Applicants state that (a) secondary market trading in Shares does not involve the Funds as parties and cannot result in dilution of an investment in Shares, and (b) to the extent different prices exist during a given trading day, or from day to day, such variances occur as a result of third-party market forces, such as supply and demand. Therefore, applicants assert that secondary market transactions in Shares will not lead to discrimination or preferential treatment among purchasers. Finally, applicants contend that the proposed distribution system will be orderly because arbitrage activity will ensure that the Shares do not trade at a material discount or premium in relation to their NAV.
7. Section 22(e) of the Act generally prohibits a registered investment company from suspending the right of redemption or postponing the date of payment of redemption proceeds for more than seven days after the tender of a security for redemption. Applicants state that settlement of redemptions for Foreign Funds and Global Funds will be contingent not only on the settlement cycle of the U.S. securities markets but also on the delivery cycles in local markets for the foreign Portfolio Positions held by the Foreign Funds and Global Funds. Applicants state that current delivery cycles for transferring Redemption Instruments to redeeming investors, coupled with local market holiday schedules, in certain circumstances will require a delivery process for the Foreign Funds and Global Funds of up to 14 calendar days. Applicants request relief under section 6(c) of the Act from section 22(e) to allow Foreign Funds and Global Funds to pay redemption proceeds up to 14 calendar days after the tender of the Creation Units for redemption. Except as disclosed in the relevant Foreign Fund's or Global Fund's SAI, applicants expect that each Foreign Fund and Global Fund will be able to deliver redemption proceeds within seven days.
8. Applicants state that Congress adopted section 22(e) to prevent unreasonable, undisclosed and unforeseen delays in the actual payment of redemption proceeds. Applicants state that allowing redemption payments for Creation Units of a Foreign Fund or Global Fund to be made within the number of days indicated above would not be inconsistent with the spirit and intent of section 22(e). Applicants state that the SAI will disclose those local holidays (over the period of at least one year following the date of the SAI), if any, that are expected to prevent the delivery of in kind redemption proceeds in seven calendar days, and the maximum number of days (up to fourteen calendar days) needed to deliver the proceeds for each affected Foreign Fund and Global Fund.
9. Applicants are not seeking relief from section 22(e) with respect to Foreign Funds or Global Funds that do not effect creations and redemptions of Creation Units in-kind.
10. Section 12(d)(1)(A) of the Act prohibits a registered investment company from acquiring shares of an investment company if the securities represent more than 3% of the total outstanding voting stock of the acquired company, more than 5% of the total assets of the acquiring company, or, together with the securities of any other investment companies, more than 10% of the total assets of the acquiring company. Section 12(d)(1)(B) of the Act prohibits a registered open-end investment company, its principal underwriter, or any other broker or dealer from selling the investment company's shares to another investment company if the sale would cause the acquiring company to own more than 3% of the acquired company's voting stock, or if the sale would cause more than 10% of the acquired company's voting stock to be owned by investment companies generally.
11. Applicants request an exemption to permit management investment companies (“Investing Management Companies”) and unit investment trusts (“Investing Trusts”) registered under the Act that are not sponsored or advised by the Adviser or an entity controlling, controlled by, or under common control with the Adviser and are not part of the same “group of investment companies,” as defined in section 12(d)(1)(G)(ii) of the Act, as the Funds (collectively, “Investing Funds”) to acquire Shares beyond the limits of section 12(d)(1)(A). In addition, applicants seek relief to permit a Fund, any Distributor, and/or any Broker to sell Shares to Investing Funds in excess of the limits of section 12(d)(1)(B).
12. Each Investing Management Company's investment adviser within the meaning of section 2(a)(20)(A) of the Act is the “Investing Fund Adviser” and each Investing Management Company's investment adviser within the meaning of section 2(a)(20)(B) of the Act is the “Investing Fund Sub-Adviser.” Any investment adviser to an Investing Fund will be registered under the Advisers Act. Each Investing Trust's sponsor is the “Sponsor.”
13. Applicants submit that the proposed conditions to the requested relief adequately address the concerns underlying the limits in section 12(d)(1)(A) and (B), which include concerns about undue influence by a fund of funds over underlying funds, excessive layering of fees and overly complex fund structures. Applicants believe that the requested exemption is
14. Applicants believe that neither an Investing Fund nor an Investing Fund Affiliate would be able to exert undue influence over a Fund.
15. Applicants do not believe that the proposed arrangement will involve excessive layering of fees. The board of directors or trustees of any Investing Management Company, including a majority of the directors or trustees who are not interested directors or trustees within the meaning of section 2(a)(19) of the Act (“disinterested directors or trustees”), will find that the advisory fees charged under the contract are based on services provided that will be in addition to, rather than duplicative of, services provided under the advisory contract of any Fund in which the Investing Management Company may invest. In addition, under condition B.5, an Investing Fund Adviser, or Investing Trust's trustee (“Trustee”) or Sponsor, will waive fees otherwise payable to it by the Investing Fund in an amount at least equal to any compensation (including fees received pursuant to any plan adopted by a Fund under rule 12b–1 under the Act) received from a Fund by the Investing Fund Adviser, Trustee or Sponsor or an affiliated person of the Investing Fund Adviser, Trustee or Sponsor, in connection with the investment by the Investing Fund in the Fund. Applicants also state that any sales charges and/or service fees charged with respect to shares of an Investing Fund will not exceed the limits applicable to a fund of funds as set forth in Conduct Rule 2830 of the NASD.
16. Applicants submit that the proposed arrangement will not create an overly complex fund structure. Applicants note that a Fund will be prohibited from acquiring securities of any investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act, except to the extent permitted by exemptive relief from the Commission permitting the Fund to purchase shares for short-term cash management purposes. To ensure that an Investing Fund is aware of the terms and conditions of the requested order, the Investing Funds must enter into an agreement with the respective Funds (“Investing Fund Participation Agreement”). The Investing Fund Participation Agreement will include an acknowledgement from the Investing Fund that it may rely on the order only to invest in the Funds and not in any other investment company.
17. Applicants also note that a Fund may choose to reject a direct purchase of Shares in Creation Units by an Investing Fund. To the extent that an Investing Fund purchases Shares in the secondary market, a Fund would still retain its ability to reject initial purchases of Shares made in reliance on the requested order by declining to enter into the Investing Fund Participation Agreement prior to any investment by an Investing Fund in excess of the limits of section 12(d)(1)(A).
18. Section 17(a) of the Act generally prohibits an Affiliated Person or a Second-Tier Affiliate, from selling any security to or purchasing any security from a registered investment company. Section 2(a)(3) of the Act defines “affiliated person” of another person to include any person directly or indirectly owning, controlling, or holding with power to vote 5% or more of the outstanding voting securities of the other person and any person directly or indirectly controlling, controlled by, or under common control with, the other person. Section 2(a)(9) of the Act defines “control” as the power to exercise a controlling influence over the management or policies of a company, and provides that a control relationship will be presumed where one person owns more than 25% of a company's voting securities. The Funds may be deemed to be controlled by the Adviser or an entity controlling, controlled by or under common control with the Adviser and hence Affiliated Persons of each other. In addition, the Funds may be deemed to be under common control with any other registered investment company (or series thereof) advised by the Adviser or an entity controlling, controlled by or under common control with the Adviser (an “Affiliated Fund”). Applicants also state that any investor, including Market Makers, owning 5% or holding in excess of 25% of the Trust or such Funds may be deemed affiliated persons of the Trust or such Funds. In addition, an investor could own 5% or more, or in excess of 25% of the outstanding shares of one or more Affiliated Funds making that investor a Second-Tier Affiliate of the Funds.
19. Applicants request an exemption under sections 6(c) and 17(b) of the Act from sections 17(a)(1) and 17(a)(2) of the Act in order to permit in-kind purchases and redemptions of Creation Units from the Funds by persons that are Affiliated
20. Applicants contend that no useful purpose would be served by prohibiting such affiliated persons from making in-kind purchases or in-kind redemptions of Shares of a Fund in Creation Units. Deposit Instruments and Redemption Instruments for each Fund will be valued in the same manner as the Portfolio Securities currently held by such Fund, and will be valued in this same manner, regardless of the identity of the purchaser or redeemer. Portfolio Positions, Deposit Instruments, Redemption Instruments, and applicable Balancing Amounts (except where a fund permits an in-kind purchaser or redeemer to substitute cash as specified above) will be the same regardless of the identity of the purchaser or redeemer. Therefore, applicants state that in-kind purchases and redemptions will afford no opportunity for the specified affiliated persons of a Fund to effect a transaction detrimental to the other holders of Shares. Applicants also believe that in-kind purchases and redemptions will not result in abusive self-dealing or overreaching of the Fund. Applicants also submit that the sale of Shares to and redemption of Shares from an Investing Fund satisfies the standards for relief under sections 17(b) and 6(c) of the Act. Applicants note that any consideration paid for the purchase or redemption of Shares directly from a Fund will be based on the NAV of the Fund in accordance with policies and procedures set forth in the Fund's registration statement.
Applicants agree that any order of the Commission granting the requested relief will be subject to the following conditions:
1. As long as a Fund operates in reliance on the requested order, the Shares of such Fund will be listed on an Exchange.
2. Neither the Trust nor any Fund will be advertised or marketed as an open-end investment company or a mutual fund. Any advertising material that describes the purchase or sale of Creation Units or refers to redeemability will prominently disclose that Shares are not individually redeemable and that owners of Shares may acquire those Shares from a Fund and tender those Shares for redemption to a Fund in Creation Units only.
3. The Web site maintained for each Fund, which is and will be publicly accessible at no charge, will contain, on a per Share basis for each Fund, the prior Business Day's NAV and the market closing price or the midpoint of the bid/ask spread at the time of the calculation of such NAV (“Bid/Ask Price”), and a calculation of the premium or discount of the market closing price or Bid/Ask Price against such NAV.
4. The requested relief to permit ETF operations will expire on the effective date of any Commission rule under the Act that provides relief permitting the operation of index-based exchange-traded funds.
1. The members of an Investing Funds' Advisory Group will not control (individually or in the aggregate) a Fund within the meaning of section 2(a)(9) of the Act. The members of an Investing Funds' Sub-Advisory Group will not control (individually or in the aggregate) a Fund within the meaning of section 2(a)(9) of the Act. If, as a result of a decrease in the outstanding voting securities of a Fund, the Investing Funds' Advisory Group or the Investing Funds' Sub-Advisory Group, each in the aggregate, becomes a holder of more than 25% of the outstanding voting securities of a Fund, it will vote its Shares of the Fund in the same proportion as the vote of all other holders of the Fund's Shares. This condition does not apply to the Investing Funds' Sub-Advisory Group with respect to a Fund for which the Investing Fund Sub-Adviser or a person controlling, controlled by, or under common control with the Investing Fund Sub-Adviser acts as the investment adviser within the meaning of section 2(a)(20)(A) of the Act.
2. No Investing Fund or Investing Fund Affiliate will cause any existing or potential investment by the Investing Fund in a Fund to influence the terms of any services or transactions between the Investing Fund or an Investing Fund Affiliate and the Fund or a Fund Affiliate.
3. The board of directors or trustees of an Investing Management Company, including a majority of the disinterested directors or trustees, will adopt procedures reasonably designed to ensure that the Investing Fund Adviser and any Investing Fund Sub-Adviser are conducting the investment program of the Investing Management Company without taking into account any consideration received by the Investing Management Company or an Investing Fund Affiliate from a Fund or a Fund Affiliate in connection with any services or transactions.
4. Once an investment by an Investing Fund in securities of a Fund exceeds the limit in section 12(d)(1)(A)(i) of the Act, the board of trustees of the Trust (“Board”), including a majority of the disinterested trustees, will determine that any consideration paid by the Fund to the Investing Fund or an Investing Funds Affiliate in connection with any services or transactions: (a) Is fair and reasonable in relation to the nature and quality of the services and benefits received by the Fund; (b) is within the range of consideration that the Fund would be required to pay to another unaffiliated entity in connection with the same services or transactions; and (c) does not involve overreaching on the part of any person concerned. This condition does not apply with respect to any services or transactions between a Fund and its investment adviser(s), or any person controlling, controlled by, or under common control with such investment adviser(s).
5. The Investing Fund Adviser, Trustee or Sponsor, as applicable, will waive fees otherwise payable to it by the
6. No Investing Fund or Investing Fund Affiliate (except to the extent it is acting in its capacity as an investment adviser to a Fund) will cause a Fund to purchase a security in an Affiliated Underwriting.
7. The Board, including a majority of the disinterested trustees, will adopt procedures reasonably designed to monitor any purchases of securities by a Fund in an Affiliated Underwriting, once an investment by an Investing Fund in the securities of the Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, including any purchases made directly from an Underwriting Affiliate. The Board will review these purchases periodically, but no less frequently than annually, to determine whether the purchases were influenced by the investment by the Investing Fund in the Fund. The Board will consider, among other things: (a) whether the purchases were consistent with the investment objectives and policies of the Fund; (b) how the performance of securities purchased in an Affiliated Underwriting compares to the performance of comparable securities purchased during a comparable period of time in underwritings other than Affiliated Underwritings or to a benchmark such as a comparable market index; and (c) whether the amount of securities purchased by the Fund in Affiliated Underwritings and the amount purchased directly from an Underwriting Affiliate have changed significantly from prior years. The Board will take any appropriate actions based on its review, including, if appropriate, the institution of procedures designed to ensure that purchases of securities in Affiliated Underwritings are in the best interest of shareholders of the Fund.
8. Each Fund will maintain and preserve permanently in an easily accessible place a written copy of the procedures described in the preceding condition, and any modifications to such procedures, and will maintain and preserve for a period of not less than six years from the end of the fiscal year in which any purchase in an Affiliated Underwriting occurred, the first two years in an easily accessible place, a written record of each purchase of securities in Affiliated Underwritings once an investment by an Investing Fund in the securities of the Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth from whom the securities were acquired, the identity of the underwriting syndicate's members, the terms of the purchase, and the information or materials upon which the Board's determinations were made.
9. Before investing in a Fund in excess of the limits in section 12(d)(1)(A), each Investing Fund and the Fund will execute an Investing Fund Participation Agreement stating, without limitation, that their respective boards of directors or trustees and their investment advisers, or Trustee and Sponsor, as applicable, understand the terms and conditions of the order, and agree to fulfill their responsibilities under the order. At the time of its investment in Shares of a Fund in excess of the limit in section 12(d)(1)(A)(i), an Investing Fund will notify the Fund of the investment. At such time, the Investing Fund will also transmit to the Fund a list of the names of each Investing Fund Affiliate and Underwriting Affiliate. The Investing Fund will notify the Fund of any changes to the list of names as soon as reasonably practicable after a change occurs. The Fund and the Investing Fund will maintain and preserve a copy of the order, the Investing Fund Participation Agreement, and the list with any updated information for the duration of the investment and for a period of not less than six years thereafter, the first two years in an easily accessible place.
10. Before approving any advisory contract under section 15 of the Act, the board of directors or trustees of each Investing Management Company, including a majority of the disinterested directors or trustees, will find that the advisory fees charged under such contract are based on services provided that will be in addition to, rather than duplicative of, the services provided under the advisory contract(s) of any Fund in which the Investing Management Company may invest. These findings and their basis will be recorded fully in the minute books of the appropriate Investing Management Company.
11. Any sales charges and/or service fees charged with respect to shares of an Investing Fund will not exceed the limits applicable to an Investing Fund as set forth in Conduct Rule 2830 of the NASD.
12. No Fund will acquire securities of an investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act, except to the extent permitted by exemptive relief from the Commission permitting the Fund to purchase shares of other investment companies for short-term cash management purposes.
For the Commission, by the Division of Investment Management, under delegated authority.
Pursuant to Section 19(b)(1) under the Securities Exchange Act of 1934 (the “Act”)
The Exchange is filing with the Securities and Exchange Commission (“Commission”) a proposed rule change to amend the Fee Schedule to create a new fee structure for Complex Orders on the BOX Market LLC (“BOX”) options facility. Changes to the fee schedule pursuant to this proposal will be effective upon filing. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's Internet 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 aspects of such statements.
The Exchange proposes to amend the Fee Schedule for trading on BOX to create a new fee structure for Complex Orders. The Exchange recently amended its rules related to trading Complex Orders
First, the Exchange proposes to establish a new section (Section III. Complex Order Transaction Fees) in the BOX Fee Schedule to detail the fee and credit structure for Complex Order executions (the “Complex Order Fees”). The remaining sections of the Fee Schedule (Eligible Orders Routed to an Away Exchange, Technology Fees, and Regulatory Fees) will be renumbered accordingly.
The Exchange then proposes to specify that the Complex Order Fees will be applied per contract per leg to all executions of Complex Orders. Executions of Complex Orders will not be subject to Sections I (Exchange Fees) and II (Liquidity Fees and Credits), and Complex Orders for Mini Options orders will be assessed 1/10th of the otherwise applicable Complex Order Fees.
The Exchange also proposes to count all Complex Order transactions by Market Makers toward their monthly average daily volume “ADV” as outlined in Section I.B. (Exchange Fees). BOX currently gives volume incentives for standard transaction fees to Market Makers that, on a daily basis, trade an average daily volume, as calculated at the end of the month, of more than 5,000 contracts on BOX. The Exchange notes that the Options Regulatory Fee outlined in Section V (Regulatory Fees) will apply to Complex Order Fees.
The Exchange then proposes that Complex Order Fees will be determined according to whether the Complex Order executes against orders on the BOX Book or against another Complex Order and according to the account types of the Participant submitting the Complex Order and the contra party.
In proposed Section III.A, Complex Orders Executed Against Orders on the BOX Book, the Exchange proposes to adopt a fee or credit based on the Participant's Account Type.
For example, if a Professional Customer's Complex Order A+B executes against orders on the BOX Book, the Professional Customer will be charged $0.90 ($0.45 for A, plus $0.45 for B). A Public Customer executing Complex Order A+B will receive a credit of $0.70 ($0.35 for A, plus $0.35 for B).
In proposed Section III.B, Complex Orders Executed Against Other Complex Orders, the Exchange proposes to adopt a fee or credit based on the Participant's account type and the contra party's account type. In these transactions, Complex Orders in penny pilot classes will be assessed a lower fee than those in non-penny pilot classes. This fee structure will apply when a Complex Order executes against another Complex Order on the Complex Order Book.
Specifically, the Exchange proposes to assess a distinct fee or credit, on a per contract per leg basis, for Complex Orders executed against another Complex Order on the Complex Order Book by each of Public Customers, Professional Customers, Broker Dealers and Market Makers depending upon the contra order account type in the transaction.
The Exchange proposes the fees and credits set forth in the table below (and included in proposed Section III.B) when Complex Orders execute against other Complex Orders on the Complex Order Book:
For example, if a Professional Customer's Complex Order A+B in a penny pilot class executes against a Public Customer's Complex Order on the Complex Order Book, the Professional Customer will be charged $0.90 ($0.45 for A, plus $0.45 for B) and the Public Customer will receive a $0.70 credit ($0.35 for A, plus $0.35 for B). To expand upon this example, if the Professional Customer's same Complex Order is executed against a Market Maker's Complex Order on the Complex Order Book, the Professional Customer will be charged $0.40 ($0.20 for A, plus $0.20 for B) and the Market Maker will be charged $0.20 ($0.10 for A, plus $0.10 for B).
In proposed Section III.C, Orders on BOX Book Executed Against Complex Orders, the Exchange proposes to clarify that orders on the BOX Book that execute against Complex Orders will be treated as standard orders for purposes of the Fee Schedule and continue to be subject to Sections I (Exchange Fees) and II (Liquidity Fees and Credits).
The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act,
The Exchange believes that the proposed Complex Order Fees are reasonable, equitable and non-discriminatory. In particular, the proposed Complex Order Fees will allow the Exchange to be competitive with other exchanges and to apply fees and credits in a manner that is equitable among all BOX Participants. The Exchange operates within a highly competitive market in which market participants can readily direct order flow to any other competing exchange if they determine fees at a particular exchange to be excessive. The proposed Complex Order Fees are intended to attract Complex Orders to the Exchange by offering market participants incentives to submit their Complex Orders to the Exchange. The Exchange believes it is appropriate to provide incentives for market participants to submit Complex Orders, resulting in greater liquidity and ultimately benefiting all Participants trading on the Exchange.
The Exchange believes that exempting Complex Orders from Section I (Exchange Fees) and Section II (Liquidity Fees and Credits) is reasonable, equitable and not unfairly discriminatory. The proposed Complex Order Fees are meant to take the place of Exchange Fees for Complex Order transactions. The Exchange's Liquidity Fees and Credits are intended to attract order flow to the Exchange by offering incentives to all market participants to submit orders to the Exchange and the Exchange believes that the proposed Complex Order fee structure will provided appropriate incentives to encourage Participants to submit Complex Orders. The Exchange believes that exempting Complex Orders from liquidity fees and credits is reasonable compared to the similar fees and credits offered by the other exchanges. The Exchange believes exempting Complex Orders from liquidity fees and credits is not unfairly discriminatory as the exemption of Complex Order transactions from exchange fees and liquidity fees and credits applies equally to all Participants on the Exchange.
The Exchange proposes Complex Order Fees in Mini Options at a rate that is 1/10th the rate of the otherwise applicable Complex Order Fees outlined above. The Exchange believes the proposed Complex Order Fees applicable to Mini Options are reasonable and equitable in light of the fact that Mini Options have a smaller exercise and assignment value, 1/10th that of a standard option contract. Therefore, assessing 1/10th of the otherwise applicable Complex Order Fees is appropriate for Complex Orders involving Mini Options. Furthermore, Mini Options have been approved for trading at several other competing exchanges and market participants can readily direct their Complex Order flow to any these exchanges if they determine the Exchange's Complex Order Mini Option fees to be excessive.
The Exchange also believes it is reasonable, equitable and not unfairly discriminatory to include Complex Order transaction volume in each Market Maker's ADV calculation because doing so will provide the Market Maker with an opportunity to qualify for discounted fees and, therefore, further incentivize these essential Participants to trade more order flow on the Exchange, which the Exchange believes will ultimately benefit all Participants trading on BOX.
Increased Market Maker order flow will also benefit all market participants by deepening the BOX liquidity pool, supporting the quality of price discovery, promoting market transparency and improving investor protection. The Exchange believes that including Complex Order transaction volume in the ADV calculation will provide additional incentive for Market Makers to increase Complex Order volume on BOX. Increased Complex Order volume increases potential revenue to BOX, allowing the Exchange to spread its administrative and infrastructure costs over a greater number of transactions, which could lead to lower costs per transaction. The Exchange believes that the volume based discounts for Market Makers are equitable because they are open to all Market Makers 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.
With regard to the proposed Complex Order Fees that will be determined
The Exchange believes that the proposed Complex Order Fee model is reasonable because a Public Customer submitting Complex Orders on BOX will recognize that it will not pay a fee for these transactions. Depending on where and with whom the Complex Order executes, the Public Customer may receive an additional benefit for submitting the order. Likewise, a Professional Customer or Broker Dealer submitting Complex Orders will recognize that it will not be charged more than $0.45 in penny pilot issues and $0.80 in non-penny pilot issues. The same is true for Market Makers, who will recognize that their maximum charge when submitting a Complex Order will be $0.40 in penny pilot issues and $0.75 in non-penny pilot issues.
The Exchange believes it is reasonable and equitable to assess Complex Order Fees based upon issue type, where the Complex Order executes, the account type of the Participant submitting the Complex Order and the contra party account type. The Exchange's Complex Order Fees must be competitive with other exchanges to attract order flow, execute orders and grow its market. The Exchange believes the proposed Complex Order Fees are competitive with both Arca and ISE.
The Exchange believes it is reasonable and equitable to provide credits for Public Customer Complex Orders and to charge fees to Professional Customers, Broker Dealers and Market Makers when their Complex Orders execute on the BOX Book. The Exchange believes that the proposed $0.35 credit for Public Customers, $0.45 fee for Professional Customers and Broker Dealers, and $0.40 fee for Market Makers strikes an appropriate balance between the fees charged for standard orders and the proposed Complex Order Fees. The Complex Order Fees will continue to encourage Participants to execute Complex Orders by ensuring that they receive similar incentives regardless of where their Complex Order executes. The Exchange believes this will help attract Complex Order flow to the Exchange and create increased liquidity, which will ultimately benefit all Participants trading on BOX. The proposed fees and credits are also competitive with the fees and credits offered for similar transactions on at least one other exchange.
The Exchange believes providing a credit to Public Customers for Complex Orders that execute against orders on the BOX Book is equitable and non-discriminatory. The securities markets generally, and BOX in particular, have historically aimed to improve markets for investors and develop various features within the market structure for customer benefit. Accordingly, the Exchange believes that providing a credit for Public Customer Complex Order transactions is appropriate and not unfairly discriminatory. Public Customers are less sophisticated than other Participants and the credit will help to attract a high level of Public Customer order flow to the Complex Order Book and create liquidity, which the Exchange believes will ultimately benefit all Participants trading on BOX.
The Exchange also believes it is equitable and not unfairly discriminatory for BOX Market Makers to be assessed lower fees than Professional Customers and Broker Dealers for Complex Orders that execute against orders on the BOX Book because of the significant contributions to overall market quality that Market Makers provide. Specifically, Market Makers can provide higher volumes of liquidity and lowering their Complex Order fees will help attract a higher level of Market Maker order flow to the Complex Order Book and create liquidity, which the Exchange believes will ultimately benefit all Participants trading on BOX. As such, the Exchange believes it is appropriate that Market Makers be charged lower Complex Order transaction fees. Market Makers also have additional obligations that are not applicable to Professional Customers and Broker Dealers.
As stated above, the Exchange believes that the Complex Order Fees proposed for Complex Orders that execute against other Complex Orders are reasonable and equitable. The proposed credits and fees are competitive with the credits offered for similar transactions on at least one other exchange.
The Exchange also believes it is reasonable to charge Professional Customers, Broker Dealers, and Market Makers less for executions in penny pilot issues because these classes are typically the more actively traded and assessing lower fees will further incentivize Complex Order transaction in penny pilot issues on the Exchange, ultimately benefiting all Participants trading on BOX. The Complex Order Fees are competitive with the fees and credits offered for similar transactions
The Exchange believes that it is equitable and not unfairly discriminatory to exempt Public Customers from Complex Order fees when executing against another Public Customer's Complex Order and provide a credit when the same order executes against other Participant's Complex Orders. As stated above, BOX has historically tried to develop features within the market structure for the benefit of the customer. As such, the Exchange believes that exempting and crediting Public Customer Complex Order transactions is appropriate and not unfairly discriminatory. Public Customers are less sophisticated than other Participants and the Exchange believes exempting and crediting Public Customer Complex Order transactions will help to attract a high level of Public Customer order flow to the Complex Order Book and create liquidity, which will ultimately benefit all Participants trading on BOX. In addition, the proposed fees and credits are competitive with the Complex Order fees and credits on at least one other exchange.
Further, the Exchange believes that the proposed Complex Order Fees for Professional Customers, Broker Dealers, and Market Makers interacting with other Complex Orders are equitable, reasonable and not unfairly discriminatory. Professional Customers, while Public Customers by virtue of not being Broker Dealers, generally engage in trading activity more similar to Broker Dealer proprietary trading accounts (more than 390 standard orders per day on average). The Exchange believes the relative activity of Professional Customers will be similar for Complex Orders, and the higher level of trading activity will draw a greater amount of BOX system resources than that of non-professional, Public Customers. Because this higher level of trading activity will result in greater ongoing operational costs, the Exchange aims to recover its costs by assessing Professional Customers and Broker Dealers a market competitive fee for Complex Order transactions.
Finally, the Exchange believes it is reasonable, equitable and non-discriminatory to give Public Customers a higher credit when their Complex Orders execute against a non-Public Customer on the Complex Order Book and, accordingly, charge non-Public Customers a higher fee when their Complex Order executes against a Public Customer on the Complex Order Book. The Exchange, and the securities market generally, aims to improve markets by developing features for the benefit of its customers. Similar to the payment for order flow and other pricing models that have been adopted by the Exchange and other exchanges to attract Public Customer order flow, the Exchange increases fees to non-Public Customers in order to provide incentives for Public Customers. The Exchange believes that providing incentives for Complex Order transactions by Public Customers is reasonable and, ultimately, will benefit all Participants trading on the Exchange by attracting Public Customer order flow. Accordingly, the Exchange believes that this fee differential is appropriate and not unfairly discriminatory.
The Exchange also believes it is equitable and not unfairly discriminatory for BOX Market Makers to be assessed lower Complex Order Fees than Professional Customers and Broker Dealers. As discussed above, Market Makers provide significant contributions to market quality and have additional obligations that Professional Customers and Broker Dealers do not.
The Exchange believes that the proposed Complex Order Fees will keep the Exchange competitive with other exchanges and will be applied in an equitable manner among all BOX Participants. The Exchange believes the proposed Complex Order Fees are fair and reasonable and competitive with fees in place on other exchanges. Further, the Exchange believes that the competitive marketplace impacts the fees proposed for BOX.
The Exchange believes that the Complex Order Fees will neither impose burdens on competition among various Exchange Participants nor impose any burden on competition among exchanges in the listed options marketplace, not necessary or appropriate in furtherance of the purposes of the Act. The proposed change is designed to create an appropriate fee structure for Complex Orders on the Exchange.
The Exchange believes that adopting Complex Order Fees will not impose a burden on competition among various Exchange Participants. BOX currently assesses distinct standard contract Exchange fees for different account and transaction types. The Exchange believes that applying a fee structure that is determined by whether the Complex Order executes against orders on the BOX Book or against other Complex Orders, and according to the account types of the Participant submitting the Complex Order and the contra party, will result in Participants being charged appropriately for these transactions. Submitting a Complex Order is entirely voluntary and Participants can determine which type of order they wish to submit, if any, to the Exchange.
Further, the Exchange believes that this proposal will enhance competition between exchanges because it is designed to allow the Exchange to better compete with other exchanges for Complex Order flow. In this regard, Complex Orders are a new order type being introduced by the Exchange and BOX is unable to absolutely determine the impact that the Complex Order Fees proposed herein will have on trading. That said, however, the Exchange believes that the proposed Complex Order Fees would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing exchanges. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
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 Exchange Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend the rule change if it appears to the Commission that the action is necessary or appropriate in the public interest, for the protection of investors, or would otherwise further the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to 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 (“Act”)
The proposed rule change is to modify the fee schedule related to NSCC's Portfolio Composition File Reporting in Addendum A of NSCC's Rules and Procedures (“Rules”), as described below.
In its filing with the Commission, NSCC 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. NSCC 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 for NSCC to revise its fee schedule (as listed in Addendum A of its Rules
Pursuant to this proposed rule change, NSCC implemented new fees for the offering of an enhanced reporting interface that allows Members to receive a Portfolio Composition File that contains only the Index Receipt
NSCC continues to make available to Members subscriptions to Legacy Files at the current fee rates.
Pursuant to the fee schedule in Addendum A of NSCC's Rules, Members are currently charged $125 per Legacy File.
The proposed rule change relates only to the enhanced reporting of Portfolio Composition Files and does not otherwise impact Index Receipt processing functionality.
The fee changes described above took effect on May 9, 2013.
NSCC is amending Addendum A of its Rules to include the fee schedule for “Subscription-based Portfolio Composition File Reporting,” as shown above. No other changes to the Rules are contemplated by this proposed rule change.
NSCC believes that the proposed rule change is consistent with the requirements of the Act, as amended, specifically Section 17A(b)(3)(D),
NSCC does not believe that the proposed rule change will have any impact, or impose any burden, on competition.
Written comments relating to the proposed rule change have not yet been solicited or received. NSCC will notify the Commission of any written comments received by NSCC.
The forgoing 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 in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC, 20549–1090.
All submissions should refer to File No. SR–NSCC–2013–06. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (
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 No. SR–NSCC–2013–06 and should be submitted on or before June 12, 2013.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
OCC proposes to accommodate the use of vault receipts or warehouse depository receipts in electronic form (“electronic receipts”), rather than vault receipts or warehouse depository receipts in physical form, to represent the metals underlying physically-settled futures contracts on metals (“Precious Metals Futures”) traded by NYSE Liffe US LLC (“NYSE Liffe US”).
In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The primary purpose of this proposed rule change is to revise OCC's Rules (the “Rules”) to accommodate NYSE Liffe US's transition to using electronic receipts, rather than vault receipts or warehouse depository receipts in physical form, to represent the metals underlying Precious Metals Futures. To make this accommodation, OCC proposes to revise its Rules regarding the delivery of the metals underlying such futures contracts to provide that the vault receipts used to facilitate settlement can be held in either electronic or physical form during a transition period and, after such transition period expires, must be in electronic form. In addition, the proposed Rules clarify that the warehouse depository receipts created by NYSE Liffe US represent a proportional interest in a specified pool of the vault receipts held by NYSE Liffe US for contracts such as 100 oz. gold futures and 5,000 oz. silver futures. Such warehouse depository receipts shall be used in the settlement of mini-sized gold and silver futures and shall, in all cases, be in electronic form. The proposed Rules also clarify that vault receipts that are subject to third party liens or encumbrances are not eligible to be delivered to settle obligations pertaining to Precious Metals Futures.
In the event of a default or insolvency by either the delivering or receiving Clearing Member with respect to a Precious Metals Futures contract, OCC is required to pay damages to the non-defaulting Clearing Member. The amount of damages is determined by OCC, taking into account the delivery payment amount for the applicable Precious Metals Futures contract, the market price of the underlying interest, market conditions generally and reasonable and customary transaction costs applicable to transactions in the underlying interest. As a means of allowing OCC to complete delivery of the underlying precious metals owed by, or recover the amount of damages from, the defaulting Clearing Member, the proposed Rules authorize OCC to maintain a perfected security interest, or lien, in the vault receipts tendered for delivery during the delivery process. This lien will be automatically released at 10:00 a.m. Central Time on the related delivery date unless by such time OCC provides NYSE Liffe US with a notification that there was a default by the delivering Clearing Member, thereby keeping the lien in place. OCC intends to perfect its security interest in three ways: (a) By control; (b) by possession through a bailee; and (c) by filing financing statements.
Revised Article 7 of the Uniform Commercial Code (“UCC”) permits a secured party with a security interest in an electronic document of title to perfect that security interest by “control.” Revised Article 7 of the UCC is in effect in Illinois, but not in New York. OCC believes that certain procedures undertaken by NYSE Liffe US through its electronic delivery system, as detailed in the Amended and Restated Clearing Agreement (which is governed by the law of the state of Illinois), (a) conform to the requirements of Revised Article 7 of the UCC, as in effect in Illinois, and (b) are designed to effect the perfection of OCC's security interest in the electronic receipts through “control.” OCC effects perfection of its security interest in the electronic receipts by “control” in accordance with Revised Article 7 of the UCC, because NYSE Liffe US's electronic delivery system reliably establishes OCC as the transferee of such electronic receipts during the delivery process.
In the event a court applies the laws of a jurisdiction that has not adopted Revised Article 7 of the UCC, OCC believes that its security interest in the electronic receipts would still be perfected under Article 9 of the UCC because of the bailment arrangements in place with the vaults holding the underlying precious metals. Each vault will sign a vault agreement agreeing that the vault holds the metals on behalf of OCC during the delivery process. OCC is an express third-party beneficiary of these vault agreements.
In addition, both OCC's Rules and the Amended and Restated Clearing Agreement provide for a secondary method of perfecting OCC's security interest in both the electronic receipts and the underlying precious metals through the filing of financing statements against each Clearing Member in accordance with Article 9 of the UCC. Filing financing statements is an effective way to perfect the security interest in jurisdictions with, and without, Revised Article 7 of the UCC in effect.
OCC believes that its primary and secondary perfection methods provide it with ample protection in the event of one of its clearing members fails to deliver a vault receipt that represent metals underling Precious Metals Futures. OCC perfected its security interest in such vault receipts through methods of perfection that work in jurisdictions that have adopted Revised Article 7 of the UCC, like Illinois, and in jurisdictions that have not, like New York. OCC has also adopted traditional perfection methods such as filing financing statements. Moreover, OCC requires each Clearing Member to deposit margin, which provides protection for OCC in the event of a Clearing Member's failure to satisfy its delivery or receipt obligations in respect of the settlement of Precious Metals Futures.
The proposed changes to OCC's By-Laws and Rules are consistent with the purposes and requirements of Section 17A(b)(3)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act” or “Act”), because they are designed to permit OCC to perform clearing services for products that are subject to the jurisdiction of the Commodity Futures Trading Commission (the “CFTC”) without adversely affecting OCC's obligations with respect to the prompt and accurate clearance and settlement of securities transactions or the protection of securities investors and the public interest. They accomplish this purpose by revising existing procedures regarding the delivery of metals underlying certain physically-settled futures and futures option contracts to make express provision for the use of warehouse depository receipts in electronic form and for a transition to the use of vault receipts that are also in electronic form as a more efficient method of delivery consistent with evolving industry practice. The proposed rule change is not inconsistent with any rules of OCC, including any rules proposed to be amended.
OCC does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the Act because it relates solely to a commodity futures product subject to the exclusive jurisdiction of the Commodity Futures Trading Commission and therefore will not have any impact, or impose any burden, on competition in securities markets or any other market governed by the Act.
Written comments on the proposed rule change were not and are not intended to be solicited with respect to the proposed rule change and none have been received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(i) 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.
All submissions should refer to File Number SR–OCC–2013–06. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (
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)(i) under Regulation NMS,
The Commission is publishing this notice to solicit comments from interested persons on the proposed Reversal Amendments.
On March 11, 2013, the Participants filed with the Commission for immediate effectiveness the Sixteenth Charges Amendment to the CTA Plan and the Eighth Charges Amendment to the CQ Plan (the “March 11 Filings”). Those two amendments (the “Two Amendments”) made a number of changes to the fees payable under the Plans in an effort to achieve greater simplicity and to reduce administrative burdens.
Among other things, they changed professional subscriber charges, nonprofessional subscriber charges, per-quote packet charges and access charges. They also added new redistribution charges, multiple feed charges and late-reporting charges, and the deletion of the Network B ticker charge.
In addition, they consolidated, simplified and updated the market data fee schedules under both Plans by replacing Schedules A–1 through A–4 of Exhibit E to the CTA Plan and Schedules A–1 through A–4 of Exhibit E to the CQ Plan with a single, consolidated fee schedule (the “CTA/CQ Fee Schedule”).
The Participants announced that all of those proposed changes would become effective as of April 1, 2013.
On March 27, 2013, the Participants filed with the Commission for immediate effectiveness the Seventeenth Charges Amendment to the CTA Plan and the Ninth Charges Amendment to the CQ Plan (the “March 27 Filings”).
The March 27 Filings amended the effective date for one of the professional subscriber device fee changes set forth in March 11 Filings, the change by which the Participants combined separate monthly device fees that professional subscribers pay for Network B last sale information under the CTA Plan and for Network B quotation information under the CQ Plan into one combined monthly fee of $24.00 per device for both last sale information and quotation information (the “Network B Device Fee Change”).
The March 27 Filings delayed the effective date of the Network B Device Fee Change from April 1, 2013 to July 1, 2013.
After consultation with Commission staff, the Participants propose to reverse all of the fee changes (the “Fee Simplification Changes”) set forth in the March 11 Filings and the March 27 Filings. As a result of the reversal, the Fee Simplification Changes set forth in the March 11 Filings would not be deemed to have taken effect on April 1, 2013 and the Fee Simplification Changes set forth in the March 27 Filings, would not take effect on July 1, 2013, meaning that the Participants would not implement the Fee Simplification Changes for the month of April 2013 or otherwise. The Participants anticipate re-examining the Fee Simplification Amendments with the potential for re-filing them at a later date.
Not applicable.
The Reversal Amendments shall be effective when this Agreement has been executed on behalf of each Participant and the amendment has been filed with the Commission. Once effective, the Reversal Amendment would cause the changes set forth in the March 11 Filings
Not applicable.
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 proposed plan 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.
Not applicable.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed amendments 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–2013–03 and should be submitted on or before June 12, 2013.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) under the Securities Exchange Act of 1934 (the “Act”)
The Exchange is filing with the Securities and Exchange Commission (“Commission”) a proposed rule change to amend the Fee Schedule to establish fees for Jumbo SPY Option transactions on the BOX Market LLC (“BOX”) options facility. While changes to the fee schedule pursuant to this proposal will be effective upon filing, the changes will become operative on May 10, 2013. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's Internet Web site at
In its filing with the Commission, the Exchange included statements
The Exchange received approval to list and trade option contracts overlying 1,000 shares of the SPDR® S&P® 500 Exchange-Traded Fund
The Exchange notes that in the approval order the Commission stated it believed “the listing and trading of Jumbo SPY Options could benefit investors by providing them with an additional investment alternative.” The Commission also stated “that the listing and trading of Jumbo SPY Options could benefit investors by providing another means to mitigate risk in managing large portfolios, particularly for institutional investors.”
The Exchange will list Jumbo SPY Options beginning May 10, 2013. The purpose of this filing is to establish transaction fees for trading in Jumbo SPY Options. In considering the appropriate and equitable amount for these transaction fees, the Exchange considered that it would like to promote trading in this new product by keeping the Jumbo SPY Options fees low and easy for investors to understand. The Exchange believes that the proposed transaction fees strikes the appropriate balance between establishing reasonable fees and the Exchange's goal of introducing a new product to the marketplace that is competitively priced.
The following is a discussion of the existing Fee Schedule as it relates to the treatment of Jumbo SPY Options as compared to standard option contracts.
The Exchange proposes to create a new category of Section I (Exchange Fees) for Jumbo SPY Option transactions. Currently the Exchange assesses exchange fees based on the transaction type and account type. Specifically, the Exchange has distinct fees for Auction Transactions (transactions executed through the BOX Price Improvement Period, Solicitation, and Facilitation auction mechanisms), and non-Auction Transactions (transactions executed on the BOX Book). The account types on BOX are Public Customer, Professional Customer, Broker-Dealer, and Market Maker (see BOX Rule 100 Series for definitions of each).
The Exchange proposes to create a new category of Exchange Fees for all Jumbo SPY Option transactions, regardless of whether the transaction is through an Auction or executed on the BOX Book (therefore a Non-Auction Transaction). Specifically the Exchange proposes to assess a $0.00 per contract fee for Public Customers and a $0.25 per contract fee for Professional Customers and Broker-Dealers. For Market Makers the Exchange proposes to assess either a $0.25 per contract fee or a tiered per contract execution fee based upon the Participant's monthly average daily volume (“ADV”) detailed in Section I.B of the Fee Schedule, whichever one is lower. For example, under Section I.B of the Fee Schedule a Market Maker with a monthly ADV of 6,000 contracts would be charged a per contract fee of $0.30. This amount is higher than $0.25 so the Market Maker would only be charged $0.25 per contract in Jumbo SPY Option transactions. However, if the Market Maker had a monthly ADV of 60,000 contracts, the per contract fee would be lowered to $0.18. This fee is lower than $0.25 so the Market Maker would be charged $0.18 per contract in any Jumbo SPY Option transactions.
For Exchange Fees that are based upon a Participant's monthly average daily volume (“ADV”) as outlined in Sections I.A. and I.B., the Exchange proposes to count all Jumbo SPY Option transactions the same as standard option transactions. The Exchange currently gives volume incentives for Initiating Participants based on their ADV in Auction Transactions, and for Market Makers based on their ADV in all transactions executed on BOX. For example, a Broker-Dealer initiating a Jumbo SPY Option Primary Improvement Order would be charged according to the proposed Jumbo SPY Option transaction sub-section outlined above, or $0.25. However, this transaction would count toward that Broker-Dealer's ADV in Auction Transactions under Section I.A.
The Exchange currently assesses liquidity fees and credits for all options classes traded on BOX (unless explicitly stated otherwise) that are applied in addition to any applicable Exchange Fees described above. The Exchange proposes to amend Section II.D (Exempt Transactions) to state that transactions in Jumbo SPY Options will also be considered exempt from all liquidity fees and credits.
The Exchange currently assesses fees and rebates for all Complex Order executions. The Exchange proposes to assess all Complex Order executions involving Jumbo SPY Options the standard Complex Order transaction fee under this section.
The Exchange is not proposing to adopt a routing fee for Jumbo SPY Options because Jumbo SPY Options are not currently traded on any other options exchange.
Presently the Exchange charges an Options Regulatory Fee (“ORF”) of $0.0030 per contract. The Options Regulatory Fee is assessed on each BOX Options Participant for all options transactions executed or cleared by the BOX Options Participant that are cleared by The Options Clearing Corporation (OCC) in the customer range regardless of the exchange on which the transaction occurs. The Exchange is proposing to charge the same rate for transactions in Jumbo SPY Options, since the costs to the Exchange to process quotes, orders, trades and the necessary regulatory surveillance programs and procedures in Jumbo SPY Options are the same as for standard contracts. As such, the Exchange feels that it is appropriate to charge the ORF at the same rate as the standard contract.
The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act,
In setting the proposed fees for Jumbo SPY Option transactions, the Exchange considered that it would like to promote trading in this new product by keeping the Jumbo SPY Option transaction fees low and easy for investors to understand. The Exchange believes that these fees strike the appropriate balance between establishing new fees and the Exchange's goal of introducing new products to the marketplace that are competitively priced.
First, the Exchange believes the proposed fees are reasonable and equitable because they provide comparable pricing to the transaction fees currently assessed by the Exchange. The Exchange also believes it is equitable and not unfairly discriminatory that Public Customers be charged $0.00 for transactions in Jumbo SPY Options. Public Customers are currently not charged PIP Order and Agency Order transactions, and establishing the same fee will help promote Public Customer order flow in Jumbo SPY Options. The securities markets generally, and BOX in particular, have historically aimed to improve markets for investors and develop various features within the market structure for customer benefit. As such, the Exchange believes the proposed fee for Public Customer transactions in Jumbo SPY Options is appropriate and not unfairly discriminatory. The Exchange believes it promotes the best interests of investors to have lower transaction costs for Public Customers, and that the proposed Jumbo SPY fees will attract Public Customer order flow to BOX.
Moreover, the Exchange believes that assessing a $0.25 fee for Jumbo SPY Option transactions by Professionals, Broker-Dealers, and in certain cases Market Makers, is reasonable because it will help promote trading in this new product. These Participants are currently charged higher fees for their Auction and Non-Auction Transactions, and assessing a lower fee than would otherwise be applicable will help generate trading in Jumbo SPY Options. The Exchange also believes that this fee is equitable and not unfairly discriminatory because these types of Participants are more sophisticated and have higher levels of order flow activity and system usage. This level of trading activity draws on a greater amount of BOX system resources than that of Public Customers, and thus, greater ongoing BOX operational costs. As such, rather than passing the costs of these higher order volumes along to all market participants, the Exchange believes it is more reasonable and equitable to assess those costs to the persons directly responsible. To that end, BOX aims to recover costs incurred by assessing Professionals, Broker-Dealers and Market Makers a higher fee for Jumbo SPY Option transactions than the fee proposed for Public Customers. Further, the Exchange believes that charging Professionals, Broker-Dealers and in certain cases Market Makers the same fee for all transactions in Jumbo SPY Options is not unfairly discriminatory as the fees will apply to these Participants equally. Additionally, Professionals and Broker-Dealers remain free to change the manner in which they access BOX.
Further, with regard to Jumbo SPY Option transaction fees, the Exchange believes it is equitable and not unfairly discriminatory for BOX Market Makers to have the opportunity to benefit from a potentially discounted fee than that charged to Broker-Dealers and Professional Customers. Market Makers also have additional obligations that are not applicable to Professional Customers and Broker-Dealers. In particular, they must maintain active two-sided markets in the classes in which they are appointed, and must meet certain minimum quoting requirements. As such, the Exchange believes it is appropriate that Market Makers be charged potentially lower Jumbo SPY Option transaction fees on BOX than the fees charged to Broker-Dealers and Professional Customers.
The Exchange believes that the proposed tiered and potentially discounted Jumbo SPY Options fees for Market Makers that, on a daily basis, trade an average daily volume (as calculated at the end of the month) of more than 50,000 contracts on BOX represent a fair and equitable allocation of reasonable dues, fees, and other charges as they are aimed at incentivizing these Participants to provide a greater volume of liquidity. Specifically, Market Makers can provide higher volumes of liquidity and possibly lowering their Jumbo SPY Option fees may help attract a higher level of Market Maker order flow to BOX and create liquidity, which the Exchange believes will ultimately benefit all Participants trading on BOX. As such, the Exchange believes it is appropriate that Market Makers may potentially be charged lower Jumbo SPY Option transaction fees.
The Exchange believes that the proposed Market Maker tiered execution fee for Jumbo SPY Options contracts is equitable because it is available to all Market Makers on an equal basis and provides discounts that are reasonably related to the size of the contract and the value to an exchange's market quality associated with higher levels of market activity. For the reasons listed above, the Exchange believes it is appropriate that Market Makers be charged potentially lower transaction fees for Jumbo SPY Options on BOX when they provide greater volumes of liquidity to the market.
The Exchange also believes it is reasonable, equitable and not unfairly discriminatory to combine the volume in standard options contracts and Jumbo SPY Options to calculate an Initiating Participant or Market Maker's ADV under Sections I.A. and I.B., because doing so will provide these Participants with an opportunity to qualify for lower transaction fees, therefore, incentivizing them to trade more order flow on the Exchange. Specifically, the Exchange believes that providing a volume discount to Options Participants that initiate auctions on Customer orders incentivizes these Participants to submit their customer orders to BOX, particularly into the PIP for potential price improvement. Even though they are treated differently in regards to the transaction fee assessed, Jumbo SPY Option Auction transactions are still Auction Transactions and Initiating Participants should receive the benefit of aggregating all their Auction transactions to more easily attain a discounted fee tier. The Exchange also believes it is reasonable, equitable and not unfairly discriminatory to combine volume in standard options and Jumbo SPY Options to calculate the tier a Market Maker has reached because doing so will provide the Market Maker with an opportunity to qualify for increased rebates and, therefore, incentivize Participants to trade more of such order flow on the Exchange.
The Exchange believes that the proposed Jumbo SPY Option Exchange Fees will be applied in such a manner so as to be equitable among all BOX Participants. The Exchange believes the proposed fees are fair and reasonable.
The Exchange proposes to assess Complex Orders involving Jumbo SPY Options the standard fees and credits outlined in Section III (Complex Order Transaction Fees). The Exchange believes the proposed Complex Order Fees applicable to Jumbo SPY Options are reasonable, equitable and non-
BOX believes that it is reasonable, equitable and not unfairly discriminatory to exempt Jumbo SPY Option transactions from Liquidity Fees and Credits. Liquidity fees and credits are intended to attract order flow to BOX by offering incentives to all market participants to submit their orders to BOX. While the Exchange believes that listing Jumbo SPY Options will benefit investors by providing additional methods to trade highly liquid SPY options and mitigate the risks inherent in managing large portfolios, due to the unique and novel nature of Jumbo SPY Options the Exchange believes it is reasonable to not provide additional incentives to market participants to submit orders in this product.
Further, since SPY options are currently the most actively traded option class in terms of average daily volume (“ADV”),
Further, the Exchange believes that this proposal is not unfairly discriminatory as the exemption of Jumbo SPY Options from liquidity fees and credits applies equally to all Participants and across all account types on the Exchange.
The Exchange is not proposing to adopt a routing fee for Jumbo SPY Options because Jumbo SPY Options are not currently traded on any other options exchange.
Finally, as discussed above, the Exchange believes that charging the same ORF for transactions in Jumbo SPY Options is reasonable, equitable and not unfairly discriminatory since the costs to the Exchange to process quotes, orders, trades and maintain the necessary regulatory surveillance programs and procedures in Jumbo SPY Options are the same as for standard options. The ORF is in place to help the Exchange offset regulatory expenses and the Exchange's cost of supervising and regulating Participants, including performing routine surveillances, and policy, rulemaking, interpretive, and enforcement activities remains the same for Jumbo SPY Options.
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. The Exchange believes that by offering Jumbo SPY Options it will encourage order flow to be directed to the Exchange, which will benefit all market participants by increasing liquidity on the Exchange. Specifically, the Exchange believes that adopting fees for Jumbo SPY Options that are low and easy for investors to understand will incentivize market participants to trade this new product and will not impose a burden on competition among various market participants on the Exchange but rather will continue to promote competition on the Exchange.
The Exchange believes that the adopting of the proposed fees for Jumbo SPY Options will not impose any unnecessary burden on intermarket competition because even though Jumbo SPY Options will be listed solely on the Exchange, the Exchange operates in a highly competitive market compromised of eleven exchanges, any of which may determine to trade a similar product. Also, Jumbo SPY Options should result in increased options volume and greater trading opportunities for all market participants.
The Exchange also believes that adopting fees on Jumbo SPY Options will not impose a burden on competition among various market participants on the Exchange. BOX currently assesses distinct standard contract Exchange fees for different account and transaction types. The Exchange believes that applying a similarly segmented fee structure to Jumbo SPY Options will result in these participants being charged proportionally for their transactions in Jumbo SPY Options.
Accordingly, the fees that are assessed by the Exchange described in the above proposal are influenced by these robust market forces and therefore must remain competitive with fees charged by other venues for other products, and therefore must continue to be reasonable and equitably allocated.
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 Exchange Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend the rule change if it appears to the Commission that the action is necessary or appropriate in the public interest, for the protection of investors, or would otherwise further the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change, as amended, 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 to amend its Fees Schedule. The text of the proposed rule change is available on the Exchange's Web site (
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.
Footnote 13 of the Exchange Fees Schedule places caps on transaction fees for transactions involving a number of different trading strategies, and states that, to qualify transactions for such caps, a rebate request with supporting documentation must be submitted to the Exchange within 3 business days of the transactions.
The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
CBOE 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. The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed change does not change to whom the Marketing Fee exemption for strategy executions applies; it merely states the manner for those executing such transactions to receive the exemption. The Exchange does not believe that the proposed rule change will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed change because only applies to trading on CBOE and does not amend any fees, or to whom such fees apply. To the extent that the more clear explanation of the manner by which a market participant executing a strategy transaction may apply for such transaction's exemption from the Marketing Fee may be attractive to market participants on other exchanges, such market participants may elect to become market participants on CBOE.
The Exchange neither solicited nor received comments on the proposed rule change.
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.
On March 21, 2013, NYSE Arca, Inc. (“Exchange” or “NYSE Arca”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act” or “Exchange Act”)
The Exchange proposes to list and trade Shares of the Fund under NYSE Arca Equities Rule 8.600, which governs the listing and trading of Managed Fund Shares. The Shares will be offered by AdvisorShares Trust (“Trust”), a statutory trust organized under the laws of the State of Delaware and registered
The Sub-Adviser will seek to achieve the Fund's investment objective by short selling a portfolio of foreign equity securities, U.S. exchange-listed and traded equity securities of non-U.S. organizations, and American Depositary Receipts (“ADRs”). The Fund may invest in such equity securities of any capitalization range and in any market sector at any time as necessary to seek to achieve the Fund's investment objective. Under normal circumstances,
The Fund will be actively managed and thus will not seek to replicate the performance of a specified passive index of securities. Instead, it will use an active investment strategy to seek to meet its investment objective. The Sub-Adviser, subject to the oversight of the Adviser and the Board of Trustees, will have discretion on a daily basis to manage the Fund's portfolio in accordance with the Fund's investment objective and investment policies. The Sub-Adviser will utilize various fundamental and technical research techniques in security selection. In selecting short positions, the Sub-Adviser will seek to identify securities that may be overvalued and due for capital depreciation. Once a position is included in the Fund's portfolio, it will be subject to regular fundamental and technical risk management review.
The equity securities in which the Fund may invest consist of common stocks, preferred stocks, warrants to acquire common stock, securities convertible into common stock, investments in master limited partnerships, rights, and REITs. The Fund may transact in equity securities traded in the U.S. on registered exchanges or, in the case of ADRs, the over-the-counter market. The Fund may short sell up to 10% of its total assets in unsponsored ADRs. The Fund may invest in the equity securities of foreign issuers, including the securities of foreign issuers in emerging market countries.
The Fund may invest in issuers located outside the United States directly, or in financial instruments that are indirectly linked to the performance of foreign issuers. Examples of such financial instruments include ADRs, Global Depositary Receipts (“GDRs”), European Depositary Receipts (“EDRs”), International Depository Receipts (“IDRs”), “ordinary shares,” and “New York shares.”
The Fund may engage regularly in short sales transactions in which the Fund sells a security it does not own. To complete such a transaction, the Fund must borrow or otherwise obtain the security to make delivery to the buyer. The Fund then is obligated to replace the security borrowed by purchasing the security at the market price at the time of replacement. The price at such time may be more or less than the price at which the security was sold by the Fund. Until the security is replaced, the Fund will be required to pay to the lender amounts equal to any dividends or interest, which accrue during the period of the loan. To borrow the security, the Fund also may be required to pay a premium, which would increase the cost of the security sold. The Fund may also use repurchase agreements to satisfy delivery obligations in short sales transactions. The proceeds of the short sale will be retained by the broker, to the extent necessary to meet the margin requirements, until the short position is closed out.
Until the Fund closes its short position or replaces the borrowed security, the Fund will: (a) Maintain a segregated account containing cash or liquid securities at such a level that (i) the amount deposited in the account plus the amount deposited with the broker as collateral will equal the current value of the security sold short and (ii) the amount deposited in the segregated account plus the amount deposited with the broker as collateral will not be less than the market value of the security at the time the security was sold short; or (b) otherwise cover the Fund's short position. The Fund may use up to 100% of its portfolio to engage in short sales transactions and collateralize its open short positions.
While the Fund will invest at least 80% of its assets as described above, the Fund may invest in certain other investments, as described below. The
The Fund may invest in several different types of investment companies from time to time, including mutual funds and business development companies (“BDCs”),
The Fund may invest, under normal circumstances, up to 10% of its net assets in debt securities. Debt securities include a variety of fixed income obligations, including, but not limited to, corporate debt securities, government securities, municipal securities, convertible securities, and mortgage-backed securities. Debt securities include investment-grade securities, non-investment-grade securities, and unrated securities. The Fund may invest in non-investment-grade securities.
The Fund may enter into repurchase agreements with financial institutions, which may be deemed to be loans.
The Fund, in the ordinary course of business, may purchase securities on a when-issued or delayed-delivery basis (
To respond to adverse market, economic, political or other conditions, the Fund may refrain from short selling and increase its investment in U.S. government securities, short-term high quality fixed income securities, money market instruments, overnight and fixed-term repurchase agreements, cash and cash equivalents with maturities of one year or less. The Fund may hold little or no short positions for extended periods, depending on the Sub-Adviser's assessment of market conditions.
The Fund may not (i) with respect to 75% of its total assets, purchase securities of any issuer (except securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities or shares of investment companies) if, as a result, more than 5% of its total assets would be invested in the securities of such issuer; or (ii) acquire more than 10% of the outstanding voting securities of any one issuer. In addition, the Fund may not invest 25% or more of its total assets in the securities of one or more issuers conducting their principal business activities in the same industry or group of industries. The Fund will not invest 25% or more of its total assets in any investment company that so concentrates. This limitation does not apply to investments in securities issued or guaranteed by the U.S.
The Fund may hold up to an aggregate amount of 15% of its net assets in illiquid securities (calculated at the time of investment), including Rule 144A securities. The Fund will monitor its portfolio liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained, and will consider taking appropriate steps in order to maintain adequate liquidity if, through a change in values, net assets, or other circumstances, more than 15% of the Fund's net assets are held in illiquid securities. Illiquid securities include securities subject to contractual or other restrictions on resale and other instruments that lack readily available markets as determined in accordance with Commission staff guidance.
The Fund will seek to qualify for treatment as a Regulated Investment Company under the Internal Revenue Code. The Fund will not invest in options contracts, futures contracts, or swap agreements. The Fund's investments will be consistent with the Fund's investment objective and will not be used to enhance leverage.
Additional information regarding the Fund; Shares; investment objective, strategies, methodology, and restrictions; risks; fees and expenses; creations and redemptions of Shares; availability of information; trading rules and halts; and surveillance procedures, among other things, can be found in the Registration Statement and in the Notice, as applicable.
After careful review, the Commission finds that the Exchange's proposal to list and trade the Shares is consistent with the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange.
The Commission finds that the proposal to list and trade the Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the Exchange Act,
The Commission further believes that the proposal to list and trade the Shares is reasonably designed to promote fair disclosure of information that may be necessary to price the Shares appropriately and to prevent trading when a reasonable degree of transparency cannot be assured. The Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the Disclosed Portfolio will be made available to all market participants at the same time.
The Exchange represents that the Shares are deemed to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. In support of this proposal, the Exchange has made representations, including:
(1) The Shares will conform to the initial and continuing listing criteria under NYSE Arca Equities Rule 8.600.
(2) The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws and that these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws.
(3) Except for up to 10% of ADRs, which may be unsponsored, the Fund will invest only in equity securities (including financial instruments that are linked to the performance of foreign issuers),
(4) The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions.
(5) Prior to the commencement of trading, the Exchange will inform its Equity Trading Permit Holders in an Information Bulletin of the special characteristics and risks associated with trading the Shares. Specifically, the Information Bulletin will discuss the following: (a) The procedures for purchases and redemptions of Shares and that Shares are not individually redeemable; (b) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence on its Equity Trading Permit Holders to learn the essential facts relating to every customer prior to trading the Shares; (c) the risks involved in trading the Shares during the Opening and Late Trading Sessions when an updated Portfolio Indicative Value will not be calculated or publicly disseminated; (d) how information regarding the Portfolio Indicative Value is disseminated; (e) the requirement that Equity Trading Permit Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (f) trading information.
(6) For initial and continued listing, the Fund will be in compliance with Rule 10A–3 under the Exchange Act,
(7) The Fund will not invest in options contracts, futures contracts, or swap agreements.
(8) The Fund's investments will be consistent with its respective investment objective and will not be used to enhance leverage.
(9) The Fund may hold up to an aggregate amount of 15% of its net assets in illiquid securities (calculated at the time of investment), including Rule 144A securities.
(10) A minimum of 100,000 Shares for the Fund will be outstanding at the commencement of trading on the Exchange.
For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendment No. 1 thereto, is consistent with Section 6(b)(5) of the Act
It is therefore ordered, pursuant to Section 19(b)(2) of the Exchange 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 fees applicable to Members and non-members in order to encourage use of connectivity that provides redundant access to the Exchange by eliminating any potential fees for logical ports
The Exchange currently charges a monthly fee for ports used to enter orders in the Exchange's trading system and to receive data from the Exchange. The Exchange currently charges $400.00 per month per “pair” of any port type other than a Multicast PITCH Spin Server Port or a GRP Port.
In addition, the Exchange proposes to modify the description of the billing for ports related to the Exchange's Multicast PITCH data feed.
Similarly, the Exchange proposes to modify its fee schedule in order to allow Members and non-members to take redundant Multicast PITCH data feeds from the Exchange. The Exchange's Multicast PITCH data feed is currently offered through two primary feeds, identified as the “A feed” and the “C feed”, which contain the same information but differ only in the way such feeds are received. The Exchange is in the process of commencing to offer redundant versions of the Multicast PITCH data feed and does not intend for Members and non-members that connect to such feeds to incur additional port fees. As such, the Exchange is proposing to modify its description of Multicast PITCH logical port fees so that only ports necessary to take a primary feed (either A or C), and not redundant versions of such feed, are subject to logical port fees. Again, the Exchange wishes to encourage Members and non-members to establish connectivity for business continuity purposes, including in the event the Exchange's data center is fully operational but a specific version of an Exchange data feed becomes unavailable.
Based on the proposal, the change applies to Members that obtain ports for direct access to the Exchange, Sponsored Participants sponsored by Members to receive direct access to the Exchange, non-member service bureaus that act as a conduit for orders entered by Exchange Members that are their customers, and market data recipients.
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 Exchange believes that its proposed changes to logical port fees are reasonable in light of the fact that all such changes are intended to ensure that Members and non-members are able to establish redundant connections to the Exchange without incurring additional logical port fees. In addition, the Exchange believes that the proposed changes to fees are equitably allocated among Exchange constituents as the cost savings for redundant connectivity will be available to all such constituents. The Exchange reiterates that the change
The Exchange also believes that providing financial incentives to use Exchange technology that the Exchange believes is the most technologically efficient for the Exchange and its constituents is a fair and equitable approach to pricing. Accordingly, the Exchange believes that promotion of its Multicast PITCH data feed through the continued offering of free logical ports is fair and equitable. The Multicast PITCH data feed is available to all Members, and as such, all Members have the ability to receive applicable Multicast PITCH ports free of charge. Further, the Exchange believes that promoting the use of redundant connectivity is reasonable, fair and equitable and not unreasonably discriminatory as it is uniform in application amongst Members and non-members and should enable such participants to enhance their business continuity planning.
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. To the contrary, the Exchange will not assess new fees as part of the proposal. Instead, the proposal is focused on enhancing the clarity of the fee schedule and reducing barriers to Exchange Members and non-member constituents that may be seeking to establish redundant connections to the Exchange.
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 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 to amend an amendment to the bylaws of its wholly-owned subsidiary NYSE Regulation, Inc. (“NYSE Regulation”) to eliminate a requirement that not less than two members of the board of directors of NYSE Regulation must qualify as “fair representation candidates” (as that term is defined in those bylaws). A requirement that such directors constitute a minimum of 20% of the board would remain in place. 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 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 is proposing to amend the Fourth Amended and Restated Bylaws of NYSE Regulation (“NYSE Regulation Bylaws”) to eliminate the requirement that not less than two members of the NYSE Regulation board of directors must be “fair representation candidates” (as defined in the NYSE Regulation Bylaws).
As defined in the NYSE Regulation Bylaws, fair representation candidates are Board members who are determined by member organizations of the Exchange through a specified petition process (“Petition Candidates”) or, in the absence of a sufficient number of Petition Candidates, candidates recommended by the Director Candidate Recommendation Committee (the “DCRC”) of NYSE Regulation. In addition, fair representation candidates for the NYSE Regulation Board must qualify as “non-affiliated directors” (as such term is defined in the NYSE Regulation Bylaws), i.e., U.S. Persons who are not members of the board of directors of NYSE Euronext and qualify as independent under the director independence policy of NYSE Regulation.
The NYSE Regulation Bylaws also provide that the Board shall consist of not less than three persons and that the number of directors shall be fixed from time to time by the Exchange, as sole equity member of NYSE Regulation. The size of the NYSE Regulation Board is currently fixed at five members, of which four positions are currently filled and one is open.
The Exchange believes that elimination of the two-director minimum requirement for fair representation candidates is consistent with the governance structures of other national securities exchanges that have been approved by the Securities and Exchange Commission (the “Commission”). For example, Article III, Section 5(e) of the By-Laws of the NASDAQ Stock Market LLC (“NASDAQ”) requires that the Regulatory Oversight Committee of the NASDAQ Board of Directors (the “NASDAQ ROC”), which has an oversight role comparable to that of the NYSE Regulation Board, must consist of three members, each of whom must be a Public Director (i.e., “a Director who has no material business relationship with a broker or dealer, [NASDAQ] or its affiliates, or FINRA”) and “independent director” as defined by NASDAQ Marketplace Rule 4200. There is no requirement that the NASDAQ ROC have any members who would be the equivalent of a fair representation candidate on the NYSE Regulation Board.
More recently, the Commission has approved a similar change to that proposed herein to the Operating Agreement of the Exchange and to the Bylaws of the Exchange's wholly owned subsidiary, NYSE Market, Inc.
Accordingly, approval of the change to the NYSE Regulation Bylaws proposed herein will leave NYSE Regulation with a governance structure that is completely consistent with similar structures that the Commission has approved for the Exchange, for other subsidiaries and affiliates of the Exchange and for other national securities exchanges.
The Exchange believes that the proposed rule change is consistent with Section 6(b)
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. The proposed rule change relates solely to the implementation of a more efficient and effective governance structure for NYSE Regulation and will have no effect on the NYSE's business operations or competitive position.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to 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 (“Act”),
The Exchange proposes to extend the pilot program in Rule 1059, Accommodation Transactions, to allow cabinet trading to take place below $1 per option contract under specified circumstances (the “pilot program”).
The text of the proposed rule change is set forth below. Proposed new language is underlined; proposed deletions are in brackets.
(a)–(b) No change.
.01 No change.
.02 Limit Orders Priced Below $1: Limit orders with a price of at least $0 but less than $1 per option contract may trade under the terms and conditions in Rule 1059 above in each series of option contracts open for trading on the Exchange, except that:
(a)–(c) No change.
(d) Unless otherwise extended, the effectiveness of the Commentary .02
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 Exchange proposes to extend the pilot program in Commentary .02 of Exchange Rule 1059, Accommodation Transactions, which sets forth specific procedures for engaging in cabinet trades, to allow the Commission adequate time to consider permanently allowing transactions to take place on the Exchange in open outcry at a price of at least $0 but less than $1 per option contract.
On December 30, 2010, the Exchange filed an immediately effective proposal that established the pilot program being extended by this filing. The pilot program allowed transactions to take place in open outcry at a price of at least $0 but less than $1 per option contract until June 1, 2011.
The Exchange believes that allowing a price of at least $0 but less than $1 will continue to better accommodate the closing of options positions in series that are worthless or not actively traded, particularly due to recent market conditions which have resulted in a significant number of series being out-of-the-money. For example, a market participant might have a long position in a call series with a strike price of $100 and the underlying stock might now be trading at $30. In such an instance, there might not otherwise be a market for that person to close-out its position even at the $1 cabinet price (e.g., the series might be quoted no bid).
The Exchange hereby seeks to extend the pilot period for such $1 cabinet trading until January 5, 2014. The Exchange seeks this extension to allow the procedures to continue without interruption.
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 proposal does not raise any issues of intra-market competition because it applies to all options participants in the same manner.
No written comments were either solicited or received.
Because the foregoing 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
All submissions should refer to File Number SR–Phlx–2013–53. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
As more fully discussed below, the proposed rule change is to modify DTC's Fee Schedule, to include revising, consolidating, and adding certain fees associated with corporate action events.
In its filing with the Commission, DTC 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. DTC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements.
The purpose of this proposed rule change is for DTC to revise its Fee Schedule
Currently, DTC charges its Participants fees for different event types and processes associated with corporate actions. DTC's Fee Schedule includes 60 different fees related to corporate actions.
Pursuant to the proposed rule change, DTC is reducing the number of fees associated with corporate actions and grouping such fees into five categories based on transaction type: Allocations, Elections, Voluntary Corporate Action Event Handling, Treasury Shares Adjustments, and Coupon Processing. As such, the total number of fees relating to corporate actions is reduced from 60 to16.
Additionally, DTC states that it is modifying the fee structure associated with the processing of corporate action events to align the fee with the appropriate level of risk and operational cost associated with the event. For example, DTC is reducing fees related to events with more automation and less complexity, since such events present less risk in processing. Examples of such events include those that require payments for principal and interest, redemptions, and cash and stock dividends.
Similarly, DTC is increasing fees for events that it believes present more risk and require manual intervention, such as mandatory and voluntary corporate events. DTC believes those events are considered riskier because they have greater complexity, and they require enhanced due diligence by DTC to ascertain exact event details, client entitlements, and payment calculations.
DTC is also introducing a new fee related to consent-only processing of reorganization events.
DTC is also implementing a new late notification of corporate events fee in the event that an agent does not comply with certain operational arrangements that require the agent to notify DTC no fewer than 10 days in advance of expiration of a corporate action event.
Additionally, DTC is eliminating announcement-related fees and introducing a voluntary event handling fee.
DTC is also increasing fees associated with the proxy record date meeting, in order to align the fees with the operational cost of handling those events.
DTC believes that the fee revisions discussed above are consistent with DTC's overall service pricing philosophy—to align service fees with the underlying costs and to discourage manual and exception processing.
The effective date for fee changes contained in the proposed rule change, as outlined above, is July 1, 2013.
DTC believes that the proposed rule change is consistent with the requirements of the Act, as amended, specifically Section 17A(b)(3)(D),
DTC does not believe that the proposed rule change will have any impact, or impose any burden, on competition.
Written comments relating to the proposed rule change have not yet been solicited or received. DTC will notify the Commission of any written comments received by DTC.
The forgoing 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 in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
All submissions should refer to File No. SR–DTC–2013–06. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (
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 No. SR–DTC–2013–06 and should be submitted on or before June 12, 2013.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
U.S. Small Business Administration (SBA).
Notice of open meeting of the Regional (Region X) Small Business Regulatory Fairness Board.
The (SBA) Office of the National Ombudsman is issuing this notice to announce the location, date and time of the Regional Small Business Regulatory Fairness hearing. This meeting is open to the public.
The hearing will be held on Thursday, June 6, 2013 from 9:00 a.m. to 11:30 a.m. (PST).
The meeting will be at The Rainer Club, 820—4th Avenue, Seattle, WA 98104–1653.
Pursuant to the Small Business Regulatory Enforcement Fairness Act (Pub. L. 104–121), Sec. 222, SBA announces the meeting for Business Organizations, Trade Associations, Chambers of Commerce and related organizations serving small business concerns to report experiences regarding unfair or excessive Federal regulatory enforcement issues affecting their members.
The meeting is open to the public; however, advance notice of attendance is requested. Anyone wishing to attend and/or make a presentation to the Region X Regulatory Fairness Board must contact José Méndez by May 30, 2013 in writing, by fax or email in order to be placed on the agenda. José Méndez, Case Management Specialist, SBA, Headquarters, 409 3rd Street SW., Suite 7125, Washington, DC, phone (202) 205–6178 and fax (202) 481–2707, email:
For more information on the Office of the National Ombudsman, see our Web site at
U.S. Small Business Administration.
Notice of intent to waive the Nonmanufacturer Rule for commercial-type ovens, gas ranges, and ranges.
The U.S. Small Business Administration (SBA) is considering granting a class waiver of the Nonmanufacturer Rule for commercial-type ovens, gas ranges, and ranges, under Product Service Code (PSC) 7310 (Food Cooking, Baking, and Serving Equipment), under the North American Industry Classification System (NAICS) code 333318 (Other Commercial and Service Industry Machinery Manufacturing). According to the waiver request, no small business manufacturers supply this class of products to the Federal government. Thus, SBA is seeking information on whether there are small business manufacturers of these items. If granted, the waiver would allow otherwise qualified small businesses to supply the product of any manufacturer on a Federal contract set aside for small businesses, Service-Disabled Veteran-Owned (SDVO) small businesses, Participants in the SBA's 8(a) Business Development (BD) program, or Women-Owned Small Businesses (WOSBs).
Comments and source information must be submitted July 8, 2013.
You may submit comments and source information, identified by docket number SBA–2013–0005, by any of the following methods:
(1)
(2)
All comments will be posted on
Edward Halstead, by telephone at (202) 205–9885, or by email at
Section 8(a)(17) of the Small Business Act (Act), 15 USC 637(a)(17), and SBA's implementing regulations require that recipients of Federal contracts for supplies which are set aside for small businesses, Service-Disabled Veteran-Owned (SDVO) small businesses, Women-Owned Small Businesses (WOSBs), or Participants in SBA's 8(a) BD Program must provide the product of a small business manufacturer or processor, if the recipient is other than the actual manufacturer or processor of the product. This requirement is commonly referred to as the Nonmanufacturer Rule. 13 CFR 121.406(b). Section 8(a)(17)(B)(iv)(II) of the Act authorizes SBA to waive the Nonmanufacturer Rule for any class of products for which there are no small business manufacturers or processors available to participate in the Federal market.
In order to be considered available to participate in the Federal market for a class of products, a small business manufacturer must have been awarded or have performed a contract to supply a specific class of products to the Federal Government within 24 months from the date of the request for waiver, either directly or through a dealer, or have submitted an offer on a solicitation for that class of products within that time frame. 13 CFR 121.1202(c). SBA defines “class of products” as an individual subdivision within a (NAICS) Industry Number as established by the Office of Management and Budget in the NAICS Manual. 13 CFR 121.1202(d). In addition, SBA uses (PSCs) to further identify particular products within the NAICS code to which a waiver would apply.
On July 12, 2012, SBA received a request to waive the Nonmanufacturer Rule for commercial ovens and broilers, PSC 7310, under NAICS code 333319 (Other Commercial and Service Industry Machinery Manufacturing). SBA notes that at the time of the request, these items were classified under NAICS code 333319. However, effective October 1, 2012, SBA published revised NAICS codes and Small Business Size Standards, for purposes of Government procurement. As a result of this change, NAICS code 333319 is eliminated from the 2012 NAICS code listing and the items requested for waiver are now listed under the 2012 NAICS code 333318.
The public is invited to comment or provide source information to SBA on the proposed waiver of the Nonmanufacturer Rule for the products described in this notice within 45 days after the date of publication in the
Federal Aviation Administration, DOT.
Notice.
The Federal Aviation Administration (FAA) announces its findings on the noise compatibility program submitted by the Tweed-New Haven Airport Authority under the provisions of Title I of the Aviation Safety and Noise Abatement Act of 1979 (Pub. L. 96–193) and 14 CFR part 150. These findings are made in recognition of the description of federal and non-federal responsibilities in Senate Report No. 96–52 (1980). On November 26, 2012, the FAA determined that the noise exposure maps submitted by the City of Portland under Part 150 were in compliance with applicable requirements. On May 9, 2013, the New England Region Airports Division Regional Manager approved the noise compatibility program. Seventeen of the proposed program elements were approved, or approved in part. Four of the elements were disapproved.
Richard Doucette, Federal Aviation Administration, New England Region, Airports Division, 12 New England Executive Park, Burlington, Massachusetts 01803, Telephone (781) 238–7613. Documents reflecting this FAA action may be obtained from the same individual.
This notice announces that the FAA has given its overall approval to the Tweed-New Haven Regional Airport noise compatibility program, effective May 9, 2013.
Under Section 104(a) of the Aviation Safety and Noise Abatement Act of 1979 (hereinafter the Act), an airport operator who has previously submitted a noise exposure map may submit to the FAA a noise compatibility program which sets forth the measures taken or proposed by the airport operator for the reduction of existing non-compatible land uses and prevention of additional non-compatible land uses within the area covered by the noise exposure maps.
The Act requires such programs to be developed in consultation with interested and affected parties including local communities, government agencies, airport users, and FAA personnel.
Each airport noise compatibility program developed in accordance with Federal Aviation Regulation (FAR), Part 150 is a local program, not a federal program. The FAA does not substitute its judgment for that of the airport proprietor with respect to which measures should be recommended for action. The FAA's approval or disapproval of FAR Part 150 program recommendations is measured according to the standards expressed in Part 150 and the Act, and is limited to the following determinations:
(a) The noise compatibility program was developed in accordance with the provisions and procedures of FAR Part 150;
(b) program measures are reasonably consistent with achieving the goals of reducing existing non-compatible land uses around the airport and preventing the introduction of additional non-compatible land uses;
(c) program measures would not create an undue burden on interstate or foreign commerce, unjustly discriminate against types or classes of aeronautical uses, violate the terms of airport grant agreements, or intrude into areas
(d) program measures relating to the use of flight procedures can be implemented within the period covered by the program without derogating safety, adversely affecting the efficient use and management of the navigable airspace and air traffic control systems, or adversely affecting other powers and responsibilities of the Administrator as prescribed by law.
Specific limitations with respect to FAA's approval of an airport noise compatibility program are delineated in FAR Part 150, Section 150.5. Approval is not a determination concerning the acceptability of land uses under Federal, state, or local law. Approval does not by itself constitute a FAA implementing action. A request for Federal action or approval to implement specific noise compatibility measures may be required, and an FAA decision on the request may require an environmental assessment of the proposed action.
Approval does not constitute a commitment by the FAA to financially assist in the implementation of the program nor a determination that all measures covered by the program are eligible for grant-in-aid funding from the FAA under the Airport and Airway Improvement Act of 1982. Where Federal funding is sought, requests for project grants must be submitted to the FAA Regional Office in Burlington, Massachusetts.
The Tweed-New Haven Airport Authority submitted to the FAA, on November 13, 2012, noise exposure maps, descriptions, and other documentation produced during the noise compatibility planning study conducted from 2010 to 2012. The Tweed-New Haven Regional Airport noise exposure maps were determined by FAA to be in compliance with applicable requirements on November 26, 2012. Notice of this determination was published in the
The Tweed-New Haven Regional Airport study contains a proposed noise compatibility program comprised of actions designed for implementation by airport management and adjacent jurisdictions from the date of study completion to beyond the year 2018. The Tweed-New Haven Airport Authority requested that the FAA evaluate and approve this material as a noise compatibility program as described in Section 104(b) of the Act. The FAA began its review of the program on November 26, 2012, and was required by a provision of the Act to approve or disapprove the program within 180 days (other than the use of new flight procedures for noise control). Failure to approve or disapprove such a program within the 180-day period shall be deemed to be an approval of such a program.
The submitted program contained 21 proposed actions for noise mitigation on and off the airport. The FAA completed its review and determined that the procedural and substantive requirements of the Act and FAR Part 150 have been satisfied. The New England Region Airports Division Manager therefore approved the overall program effective May 9, 2013.
FAA's determinations are set forth in detail in a Record of Approval endorsed by the Acting Associate Administrator on May 9, 2013. The Record of Approval, as well as other evaluation materials and the documents comprising the submittal, are available for review at the FAA office listed above and at the administrative offices of Tweed-New Haven Regional Airport.
In accordance with Part 211 of Title 49 of the Code of Federal Regulations (CFR), this document provides the public notice that by a document received on March 19, 2013, the North Shore Railroad Company (NSHR) has petitioned the Federal Railroad Administration (FRA) for a waiver of compliance from certain provisions of the Federal railroad safety regulations contained at 49 CFR part 223. FRA assigned the petition Docket Number FRA–2013–0028.
NSHR petitioned FRA to grant a waiver of compliance from the safety glazing provisions of 49 CFR 223.15,
ORXX 3247 has 24 side windows and no end windows. Nineteen side windows are 27″ × 61″ and five are 27″ × 25″. Each window has dual-pane-style laminated safety glazing (plated outside and laminated inside). None of the windows opens; however, the two emergency exit windows on each end of ORXX 3247 are clearly marked and have hammers mounted on them to break out glazing under emergency conditions. ORXX 3247 is equipped with flashlights, other battery-powered lighting, and an axe.
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:
•
•
•
•
Communications received by July 8, 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
Maritime Administration, Department of Transportation.
Notice.
As authorized by 46 U.S.C. 12121, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before June 21, 2013.
Comments should refer to docket number MARAD–2013–0056. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. Department of Transportation, Docket Operations, M–30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590. You may also send comments electronically via the Internet at
Linda Williams, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE., Room W23–453, Washington, DC 20590. Telephone 202–366–0903, Email
As described by the applicant the intended service of the vessel MON AMI is:
The complete application is given in DOT docket MARAD–2013–0056 at
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
By Order of the Maritime Administrator.
Maritime Administration, Department of Transportation.
Notice.
As authorized by 46 U.S.C. 12121, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before June 21, 2013.
Comments should refer to docket number MARAD–2013–0058. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. Department of Transportation, Docket Operations, M–30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590. You may also send comments electronically via the Internet at
Linda Williams, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE., Room W23–453, Washington, DC 20590. Telephone 202–366–0903, Email
As described by the applicant the intended service of the vessel WIPE OUT 2 is:
The complete application is given in DOT docket MARAD–2013–0058 at
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
By Order of the Maritime Administrator.
Maritime Administration, Department of Transportation.
Notice.
As authorized by 46 U.S.C. 12121, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before June 21, 2013.
Comments should refer to docket number MARAD–2013–0060. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. Department of Transportation, Docket Operations, M–30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590. You may also send comments electronically via the Internet at
Linda Williams, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE., Room W23–453, Washington, DC 20590. Telephone 202–366–0903, Email
As described by the applicant the intended service of the vessel SAFARI is:
The complete application is given in DOT docket MARAD–2013–0060 at
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
By Order of the Maritime Administrator.
Maritime Administration, Department of Transportation.
Notice.
As authorized by 46 U.S.C. 12121, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before June 21, 2013.
Comments should refer to docket number MARAD–2013–0061. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. Department of Transportation, Docket Operations, M–30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE, Washington, DC 20590. You may also send comments electronically via the Internet at
Linda Williams, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey
As described by the applicant the intended service of the vessel OSPREY is:
The complete application is given in DOT docket MARAD–2013–0061 at
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
By Order of the Maritime Administrator.
Maritime Administration, Department of Transportation.
Notice.
As authorized by 46 U.S.C. 12121, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before June 21, 2013.
Comments should refer to docket number MARAD–2013–0054. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. Department of Transportation, Docket Operations, M–30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590. You may also send comments electronically via the Internet at
Linda Williams, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE., Room W23–453, Washington, DC 20590. Telephone 202–366–0903, Email
As described by the applicant the intended service of the vessel LITTLE BAY WATCH is:
The complete application is given in DOT docket MARAD–2013–0054 at
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
By Order of the Maritime Administrator.
Maritime Administration, Department of Transportation.
Notice.
As authorized by 46 U.S.C. 12121, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before June 21, 2013.
Comments should refer to docket number MARAD–2013–0055. Written comments may be submitted by
Linda Williams, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE., Room W23–453, Washington, DC 20590. Telephone 202–366–0903, Email
As described by the applicant the intended service of the vessel VELA is:
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
By Order of the Maritime Administrator.
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
List of Applications Delayed more than 180 days.
In accordance with the requirements of 49 U.S.C. 5117(c), PHMSA is publishing the following list of special permit applications that have been in process for 180 days or more. The reason(s) for delay and the expected completion date for action on each application is provided in association with each identified application.
Ryan Paquet, Director, Office of Hazardous Materials Special Permits and Approvals, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, East Building, PHH–30, 1200 New Jersey Avenue Southeast, Washington, DC 20590–0001, (202) 366–4535
1. Awaiting additional information from applicant
2. Extensive public comment under review
3. Application is technically complex and is of significant impact or precedent-setting and requires extensive analysis
4. Staff review delayed by other priority issues or volume of special permit applications
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
List of Applications for Modification of Special Permits.
In accordance with the procedures governing the application for, and the processing of, special permits from the Department of Transportation's Hazardous Material Regulations (49 CFR part 107, subpart B), notice is hereby given that the Office of Hazardous Materials Safety has received the applications described herein. This notice is abbreviated to expedite docketing and public notice. Because the sections affected, modes of transportation, and the nature of application have been shown in earlier
Comments must be received on or before June 6, 2013.
Comments should refer to the application number and be submitted in triplicate. If confirmation of receipt of comments is desired, include a self-addressed stamped postcard showing the special permit number.
Copies of the applications are available for inspection in the Records Center, East Building, PHH–30, 1200 New Jersey Avenue Southeast, Washington DC or at
This notice of receipt of applications for modification of special permit is published in accordance with Part 107 of the Federal hazardous materials transportation law (49 U.S.C. 5117(b); 49 CFR 1.53(b)).
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
List of Applications for Special Permits
In accordance with the procedures governing the application for, and the processing of, special permits from the Department of Transportation's Hazardous Material Regulations (49 CFR part 107, subpart B), notice is hereby given that the Office of Hazardous Materials Safety has received the application described herein. Each mode of transportation for which a particular special permit is requested is indicated by a number in the “Nature of Application” portion of the table below as follows: 1—Motor vehicle, 2—Rail freight, 3—Cargo vessel, 4—Cargo aircraft only, 5—Passenger-carrying aircraft.
Comments must be received on or before June 21, 2013.
Comments should refer to the application number and be submitted in triplicate. If confirmation of receipt of comments is desired, include a self-addressed stamped postcard showing the special permit number.
Copies of the applications are available for inspection in the Records Center, East Building, PHH–30, 1200 New Jersey Avenue Southeast, Washington DC or at
This notice of receipt of applications for special permit is published in accordance with Part 107 of the Federal hazardous materials transportation law (49 U.S.C. 5117(b); 49 CFR 1.53(b)).
Pipeline and Hazardous Materials Safety Administration (PHMSA), Department of Transportation, and the Occupational Safety and Health Administration (OSHA), Department of Labor.
Notice of public meeting.
This notice is to advise interested persons that PHMSA and OSHA will conduct a joint public meeting in preparation for United Nations meetings being held in Geneva, Switzerland, this summer. PHMSA is hosting the morning portion of the meeting to discuss proposals in preparation for the 43rd session of the United Nations Sub-Committee of Experts on the Transport of Dangerous Goods (UNSCOE TDG) to be held June 24 to 28, 2013, in Geneva. During this meeting, PHMSA is also soliciting comments relative to potential new work items which may be considered for inclusion in its international agenda. OSHA is hosting the afternoon portion of the meeting to discuss proposals in preparation for the 25th session of the United Nations Sub-Committee of Experts on the Globally Harmonized System of Classification and Labelling of Chemicals (UNSCEGHS) to be held July 1 to 3, 2013, in Geneva. OSHA, along with the U.S. Interagency GHS Coordinating Group, plans to consider the comments and information gathered at this public meeting when developing the U.S. Government positions for the UNSCEGHS meeting.
Wednesday, June 12, 2013.
The meeting will be held at the DOT Headquarters, West Building, Conference Rooms 8–10, 1200 New Jersey Avenue SE., Washington, DC 20590.
Conference call-in and “live meeting” capability will be provided for this meeting. Specific information on call-in and live meeting access will be posted when available at
Vincent Babich or Kevin Leary, Office of Hazardous Materials Safety, International Standards, Department of Transportation, Washington, DC 20590; telephone (202) 366–8553. You may also contact Maureen Ruskin, Office of Chemical Hazards-Metals, OSHA, Directorate of Standards and Guidance, Department of Labor, Washington, DC 20210; telephone: (202) 693–1950.
Copies of this
The primary purpose of this meeting will be to prepare for the 43rd session of the UNSCOE TDG. The 43rd session of the UNSCOE TDG is the first meeting scheduled for the 2013–2014 biennium. The UNSCOE will consider proposals for the 19th Revised Edition of the United Nations Recommendations on the Transport of Dangerous Goods Model Regulations which will be implemented within relevant domestic, regional, and international regulations from January 1, 2017. Copies of working documents, informal documents, and the meeting agenda may be obtained from the United Nations Transport Division's Web site at
General topics on the agenda for the UNSCOE TDG meeting include:
Following the 43rd session of the UNSCOE TDG, a copy of the Sub-Committee's report will be available at the United Nations Transport Division's Web site at
OSHA is hosting an open informal public meeting of the U.S. Interagency GHS Coordinating Group to provide interested groups and individuals with an update on GHS-related issues and an opportunity to express their views orally and in writing for consideration in developing U.S. Government positions for the upcoming UNSCEGHS meeting. Interested stakeholders may also provide input on issues related to OSHA's activities in the U.S.—Canada Regulatory Cooperation Council (RCC) at the meeting. The public is invited to attend and is requested to pre-register for the meeting by following the instructions provided in the “REGISTRATION” section of this notice.
General topics on the agenda include:
• Review of Working papers
• Review of 2013–2014 Program of work
• Working Group updates
• Regulatory Cooperation Council (RCC) Update
Information on the work of the UNSCEGHS, including meeting agendas, reports, and documents from previous sessions, can be found on the United Nations Economic Commission for Europe (UNECE) Transport Division Web site located at the following web address:
Pipeline And Hazardous Materials Safety Administration (PHMSA), DOT.
Notice of actions on Special Permit Applications.
In accordance with the procedures governing the application for, and the processing of, special permits from the Department of Transportation's Hazardous Material Regulations (49 CFR part 107, subpart B), notice is hereby given of the actions on special permits applications in (April to April 2013). The mode of transportation involved are identified by a number in the “Nature of Application” portion of the table below as follows: 1—Motor vehicle, 2—Rail freight, 3—Cargo vessel, 4—Cargo aircraft only, 5—Passenger-carrying aircraft. Application numbers prefixed by the letters EE represent applications for Emergency Special Permits. It should be noted that some of the sections cited were those in effect at the time certain special permits were issued.
10964–M Request by Kidde Aerospace & Defense Wilson, NC April 04, 2013. To modify the permit to authorize a rework procedure to allow fire extinguishers which were “steel stamped” to e returned to within original specifications.
15746–N Request by Siex Burgos, Spain, April 25, 2013. To authorize the transportation in commerce of Division 2.2 gases in cylinders manufactured according to the European Directive for Transportable Pressure Vessels.
15834–N Request by Multistar Ind., Inc. Othello, WA April 01, 2013. To authorize the transportation in commerce of certain portable tanks and cargo tanks containing anhydrous ammonia that do not have manufacturer's data reports required by 49 CFR 180.605(1).
15821–N Request by Circor Instrumentation Technologies dba, Hoke Incorporated Spartanburg, SC April 26, 2013. To authorize the manufacture, marking, sale and use of non-DOT specification cylinders manufactured from Hastelloy C–276 (ASTM B622) material.
By petition filed on February 28, 2013, Grainbelt Corporation (GNBC) requests that the Board partially revoke a class exemption to permit the amended trackage rights arrangements between grantee GNBC and grantors BNSF Railway Company (BNSF) and Stillwater Central Railroad Company (SLWC) exempted in
In the notice of exemption, BNSF and SLWC each agreed to grant amended trackage rights to GNBC, which together allow GNBC to provide local service to a grain shuttle facility in Headrick, Okla. Specifically, BNSF has amended its trackage rights to permit local service over the connecting line between the connection with SLWC east of Long, Okla. (milepost 668.73), and Altus, Okla. (milepost 688.00), and SLWC has amended its trackage rights to permit local service between Snyder Yard (milepost 664.00) and its connection with BNSF east of Long (milepost 668.73).
Prior to the amended trackage rights arrangement exempted in Docket No. FD 35719, GNBC already held overhead trackage rights granted by the predecessor of BNSF between Snyder Yard (milepost 664.00) and Quanah, Tex. (milepost 723.30), under which GNBC has the right to interchange at Quanah with BNSF and Union Pacific Railroad Company. BNSF subsequently sold a portion of the subject trackage to SLWC. The original trackage rights were supplemented in 2009 to allow GNBC to
Although the parties have expressly agreed on the duration of the amended trackage rights arrangements, trackage rights approved under the class exemption at 49 CFR 1180.2(d)(7) typically remain effective indefinitely, regardless of any contract provisions. Occasionally, trackage rights exemptions have been granted for a limited time period rather than in perpetuity.
Under 49 U.S.C. 10502, the Board may exempt a person, class of persons, or a transaction or service, in whole or in part, when it finds that: (1) Continued regulation is not necessary to carry out the rail transportation policy of 49 U.S.C. 10101; and (2) either the transaction or service is of limited scope, or regulation is not necessary to protect shippers from the abuse of market power.
GNBC's amended trackage rights have already been authorized under the class exemption at 49 CFR 1180.2(d)(7).
To provide the statutorily mandated protection to any employee adversely affected by the discontinuance of the amended trackage rights, we will impose the employee protective conditions set forth in
This decision will not significantly affect either the quality of the human environment or the conservation of energy resources.
1. The petition for partial revocation is granted.
2. Under 49 U.S.C. 10502, the trackage rights described in Docket No. FD 35719 are exempted, as discussed above, to permit the trackage rights to expire on February 1, 2023, subject to the employee protective conditions set forth in
3. GNBC's supplemental trackage rights granted in Docket No. FD 35332, previously set to expire in 2019 in Docket No. FD 35332 (Sub-No. 1), are permitted to expire on February 1, 2023, subject to the employee protective conditions set forth in
4. Notice will be published in the
5. This decision will be effective on June 21, 2013. Petitions to stay must be filed by June 3, 2013. Petitions for reconsideration must be filed by June 11, 2013.
By the Board, Chairman Elliott, Vice Chairman Begeman, and Commissioner Mulvey.
Office of Foreign Assets Control, Treasury Department.
Notice.
The Treasury Department's Office of Foreign Assets Control (“OFAC”) is publishing on OFAC's list of Specially Designated Nationals and Blocked Persons (“SDN List”) the names of two entities, whose property and interests in property are blocked pursuant to Executive Order 13382 of June 28, 2005, “Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters.” The designations by the Director of OFAC, pursuant to Executive Order 13382, were effective on May 15, 2013.
The designations by the Director of OFAC, pursuant to Executive Order 13382, were effective on May 15, 2013.
Assistant Director, Compliance Outreach & Implementation, Office of Foreign Assets Control, Department of the Treasury, Washington, DC 20220, Tel.: 202/622–2490.
This document and additional information concerning OFAC are available from OFAC's Web site (
On June 28, 2005, the President, invoking the authority,
Section 1 of the Order blocks, with certain exceptions, all property and interests in property that are in the United States, or that hereafter come within the United States or that are or hereafter come within the possession or control of United States persons, of: (1) The persons listed in the Annex to the Order; (2) any foreign person determined by the Secretary of State, in consultation with the Secretary of the Treasury, the Attorney General, and other relevant agencies, to have engaged, or attempted to engage, in activities or transactions that have materially contributed to, or pose a risk of materially contributing to, the proliferation of weapons of mass destruction or their means of delivery (including missiles capable of delivering such weapons), including any efforts to manufacture, acquire, possess, develop, transport, transfer or use such items, by any person or foreign country of proliferation concern; (3) any person determined by the Secretary of the Treasury, in consultation with the Secretary of State, the Attorney General, and other relevant agencies, to have provided, or attempted to provide, financial, material, technological or other support for, or goods or services in support of, any activity or transaction described in clause (2) above or any person whose property and interests in property are blocked pursuant to the Order; and (4) any person determined by the Secretary of the Treasury, in consultation with the Secretary of State, the Attorney General, and other relevant agencies, to be owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the Order.
On May 15, 2013, the Deputy Director of OFAC, in consultation with the Departments of State, Justice, and other relevant agencies, designated two entities whose property and interests in property are blocked pursuant to Executive Order 13382.
The list of additional designees is as follows:
Office of Foreign Assets Control, Department of the Treasury.
Notice.
The Treasury Department's Office of Foreign Assets Control (“OFAC”) is publishing the name of one entity identified as the Government of Iran under the Iranian Transactions and Sanctions Regulations (the “ITSR”), 31 CFR Part 560, and Executive Order 13599, and has updated OFAC's list of Specially Designated Nationals and Blocked Persons (“SDN List”) to identify this entity.
The identification by the Director of OFAC of the entity identified in this notice, pursuant to the ITSR and Executive Order 13599, was announced on May 9, 2013.
Assistant Director, Sanctions Compliance and Evaluation, Office of Foreign Assets Control, Department of the Treasury, Washington, DC 20220, Tel.: 202/622–2490.
The SDN List and additional information concerning OFAC are available from OFAC's Web site (
On February 5, 2012, the President issued Executive Order 13599, “Blocking Property of the Government of Iran and Iranian Financial Institutions” (the “Order”). Section 1(a) of the Order blocks, with certain exceptions, all property and interests in property of the Government of Iran, including the Central Bank of Iran, that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, including any foreign branch.
Section 7(d) of the Order defines the term “Government of Iran” to mean the Government of Iran, any political subdivision, agency, or instrumentality thereof, including the Central Bank of Iran, and any person owned or controlled by, or acting for or on behalf of, the Government of Iran.
Section 560.211 of the ITSR implements Section 1(a) of the Order. Section 560.304 of the ITSR defines the term “Government of Iran” to include: “(a) The state and the Government of Iran, as well as any political subdivision, agency, or instrumentality thereof, including the Central Bank of Iran; (b) Any person owned or controlled, directly or indirectly, by the foregoing; and (c) Any person to the extent that such person is, or has been, since the effective date, acting or purporting to act, directly or indirectly, for or on behalf of any of the foregoing; and (d) Any other person determined by the Office of Foreign Assets Control [(“OFAC”)] to be included within [(a) through (c)].” Section 560.313 of the ITSR further defines an “entity owned or controlled by the Government of Iran” to include “any corporation, partnership, association, or other entity in which the Government of Iran owns a 50 percent or greater interest or a controlling interest, and any entity which is otherwise controlled by that government.” On May 9, 2013, the Director of OFAC identified one entity as meeting the definition of the Government of Iran pursuant to the Order and the ITSR, and updated the SDN List to identify this entity.
The listing for this entity is as follows:
United States Mint, Department of the Treasury.
Notice.
The United States Mint is announcing the re-pricing of the 2012 and 2013 United States Mint America the Beautiful Quarters Silver Proof Set, the 2013 United States Mint Silver Proof Set, and the 2013 United States Mint Congratulations Set.
2012 and 2013 United States Mint America the Beautiful Quarters Silver Proof Sets will be offered for sale at a price of $36.95.
2013 United States Mint Silver Proof Set will be offered for sale at a price of $60.95.
2013 United States Mint Congratulations Set will be offered for sale at a price of $59.95.
J. Marc Landry, Acting Associate Director for Sales and Marketing; United States Mint; 801 9th Street NW., Washington, DC 20220; or call 202–354–7500.
31 U.S.C. 5111, 5112 & 9701.
Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)–(h), that a proposed Final Judgment, Stipulation and Competitive Impact Statement have been filed with the United States District Court for the District of Columbia in
Copies of the Complaint, proposed Final Judgment and Competitive Impact Statement are available for inspection at the Department of Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth Street NW., Suite 1010, Washington, DC 20530 (telephone: 202–514–2481), on the Department of Justice's Web site at
Public comment is invited within 60 days of the date of this notice. Such comments, including the name of the submitter, and responses thereto, will be posted on the U.S. Department of Justice, Antitrust Division's internet Web site, filed with the Court and, under certain circumstances, published in the
The United States of America, acting under the direction of the Attorney General of the United States, brings this civil action under the antitrust laws of the United States to enjoin the proposed acquisition by Anheuser-Busch InBev SA/NV (“ABI”) of the remainder of Grupo Modelo S.A.B. de C.V. (“Modelo”) that it does not already own, and to obtain equitable and other relief as appropriate. The United States alleges as follows:
1. Fundamental to free markets is the notion that competition works best and consumers benefit most when independent firms battle hard to win business from each other. In industries characterized by a small number of substantial competitors and high barriers to entry, further consolidation is especially problematic and antithetical to the nation's antitrust laws. The U.S. beer industry—which serves tens of millions of consumers at all levels of income—is highly concentrated with just two firms accounting for approximately 65% of all sales nationwide. The transaction that is the subject of this Complaint threatens competition by combining the largest and third-largest brewers of beer sold in the United States. The United States therefore seeks to enjoin this acquisition and prevent a serious violation of Section 7 of the Clayton Act.
2. Today, Modelo aggressively competes head-to-head with ABI in the United States. That competition has resulted in lower prices and product innovations that have benefited consumers across the country. The proposed acquisition would eliminate this competition by further concentrating the beer industry, enhancing ABI's market power, and facilitating coordinated pricing between ABI and the next largest brewer, MillerCoors, LLC. The approximate market shares of U.S. beer sales, by dollars, are illustrated below:
3. Defendants' combined national share actually understates the effect that eliminating Modelo would have on competition in the beer industry, both because Modelo's share is substantially higher in many local areas than its national share, and because of the interdependent pricing dynamic that already exists between the largest brewers. As the two largest brewers, ABI and MillerCoors often find it more profitable to follow each other's prices than to compete aggressively for market share by cutting price. Among other things, ABI typically initiates annual price increases in various markets with the expectation that MillerCoors' prices will follow. And they frequently do.
4. In contrast, Modelo has resisted ABI-led price hikes. Modelo's pricing strategy—“The Momentum Plan”—seeks to narrow the “price gap” between Modelo beers and lower-priced premium domestic brands, such as Bud and Bud Light. ABI internal documents acknowledge that Modelo has put “increasing pressure” on ABI by pursuing a competitive strategy
5. Because Modelo prices have not closely followed ABI's price increases, ABI and MillerCoors have been forced to offer lower prices and discounts for their brands to discourage consumers from “trad[ing] up” to Modelo brands. If ABI were to acquire the remainder of Modelo, this competitive constraint on ABI's and MillerCoors' ability to raise their prices would be eliminated.
6. The acquisition would also eliminate the substantial head-to-head competition that currently exists between ABI and Modelo. The loss of this head-to-head competition would enhance the ability of ABI to unilaterally raise the prices of the brands that it would own post-acquisition, and diminish ABI's incentive to innovate with respect to new brands, products, and packaging.
7. Accordingly, ABI's acquisition of the remainder of Modelo would likely substantially lessen competition and is therefore illegal under Section 7 of the Clayton Act, 15 U.S.C. 18.
8. For no substantial business reason other than to avoid liability under the antitrust laws, ABI has entered into an additional transaction contingent on the approval of its acquisition of the remainder of Modelo. Specifically, ABI has agreed to sell Modelo's existing 50% interest in Crown Imports LLC (“Crown”)
9. The sale of Modelo's 50% interest in Crown to Constellation is designed predominantly to help ABI win antitrust approval for its acquisition of Modelo, creating a façade of competition between ABI and its importer. In reality, Defendants' proposed “remedy” eliminates from the market Modelo—a particularly aggressive competitor—and replaces it with an entity wholly dependent on ABI. As Crown's CEO wrote to his employees after the acquisition was announced: “Our #1 competitor will now be our supplier . . . it is not currently or will not, going forward, be `business as usual.’ ” The deficiencies of the “remedy” are apparent from the illustrations of the pre- and post-transaction chains of supply below, demonstrating how the “remedy” transforms horizontal competition into vertical dependency:
10. Constellation has already shown through its participation in the Crown joint venture that it does not share Modelo's incentive to thwart ABI's price leadership. In fact, Constellation consistently has urged following ABI's price leadership. Given that Constellation was inclined to follow ABI's price leadership before the acquisition, it is unlikely to reverse course after—when it would be fully dependent on ABI for its supply of beer, and will effectively be ABI's business partner. In addition, Constellation would need to preserve a strong relationship with ABI to encourage ABI from exercising its option to terminate the agreement after 10 years.
11. For these reasons, as alleged more specifically below, the proposed acquisition, if consummated, would likely substantially lessen competition in violation of Section 7 of the Clayton Act. The likely anticompetitive effects of the proposed acquisition would not be prevented or remedied by the sale of Modelo's existing interest in Crown to Constellation and the supply agreement between ABI and Constellation.
12. The United States brings this action under Section 15 of the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain Defendants ABI and Modelo from violating Section 7 of the Clayton Act, as amended, 15 U.S.C. 18.
13. This Court has subject matter jurisdiction over this action under Section 15 of the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337, and 1345.
14. Venue is proper under Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391.
15. Defendants are engaged in, and their activities substantially affect, interstate commerce. ABI and Modelo annually brew several billion dollars worth of beer, which is then advertised and sold throughout the United States.
16. This Court has personal jurisdiction over each Defendant. Modelo has consented to personal jurisdiction in this judicial district. ABI is found and transacts business in this District through its wholly-owned United States subsidiaries, over which it exercises control.
17. ABI is a corporation organized and existing under the laws of Belgium, with headquarters in Leuven, Belgium. ABI is the largest brewer and marketer of beer sold in the United States. ABI owns and operates 125 breweries worldwide, including 12 in the United States. It owns more than 200 beer brands, including Bud Light, the number one brand in the United States, and other popular brands such as Budweiser, Busch, Michelob, Natural Light, Stella Artois, Goose Island, and Beck's.
18. Modelo is a corporation organized and existing under the laws of Mexico, with headquarters in Mexico City, Mexico. Modelo is the third-largest brewer of beer sold in the United States. Modelo's Corona Extra brand is the top-selling import in the United States. Its other popular brands sold in the United States include Corona Light, Modelo Especial, Negra Modelo, Victoria, and Pacifico.
19. ABI currently holds a 35.3% direct interest in Modelo, and a 23.3% direct interest in Modelo's operating subsidiary Diblo, S.A. de C.V. ABI's current part-ownership of Modelo gives ABI certain minority voting rights and the right to appoint nine members of Modelo's 19-member Board of Directors. However, as ABI stated in its most recent annual report, ABI does “not have voting or other effective control of . . . Grupo Modelo.”
20. ABI and Modelo executives agree that there is currently vigorous competition between the ABI and Modelo brands in the United States. Indeed, firewalls are in place to ensure that the ABI members of Modelo's Board do not become privy to information about the pricing, marketing, or distribution of Modelo brands in the United States.
21. Modelo executives run its day-to-day business, including Modelo's relationship and interaction with its U.S. importer, Crown. Modelo owns half of Crown and may exercise an option at the end of 2013, to acquire in 2016, the half of Crown it does not already own. Today, Modelo must approve Crown's general pricing parameters, changes in strategic direction, borrowing activities, and capital investment above certain thresholds. Modelo also sets the global strategic themes for the brands it owns. Essentially, Crown is a group of employees who report to Crown's owners: Modelo and Constellation.
22. The acquisition gives complete control of Modelo to ABI, and gives ABI full access to competitively sensitive information about the sale of the Modelo brands in the United States—access that ABI does not currently enjoy. ABI presently has no day-to-day role in Modelo's United States business and is walled off from strategic discussions regarding Modelo sales in the United States.
23. On June 28, 2012, ABI agreed to purchase the remaining equity interest from Modelo's owners, thereby obtaining full ownership and control of Modelo, for about $20.1 billion.
24. As noted above, in an effective acknowledgement that the acquisition of Modelo raises significant competitive concerns, Defendants simultaneously entered into another transaction in an attempt to “remedy” the competitive harm caused by ABI's acquisition of the remainder of Modelo: ABI has agreed to sell Modelo's existing 50% interest in Crown to Constellation, so that Crown, previously a joint-venture between Modelo and Constellation, would become wholly owned by Constellation. As part of this strategy, ABI and Constellation have negotiated a supply agreement giving Constellation the exclusive right to import Modelo beer into the United States for ten years. These transactions are contingent on the closing of ABI's acquisition of Modelo.
25. “Beer” is comprised of a wide variety of brands of alcoholic beverages usually made from a malted cereal grain, flavored with hops, and brewed via a process of fermentation. Beer is substantially differentiated from other alcoholic beverages by taste, quality, alcohol content, image, and price.
26. In addition to brewing, beer producers typically also sell, market, and develop multiple brands. Marketing and brand building take various forms including sports sponsorships, print advertising, national television campaigns, and increasingly, online marketing. For example, Modelo has recently invested in “more national advertising [and] more national sports” in order to “build the equity of [its] brands.”
27. Most brewers use distributors to merchandise, sell, and deliver beer to retailers. Those end accounts are primarily grocery stores, large retailers such as Target and Walmart, and convenience stores, liquor stores, restaurants, and bars which, in turn, sell beer to the consumer. Beer brewed in foreign countries may be sold to an importer, which then arranges for distribution to retailers.
28. ABI groups beer into four segments: Sub-premium, premium, premium plus, and high-end. The sub-premium segment, also referred to as the value segment, generally consists of lager beers, such as Natural and Keystone branded beer, and some ales and malt liquors, which are priced lower than premium beers, made from less expensive ingredients and are generally perceived as being of lower
29. The high-end category includes craft beers, which are often produced in small-scale breweries, and imported beers. High-end beers sell at a wide variety of price points, most of which are higher than premium and premium plus beers. The high-end segment includes craft beers such as Dogfish Head, Flying Dog, and also imported beers, the best selling of which is Modelo's Corona. ABI also owns high-end beers including Stella Artois and Goose Island. Brewers with a broad portfolio of brands, such as ABI, seek to maintain “price gaps” between each segment. For example, premium beer is priced above sub-premium beer, but below premium plus beer.
30. Beers compete with one another across segments. Indeed, ABI and Modelo brands are in regular competition with one another. For example, Modelo, acting through Crown in the United States, usually selects “[d]omestic premium” beer, namely, ABI's Bud Light, as its benchmark for its own brands' pricing.
31. Beer is a relevant product market and line of commerce under Section 7 of the Clayton Act. Other alcoholic beverages, such as wine and distilled spirits, are not sufficiently substitutable to discipline at least a small but significant and nontransitory increase in the price of beer, and relatively few consumers would substantially reduce their beer purchases in the event of such a price increase. Therefore, a hypothetical monopolist producer of beer likely would increase its prices by at least a small but significant and non-transitory amount.
32. The 26 local markets, defined by Metropolitan Statistical Areas (“MSAs”),
33. The relevant geographic markets for analyzing the effects of this acquisition are best defined by the locations of the customers who purchase beer, rather than by the locations of breweries. Brewers develop pricing and promotional strategies based on an assessment of local demand for their beer, local competitive conditions, and local brand strength. Thus, the price for a brand of beer can vary by local market.
34. Brewers are able to price differently in different locations, in part, because arbitrage across local markets is unlikely to occur. Consumers buy beer near their homes and typically do not travel to other areas to buy beer when prices rise. Also, distributors' contracts with brewers and their importers contain territorial limits and prohibit distributors from reselling beer outside their territories. In addition, each state has different laws and regulations regarding beer distribution and sales that would make arbitrage difficult.
35. Accordingly, a hypothetical monopolist of beer sold into each of the local markets identified in Appendix A would likely increase its prices in that local market by at least a small but significant and non-transitory amount.
36. Therefore, the MSAs identified in Appendix A are relevant geographic markets and “sections of the country” within the meaning of Section 7 of the Clayton Act.
37. There is also competition between brewers on a national level that affects local markets throughout the United States. Decisions about beer brewing, marketing, and brand building typically take place on a national level. In addition, most beer advertising is on national television, and brewers commonly compete for national retail accounts. General pricing strategy also typically originates at a national level. A hypothetical monopolist of beer sold in the United States would likely increase its prices by at least a small but significant and non-transitory amount. Accordingly, the United States is a relevant geographic market under Section 7 of the Clayton Act.
38. The relevant markets are highly concentrated and would become significantly more concentrated as a result of the proposed acquisition.
39. ABI is the largest brewer of beer sold in the United States. MillerCoors is the second-largest brewer of beer sold in the United States. MillerCoors owns the Miller and Coors brands and also many smaller brands including Blue Moon and Keystone Light. Modelo is the third-largest brewer of beer sold in the United States, with annual U.S. sales of $2.47 billion, 7% market share nationally, and a market share that is nearly 20% in some local markets. Modelo owns the Corona, Modelo, Pacifico, and Victoria brands. The remaining sales of beer in the U.S. are divided among Heineken and fringe competitors, including many craft brewers, which the Defendants characterize as being “fragmented . . . small player[s].”
40. Concentration in relevant markets is typically measured by the Herfindahl-Hirschman Index (“HHI”). Market concentration is often one useful indicator of the level of competitive vigor in a market and the likely competitive effects of a merger. The more concentrated a market, and the more a transaction would increase concentration in a market, the more likely it is that a transaction would result in a meaningful reduction in competition. Markets in which the HHI is in excess of 2,500 points are considered highly concentrated.
41. The beer industry in the United States is highly concentrated and would become substantially more so as a result of this acquisition. Market share estimates demonstrate that in 20 of the 26 local geographic markets identified in Appendix A, the post-acquisition HHI exceeds 2,500 points, in one market is as high as 4,886 points, and there is an increase in the HHI
42. In the United States, the Defendants will have a combined
43. The market concentration measures, coupled with the significant increases in concentration, described above, demonstrate that the acquisition is presumed to be anticompetitive.
44. ABI and MillerCoors typically announce annual price increases in late summer for execution in early fall. The increases vary by region, but typically cover a broad range of beer brands and packs. In most local markets, ABI is the market share leader and issues its price announcement first, purposely making its price increases transparent to the market so its competitors will get in line. In the past several years, MillerCoors has followed ABI's price increases to a significant degree.
45. The specifics of ABI's pricing strategy are governed by its “Conduct Plan,” a strategic plan for pricing in the United States that reads like a how-to manual for successful price coordination. The goals of the Conduct Plan include: “yielding the highest level of followership in the short-term” and “improving competitor conduct over the long-term.”
46. ABI's Conduct Plan emphasizes the importance of being “Transparent—so competitors can clearly see the plan;” “Simple—so competitors can understand the plan;” “Consistent—so competitors can predict the plan;” and “Targeted—consider competition's structure.” By pursuing these goals, ABI seeks to “dictate consistent and transparent competitive response.” As one ABI executive wrote, a “Front Line Driven Plan sends Clear Signal to Competition and Sets up well for potential conduct plan response.” According to ABI, its Conduct Plan “increases the probability of [ABI] sustaining a price increase.”
47. The proposed merger would likely increase the ability of ABI and the remaining beer firms to coordinate by eliminating an independent Modelo—which has increasingly inhibited ABI's price leadership—from the market.
48. In the past several years, Modelo, acting through Crown, has disrupted ABI's pricing strategy by declining to match many of the price increases that were led by ABI and frequently joined by MillerCoors.
49. In or around 2008, Crown implemented its “Momentum Plan” with Modelo's enthusiastic support. The Momentum Plan is specifically designed to grow Modelo's market share by shrinking the price gaps between brands owned by Modelo and domestic premium brands. By maintaining steady pricing while the prices of premium beer continues to rise, Modelo has narrowed the price gap between its beers and ABI's premium beers, encouraging consumers to trade up to Modelo brands. These narrowed price gaps frustrate ABI and MillerCoors because they result in Modelo gaining market share at their expense.
50. Under the Momentum Plan, Modelo brand prices essentially remained flat despite price increases from ABI and other competitors, allowing Modelo brands to achieve their targeted price gaps to premium beers in various markets. After Modelo implemented its price gap strategy, Modelo brands experienced market share growth.
51. Because of the Momentum Plan, prices on the Modelo brands have increased more slowly than ABI has increased premium segment prices. Thus, as ABI has observed, in recent years, the “gap between Premium and High End has been reducing . . . due to non [high-end] increases.” Over the same time period, the high-end segment has been gaining market share at the expense of ABI's and MillerCoors' premium domestic brands.
52. In internal strategy documents, ABI has repeatedly complained about pressure resulting from price competition with the Modelo brands: “Recent price actions delivered expected Trade up from Sub Premium, however it created additional share pressure from volume shifting to High End where we under-index;” “Consumers switching to High End accelerated by price gap compression;” “While relative Price to MC [MillerCoors] has remained stable the lack of Price increase in Corona is increasing pressure in Premium.” An ABI presentation from November 2011 stated that ABI's strategy was “Short-Term []: We must slow the volume trend of High End Segment and cannot let the industry transform.” Owning the Modelo brands will enable ABI to implement that strategy.
53. The competition that Modelo has created by not following ABI price increases has constrained ABI's ability to raise prices and forced ABI to become more competitive by offering innovative brands and packages to limit its share losses and to attract customers.
54. Competition between the ABI and Modelo brands has become increasingly intense throughout the country, particularly in areas with large Latino populations. As the country's Latino population is forecasted to grow over time, ABI anticipates even more rigorous competition with Modelo. Here are some examples of how the Modelo brands have disciplined the pricing of the market leaders.
55. Modelo, acting through Crown, has not followed ABI-led price increases in local markets in California. Because of the aggressive pricing of the Modelo brands, ABI's Bud and Bud Light brands have reported “[h]eavy share losses” to Modelo's Corona and Modelo Especial.
56. Consumers in California markets have been the beneficiaries of Modelo's aggressive pricing. ABI rescinded a planned September 2010 price increase because of the share growth of Modelo's Corona brand. ABI also considered launching a new line, “Michelob Especial,”—a Modelo brand is “Modelo Especial”—targeted at California's Latino community. ABI recognized that Corona's strength in California meant that “innovation [is] required.” Nonetheless, Modelo continued “eating [Budweiser's] lunch” in California to the point where ABI's Vice President of Sales observed that “California is a burning platform” for ABI, which was “losing share” because of “price compression” between ABI and Corona.
57. In 2012, ABI's concern about losing market share to Modelo in California caused a full-blown price war. ABI implemented “aggressive price reductions . . .” that were seen as “specifically targeting Corona and Modelo.” These aggressive discounts appear to have been taken in support of ABI's expressed desire to discipline Modelo's aggressive pricing with the ultimate goal of “driv[ing] them to go up” in price. Both MillerCoors and Modelo followed ABI's price decrease, and ABI responded by dropping its price even further to stay competitive.
58. Competition between the ABI and Modelo brands in local markets in Texas is also intense. Beginning in or about 2010, some Modelo brands began to be priced competitively with ABI's Bud Light, the leading domestic brand throughout the state. Modelo brands also benefited from price promotions and regional advertising. By 2011, Modelo had begun gaining market share at ABI's expense. ABI recognized
59. Ultimately, aggressive pricing on some Modelo brands forced ABI to lower its prices in local Texas markets, and adjust its marketing strategy to better respond to competition from the Modelo brands. According to an ABI Regional Vice President of Sales, ABI set “pricing, packaging and retail activity targets to address [Modelo's] Especial” brand. In both Houston and San Antonio, ABI also lowered the price of its Bud Light Lime brand to match Modelo Especial price moves.
60. In the summer of 2011, Modelo, acting through Crown, sought to narrow the gap in price between its brands and those of domestic premiums, including the ABI brands in New York City. ABI became concerned that “price compression on Premiums by imports” would cause premium domestic customers to trade up to the import segment. ABI's Vice President of Sales observed that the price moves on Modelo's Corona brand, and corresponding reductions by MillerCoors and Heineken, meant that ABI would “need to respond in some fashion,” and that its planned price increase was “in jeopardy.” ABI ultimately chose to respond by delaying a planned price increase to “limit the impact of price compression on our premiums as a result of the Corona . . . deeper discount.”
61. Competition spurred by Modelo has benefitted consumers through lower beer prices and increased innovation. It has also thwarted ABI's vision of leading industry prices upward with MillerCoors and others following. As one ABI executive stated in June 2011, “[t]he impact of Crown Imports not increasing price has a significant influence on our volume and share. The case could be made that Crown's lack of increases has a bigger influence on our elasticity than MillerCoors does.” ABI's acquisition of full ownership and control of Modelo's brands and brewing assets will facilitate future pricing coordination.
62. ABI is intent on moderating price competition. As it has explained internally: “We must defend from value-destroying pricing by: [1] Ensuring competition does not believe they can take share through pricing[,] [and] [2] Building discipline in our teams to prevent unintended initiation or acceleration of value-destroying actions.” ABI documents show that it is increasingly worried about the threat of high-end brands, such as Modelo's, constraining its ability to increase premium and sub-premium pricing. In general, ABI, as the price leader, would prefer a market not characterized by aggressive pricing actions to take share because “[t]aking market share this way is unsustainable and results in lower total industry profitability which damages all players long-term.”
63. ABI would have strong incentives to raise the prices of its beers were it to acquire Modelo. First, lifting the price of Modelo beers would allow ABI to further increase the prices of its existing brands across all beer segments. Second, as the market leader in the premium and premium-plus segments, and as a brewer with an approximate overall national share of approximately 46% of beer sales post-acquisition, coupled with its newly expanded portfolio of brands, ABI stands to recapture a significant portion of any sales lost due to such a price increase, because a significant percentage of those lost sales will go to other ABI-owned brands.
64. Therefore, ABI likely would unilaterally raise prices on the brands of beer that it owns as a result of the acquisition.
65. Modelo's growth in the United States has repeatedly spurred product innovation by ABI. In 2011, ABI decided to “Target Mexican imports” and began planning three related ways of doing so. First, ABI would acquire the U.S. sales rights to Presidente beer, the number one beer in Central America, and greatly expand Presidente's distribution in the United States. Second, ABI would acquire a “Southern US or Mexican craft brand,” and use it to compete against Mexican imports. Finally, ABI would license trademarks to another tropical-style beer, in a project that the responsible ABI manager described as a “Corona killer.”
66. ABI's Bud Light Lime, launched in 2008, was also targeted at Corona (commonly served with a slice of lime), going so far as to mimic Corona's distinctive clear bottle. As one Modelo executive noted after watching a commercial for Bud Light Lime, the product was “invading aggressively and directly the Corona territory.” Another executive commented that the commercial itself was “[v]ery similar” to one Modelo, through Crown, was developing at the same time.
67. The proposed acquisition's harmful effect on product innovation is already evident. If ABI were to acquire Modelo and enter into the supply agreement with Constellation, ABI would be forbidden from launching a “Mexican-style Beer” in the United States. Further, ABI would no longer have the same incentives to introduce new brands to take market share from the Modelo brands.
68. The significant increase in market concentration that the proposed acquisition would produce in the relevant markets, combined with the loss of head-to-head competition between ABI and Modelo, is likely to result in unilateral price increases by ABI and to facilitate coordinated pricing between ABI and remaining market participants.
69. New entry and expansion by existing competitors are unlikely to prevent or remedy the acquisition's likely anticompetitive effects. Barriers to entry and expansion within each of these harmed markets include: (i) The substantial time and expense required to build a brand reputation; (ii) the substantial sunk costs for promotional and advertising activity needed to secure the distribution and placement of a new entrant's beer products in retail outlets; (iii) the difficulty of securing shelf-space in retail outlets; (iv) the time and cost of building new breweries and other facilities; and (v) the time and cost of developing a network of beer distributors and delivery routes.
70. Although ABI asserts that the acquisition would produce efficiencies, it cannot demonstrate acquisition-specific and cognizable efficiencies that would be passed-through to U.S. consumers, of sufficient size to offset the acquisition's significant anticompetitive effects.
71. In light of the high market concentration, and substantial likelihood of anticompetitive effects, ABI's acquisition of the remainder of Modelo is illegal. Defendants thus evidently structured their transactions
72. Constellation has not shown Crown and Modelo's past willingness to thwart ABI's price leadership. While Modelo supported narrowing the gap between the prices of its brands and those of ABI premium brands, Constellation's executives have sought to follow ABI's pricing lead. In August 2011, Constellation's Managing Director wrote to Crown's CEO: “Since ABI has already announced an October general price increase I was wondering if you are considering price increases for the Modelo portfolio? . . .. From a positioning and image perspective I believe it would be a mistake to allow the gaps to be narrowed . . . I think ABI's announcement gives you the opportunity to increase profitability without having to sacrifice significant volume.” Similarly, in December of 2011, Constellation's CFO wrote to his counterpart at Crown that he thought price increases on the Modelo brands were viable “if domestics [i.e. Bud and Bud Light] keep going up” but worried that “Modelo gets a vote as well.” And in June of 2012, a Crown executive stated that Constellation's plan for annual price increases “put at risk the relative success” of the Momentum Plan.
73. Crown executives have recognized the differing incentives, as it relates to pricing, of their two owners. As one Crown executive observed in a March 2011 email, “Modelo has a higher interest in building volume so that they can cover manufacturing costs, gain manufacturing profits and build share as the brand owners.” Constellation, however, “is interested primarily in the financial return on a short-term or at the most on a mid-term basis.”
74. Post-transaction, Constellation would no longer be so constrained. Even if Crown's own executives wanted to continue an aggressive pricing strategy, they would be required to answer to Crown's new sole owner—Constellation.
75. Crown executives were concerned about what would happen if Constellation gained complete control of Crown. Crown's CEO wrote to Constellation's CEO after Defendants' proposed “remedy” was announced: “the Crown team [] is extremely anxious about this change in ownership. This is in no small part the result of Constellation's actions over the term of the joint venture to limit investment in the business in the areas of manpower and marketing.” Constellation's CEO responded internally: “[Q]uite something. I see a management issue brewing.” In another email, Crown's CEO wrote to his employees that Constellation had been “consistently non supportive of the business through Crown's history . . . seeking to drive profits at all costs.”
76. Crown's fears appear well-grounded. In 2010, Modelo sued Constellation for breach of fiduciary duty, after Constellation had refused to invest in marketing the Modelo brands. In its Complaint, Modelo alleged “Constellation [] knew that [Crown] management's plan was in Crown's best interests, but they blocked it anyway in an effort to secure unwarranted benefits for Constellation.”
77. Post-acquisition, Constellation would not need to ask Modelo for permission to follow ABI's price-leadership. Instead, Constellation would be free to follow ABI's lead. Moreover, ABI and Constellation will have every incentive to act together on pricing because of the vast profits each would stand to make if beer prices were to increase.
78. The contingent supply relationship between ABI and Constellation would also facilitate joint pricing between the two companies. Post-acquisition, there would be day-to-day interaction between ABI and Constellation on matters such as volume, packaging, transportation of product, and new product innovation. ABI and Constellation would have countless opportunities that could creatively be exploited, and that no one could predict or control, to allow ABI to reward Constellation (or refrain from punishing Constellation) in exchange for Constellation raising the price of the Modelo brands. The lucrative supply agreement from which Constellation seeks to gain billions of dollars in profits itself incentivizes Constellation to keep ABI happy to avoid terminating Constellation's rights in ten years.
79. ABI and Constellation are more likely to decide on mutually profitable pricing. Unlike ABI and Modelo, which are horizontal competitors, Constellation would be a mere participant in ABI's supply chain under the proposed arrangement.
80. ABI and Modelo have sought to avoid acting together on matters of competitive significance in the relevant markets in the U.S. Accordingly, they have built in several firewalls—including ABI's exclusion from sensitive portions of Modelo board meetings concerning the sale of Modelo beer in the U.S.—to insulate ABI from Modelo's U.S. business. Post-acquisition, those firewalls would be gone.
81. The loss of Modelo also, by itself, facilitates interdependent pricing. Today, ABI would need to reach agreement with both Modelo and Constellation to ensure that pricing for the Modelo brands followed ABI's lead. After the proposed transactions, working together on price would be easier because only Constellation would need to follow or agree with ABI.
82. Even if Constellation wanted to act at odds with ABI post-transaction, it would be unlikely to do so. Constellation will own no brands or brewing or bottling assets of its own. It would be dependent on ABI for its supply. Thus, Defendants' proposed remedy puts Constellation in a considerably weaker competitive position compared to Modelo, which owns both brands and breweries.
83. ABI could terminate the contingent supply agreement at any time. And if ABI is displeased with Constellation's strategy in the United States, it might simply withhold or delay supply to punish Constellation.
84. The supply agreement may also be renegotiated at any time during the 10-year period. Thus, it provides no guaranteed protection for consumers that any of its terms will be followed if ABI is able to secure antitrust approval for this acquisition.
85. The United States incorporates the allegations of paragraphs 1 through 84 above as if set forth fully herein.
86. The proposed acquisition of the remainder of Modelo by ABI would likely substantially lessen competition—even after Defendants' proposed “remedy”—in the relevant markets, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. The transactions would have the following anticompetitive effects, among others:
(a) Eliminating Modelo as a substantial, independent, and
(b) Competition generally in the relevant markets would likely be substantially lessened;
(c) Prices of beer would likely increase to levels above those that would prevail absent the transaction, forcing millions of consumers in the United States to pay higher prices;
(d) Quality and innovation would likely be less than levels that would prevail absent the transaction;
(e) The acquisition would likely promote and facilitate pricing coordination in the relevant markets; and
(f) The acquisition would provide ABI with a greater incentive and ability to increase its pricing unilaterally.
87. The United States requests that:
(a) The proposed acquisition be adjudged to violate Section 7 of the Clayton Act, 15 U.S.C. 18;
(b) The Defendants be permanently enjoined and restrained from carrying out the Agreement and Plan of Merger dated June 28, 2012, and the “Transaction Agreement” dated June 28, 2012, between Modelo, Diblo, and ABI, or from entering into or carrying out any agreement, understanding, or plan by which ABI would acquire the remaining interest in Modelo, its stock, or any of its assets;
(c) The United States be awarded costs of this action; and
(d) The United States be awarded such other relief as the Court may deem just and proper.
Respectfully submitted,
Pursuant to Section 2(b) of the Antitrust Procedures and Penalties Act (“APPA” or “Tunney Act”), 15 U.S.C. 16(b)–(h), Plaintiff United States of America (“United States”) files this Competitive Impact Statement relating to the proposed Final Judgment submitted on April 19, 2013, for entry in this civil antitrust proceeding.
On June 28, 2012, Defendant Anheuser-Busch InBev SA/NV (“ABI”) agreed to purchase the remaining equity interest in Defendant Grupo Modelo, S.A.B. de C.V. (“Modelo”) for approximately $20.1 billion. The United
On April 19, 2013, the United States filed an Explanation of Consent Decree Procedures, which included a Stipulation and Order and a proposed Final Judgment as exhibits that are collectively designed to eliminate the anticompetitive effects that the acquisition would have otherwise caused. The proposed Final Judgment, which is explained more fully below, will accomplish the complete divestiture of Modelo's U.S. business to Modelo's current joint venture partner, Constellation Brands, Inc. (“Constellation”), or, if that transaction fails to close, to another acquirer capable of replacing the competition that Modelo currently brings to the United States market. This structural fix will maintain Modelo Brand Beers
Specifically, under the proposed Final Judgment, ABI is required to divest and/or license to Constellation (or to an alternative purchaser if the sale to Constellation for some reason does not close) certain tangible and intangible assets (hereafter the “Divestiture Assets”), including:
• A perpetual and exclusive United States license to Corona Extra, this country's best-selling imported beer and #5 brand overall, and to nine other Modelo Brand Beers including Corona Light, Modelo Especial, Negra Modelo, and Pacifico;
• Modelo's newest, most technologically advanced brewery (the “Piedras Negras Brewery”), which is located in Mexico near the Texas border, and the assets and companies associated with it;
• Modelo's limited liability membership interest in Crown Imports, LLC (“Crown”), the joint venture established by Modelo and Constellation to import, market, and sell certain Modelo beers into the United States; and
• Other assets, rights, and interests necessary to ensure that Constellation (or an alternative purchaser) is able to compete in the beer market in the United States using the Modelo Brand Beers, independent of a relationship with ABI and Modelo.
In order to guarantee that the acquirer of the Divestiture Assets will be able to supply Modelo Brand Beer to the United States market independent of ABI, the proposed Final Judgment contains provisions designed to ensure that Constellation (or an alternative acquirer) will have sufficient brewing capacity to meet current and future demand for Modelo Brand Beer in the United States. Because the Piedras Negras Brewery currently produces enough Modelo Brand Beer to serve only approximately 60% of present U.S. demand, Constellation has committed to build out and expand the Piedras Negras Brewery to brew and package sufficient quantities of Corona, Modelo Especial, and other Modelo Brand Beer to meet the large and growing demand for these beers in the United States. This expansion is included as a direct requirement under the proposed Final Judgment and will assure Constellation's future independence as a self-supplied brewer and seller in the United States beer market.
The United States and Defendants have stipulated that the proposed Final Judgment may be entered after compliance with the APPA. Entry of the proposed Final Judgment would terminate this action, except that the Court would retain jurisdiction to construe, modify, or enforce the provisions of the proposed Final Judgment and to punish violations thereof.
ABI is a corporation organized and existing under the laws of Belgium, with headquarters in Leuven, Belgium. ABI brews and markets more beer sold in the United States than any other firm, with a 39% market share nationally. ABI owns and operates 125 breweries worldwide, including 12 in the United States. It owns more than 200 different beer brands, including Bud Light, the highest selling brand in the United States, and other popular brands such as Budweiser, Busch, Michelob, Natural Light, Stella Artois, Goose Island, and Beck's.
Modelo is a corporation organized and existing under the laws of Mexico, with headquarters in Mexico City, Mexico. Modelo is the third-largest brewer of beer sold in the United States, with a 7% market share nationally. Modelo owns the top-selling beer imported into the United States, Corona Extra. Its other popular brands sold in the United States include Corona Light, Modelo Especial, Negra Modelo, Victoria, and Pacifico. Crown, the joint venture established by Modelo and Constellation, imports, markets, and sells certain Modelo's brands into the United States.
Constellation, headquartered in Victor, New York, is a beer, wine, and spirits company with a portfolio of more than 100 products, including Robert Mondavi, Clos du Bois, Ruffino, and SVEDKA Vodka. It produces wine and distilled spirits, with more than forty facilities worldwide. Constellation is not currently a beer brewer; Constellation's only involvement in the beer market in the United States is through its interest in Crown, although it actively participates in the management of that joint venture. Constellation is a Defendant to this action for the purpose of assuring the satisfaction of the objectives of the proposed Final Judgment, including the expansion of the Piedras Negras Brewery.
ABI currently holds a 35.3% direct interest in Modelo, and a 23.3% direct interest in Modelo's operating subsidiary Diblo S.A. de C.V (“Diblo”). ABI's current stake in Modelo gives ABI certain minority voting rights and the right to appoint nine members of Modelo's 19-member Board of Directors.
On June 28, 2012, ABI agreed to purchase, through an Agreement and Plan of Merger, along with a Transaction Agreement between ABI, Modelo and Diblo, the remaining equity interest from Modelo's owners, thereby obtaining full ownership and control of Modelo, for approximately $20.1 billion.
At the time, Defendants also proposed to sell Modelo's stake in Crown to Constellation and enter into a ten-year supply agreement to provide Modelo beer to Constellation to import into the United States. The United States rejected this proposed vertical “fix” to a horizontal merger as inadequate to address the likely harm to competition that would result from the proposed transaction. Most importantly, the proposed supply agreement would not have alleviated the potential harm to competition that the proposed transaction created: It did not create an independent, fully-integrated brewer with permanent control of Modelo Brand Beer in the United States. The United States therefore filed a Complaint to enjoin this proposed acquisition on January 31, 2013.
Beer is a relevant product market under Section 7. Wine, distilled liquor, and other alcoholic or non-alcoholic beverages do not substantially constrain the prices of beer, and a hypothetical monopolist in the beer market could profitably raise prices. ABI and other brewers generally categorize beers internally into different tiers based primarily on price, including sub-premium, premium, premium plus, and high-end. However, beers in different categories compete with each other, particularly when in adjacent tiers. For example, Modelo's Corona Extra—usually considered a high-end beer—regularly targets ABI's Bud Light, a premium light beer, as its primary competitor.
Both national and local geographic markets exist in this industry. The proposed merger would likely result in increased prices for beer in the United States market as a whole and in at least 26 Metropolitan Statistical Areas (“MSAs”). Large beer companies make competitive decisions and develop strategies regarding product development, marketing, and brand-building on a national level. Further, large beer brewers typically create and implement national pricing strategies.
However, beer brewers make many pricing and promotional decisions at the local level, reflecting local brand preferences, demographics, and other factors, which can vary significantly from one local market to another. The 26 MSAs alleged in the Complaint are areas in which beer purchasers are particularly vulnerable to targeted price increases.
The beer industry in the United States is highly concentrated and would become more so if ABI were allowed to acquire all of the remaining Modelo assets required to compete in the United States, as the transaction was originally proposed. ABI and MillerCoors, the two largest beer brewers in the United States, account for more than 65% of beer sold in the United States. Modelo is the third largest beer brewer, constituting approximately 7% of national sales, and in certain MSAs its market share approaches 20%. Heineken and hundreds of smaller fringe competitors comprise the remainder of the beer market. In the 26 MSAs alleged in the Complaint, ABI and Modelo control an even larger share of the market, creating a presumption under the Clayton Act that the merger of the two firms would result in harm to competition in those markets.
Even so, the market shares of ABI and Modelo understate the potential anticompetitive effect of the proposed merger. The United States determined through its investigation that large brewers engage in significant levels of tacit coordination and that coordination has reduced competition and increased prices. In most regions of the United States, major brewers implement price increases on an annual basis in the fall. ABI is usually first to announce its annual price increases, setting forth recommended wholesale price increases designed to be transparent and to encourage others to follow. MillerCoors typically announces its price increases after ABI has publicized its price increases, and largely matches ABI's price increases. As a result, although ABI and MillerCoors have highly visible competing advertising and product innovation programs, they do not substantially constrain each other's annual price increases.
The third largest brewer, Modelo, has increasingly constrained ABI's and MillerCoors's ability to raise prices. To build its market share, Modelo (through its importer Crown) has tended not to follow the announced price increases of ABI and MillerCoors. This competitive strategy narrowed the price gap between Modelo's high-end brands and ABI's and MillerCoors's premium and premium plus brands, allowing Modelo to build market share at the expense of ABI and MillerCoors. By compressing the price gap between high-end and premium brands, Modelo's actions have increasingly limited ABI's ability to lead beer prices higher. Therefore, ABI's acquisition of Modelo, as originally proposed, would have been likely to lead to higher beer prices in the United States by eliminating a competitor that resisted coordinated price increases initiated by the market share leader, ABI.
ABI and Modelo compete aggressively. Modelo brands compete with ABI brands in numerous venues and occasions, appealing to similar sets of consumers in terms of taste, quality, consumer perception, and value. As a result, Modelo (through its importer Crown) often sets its prices in particular markets with reference to the price of the leading ABI products, and engages in price competition through promotional activity designed to take share from the market leaders. Because a significant number of consumers regard the ABI brands and Modelo brands as substitutes, the merger, absent the divestiture, would create an incentive for ABI to raise the prices of some or all of the merged firm's brands and profitably recapture sales that result from consumers switching between the ABI brands and Modelo brands.
Further, competition from Modelo has spurred additional significant product innovation from ABI, including the introduction of Bud Light Lime, the introduction of new packages such as “Azulitas,”
Neither entry into the beer market, nor any repositioning of existing brewers, would undo the anticompetitive harm from ABI's acquisition of Modelo, as originally proposed. Modelo's brands compete well against ABI due to their brand positioning and reputation, their well-established marketing and broad acceptance by a wide range of consumers, and their robust distribution network resulting in the near-ubiquity of Corona Extra in the establishments where consumers purchase and
The proposed Final Judgment contains a clean, structural remedy that eliminates the likely anticompetitive effects of the acquisition in the market for beer in the United States and the 26 local markets identified in the Complaint. The divestitures required by the proposed Final Judgment will create an independent and economically viable competitor that will stand in the shoes of Modelo in the United States. Specifically, the divestiture of the Piedras Negras Brewery and Modelo's interest in Crown, and the perpetual brand licenses required by the proposed Final Judgment, will vest in Constellation (or an alternative purchaser, should ABI's divestiture to Constellation not be completed) the brewing capacity, the assets, and the other rights needed to produce, market, and sell Modelo Brand Beer in a manner similar to that which we see today. In short, the divestiture preserves the current structure of the beer market in the United States by maintaining an independent brewer with an incentive to resist following ABI's price leadership in order to expand share. Furthermore, the proposed Final Judgment puts an end to the existing entanglements between ABI and Modelo with respect to the United States beer market. Finally, the proposed Final Judgment also provides for supervision by this Court and the United States of the transition services necessary to allow Constellation or another acquirer to compete effectively while the divestiture and expansion of the Piedras Negras Brewery are completed.
The proposed Final Judgment requires ABI, within 90 days after entry of the Stipulation and Order by the Court, to (1) divest to Constellation Modelo's current interest in Crown, along with the Piedras Negras Brewery and associated assets, and (2) grant to Constellation a perpetual, assignable license to ten of the most popular Modelo Brand Beers, including Corona and Modelo Especial, for sale in the United States.
The proposed Final Judgment differs significantly from the deal that ABI sought unilaterally to impose and that is described in the Complaint. It vertically integrates the production and sale of Modelo Brand Beer in the United States and eliminates ABI's control of Modelo Brand Beer in the United States, as illustrated below:
The proposed Final Judgment requires ABI to license rather than divest the brands because ABI retains the right to brew and market Modelo's brands throughout the rest of the world. The structure of the licenses provides Constellation all the rights and abilities it needs to compete in the United States as Modelo did before the merger, including the opportunity to introduce new brands in the United States that Modelo already markets in Mexico, such as León. The licenses are perpetual and assignable and cannot be terminated by ABI for any reason. They include the right to develop and launch new brand extensions and packages, to update brand recipes in response to consumer demand, and to adopt, or decline to adopt, any updated recipes for any of the licensed brands that ABI may choose to use outside the United States. This flexibility allows Constellation to adapt to changing market conditions in the United States to compete effectively in the future, and reduces ABI's ability to interfere with those adaptations.
The assets must be divested and/or licensed in such a way as to satisfy the United States, in its sole discretion, that the operations can and will be operated by the purchaser as a viable, ongoing business that can compete effectively in the relevant market. Defendants ABI and Modelo must take all reasonable steps necessary to accomplish the divestiture
For the divestiture to be successful in replacing Modelo as a competitor, Constellation must expand the Piedras Negras Brewery's production capabilities. Section V.A of the proposed Final Judgment requires Constellation (or an alternative purchaser) to expand the Piedras Negras Brewery to be able to produce 20 million hectoliters of packaged beer annually by December 31, 2016. Such expansion will allow Constellation to produce, independently from ABI, enough Modelo Brand Beer to replicate Modelo's current competitive role in the United States. The required expansion also allows for expected future growth in sales of the licensed brands. In carrying out the expansion, Constellation is required to use its best efforts to adhere to specific construction milestones delineated in Sections V.A.1–8 of the proposed Final Judgment. A Monitoring Trustee will be appointed who will have the responsibility to observe the expansion and to report to the United States and the Court on whether the expansion is on track to be completed in the required timeframe.
Requiring the buyer of divested assets to improve those assets for the purposes of competing against the seller is an exceptional remedy that the United States found appropriate under the specific set of facts presented here. The recently constructed Piedras Negras Brewery is an ideal brewery for divestiture because it is near the United States border, is highly efficient, and features modular construction that was designed and equipped specifically to allow for economical expansion. No other combination of Modelo's brewing assets would have properly addressed the competitive harm caused by the proposed merger and allowed the acquirer of the Divestiture Assets to compete as effectively and economically with ABI as Modelo does today.
The proposed Final Judgment provides for or incorporates agreements protecting Constellation's ability to operate and expand the Piedras Negras Brewery while actively competing in the United States.
As part of the asset purchase, Constellation (or an alternative purchaser) will become the owner of the company that employs personnel who currently operate the Piedras Negras Brewery.
Sections IV.G–I of the proposed Final Judgment require the parties to enter into transition services and interim supply agreements. The transition services agreement (Section IV.G) requires ABI to provide consulting services with respect to topics such as the management of the Piedras Negras Brewery, logistics, material resource planning, and other general administrative services that Modelo currently provides to the Piedras Negras Brewery. The transition services agreement also requires ABI to supply certain key inputs (such as aluminum cans, glass, malt, yeast, and corn starch) for a limited time. The interim supply agreement (Section IV.H–I) requires ABI to supply Constellation with sufficient Modelo Brand Beer each year to make up for any difference between the demand for such beers in the United States and the Piedras Negras Brewery's capacity to fulfill that demand.
The transition services and interim supply agreements are necessary to allow Constellation (or an alternative purchaser) to continue to compete in the United States during the time it takes to expand the Piedras Negras Brewery's capacity to brew and bottle beer, but are time-limited to assure that Constellation will become a fully independent competitor to ABI as soon as practicable. As such, in conjunction with the firewall provisions described below, they prevent the vertical supply arrangement from causing competitive harm in the near term. The proposed Final Judgment subjects these agreements, including any extensions, to monitoring by a court-appointed trustee and, in the event that a firm other than Constellation acquires the assets, the acquisition requires approval by the United States.
Effective distribution is important for a brewer to be competitive in the beer industry. The proposed Final Judgment imposes two requirements on ABI regarding its distribution network that are designed to limit ABI's ability to interfere with Constellation's effective distribution of Modelo Brand Beer. These requirements ensure that Constellation can reduce the threat of discrimination in distribution at the hands of ABI-owned distributors or ABI-sponsored distributor incentive programs, in recognition of the influence ABI already exercises in the concentrated beer distribution markets.
First, Section V.C of the proposed Final Judgment provides that, for ABI's majority-owned distributors (“ABI-Owned Distributors”) that distribute Modelo Brand Beer, Constellation will have a window of opportunity to terminate that distribution relationship and direct the ABI-owned distributor to sell the distribution rights to another distributor. Similarly, should ABI subsequently acquire any distributors that have contractual rights to distribute Modelo Brand Beer, Constellation may require ABI to sell those rights.
Second, the proposed Final Judgment prevents ABI for 36 months from downgrading a distributor's ranking in ABI's distributor incentive programs by virtue of the distributor's decision to carry Modelo Brand Beer. The 36-month time period tracks the initial term of the transition service and interim supply agreements, and thus allows Constellation to maintain a status quo position for the Modelo Brand Beer in ABI's distribution incentive programs until Constellation can operate independently of ABI.
In the event that Defendants do not accomplish the divestiture as prescribed in the proposed Final Judgment, either to Constellation or to an alternative buyer, Section VI of the proposed Final Judgment provides that the Court will appoint a Divestiture Trustee selected by the United States to complete the divestiture. If a Divestiture Trustee is appointed, the proposed Final Judgment provides that ABI will pay all costs and expenses of the Divestiture Trustee. Under the proposed Final Judgment, the Divestiture Trustee shall have the ability to modify the package of assets to be divested, should such modification become necessary to enable an acquirer
Section VIII of the proposed Final Judgment permits the appointment of a Monitoring Trustee by the United States in its sole discretion and the United States intends to appoint one and seek the Court's approval. The Monitoring Trustee will ensure that Defendants expeditiously comply with all of their obligations and perform all of their responsibilities under the proposed Final Judgment and the Stipulation and Order; that the Divestiture Assets remain economically viable, competitive, and ongoing assets; and that competition in the sale of beer in the United States in the relevant markets is maintained until the required divestitures and other requirements of the proposed Final Judgment have been accomplished. The Monitoring Trustee will have the power and authority to monitor Defendants' compliance with the terms of the Final Judgment and attendant interim supply and services contracts. The Monitoring Trustee will have access to all personnel, books, records, and information necessary to monitor such compliance, and will serve at the cost and expense of ABI. The Monitoring Trustee will file reports every 90 days with the United States and the Court setting forth Defendants' efforts to comply with their obligations under the proposed Final Judgment and the Stipulation and Order.
Defendants have entered into the Stipulation and Order attached as an exhibit to the Explanation of Consent Decree Procedures, which was filed simultaneously with the Court, to ensure that, pending the divestitures, the Divestiture Assets are maintained as an ongoing, economically viable, and active business. The Stipulation and Order ensures that the Divestiture Assets are preserved and maintained in a condition that allows the divestitures to be effective. The Stipulation and Order also adds Constellation as a Defendant for purposes of entering the Final Judgment.
Section XII of the proposed Final Judgment requires ABI to notify the United States in advance of executing certain transactions that would not otherwise be reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transactions covered by these provisions include the acquisition or license of any interest in non-ABI brewing assets or brands, excluding acquisitions of: (1) Foreign-located assets that do not generate at least $7.5 million in annual gross revenue from beer sold for resale in the United States; (2) certain ordinary-course asset purchases and passive investments; and (3) distribution licenses that do not generate at least $3 million in annual gross revenue in the United States. This provision ensures that the United States will have the ability to take action in advance of any transactions that could potentially impact competition in the United States beer market.
Section XIII of the proposed Final Judgment requires ABI and Modelo to implement firewall procedures to prevent Constellation's (or an alternative acquirer's) confidential business information from being used within ABI or Modelo for any purpose that could harm competition or provide an unfair competitive advantage to ABI based on its role as a temporary supplier to Constellation under either the transition services or interim supply agreements. Within ten days of the Court approving the Stipulation and Order described above, ABI and Modelo must submit their planned procedures for maintaining a firewall. Additionally, ABI and Modelo must brief certain officers of the company and business personnel who have responsibility for commercial interactions with Constellation as to their required treatment of Constellation's confidential business information. This provision ensures that ABI and Modelo cannot improperly use any confidential information they receive from Constellation in ways that would harm competition in the beer industry or impair Constellation's competitive prospects.
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any person who has been injured as a result of conduct prohibited by the antitrust laws may bring suit in federal court to recover three times the damages the person has suffered, as well as costs and reasonable attorneys' fees. Entry of the proposed Final Judgment will neither impair nor assist the bringing of any private antitrust damage action. Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the proposed Final Judgment has no prima facie effect in any subsequent private lawsuit that may be brought against Defendants.
The United States and Defendants have stipulated that the proposed Final Judgment may be entered by the Court after compliance with the provisions of the APPA, provided that the United States has not withdrawn its consent. The APPA conditions entry upon the Court's determination that the proposed Final Judgment is in the public interest.
The APPA provides a period of at least sixty (60) days preceding the effective date of the proposed Final Judgment within which any person may submit to the United States written comments regarding the proposed Final Judgment. Any person who wishes to comment should do so within sixty (60) days of the date of publication of this Competitive Impact Statement in the
Written comments should be submitted to: James Tierney, Chief, Networks and Technology Enforcement Section, Antitrust Division, United States Department of Justice, 450 5th Street NW., Suite 7100, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains jurisdiction over this action, and the parties may apply to the Court for any order necessary or appropriate for the modification, interpretation, or enforcement of the Final Judgment.
The United States considered, before initiating this lawsuit to enjoin the proposed merger, the Defendants' proposal of selling Modelo's stake in Crown to Constellation and entering into a ten-year supply agreement. The
The United States also considered, as an alternative to the proposed Final Judgment, a full trial on the merits against Defendants ABI and Modelo. The United States could have continued the litigation and sought preliminary and permanent injunctions against ABI's acquisition of Modelo. The United States is satisfied, however, that the divestiture of assets described in the proposed Final Judgment, and concomitant expansion of the brewery assets, will preserve competition for the provision of beer in the relevant market identified by the United States. Thus, the proposed Final Judgment would achieve all or substantially all of the relief the United States would have obtained through litigation, but avoids the time, expense, and uncertainty of a full trial on the merits of the Complaint.
The Clayton Act, as amended by the APPA, requires that proposed consent judgments in antitrust cases brought by the United States be subject to a sixty-day comment period, after which the court shall determine whether entry of the proposed Final Judgment “is in the public interest.” 15 U.S.C. 16(e)(1). In making that determination, the court, in accordance with the statute as amended in 2004, is required to consider:
(A) The competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial.
As the United States Court of Appeals for the District of Columbia Circuit has held, under the APPA a court considers, among other things, the relationship between the remedy secured and the specific allegations set forth in the government's complaint, whether the decree is sufficiently clear, whether enforcement mechanisms are sufficient, and whether the decree may positively harm third parties.
Courts have greater flexibility in approving proposed consent decrees than in crafting their own decrees following a finding of liability in a litigated matter. “[A] proposed decree must be approved even if it falls short of the remedy the court would impose on its own, as long as it falls within the range of acceptability or is `within the reaches of public interest.'”
Moreover, the court's role under the APPA is limited to reviewing the remedy in relationship to the violations that the United States has alleged in its Complaint, and does not authorize the court to “construct [its] own hypothetical case and then evaluate the decree against that case.”
In its 2004 amendments, Congress made clear its intent to preserve the practical benefits of utilizing consent decrees in antitrust enforcement, adding the unambiguous instruction that “[n]othing in this section shall be construed to require the court to conduct an evidentiary hearing or to require the court to permit anyone to intervene.” 15 U.S.C. 16(e)(2). The language wrote into the statute what Congress intended when it enacted the Tunney Act in 1974, as Senator Tunney explained: “[t]he court is nowhere compelled to go to trial or to engage in extended proceedings which might have the effect of vitiating the benefits of prompt and less costly settlement through the consent decree process.” 119 Cong. Rec. 24,598 (1973) (statement of Senator Tunney). Rather, the procedure for the public interest determination is left to the discretion of the court, with the recognition that the court's “scope of review remains sharply proscribed by precedent and the nature of Tunney Act proceedings.”
The following determinative materials or documents within the meaning of the APPA were considered by the United States in formulating the proposed Final Judgment:
• The Stock Purchase Agreement attached and labeled as Exhibit A to the proposed Final Judgment;
• The Amended and Restated Membership Interest Purchase Agreement attached and labeled as Exhibit A to the proposed Final Judgment;
• The Amended and Restated Sub-License Agreement attached and labeled as Exhibit A to the Stock Purchase Agreement;
• The Transition Services Agreement attached and labeled as Exhibit B to the Stock Purchase Agreement; and
• The Interim Supply Agreement attached and labeled as Exhibit A to the Amended and Restated Membership Interest Purchase Agreement.
Dated: April 19, 2013.
Respectfully submitted,
I hereby certify that on the 19th day of April, 2013, I electronically filed the below-listed documents with the Clerk of the Court using the CM/ECF system:
The CM/ECF system will send a notice of electronic filing (NEF) to counsel for the Defendants:
For Defendant Anheuser Busch InBev SA/NV:
For Defendant Grupo Modelo S.A. de C.V.:
The CM/ECF system will send a notice of electronic filing (NEF) to the counsel below, whom I also served with the above-listed documents via email after obtaining written consent pursuant to Fed. R. Civ. P. 5(b)(2)(E):
For Proposed Settlement Defendant Constellation Brands, Inc.,
Respectfully submitted,
This Court has jurisdiction over the subject matter of and each of the parties to this action. The Complaint states a claim upon which relief may be granted against Defendants ABI and Modelo under Section 7 of the Clayton Act, as amended (15 U.S.C. 18). Pursuant to the Stipulation filed simultaneously with this Final Judgment joining Constellation as a Defendant to this action for the purpose of this Final Judgment, Constellation has consented to this Court's exercise of personal jurisdiction over it.
As used in the Final Judgment:
A. “ABI” means Anheuser-Busch InBev SA/NV, its domestic and foreign parents, predecessors, divisions, subsidiaries, affiliates, partnerships and joint ventures (excluding Crown, and, prior to the completion of the Transaction, Modelo); and all directors, officers, employees, agents, and representatives of the foregoing. The terms “parent,” “subsidiary,” “affiliate,” and “joint venture” refer to any person in which there is majority (greater than 50 percent) or total ownership or control between the company and any other person.
B. “ABI-Owned Distributor” means any Distributor in which ABI owns more than 50 percent of the outstanding equity interests as of the date of the divestiture of the Divestiture Assets.
C. “Acquirer” means:
1. Constellation; or
2. an alternative purchaser of the Divestiture Assets selected pursuant to the procedures set forth in this Final Judgment.
D. “Acquirer Confidential Information” means:
1. Confidential commercial information of Constellation (or other Acquirer) that has been obtained from such entity, including quantities, units, and prices of items ordered or purchased from the Sellers by the Acquirer, and any other competitively sensitive information regarding the Sellers' or the Acquirer's performance under the Interim Supply Agreement or the Transition Services Agreement; and
2. confidential unit sales data, non-public pricing strategies and plans, or any other confidential commercial information of the Acquirer that either an ABI-Owned Distributor, or any other Distributor in which ABI acquires a majority interest after the date of the divestiture contemplated herein, obtains from the Acquirer by virtue of its relationship with the Acquirer.
E. “Beer” means any fermented alcoholic beverage that (1) is composed in part of water, a type of starch, yeast, and a flavoring and (2) has undergone the process of brewing.
F. “Brewery Companies” means (1) Compañia Cervecera de Coahuila S.A. de C.V., a subsidiary of Grupo Modelo with its headquarters in Coahuila, Mexico, and (2) Servicios Modelo de Coahuila, S.A. de C.V., a subsidiary of Grupo Modelo with its headquarters in Coahuila, Mexico.
G. “Constellation” means Constellation Brands, Inc., its domestic and foreign parents, predecessors, divisions, subsidiaries, affiliates, partnerships and joint ventures, including but not limited to, Crown, and all directors, officers, employees, agents, and representatives of the foregoing. The terms “parent,” “subsidiary,” “affiliate,” and “joint venture” refer to any person in which there is majority (greater than 50 percent) or total ownership or control between the company and any other person.
H. “Covered Entity” means any Beer brewer, importer, or brand owner (other than ABI) that derives more than $7.5 million in annual gross revenue from Beer sold for further resale in the United States, or from license fees generated by such Beer sales.
I. “Covered Interest” means any non-ABI Beer brewing assets or any non-ABI Beer brand assets of, or any interest in (including any financial, security, loan, equity, intellectual property, or management interest), a Covered Entity; except that a Covered Interest shall not include (i) a Beer brewery or Beer brand located outside the United States that does not generate at least $7.5 million in annual gross revenue from Beer sold for resale in the United States; or (ii) a license to distribute a non-ABI Beer brand where said distribution license does not generate at least $3 million in annual gross revenue in the United States.
J. “Crown” means Crown Imports, LLC, the joint venture between Constellation and Modelo that is in the business of importing Modelo Brand Beer into the United States, or any successor thereto.
K. “Defendants” means ABI, Modelo, and Constellation, and any successor or assignee to all or substantially all of the business or assets of ABI, Modelo, or Constellation involved in the brewing of Beer.
L. “Distributor” means a wholesaler in the Territory who acts as an intermediary between a brewer or importer of Beer and a retailer of Beer.
M. “Distributor Incentive Program” means the Anheuser-Busch Voluntary Alignment Incentive Program and any other policy or program, either currently in effect or implemented hereafter, that offers some type of benefit to a Distributor based on the Distributor's sales performance, its loyalty in supporting any brand or brands of Beer, or its commercial support for any brand or brands of Beer, including decisions of which brands to carry or the sales volume of each.
N. “Divestiture Assets” means all tangible and intangible assets, rights and interests necessary to effectuate the purposes of this Final Judgment, as specified by the following agreements attached hereto and labeled as Exhibit A to this Final Judgment: The Stock Purchase Agreement (including the exhibits thereto) and the MIPA (including the exhibits thereto). In addition:
1. In the event that the Acquirer is a buyer other than Constellation, the Divestiture Assets shall also include the Entire Importer Interest, pursuant to ABI's Drag-Along Right to require Constellation to divest such interest, and subject to Constellation's right to receive compensation in the event of such divestiture, as set forth in Section 12.5 of the MIPA, attached hereto in Exhibit A; and
a. in the event that a Divestiture Trustee is appointed, the Divestiture Trustee may, with the consent of the United States pursuant to Section IV.J herein: Include in the Divestiture Assets any additional assets, including tangible assets as well as intellectual property interests and other intangible interests or assets that extend beyond the United States, if the Divestiture Trustee finds the inclusion of such assets necessary to enable the Acquirer to expand the Piedras Negras Brewery to a Nominal Capacity of at least twenty (20) million hectoliters of packaged Beer per year, or to remedy any breach that the Monitoring Trustee has identified pursuant to Section VIII.B.3 herein; or
b. remove from the divestiture package any assets that are not needed by the Acquirer to accomplish the purposes of this Final Judgment, if such removal will facilitate the divestiture of Modelo's United States Beer business as contemplated by this Final Judgment.
O. “Drag-Along Right” means ABI's right, as defined in Section 12.5(b) of the MIPA, attached hereto in Exhibit A, to require Constellation to divest Constellation's interest in Crown in the event Constellation is not the Acquirer.
P. “Entire Importer Interest” means Constellation's present interest in Crown, as defined in Section 12.5(b) of the MIPA, attached hereto in Exhibit A.
Q. “Hold Separate Stipulation and Order” means the Stipulation and Order filed by the parties simultaneously herewith, which imposes certain duties on the Defendants with respect to the operation of the Divestiture Assets pending the proposed divestitures, and also adds Constellation as a Defendant in this action.
R. “Interim Supply Agreement” means:
1. The form of agreement between Modelo and Crown, attached as Exhibit A to the MIPA, attached hereto, and incorporated herein, or
2. in the event the Divestiture Assets are sold to an Acquirer other than Constellation, an agreement between Sellers and the Acquirer to provide the same types of services under substantially similar terms as provided in Exhibit A to the MIPA incorporated hereto, subject to approval by the United States in its sole discretion.
S. “MIPA” means the Amended and Restated Membership Interest Purchase Agreement among Constellation Beers Ltd., Constellation Brands Beach Holdings, Inc., Constellation Brands, Inc., and Anheuser-Busch InBev SA/NV dated February 13, 2013, as amended on April 19, 2013, and attached hereto in Exhibit A.
T. “Modelo” means Grupo Modelo, S.A.B. de C.V., its domestic and foreign parents, predecessors, divisions, subsidiaries, affiliates, partnerships and joint ventures (excluding Crown and the entities listed on Exhibit B hereto); and all directors, officers, employees, agents, and representatives of the foregoing. The terms “parent,” “subsidiary,” “affiliate,” and “joint venture” refer to any person in which there is majority (greater than 50 percent) or total ownership or control between the company and any other person.
U. “Modelo Brand Beer” means any Beer SKU that is part of the Divestiture Assets, and any Beer SKU that may become subject to the agreements giving effect to the divestitures required by Sections IV or VI of this Final Judgment.
V. “Nominal Capacity” means a brewery's annual production capacity for packaged Beer, if the brewery were operated at 100% capacity.
W. “Piedras Negras Brewery” means all the land and all existing structures, buildings, plants, infrastructure, equipment, fixed assets, inventory, tooling, personal property, titles, leases, office furniture, materials, supplies, and other tangible property located in Nava, Coahuila, Mexico and owned by the Brewery Companies.
X. “Sellers” means ABI and Modelo.
Y. “Stock Purchase Agreement” means the Stock Purchase Agreement between Anheuser-Busch InBev SA/NV and Constellation Brands, Inc. dated February 13, 2013, as amended on April 19, 2013, and attached hereto in Exhibit A.
Z. “Sub-License Agreement” means the Amended and Restated Sub-License Agreement between Marcas Modelo, S.A. de C.V. and Constellation Beers Ltd., attached as Exhibit A to the Stock Purchase Agreement.
AA. “Territory” means the fifty states of the United States of America, the District of Columbia, and Guam.
BB. “Transaction” means ABI's proposed acquisition of the remainder of Modelo.
CC. “Transition Services Agreement” means:
1. The form of agreement between ABI and Constellation attached as Exhibit B to the Stock Purchase Agreement, and incorporated herein; or
2. in the event the Divestiture Assets are sold to an Acquirer other than Constellation, an agreement between Sellers and such Acquirer to provide the same types of services under substantially similar terms as provided in Exhibit B to the Stock Purchase Agreement incorporated hereto, subject to approval by the United States in its sole discretion.
A. This Final Judgment applies to Defendants, as defined above, and all other persons in active concert or participation with any of them who receive actual notice of this Final Judgment by personal service or otherwise.
B. If, prior to complying with Section IV and VI of this Final Judgment, Sellers sell or otherwise dispose of all or substantially all of their assets or of lesser business units that include the Divestiture Assets, they shall require the purchaser to be bound by the provisions of this Final Judgment.
A. The Court orders the divestitures set forth in this Section IV, having accepted the following representations made by the parties as of the date of filing this Final Judgment:
1. By ABI, the certain representations contained in Section 3.25 of the Stock Purchase Agreement attached in Exhibit A hereto regarding the sufficiency of the assets to be divested;
2. by ABI, the certain representations contained in Section 3.26 of the Stock Purchase Agreement attached in Exhibit A hereto regarding the absence of present knowledge of impediments to the expansion of capacity of the Piedras Negras Brewery;
3. by Modelo, the representations set forth in the Letter of Grupo Modelo, S.A.B. de C.V., dated April 17, 2013, attached hereto as Exhibit C, regarding the issues described in subparagraphs A.1 and A.2 above; and
4. by Modelo, the representations set forth in the Letter of Grupo Modelo, S.A.B. de C.V., dated April 17, 2013, attached hereto as Exhibit C, regarding the sufficiency of the assets being divested for the importation, marketing, distribution and sale of Modelo Brand Beer in the United States.
B. ABI is ordered and directed, upon the later of (1) the completion of the Transaction or (2) ninety (90) calendar days after the filing of this proposed Final Judgment, to divest the Divestiture Assets in a manner consistent with this Final Judgment to an Acquirer acceptable to the United States in its sole discretion. The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed sixty (60) calendar days in total, and shall notify the Court in such circumstances. ABI agrees to use its best efforts to divest the Divestiture Assets as expeditiously as possible.
C. In the event Sellers are attempting to divest the Divestiture Assets to an Acquirer other than Constellation, in accomplishing the divestiture ordered by this Final Judgment, Sellers promptly shall make known, by usual and customary means, the availability of the Divestiture Assets. Sellers shall inform any person making inquiry regarding a possible purchase of the Divestiture Assets that they are being divested pursuant to this Final Judgment and provide that person with a copy of this Final Judgment. Sellers shall offer to furnish to all prospective Acquirers, subject to customary confidentiality assurances, all information and documents relating to the Divestiture Assets customarily provided in a due diligence process except such information or documents subject to the attorney-client privileges or work-product doctrine. Sellers shall make available such information to the United States at the same time that such information is made available to any other person.
D. Sellers shall provide the Acquirer and the United States information relating to the personnel involved in the operation of the Divestiture Assets to enable the Acquirer to make offers of employment. Sellers will not interfere with any negotiations by the Acquirer to retain, employ or contract with any employee of the Brewery Companies. Interference with respect to this paragraph includes, but is not limited to, enforcement of non-compete clauses, solicitation of employment with ABI or Modelo, offers to transfer to another facility of ABI or Modelo, and offers to increase salary or other benefits apart from those offered company-wide.
E. In the event the Sellers are attempting to divest the Divestiture Assets to an Acquirer other than Constellation, Sellers shall permit prospective Acquirers of the Divestiture Assets to have reasonable access to personnel and to make inspections of the physical facilities of the Piedras Negras Brewery; access to any and all environmental, zoning, and other permit documents and information; and access to any and all financial, operational, or other documents and information customarily provided as part of a due diligence process.
F. Defendants shall, as soon as possible, but within two (2) business days after completion of the relevant event, notify the United States of: (1) The effective date of the completion of the Transaction; and (2) the effective date of the sale of the Divestiture Assets to the Acquirer.
G. Any amendment or modification of any of the agreements in Exhibit A, or any similar agreements entered with an Acquirer pursuant to Section IV.B, may only be entered into with the approval of the United States in its sole discretion. Sellers and the Acquirer shall enter into a Transition Services Agreement for a period up to three (3) years from the date of the divestiture to enable the Acquirer to compete effectively in providing Beer in the United States. Sellers shall perform all duties and provide any and all services required of Sellers under the Transition Services Agreement. Any amendments or modifications of the Transition Services Agreement may only be entered into with the approval of the United States in its sole discretion.
H. Sellers and the Acquirer shall enter into an Interim Supply Agreement for a period up to three (3) years from the execution date of the divestiture to enable the Acquirer to compete effectively in providing Beer in the United States. Sellers shall perform all duties and provide any and all services required of Sellers under the Interim Supply Agreement. Any amendments, modifications, or extensions of the Interim Supply Agreement beyond three (3) years may only be entered into with the approval of the United States in its sole discretion.
I. If the Acquirer seeks an extension of the Interim Supply Agreement, the Acquirer shall so notify the United States in writing at least four (4) months prior to the date the Interim Supply Agreement expires. If the United States approves such an extension, it shall so notify the Acquirer in writing at least three (3) months prior to the date the Interim Supply Agreement expires. The total term of the Interim Supply Agreement and any extension(s) so approved shall not exceed five (5) years.
J. Unless the United States otherwise consents in writing, the divestiture pursuant to Section IV or VI shall include the entire Divestiture Assets, and shall be accomplished in such a way as to satisfy the United States, in its sole discretion, that the Divestiture Assets can and will be used by the Acquirer as part of a viable, ongoing business, engaged in providing Beer in the United States. The divestiture shall be:
1. made to an Acquirer that, in the United States' sole judgment, has the intent and capability (including the necessary managerial, operational, technical and financial capability) to complete the expansion of the Piedras Negras Brewery as contemplated herein, and to compete in the business of providing Beer; and
2. accomplished so as to satisfy the United States, in its sole discretion, that none of the terms of the agreement between an Acquirer and Sellers gives Sellers the ability unreasonably to raise the Acquirer's costs, to lower the Acquirer's efficiency, or otherwise to interfere in the ability of the Acquirer to compete effectively.
A. Acquirer shall accomplish the expansion of the Piedras Negras Brewery to a Nominal Capacity of at least twenty (20) million hectoliters of packaged Beer annually, to include the ability to produce commercially reasonable quantities of each Modelo Brand Beer offered by Crown for sale in the United States as of the date of filing
1. Within six (6) months from the date of divestiture, the appointment of, and contracts executed with, design and engineering firms;
2. Within twelve (12) months from the date of divestiture, the completion of the design and engineering (including specifications and rated capacities) of the brewhouse, packaging hall, and warehouse;
3. Within twelve (12) months from the date of divestiture, the obtainment of all necessary permits;
4. Within twelve (12) months from the date of divestiture, the commencement of construction of the brewhouse, packaging hall, and warehouse;
5. Within twenty-four (24) months from the date of divestiture, the completion of the construction of the warehouse and completion of the installation of equipment in the warehouse;
6. Within thirty (30) months from the date of divestiture, the completion of the construction of the brewhouse and completion of the installation of equipment in the brewhouse;
7. Within thirty-six (36) months from the date of divestiture, the completion of the construction of the packaging hall and the completion of the installation of equipment in the packaging hall; and
8. Within thirty-six (36) months from the date of divestiture, Constellation determines in its discretion that it is able to obtain its supply requirements from the Piedras Negras Brewery and is no longer dependent on supply under the Interim Supply Agreement.
B. For a period of thirty-six (36) months after the date of the divestiture, (i) ABI shall not make any change to its Distributor Incentive Program that would cause any Modelo Brand Beer to count against a Distributor's level of alignment, nor implement a new Distributor Incentive Program that would have a similar effect; and (ii) additionally, any Distributor's carrying of Modelo Brand Beer shall not be considered by ABI to be an adverse factor or circumstance when determining whether or not to approve such Distributor's purchase of any other Distributor.
C. For a period of two (2) years beginning one (1) year after filing of this proposed Final Judgment, as to any ABI-Owned Distributor that has rights to distribute Modelo Brand Beer in the Territory, the Acquirer shall have the right, upon sixty (60) days notice to ABI, to direct the ABI-Owned Distributor to sell those rights to another Distributor identified by Acquirer, subject to the terms for such sales set forth in Exhibit D hereto, and incorporated herein. At least thirty (30) days before ABI acquires a majority of the equity interests in any additional Distributors after divestiture of the Divestiture Assets, and such Distributors have rights to distribute Modelo Brand Beer in the Territory, ABI shall notify the Acquirer of any such planned acquisition and the Acquirer shall have thirty (30) days from the date of such notice to provide notice to ABI that the Acquirer intends to exercise the rights outlined in Exhibit D hereto.
D. If Sellers and the Acquirer enter into any new agreement(s) with each other with respect to the brewing, packaging, production, marketing, importing, distribution, or sale of Beer in the United States or elsewhere, Sellers and the Acquirer shall notify the United States of the new agreement(s) at least sixty (60) calendar days in advance of such agreement(s) becoming effective and such agreement(s) may only be entered into with the approval of the United States in its sole discretion.
A. If Sellers have not divested the Divestiture Assets within the time period specified in Section IV.B, Sellers shall notify the United States of that fact in writing. Upon application of the United States, the Court shall appoint a Divestiture Trustee selected by the United States and approved by the Court to divest the Divestiture Assets in a manner consistent with this Final Judgment.
B. After the appointment of a Divestiture Trustee becomes effective, only the Divestiture Trustee shall have the right to sell the Divestiture Assets. The Divestiture Trustee shall have the power and authority to accomplish the divestiture to an Acquirer acceptable to the United States at such price and on such terms as are then obtainable upon reasonable effort by the Divestiture Trustee, subject to the provisions of Sections IV, V, VI, and VII of this Final Judgment, and shall have such other powers as this Court deems appropriate.
C. Subject to Section VI.E of this Final Judgment, the Divestiture Trustee may hire at the cost and expense of Sellers any investment bankers, attorneys, or other agents, who shall be solely accountable to the Divestiture Trustee, reasonably necessary in the Divestiture Trustee's judgment to assist in the divestiture.
D. Defendants shall not object to a sale by the Divestiture Trustee on any ground other than the Divestiture Trustee's malfeasance. Any such objections by Defendants must be conveyed in writing to the United States and the Divestiture Trustee within ten (10) calendar days after the Divestiture Trustee has provided the notice required under Section VII.A.
E. The Divestiture Trustee shall serve at the cost and expense of Sellers, pursuant to a written agreement with Sellers on such terms and conditions as the United States approves, and shall account for all monies derived from the sale of the assets sold by the Divestiture Trustee and all costs and expenses so incurred. After approval by the Court of the Divestiture Trustee's accounting, including fees for its services and those of any professionals and agents retained by the Divestiture Trustee, all remaining money shall be paid to Sellers and the trust shall then be terminated. The compensation of the Divestiture Trustee and any professionals and agents retained by the Divestiture Trustee shall be reasonable in light of the value of the Divestiture Assets and based on a fee arrangement providing the Divestiture Trustee with an incentive based on the price and terms of the divestiture and the speed with which it is accomplished, but timeliness is paramount.
F. Defendants shall use their best efforts to assist the Divestiture Trustee in accomplishing the required divestiture. The Divestiture Trustee and any consultants, accountants, attorneys, and other persons retained by the Divestiture Trustee shall have full and complete access to the personnel, books, records, and facilities of the business to be divested, and Defendants shall develop financial and other information relevant to such business as the Divestiture Trustee may reasonably request, subject to reasonable protection for trade secret or other confidential research, development, or commercial information. Defendants shall take no action to interfere with or to impede the Divestiture Trustee's accomplishment of the divestiture.
G. After its appointment, the Divestiture Trustee shall file monthly reports with the United States and the Court setting forth the Divestiture Trustee's efforts to accomplish the divestiture ordered under this Final Judgment. To the extent such reports contain information that the Divestiture Trustee deems confidential, such reports shall not be filed in the public docket of the Court. Such reports shall include the name, address, and telephone number of each person who,
H. If the Divestiture Trustee has not accomplished the divestiture ordered under this Final Judgment within six (6) months after its appointment, the Divestiture Trustee shall promptly file with the Court a report setting forth (1) the Divestiture Trustee's efforts to accomplish the required divestiture, (2) the reasons, in the Divestiture Trustee's judgment, why the required divestiture has not been accomplished, and (3) the Divestiture Trustee's recommendations. To the extent such reports contain information that the Divestiture Trustee deems confidential, such reports shall not be filed in the public docket of the Court. The Divestiture Trustee shall at the same time furnish such report to the Defendants and to the United States, which shall have the right to make additional recommendations consistent with the purpose of the trust. The Court thereafter shall enter such orders as it shall deem appropriate to carry out the purpose of the Final Judgment, which may, if necessary, include extending the trust and the term of the Divestiture Trustee's appointment by a period requested by the United States.
A. Within two (2) business days following execution of a definitive divestiture agreement with an Acquirer other than Constellation, the Defendants or the Divestiture Trustee, whichever is then responsible for effecting the divestiture required herein, shall notify the United States of any proposed divestiture required by Section IV of this Final Judgment. If the Divestiture Trustee is responsible, it shall similarly notify Defendants. The notice shall set forth the details of the proposed divestiture and list the name, address, and telephone number of each person who offered or expressed an interest in or desire to acquire any ownership interest in the Divestiture Assets or, in the case of the Divestiture Trustee, any update of the information required to be provided under Section VI.G above.
B. Within fifteen (15) calendar days of receipt by the United States of such notice, the United States may request from Defendants, the proposed Acquirer, any other third party, or the Divestiture Trustee if applicable, additional information concerning the proposed divestiture, the proposed Acquirer, and any other potential Acquirer. Defendants and the Divestiture Trustee shall furnish any additional information requested within fifteen (15) calendar days of the receipt of the request, unless the parties shall otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or within twenty (20) calendar days after the United States has been provided the additional information requested from Defendants, the proposed Acquirer, any third party, and the Divestiture Trustee, whichever is later, the United States shall provide written notice to Defendants and the Divestiture Trustee, stating whether or not it objects to the proposed divestiture. If the United States provides written notice that it does not object, the divestiture may be consummated, subject only to Defendants' limited right to object to the sale under Section VI.D of this Final Judgment. Absent written notice that the United States does not object to the proposed Acquirer or upon objection by the United States, a divestiture proposed under Section VI shall not be consummated. Upon objection by Defendants under Section VI.D, a divestiture proposed under Section VI shall not be consummated unless approved by the Court.
A. Upon the filing of this Final Judgment, the United States may, in its sole discretion, appoint a Monitoring Trustee, subject to approval by the Court.
B. The Monitoring Trustee shall have the power and authority to monitor Defendants' compliance with the terms of this Final Judgment and the Hold Separate Stipulation and Order entered by this Court, and shall have such powers as this Court deems appropriate. The Monitoring Trustee shall be required to investigate and report on the Defendants' compliance with this Final Judgment and the Defendants' progress toward effectuating the purposes of this Final Judgment, including but not limited to:
1. The attainment of the construction milestones by the Acquirer as set forth in Section V.A, the reasons for any failure to meet such milestones, and recommended remedies for any such failure;
2. any breach or other problem that arises under the Transition Services Agreement, Interim Supply Agreement, or other agreement between Sellers and Acquirer that may affect the accomplishment of the purposes of this Final Judgment, the reasons for such breach or problem, and recommended remedies therefor; and
3. any breach or other concern regarding the accuracy of the representations made by ABI in sections 3.25 and 3.26 of the Stock Purchase Agreement, incorporated herein, or successor agreements thereto, and by Modelo in the Letter of Grupo Modelo, S.A.B. de C.V., incorporated herein as Exhibit C, and recommended remedies therefor.
C. Subject to Section VIII.E of this Final Judgment, the Monitoring Trustee may hire at the cost and expense of ABI, any consultants, accountants, attorneys, or other persons, who shall be solely accountable to the Monitoring Trustee, reasonably necessary in the Monitoring Trustee's judgment.
D. Defendants shall not object to actions taken by the Monitoring Trustee in fulfillment of the Monitoring Trustee's responsibilities under any Order of this Court on any ground other than the Monitoring Trustee's malfeasance. Any such objections by Defendants must be conveyed in writing to the United States and the Monitoring Trustee within ten (10) calendar days after the action taken by the Monitoring Trustee giving rise to the Defendants' objection.
E. The Monitoring Trustee shall serve at the cost and expense of ABI on such terms and conditions as the United States approves. The compensation of the Monitoring Trustee and any consultants, accountants, attorneys, and other persons retained by the Monitoring Trustee shall be on reasonable and customary terms commensurate with the individuals' experience and responsibilities. The Monitoring Trustee shall, within three (3) business days of hiring any consultants, accountants, attorneys, or other persons, provide written notice of such hiring and the rate of compensation to ABI.
F. The Monitoring Trustee shall have no responsibility or obligation for the operation of Defendants' businesses.
G. Defendants shall use their best efforts to assist the Monitoring Trustee in monitoring Defendants' compliance with their individual obligations under this Final Judgment and under the Hold Separate Stipulation and Order. The Monitoring Trustee and any consultants, accountants, attorneys, and other persons retained by the Monitoring Trustee shall have full and complete access to the personnel, books, records, and facilities relating to compliance with this Final Judgment, subject to reasonable protection for trade secret or other confidential research, development, or commercial
H. After its appointment, the Monitoring Trustee shall file reports every ninety (90) days, or more frequently as needed, with the United States, the Defendants and the Court setting forth the Defendants' efforts to comply with their individual obligations under this Final Judgment and under the Hold Separate Stipulation and Order. To the extent such reports contain information that the trustee deems confidential, such reports shall not be filed in the public docket of the Court.
I. The Monitoring Trustee shall serve until the divestiture of all the Divestiture Assets is finalized pursuant to either Section IV or Section VI of this Final Judgment and the Transition Services Agreement and the Interim Supply Agreement have expired and all other relief has been completed as defined in Section V.A.
Sellers shall not finance all or any part of any purchase made pursuant to Section IV or VI of this Final Judgment.
Until the divestiture required by this Final Judgment has been accomplished, Defendants shall take all steps necessary to comply with the Hold Separate Stipulation and Order entered by this Court. Defendants shall take no action that would jeopardize the divestiture ordered by this Court.
A. Within twenty (20) calendar days of the filing of this proposed Final Judgment, and every thirty (30) calendar days thereafter until the divestiture has been completed under Section IV or VI, each Seller shall deliver to the United States an affidavit as to the fact and manner of its compliance with Section IV or VI of this Final Judgment. Each such affidavit shall include the name, address, and telephone number of each person who, during the preceding thirty (30) calendar days, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring, any interest in the Divestiture Assets, and shall describe in detail each contact with any such person during that period. Each such affidavit shall also include a description of the efforts Sellers have taken to solicit buyers for the Divestiture Assets, and to provide required information to prospective Acquirers, including the limitations, if any, on such information. Assuming the information set forth in the affidavit is true and complete, any objection by the United States to information provided by Sellers, including limitation on information, shall be made within fourteen (14) calendar days of receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of this proposed Final Judgment, each Defendant shall deliver to the United States an affidavit that describes in reasonable detail all actions it has taken and all steps it has implemented on an ongoing basis to comply with Section X of this Final Judgment. Each Defendant shall deliver to the United States an affidavit describing any changes to the efforts and actions outlined in its earlier affidavits filed pursuant to this section within fifteen (15) calendar days after the change is implemented.
C. Defendants shall keep all records of all efforts made to preserve and divest the Divestiture Assets until one year after such divestiture has been completed.
A. Unless such transaction is otherwise subject to the reporting and waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, 15 U.S.C. 18a (the “HSR Act”), ABI, without providing at least sixty (60) calendar days advance notification to the United States, shall not directly or indirectly acquire or license a Covered Interest in or from a Covered Entity; provided, however, that advance notification shall not be required for acquisitions of the type addressed in 16 CFR 802.1 and 802.9.
B. Any notification pursuant to Section XII.A above shall be provided to the United States in letter format, and shall identify the parties to the transaction, the assets being acquired or licensed, the value of the transaction, the seller's annual gross revenue from each brand or asset being acquired, and the identity of the current importer for any Beer being acquired that is brewed outside the United States.
C. All references to the HSR Act in this Final Judgment refer to the HSR Act as it exists at the time of the transaction or agreement and incorporate any subsequent amendments to the Act.
A. During the term of the Transition Services Agreement and the Interim Supply Agreement, Sellers shall implement and maintain reasonable procedures to prevent Acquirer Confidential Information from being disclosed by or through Sellers to those of Sellers' affiliates who are involved in the marketing, distribution, or sale of Beer in the United States, or to any other person who does not have a need to know the information.
B. Sellers shall, within ten (10) business days of the entry of the Hold Separate Stipulation and Order, submit to the United States a document setting forth in detail the procedures implemented to effect compliance with Section XIII.A of this Final Judgment. The United States shall notify Sellers within five (5) business days whether it approves of or rejects Sellers' compliance plan, in its sole discretion. In the event that Sellers' compliance plan is rejected, the reasons for the rejection shall be provided to Sellers and Sellers shall be given the opportunity to submit, within ten (10) business days of receiving the notice of rejection, a revised compliance plan. If the parties cannot agree on a compliance plan, the United States shall have the right to request that the Court rule on whether Sellers' proposed compliance plan is reasonable.
C. Defendants may at any time submit to the United States evidence relating to the actual operation of the firewall in support of a request to modify the firewall set forth in this Section XIII. In determining whether it would be appropriate for the United States to consent to modify the firewall, the United States, in its sole discretion, shall consider the need to protect Acquirer Confidential Information and the impact the firewall has had on Sellers' ability to efficiently provide services, supplies and products under the Transition Services Agreement and the Interim Supply Agreement.
D. Sellers and the Acquirer shall:
1. furnish a copy of this Final Judgment and related Competitive Impact Statement within sixty (60) days of entry of the Final Judgment to (a) each officer, director, and any other employee that will receive Acquirer Confidential Information; (b) each officer, director, and any other employee that is involved in (i) any contact with the other companies that are parties to the Transition Services Agreement and Interim Supply Agreement, (ii) making decisions under the Transition Services Agreement or the Interim Supply Agreement, (iii) making decisions regarding ABI's Distributor Incentive Programs, or (iv) making decisions regarding the treatment of Crown by either ABI-Owned Distributors, or by any other Distributor in which ABI acquires a
2. annually brief each person designated in Section XIII.D.1 on the meaning and requirements of this Final Judgment and the antitrust laws; and
3. obtain from each person designated in Section XIII.D.1, within sixty (60) days of that person's receipt of the Final Judgment, a certification that he or she (i) has read and, to the best of his or her ability, understands and agrees to abide by the terms of this Final Judgment; (ii) is not aware of any violation of the Final Judgment that has not been reported to the company; and (iii) understands that any person's failure to comply with this Final Judgment may result in an enforcement action for civil or criminal contempt of court against each Defendant and/or any person who violates this Final Judgment.
A. For the purposes of determining or securing compliance with this Final Judgment, or of determining whether the Final Judgment should be modified or vacated, and subject to any legally recognized privilege, from time to time authorized representatives of the United States Department of Justice Antitrust Division (“Antitrust Division”), including consultants and other persons retained by the United States, shall, upon written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, and on reasonable notice to Defendants, be permitted:
1. Access during Defendants' office hours to inspect and copy, or at the option of the United States, to require Defendants to provide hard copy or electronic copies of, all books, ledgers, accounts, records, data, and documents in the possession, custody, or control of Defendants, relating to any matters contained in this Final Judgment; and
2. to interview, either informally or on the record, Defendants' officers, employees, or agents, who may have their individual counsel present, regarding such matters. The interviews shall be subject to the reasonable convenience of the interviewee and without restraint or interference by Defendants.
B. Upon the written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, Defendants shall submit written reports or respond to written interrogatories, under oath if requested, relating to any of the matters contained in this Final Judgment as may be requested. Written reports authorized under this paragraph may, at the sole discretion of the United States, require Defendants to conduct, at Defendants' cost, an independent audit or analysis relating to any of the matters contained in this Final Judgment.
C. No information or documents obtained by the means provided in this section shall be divulged by the United States to any person other than an authorized representative of the executive branch of the United States, except in the course of legal proceedings to which the United States is a party (including grand jury proceedings), or for the purpose of securing compliance with this Final Judgment, or as otherwise required by law.
D. If at the time information or documents are furnished by Defendants to the United States, Defendants represent and identify in writing the material in any such information or documents to which a claim of protection may be asserted under the Protective Order, then the United States shall give Defendants ten (10) calendar days notice prior to divulging such material in any legal proceeding (other than a grand jury proceeding).
Sellers may not reacquire any part of the Divestiture Assets during the term of this Final Judgment.
The failure of any party to the Sub-License Agreement to perform any remaining obligations of such party under the Sub-License Agreement shall not excuse performance by the other party of its obligations thereunder. Accordingly, for purposes of Section 365(n) of the Bankruptcy Reform Act of 1978, as amended, and codified as 11 U.S.C. 101
This Court retains jurisdiction to enable any party to this Final Judgment to apply to this Court at any time for further orders and directions as may be necessary or appropriate to carry out or construe this Final Judgment, to modify any of its provisions, to ensure and enforce compliance, and to punish violations of its provisions.
Unless this Court grants an extension, this Final Judgment shall expire ten (10) years from the date of its entry.
Entry of this Final Judgment is in the public interest. The parties have complied with the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16, including making copies available to the public of this Final Judgment, the Competitive Impact Statement, and any comments thereon and the United States' responses to comments. Based upon the record before the Court, which includes the Competitive Impact Statement and any comments and response to comments filed with the Court, entry of this Final Judgment is in the public interest.
Court approval subject to procedures of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16.
Bureau of Consumer Financial Protection.
Final rule; official interpretation.
The Bureau of Consumer Financial Protection (Bureau) is amending its regulation which implements the Electronic Fund Transfer Act, and the official interpretation to the regulation. This final rule (the 2013 Final Rule) modifies the final rules issued by the Bureau in February, July, and August 2012 (collectively the 2012 Final Rule) that implement section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding remittance transfers. The amendments address three specific issues. First, the 2013 Final Rule modifies the 2012 Final Rule to make optional, in certain circumstances, the requirement to disclose fees imposed by a designated recipient's institution. Second and relatedly, the 2013 Final Rule also makes optional the requirement to disclose taxes collected by a person other than the remittance transfer provider. In place of these two former requirements, the 2013 Final Rule requires disclaimers to be added to the rule's disclosures indicating that the recipient may receive less than the disclosed total due to the fees and taxes for which disclosure is now optional. Finally, the 2013 Final Rule revises the error resolution provisions that apply when a remittance transfer is not delivered to a designated recipient because the sender provided incorrect or insufficient information, and, in particular, when a sender provides an incorrect account number or recipient institution identifier that results in the transferred funds being deposited in the wrong account.
This rule is effective October 28, 2013. The effective date of the rules published February 7, 2012 (77 FR 6194), July 10, 2012 (77 FR 40459), and August 20, 2012 (77 FR 50244), which were delayed on January 29, 2013 (78 FR 6025), is October 28, 2013.
Eric Goldberg, Ebunoluwa Taiwo or Lauren Weldon, Counsels; Division of Research, Markets & Regulations, Bureau of Consumer Financial Protection, 1700 G Street NW., Washington, DC 20552, at (202) 435–7700 or
This final rule (the 2013 Final Rule) revises the amendments to Regulation E published on February 7, 2012 (77 FR 6194) (February Final Rule)
The 2013 Final Rule amends the 2012 Final Rule by addressing three specific issues. First, the 2013 Final Rule modifies the 2012 Final Rule to make optional, in certain circumstances, the requirement to disclose fees imposed by a designated recipient's institution for transfers to the designated recipient's account. Second and relatedly, the 2013 Final Rule also makes optional the requirement to disclose taxes collected by a person other than the remittance transfer provider. In place of these two former requirements, the 2013 Final Rule requires providers to include disclaimers on the disclosure forms provided to senders of remittance transfers indicating that the recipient may receive less than the disclosed total due to certain recipient institution fees and taxes collected by a person other than the provider. In addition, the 2013 Final Rule permits providers to disclose these fees and taxes, or a reasonable estimate of these figures, as part of the new required disclaimer.
The 2013 Final Rule also creates an exception from the 2012 Final Rule's error provisions for certain situations in which a sender provides an incorrect account number or recipient institution identifier and that mistake results in the transfer being deposited in the account of someone other than the designated recipient. For this exception to apply, a remittance transfer provider must satisfy a number of conditions including providing notice to the sender prior to the transfer that the transfer amount could be lost, implementing reasonable verification measures to verify the accuracy of a recipient institution identifier, and making reasonable efforts to retrieve the mis-deposited funds. The 2013 Final Rule also streamlines error resolution procedures in other situations where a sender's provision of incorrect or incomplete information results in an error under the rule.
Finally, the 2013 Final Rule will go into effect on October 28, 2013.
Section 1073 of the Dodd-Frank Act amended the Electronic Fund Transfer Act (EFTA) to create a new comprehensive consumer protection regime for remittance transfers sent by consumers in the United States to individuals and businesses in foreign countries. For covered transactions sent by remittance transfer providers, section 1073 creates a new EFTA section 919, and generally requires: (i) The provision of disclosures prior to and at the time of payment by the sender for the transfer; (ii) cancellation and refund rights; (iii) the investigation and remedy of errors by providers; and (iv) liability standards for providers for the acts of their agents.
As discussed in more detail in the February Final Rule, consumers can choose among several methods of transferring money to foreign countries. The various methods of remittance transfers can generally be categorized as involving either closed network or open network systems, although hybrids between open and closed networks also exist. Consistent with EFTA section 919, the 2013 Final Rule generally applies to all remittance transfer providers, whether transfers are sent through closed network or open network systems, or some hybrid of the two.
In a closed network, a principal provider offers a service entirely through its own operations, or through a network of agents or other partners that help collect funds in the United States and disburse them abroad. Through the provider's own contractual arrangements with those agents or other partners, or through the contractual relationships owned by the provider's business partner, the principal provider can exercise some control over the
In general, closed networks can be used to send transfers that can be received in a variety of forms. But, they are most frequently used to send transfers that are not received in accounts held by depository institutions and credit unions. Additionally, closed networks are most frequently used by non-depository institutions called money transmitters, though depository institutions and credit unions may also provide (or operate as part of) closed networks. Similarly, the Bureau believes that many money transmitters operate exclusively or primarily through closed network systems.
In an open network, no single provider has control over or relationships with all of the participants that may collect funds in the United States or disburse funds abroad. Funds may pass from sending institutions through intermediary institutions to recipient institutions, any of which may deduct fees from the principal amount or set the exchange rate that applies to the transfer, depending on the circumstances. Institutions involved in open network transfers may learn about each other's practices regarding fees or other matters through any direct contractual or other relationships that do exist, through experience in sending wire transfers over time, through reference materials, or through information provided by the consumer. However, at least until the time of the February Final Rule, in open networks, there has not generally been a uniform global method for or practice of communication by all intermediary and recipient institutions with originating entities regarding the fees and exchange rates that intermediary or recipient institutions might apply to transfers.
Unlike closed networks, open networks are typically used to send funds to accounts at depository institutions or credit unions. Though they may be used by money transmitters, open networks are primarily used by depository institutions, credit unions and broker-dealers for sending money abroad. The most common form of open network remittance transfer is a wire transfer, a certain type of electronically transmitted order that directs a receiving institution to pay an identified beneficiary. Unlike closed network transactions, which generally can only be sent to agents or other entities that have signed on to work with the specific provider in question, wire transfers can reach most banks (or other institutions) worldwide through national payment systems that are connected through correspondent and other intermediary bank relationships.
Information on the volume of remittance transfers sent via certain methods is very limited. However, the Bureau believes that closed network transactions by money transmitters and wire transfers sent by depository institutions and credit unions make up the great majority of the remittance transfer market. Furthermore, the Bureau believes that, collectively, money transmitters send far more remittance transfers each year than depository institutions and credit unions combined.
The Bureau published three rules in 2012 to implement section 1073 of the Dodd-Frank Act. The Bureau then published a proposal on December 31, 2012, which would have modified those published rules in three distinct areas. 77 FR 77188 (the December Proposal). These three final rules and the December Proposal are summarized below.
On May 31, 2011, the Board of Governors for the Federal Reserve System (Board) first proposed to amend Regulation E to implement the remittance transfer provisions in section 1073 of the Dodd-Frank Act.
The 2012 Final Rule adopts provisions that govern certain electronic transfers of funds sent by consumers in the United States to designated recipients in other countries and, for covered transactions, imposes a number of requirements on remittance transfer providers. In particular, the 2012 Final Rule implements disclosure requirements in EFTA sections 919(a)(2)(A) and (B). The 2012 Final Rule includes provisions that generally require a provider to provide to a sender a written pre-payment disclosure containing detailed information about the transfer requested by the sender, specifically including the exchange rate, applicable fees and taxes, and the amount to be received by the designated recipient. In addition to the pre-payment disclosure, pursuant to the 2012 Final Rule, the provider also must furnish to a sender a written receipt when payment is made for the transfer. The receipt must include the information provided on the pre-payment disclosure, as well as additional information such as the date of availability of the funds, the designated recipient's contact information, and information regarding the sender's error resolution and cancellation rights.
Though the 2012 Final Rule's provisions permit remittance transfer providers to provide estimates in three specific circumstances, the 2012 Final Rule generally requires that disclosures state the actual exchange rate that will apply to a remittance transfer and the actual amount that will be received by the designated recipient of a remittance transfer. One of the exceptions permitting estimates includes a temporary exception for certain transfers provided by insured institutions. Pursuant to this exception, if the remittance transfer provider is an insured depository institution or credit union, the transfer is sent from the sender's account with the institution, and the provider cannot determine exact amounts for reasons beyond its control, the provider can estimate the exchange rate, any fees imposed on the remittance transfer by a person other than the provider, and, in more limited circumstances, taxes imposed by a person other than the provider. The 2012 Final Rule also includes two permanent exceptions permitting estimates, one for transfers to certain countries and the other for transfers that are scheduled five or more business days before the date of transfer.
As noted above, the EFTA, as amended by the Dodd-Frank Act, requires the disclosure of the amount to be received by the designated recipient. Because fees imposed and taxes collected on a remittance transfer by persons other than the remittance
In the February Final Rule in response to comments received on the Board's proposal, the Bureau noted that commenters had argued that fees imposed and taxes collected on the remittance transfer by a person other than the remittance transfer provider may not be known at the time the sender authorizes the remittance transfer and that this lack of knowledge could result in the provider disclosing misleading information to the sender. The Bureau also acknowledged that smaller institutions might not have the resources to obtain or monitor information about foreign tax laws or fees charged by unrelated financial institutions and that providers might not know whether a recipient had agreed to pay such fees or how much the recipient may have agreed to pay. Nevertheless, the Bureau stated that the Dodd-Frank Act specifically requires providers to disclose the amount to be received, and that fees imposed and taxes collected on the remittance transfer by a person other than the provider are a necessary component of this amount. The Bureau further stated that it was necessary and proper to exercise its authority under EFTA sections 904(a) and (c) to adopt § 1005.31(b)(1)(vi) to require the itemized disclosure of fees and taxes imposed on the remittance transfer by persons other than the provider to help senders understand the calculation of the amount received, which would aid comparison shopping and the identification of errors, and thus effectuate the purposes of the EFTA.
The 2012 Final Rule also implements EFTA sections 919(d) and (f), which direct the Bureau to promulgate error resolution standards and rules regarding appropriate cancellation and refund policies, as well as standards of liability for remittance transfer providers. The 2012 Final Rule thus defines in § 1005.33 what constitutes an error with respect to a remittance transfer, as well as what remedies are available when an error occurs. Of relevance to the 2013 Final Rule, the 2012 Final Rule provides in §§ 1005.33(a)(1)(iii) and (a)(1)(iv) that, subject to specified exceptions, an error includes the failure to make available to a designated recipient the amount of currency stated in the disclosure provided to the sender, as well as the failure to make funds available to a designated recipient by the date of availability stated in the disclosure. Where the error is the result of the sender providing insufficient or incorrect information, § 1005.33(c)(2)(ii) in the 2012 Final Rule specifies the available remedies: The provider must either refund the funds provided by the sender in connection with the remittance transfer (or the amount appropriate to correct the error) or resend the transfer at no cost to the sender, except that the provider may collect third-party fees imposed for resending the transfer. If the transfer is resent, comment 33(c)–2 to the 2012 Final Rule explains that a request to resend is a request for a remittance transfer, and thus the provider must provide the disclosures required by § 1005.31. Under § 1005.33(c)(2) of the 2012 Final Rule, even if the provider cannot retrieve the funds once they are sent, the provider still must provide the stated remedies if an error occurred.
In the February Final Rule, the Bureau stated that it would continue to monitor implementation of the new statutory and regulatory requirements. The Bureau subsequently engaged in dialogue with both industry and consumer groups regarding implementation efforts and compliance concerns. Most frequently, industry participants expressed concern about the costs and compliance challenges to remittance transfer providers of: (1) The requirement to disclose certain fees imposed by recipient institutions on remittance transfers; (2) the requirement to disclose taxes imposed by a person other than the provider, including taxes charged by foreign regional, provincial, state, or other local governments; and (3) the requirement to treat as an error, and thus resend or refund a remittance transfer, where the failure to deliver a transfer to the designated recipient occurs because the sender provided an incorrect account number to the provider. As a result, the Bureau proposed to refine these specific aspects of the 2012 Final Rule in the December Proposal.
First, the Bureau proposed to exercise its exception authority under section 904(c) of the EFTA to provide additional flexibility on how foreign taxes and recipient institution fees may be disclosed. If a remittance transfer provider did not have specific knowledge regarding variables that affect the amount of foreign taxes imposed on the transfer, the December Proposal would have permitted a provider to rely on a sender's representations regarding these variables, as permitted under the 2012 Final Rule. However, the December Proposal would have also permitted providers to estimate foreign taxes by disclosing the highest possible such tax that could be imposed with respect to any unknown variable. Similarly, if a provider did not have specific knowledge regarding variables that affect the amount of fees imposed on the remittance transfer by a recipient institution for receiving a remittance transfer in an account, the December Proposal would have permitted a provider to rely on a sender's representations regarding these variables. Separately, the December Proposal would have also permitted the provider to estimate a fee imposed on the remittance transfer by a recipient institution for receiving a transfer into an account by disclosing the highest possible fee with respect to any unknown variable, as determined based on either fee schedules made available by the recipient institution or information ascertained from prior transfers to the same recipient institution. If the provider could not obtain such fee schedules or information from prior transfers, the December Proposal would have allowed a provider to rely on other reasonable sources of information.
Second, the Bureau proposed to exercise its exception authority under section 904(c) of the EFTA to eliminate the requirement to disclose foreign taxes at the regional, state, provincial and local level. Thus, under the December Proposal, a remittance transfer provider's obligation to disclose foreign taxes would have been limited to taxes imposed on the remittance transfer by a foreign country's central government. Because the proposed changes regarding recipient institution fees and taxes, taken together, could have resulted in inexact disclosures, the December Proposal also solicited comment on whether the existing requirement in the 2012 Final Rule to state that a disclosure is “Estimated” when estimates are provided under § 1005.32 should be extended to scenarios where disclosures
Third, the December Proposal would have revised the error resolution provisions that apply when a sender provides incorrect or insufficient information to the remittance transfer provider, and, in particular, when a remittance transfer is not delivered to a designated recipient because the sender provided an incorrect account number to the provider and the incorrect account number results in the funds being deposited in the wrong account. Under the December Proposal, in these circumstances, where the provider could demonstrate that the sender provided the incorrect account number and the sender had notice that the sender could lose the transfer amount, the provider would not have been required to return or refund mis-deposited funds that could not be recovered, provided that the provider had made reasonable efforts to attempt to recover the funds.
The December Proposal also would have revised the existing remedy procedures in situations where a sender provided incorrect or insufficient information, other than an incorrect account number, to allow remittance transfer providers additional flexibility when resending funds at a new exchange rate. Under proposed § 1005.33(c)(3), providers would have been able to provide oral, streamlined disclosures and would not have been required to treat resends as entirely new remittance transfers. The Bureau also proposed to make conforming revisions in light of the proposed revisions regarding recipient institution fees and foreign taxes.
Finally, the Bureau proposed to temporarily delay the effective date of the final rule and to extend the final rule's effective date until 90 days after this final rule is published.
The Bureau received more than 100 comments on the December Proposal. The majority of comments were submitted by industry commenters, including depository institutions and money transmitters that provide remittance transfers, and industry trade associations. In addition, the Bureau received comment letters from consumer groups and several individuals.
Most industry commenters supported, or did not oppose, the proposed additional flexibility regarding the disclosure of recipient institution fees. However, many of these commenters further urged the Bureau to eliminate altogether the requirement that remittance transfer providers disclose recipient institution fees for remittance transfers to an account. These commenters largely reemphasized and expanded upon arguments that commenters had asserted prior to the publication of the February Final Rule. Primarily, that for remittance transfers sent through open networks it is very difficult, and in some cases impossible, for providers to know or even to estimate—with any degree of accuracy—the fees imposed on remittance transfers by recipient institutions. Commenters also argued that for wire transfers sent over the open network, the number of recipient institutions that might receive transfers, and thus assess fees, posed a challenge for any one U.S. institution, even a large correspondent bank, attempting to learn and accurately disclose these fees. Relatedly, commenters noted that existing systems for sending wire transfers in open networks generally do not provide a sending institution any insight into the fees charged by the recipient institution. Some of these commenters contended that Congress did not intend to require the disclosure of recipient institution fees.
In addition, industry commenters argued that the fees charged by recipient institutions for remittance transfers to an account are already transparent to the recipient (because the recipient typically has a preexisting relationship with the recipient institution), do not add transparency that benefits senders in any meaningful way, and may result in overpayment by the sender (particularly to the extent that the December Proposal permits estimates of the highest possible fee). These commenters also expressed concern that the additional flexibility proposed by the Bureau would not substantially reduce the burdens of compliance with the fee disclosure provisions because it would be difficult for remittance transfer providers to locate the materials needed—such as data from prior transactions, fee schedules, or industry surveys—to provide estimates of recipient institution fees under the proposed provisions. Relatedly, many industry commenters argued that the effort needed to compile this information would be of relatively little value to senders of remittance transfers when contrasted with the increased cost of providing the disclosures.
Consumer groups expressed differing views regarding the Bureau's proposal with respect to the disclosure of recipient institution fees. Some argued that senders of remittance transfers would be better served by disclosures that inform them only that recipient institutions may charge fees rather than with disclosures containing estimates of the fees. Others argued that Congress had intended for remittance transfer providers to arrange with recipient institutions to secure the information necessary to disclosure the relevant fee information and therefore maintained that the Bureau should make the proposed estimation provisions temporary in nature to allow and encourage providers to develop databases containing information that would eventually permit accurate disclosures of all fees imposed on remittance transfers, including recipient institutions fees.
Comments received regarding the proposed adjustments to the disclosure of foreign taxes generally mirrored the comments received regarding recipient institution fees. Again, while industry commenters generally stated that they appreciated the Bureau's proposal to eliminate the requirement to disclose subnational taxes as well as increase remittance transfer providers' flexibility to estimate other applicable foreign taxes, most industry commenters also urged the Bureau to eliminate altogether the requirement to disclose taxes collected by a person other than the provider. Consumer groups expressed differing views as to whether the Bureau should adopt the proposed revisions. Based on the perceived difficulty of knowing foreign taxes, some consumer group commenters supported the proposed flexibility with respect to the disclosure of foreign taxes in general and the elimination of the requirement to disclose subnational taxes in particular and they also emphasized the difficulty of providing tax disclosures. Others commenters urged that the Bureau should maintain the requirement that providers disclose all taxes imposed on a remittance transfer by a person other than the provider because doing so is the only way for senders to know precisely the amount that designated recipients will receive.
With respect to the Bureau's proposal to create an exception to the definition of error in the 2012 Final Rule, industry commenters uniformly supported the proposed change. Commenters repeated much of the reasoning put forth by the Bureau in the December Proposal—that
Consumer group commenters were divided on whether the Bureau should adopt the proposed exception to the definition of error. Two consumer groups argued that the proposed exception would properly calibrate the incentives for remittance transfer providers to prevent errors. These groups also agreed that remittance transfer providers should not have to bear the loss of a missing transfer when funds cannot be retrieved due to an error by the sender. Other consumer group commenters urged the Bureau not to adopt the proposed changes to the definition of the term error on the grounds that they are unnecessary because of existing error resolution procedures in subpart A of Regulation E, harmful to consumers who can ill afford to bear the loss of a missing transfer, and contrary to the intent of Congress.
In addition to the comments received on the December Proposal, the Bureau staff conducted outreach with various parties about the issues raised by the December Proposal or raised in comments. Records of these outreach conversations are reflected in
Section 1073 of the Dodd-Frank Act created a new section 919 of the EFTA that requires remittance transfer providers to provide disclosures to senders of remittance transfers, pursuant to rules prescribed by the Bureau. In particular, providers must give a sender a written pre-payment disclosure containing specified information applicable to the sender's remittance transfer, including the amount to be received by the designated recipient. The provider must also provide to the sender a written receipt that includes the information provided on the pre-payment disclosure, as well as additional specified information. EFTA section 919(a).
In addition, EFTA section 919(d) provides for specific error resolution procedures and directs the Bureau to promulgate rules regarding appropriate cancellation and refund policies. Except as described below, the final rule is issued under the authority provided to the Bureau in EFTA section 919, and as more specifically described in this
In addition to the Dodd-Frank Act's statutory mandates, EFTA section 904(a) authorizes the Bureau to prescribe regulations necessary to carry out the purposes of the title. The express purposes of the EFTA, as amended by the Dodd-Frank Act, are to establish “the rights, liabilities, and responsibilities of participants in electronic fund and remittance transfer systems” and to provide “individual consumer rights.” EFTA section 902(b). EFTA section 904(c) further provides that regulations prescribed by the Bureau may contain any classifications, differentiations, or other provisions, and may provide for such adjustments or exceptions for any class of electronic fund transfers or remittance transfers that the Bureau deems necessary or proper to effectuate the purposes of the title, to prevent circumvention or evasion, or to facilitate compliance. As described in more detail below, certain provisions of the 2013 Final Rule are adopted pursuant to the Bureau's authority under EFTA sections 904 (a) and (c).
Section 1005.30 incorporates certain definitions applicable to the remittance transfer provisions in subpart B of Regulation E. Under the 2012 Final Rule, the introductory language in § 1005.30 states that “for purposes of this subpart, the following definitions apply.” The Bureau is revising in the 2013 Final Rule this introductory language to clarify that, except as otherwise provided, for purposes of subpart B of Regulation E, the definitions in § 1005.30 apply.
Under the 2012 Final Rule, the term “designated recipient” is defined to mean any person specified by the sender as the authorized recipient of a remittance transfer to be received at a location in a foreign country. Section 1005.30(c). Comment 30(c)–1 further clarifies that a designated recipient can be either a natural person or an organization, such as a corporation.
As discussed below in the section-by-section analysis of § 1005.33(a)(1)(iv), the Bureau is adopting certain revisions to 2012 Final Rule's error resolution provisions in § 1005.33 where a transfer is delivered to someone other than the designated recipient. In particular, § 1005.33(a)(1)(iv)(D) creates a new exception to the definition of error in § 1005.33(a)(1)(iv) that applies when a sender provides an incorrect account number or recipient institution identifier, and the conditions in § 1005.33(h) are met. Based on comments received regarding these proposed changes, and, in particular, concerning the specific mistakes by a sender that might result in an error under the 2012 Final Rule, the Bureau believes that it would be useful to provide further clarity on how the designated recipient is determined for purposes of determining whether an error has occurred or the new exception under § 1005.33(a)(1)(iv) applies. In particular, the Bureau believes it necessary to address situations in which the transfer is delivered to someone other than the designated recipient named by the sender at the time of the transfer. Therefore, the Bureau is clarifying in comment 30(c)–1 that the designated recipient is identified by the name of the person stated on the disclosure provided pursuant to § 1005.31(b)(1)(iii).
As discussed in detail below in the section-by-section analysis of § 1005.31, the Bureau is eliminating the requirement to disclose certain recipient institution fees and to include such fees in the calculation of the disclosed amount to be received by the designated recipient. In order to differentiate between fees that must be disclosed and included in the calculation of the amount to be received and those that are no longer required to be disclosed and included in such calculation, the Bureau is adopting definitions under § 1005.30(h) for covered third-party fees, required to be calculated and disclosed under subpart B of Regulation E, and non-covered third-party fees, which are not required to be calculated and
The 2013 Final Rule adds new commentary to 30(h) to explain the scope of these fees. Drawing from applicable examples of fees imposed by a person other than the remittance transfer provider that were in comment 31(b)(1)–1.ii in the 2012 Final Rule, as well as proposed comments 31(b)(1)–iii and –iv which would have provided additional clarification on how to disclose recipient institution fees, comment 30(h)–1 explains that fees imposed on the remittance transfer by a person other than the provider include only those fees that are charged to the designated recipient and are specifically related to the remittance transfer.
Comment 30(h)–1 additionally provides examples of fees that are or are not specifically related to the remittance transfer. For example, overdraft fees that are imposed by a recipient's bank or funds that are garnished from the proceeds of a remittance transfer to satisfy an unrelated debt are not fees imposed on the remittance transfer because these charges are not specifically related to the remittance transfer. Comment 30(h)–1 further states that account fees are also not specifically related to a remittance transfer if such fees are merely assessed based on general account activity and not for receiving transfers. Comment 30(h)–1 additionally clarifies that fees that banks charge one another for handling a remittance transfer or other fees that do not affect the total amount that will be received by the designated recipient are not fees imposed on the remittance transfer. Comment 30(h)–1 also clarifies that fees that specifically relate to a remittance transfer may be structured on a flat per-transaction basis, or may be conditioned on other factors (such as account status or the quantity of remittance transfers received) in addition to the remittance transfer itself.
In addition, the 2013 Final Rule adds new commentary to explain the difference between covered and non-covered third-party fees. Comment 30(h)–2.i explains that under § 1005.30(h)(1), a covered third-party fee means any fee that is imposed on the remittance transfer by a person other than the remittance transfer provider including fees imposed by a designated recipient's institution for receiving a transfer into an account where such institution acts as an agent of the provider for the remittance transfer. As noted above, the rationale for this distinction is discussed further below in the section-by-section analysis of § 1005.31(b)(1)(vi). Comment 30(h)–2.ii provides examples of covered third-party fees including fees imposed on a remittance transfer by intermediary institutions in connection with a wire transfer and fees imposed on a remittance transfer by an agent of the provider at pick-up for receiving the transfer.
With respect to non-covered third-party fees, comment 30(h)–3 explains that a non-covered third-party fee means any fee imposed by the designated recipient's institution for receiving a transfer into an account, unless the institution is acting as an agent of the remittance transfer provider. It further provides as an example that a fee imposed by the designated recipient's institution for receiving an incoming transfer could be a non-covered third-party fee provided such institution is not acting as the agent of the provider. In addition, comment 30(h)–3 explains that designated recipient's account in § 1005.30(h)(2) refers only to an asset account, regardless of whether it is a consumer asset account, established for any purpose and held by a bank, savings association, credit union, or equivalent institution. It does not, however, include a credit card, prepaid card, or a virtual account held by an Internet-based or mobile telephone company that is not a bank, savings association, credit union or equivalent institution. The rationale for this interpretation is also discussed further below in the section-by-section analysis of § 1005.31(b)(1)(vi).
EFTA sections 919(a)(2)(A) and (B) require a remittance transfer provider to disclose, among other things, the amount to be received by the designated recipient in the currency in which it will be received. In the 2012 Final Rule under § 1005.31, the Bureau set forth the disclosure requirements for providers, including that providers disclose fees and taxes imposed by a person other than the provider. Pursuant to EFTA section 919(a)(4)(A), the Bureau adopted an exception in § 1005.32(a) to provide that for certain disclosures by insured depository institutions or credit unions regarding the amount of currency that will be received by the designated recipient will be deemed to be accurate in certain circumstances so long as the disclosure provides a reasonably accurate estimate of the amount of currency to be received.
As noted in the December Proposal, after the Bureau issued the February Final Rule, industry participants continued to express concerns previously raised in response to the Board's proposed rule to implement EFTA section 919. The concerns regarded the feasibility of disclosing fees imposed by a designated recipient's institution.
For the subset of transfers sent over the open network, industry participants stated that where a designated recipient's institution charges that recipient fees for receiving a transfer into an account, the remittance transfer provider would not typically know whether the recipient had agreed to pay such fees or how much the recipient had agreed to pay. Some industry participants also requested guidance on whether and how to disclose recipient institution fees that can vary based on the recipient's status with the institution, quantity of transfers received, or other variables that are not easily knowable by the sender or the provider.
Separately, after the release of the February 2012 Rule, industry expressed concern about the disclosure of foreign taxes. Industry participants argued first that it is significantly more burdensome to research and disclose subnational taxes,
With respect to both recipient institution fees and foreign taxes, industry stated that, to make the appropriate calculations and disclosures, remittance transfer
In response to these comments, in the December Proposal, the Bureau proposed to provide additional flexibility and guidance regarding the calculation and disclosure of fees imposed by a designated recipient's institution for receiving a transfer into an account and taxes imposed by a person other than the remittance transfer provider. The Bureau also proposed to eliminate the requirement to disclose regional, provincial, state, and other local foreign taxes and to include this amount in the disclosed amount received by the designated recipient. The Bureau sought comment on whether these proposed changes achieved the goals stated in the December Proposal, or whether the existing rules or another alternative were preferable.
The majority of comments on the proposed changes regarding recipient institution fee and tax disclosures came from industry participants, including large banks, community banks, credit unions, non-depository institutions, and trade associations. These commenters stated that they appreciated the Bureau's attempts to facilitate compliance, particularly with respect to the proposal to eliminate the required disclosure of subnational taxes. However, many industry commenters argued that the proposed changes did not go far enough to ease compliance burden. These industry commenters asserted that the proposed flexibility would not effectively mitigate the difficulty of researching the information needed to provide the recipient institution fee and foreign tax disclosures to senders. Further, these industry commenters also expressed concern that the proposed estimation methods could increase consumer confusion due to discrepancies in the estimated amounts disclosed. Moreover, industry commenters expressed concern that, under the estimation methods described in the December Proposal, the sender would usually receive a disclosure that showed the highest possible fee or tax that could apply. As a result of this proposed highest estimation method, commenters stated that the disclosure could result in senders increasing the amount of money transferred more than was necessary to insure that a recipient received the expected amount.
Some consumer groups also expressed skepticism about the proposed estimation methods for a different reason: they believed that any additional estimation, beyond that permitted in the 2012 Final Rule, would be detrimental to senders because they would not know the precise amount of the transfer that would be received. In contrast, other consumer groups supported the December Proposal and stated that it struck the proper balance of facilitating compliance, while also providing meaningful information to senders.
The Bureau has carefully weighed these concerns and, for the reasons explained in detail below, the Bureau believes that it is appropriate to exercise its exception authority under EFTA section 904(c) to eliminate the requirement to include certain recipient institution fees and taxes collected by a person other than the remittance transfer provider in the calculation of the amount to be received by the designated recipient pursuant to § 1005.31(b)(1)(vii). For the same reasons, the Bureau is eliminating the requirement to disclose these amounts under § 1005.31(b)(1)(vi). However, as noted above, the Bureau believes that a majority of remittance transfers are sent through closed networks whereby the recipient picks up the transfer from an agent. In these cases, all fees imposed on the remittance transfer would continue to be required to be disclosed.
For those minority of transfers where there may be non-covered third-party fees, the 2013 Final Rule requires that remittance transfer providers include, as applicable, a disclaimer on the pre-payment disclosure and receipt, or combined disclosure, indicating that the recipient may receive less due to fees charged by the recipient's bank.
As described in detail below, the 2013 Final Rule's Appendix and Model Forms have been amended to include samples of the new disclosures and disclaimers. The Bureau is also making conforming edits in several other provisions in § 1005.31 to reflect the changes in the required disclosures. These changes are described below.
In the 2013 Final Rule, § 1005.31(a)(1) provides that disclosures required by subpart B of Regulation E must be clear and conspicuous. It also states that disclosures required by this subpart may contain commonly accepted or readily understandable abbreviations or symbols.
As is explained in detail below, as part of the changes adopted in the 2013 Final Rule, the Bureau is adding two optional disclosures. First, the Bureau is making optional the requirement to disclose non-covered third-party fees and taxes collected on the remittance transfer by a person other than the remittance transfer provider.
Comment 31(b)–1 to the 2012 Final Rule provides examples of when certain disclosures may not be applicable and therefore need not be disclosed. Because of the changes that the Bureau is making with respect to the disclosure of non-covered third-party fees and taxes collected on a remittance transfer by a person other than the remittance transfer provider, the 2013 Final Rule makes certain revisions to the commentary in the 2012 Final Rule for consistency and clarification. Comment 31(b)–1 clarifies that for disclosures required by § 1005.31(b)(1)(i) through (vii), a provider may disclose a term and state that an amount or item is “not
As adopted by the 2012 Final Rule, comment 31(b)–2 states that terms used on the disclosures under §§ 1005.31(b)(1) and (2) may be more specific than the terms provided and notes, as an example, that a remittance transfer provider sending funds to Colombia may describe a tax disclosed under § 1005.31(b)(1)(vi) as a “Colombian Tax” in lieu of describing it as “Other Taxes.” In light of the changes discussed below regarding the disclosure of foreign taxes, the 2013 Final Rule eliminates as an example the disclosure of a Colombian tax. Instead, the 2013 Final Rule provides as an example that a provider sending funds may describe fees imposed by an agent at pick-up as “Pick-up Fees” in lieu of describing them as “Other Fees.” In addition, in light of the new disclosures permitted by § 1005.31(b)(1)(viii) and § 1005.33(h)(3), the comment makes conforming changes to note that the foreign language disclosures required under § 1005.31(g) must contain accurate translations of the terms, language, and notices required by § 1005.31(b) or permitted by § 1005.31(b)(1)(viii) and § 1005.33(h)(3).
Section 1005.31(b)(1)(ii) of the 2012 Final Rule states that a remittance transfer provider must disclose any fees and taxes imposed on the remittance transfer by the provider, in the currency in which the remittance transfer is funded, using the terms “Transfer Fees” for fees and “Transfer Taxes” for taxes or substantially similar terms. Since the Board's initial proposal, commenters have argued that because a tax is imposed by a government, and not by the provider, this provision may be confusing. The Bureau agrees that the original formulation may be inexact insofar as taxes are typically imposed by governments, even though they may be collected by providers. As a result, for clarity, the Bureau is revising this language to refer to taxes “collected” by the provider. This change is for clarification only and is not intended to change the meaning of the provision in the 2012 Final Rule. Consequently, § 1005.31(b)(1)(ii) of the 2013 Final Rule is revised to state, more precisely, that a provider must disclose any fees imposed and any taxes collected on the remittance transfer by the provider.
Comment 31(b)(1)–1 to the 2012 Final Rule provides general guidance on the disclosure of fees and taxes. Comment 31(b)(1)–1.i explains that taxes imposed on the remittance transfer by the remittance transfer provider, which are required to be disclosed under § 1005.31(b)(1)(ii), include taxes imposed on the remittance transfer by a State or other governmental body, and comment 31(b)(1)–1.ii focuses more specifically on how to disclose fees and taxes imposed on the remittance transfer by a person other than the provider as required by § 1005.31(b)(1)(vi).
In the December Proposal, the Bureau proposed additional clarification on other types of recipient institution fees that are, or are not, specifically related to a remittance transfer. For organizational purposes, the December Proposal divided comment 31(b)(1)–1.ii into new proposed comment 31(b)(1)–1.ii through –1.v. Specifically, proposed comment 31(b)(1)–1.ii would have contrasted the fees and taxes required to be disclosed by § 1005.31(b)(1)(ii) and the fees and taxes required to be disclosed by § 1005.31(b)(1)(vi). Proposed comment 31(b)(1)–1.iii would have revised the reference to taxes imposed by a foreign government to taxes imposed by a foreign country's central government, and the proposed commentary would have built on the existing guidance regarding applicable recipient institution fees to clarify that account fees are not specifically related to a remittance transfer if such fees are merely assessed based on general account activity and not for receiving transfers. Proposed comment 31(b)(1)–1.iv additionally would have explained that a fee that specifically relates to a remittance transfer may be structured on a flat per-transaction basis, or may be conditioned on other factors (such as account status or the quantity of remittance transfers received) in addition to on the remittance transfer itself. Proposed 31(b)(1)–1.v would have provided that the terms used to describe the fees and taxes imposed on the remittance transfer by the provider in § 1005.31(b)(1)(ii) and imposed on the remittance transfer by a person other than the provider in § 1005.31(b)(1)(vi) must differentiate between such fees and taxes.
Insofar as the Bureau is eliminating the requirement to disclose non-covered third-party fees and taxes collected on the remittance transfer by a person other than the provider, the Bureau is not adopting the proposed revisions to comments 31(b)(1)–1.ii. Instead, applicable examples concerning the types of fees related to a remittance transfer that must be disclosed have been moved to the commentary to § 1005.30(h), as discussed above.
Section 1005.31(b)(1)(v) of the 2012 Final Rule requires remittance transfer providers to disclose the transfer amount in the currency in which the funds will be received by the designated recipient. Under § 1005.31(b)(1)(v) of the 2012 Final Rule, providers are required to disclose the transfer amount only if applicable fees and taxes are imposed by persons other than the provider under § 1005.31(b)(1)(vi), in order to demonstrate to the sender how such fees reduce the amount received by the designated recipient. Insofar as § 1005.31(b)(1)(vi) in the 2013 Final Rule will now only require disclosure of covered third-party fees, the Bureau has made conforming changes to the appropriate reference in
Section 1005.31(b)(1)(vi) of the 2012 Final Rule requires remittance transfer providers to disclose any fees and taxes imposed on the remittance transfer by a person other than the provider, in the currency in which the funds will be received by the designated recipient. As discussed above, the Bureau is refining the 2012 Final Rule with respect to the disclosure of certain recipient institution fees and foreign taxes. The rationale for these changes is discussed below.
Since the Board first proposed to amend Regulation E to implement the Dodd-Frank Act's remittance transfer provisions, industry participants and representatives have argued that particularly for remittance transfers that take place over an open network, the requirement to disclose third-party fees is unduly burdensome, if not impossible, given the potential number of institutions involved in any one transfer and the fact that remittance transfer providers typically have no direct relationships with recipient institutions. In issuing the February Final Rule, the Bureau recognized the challenges for providers in disclosing fees imposed by third parties, but determined that the disclosure of third-party fees would provide senders with greater transparency regarding the cost of a remittance transfer consistent with the purposes of the EFTA.
Consequently, § 1005.31(b)(1)(vi) of the 2012 Final Rule required providers to disclose fees imposed by persons other than the provider (including fees imposed by the designated recipient's institution) and required that such fees be taken into account when calculating the disclosure of the amount to be received under § 1005.31(b)(1)(vii). In view of Congress' recognition that these determinations would be difficult in the context of open network transactions by financial institutions,
As noted above, after the Bureau published the February Final Rule, industry participants and representatives continued to express concern through comment letters and other fora that, where a designated recipient's institution charges the recipient fees for receiving a transfer in an account, the remittance transfer provider would not reasonably know, or be able to estimate, the amount of fees that might apply because fees might vary based on agreements between the recipient and the recipient institution. Relatedly, industry participants and representatives requested clarification on whether and how to disclose recipient institution fees that can vary based on the recipient's status with the institution, the account type, the quantity of transfers received, or other variables that are not easily knowable by the sender or the provider.
In response to these concerns, in the December Proposal, the Bureau proposed to provide clarification relating to which recipient institution fees remittance transfer providers were required to disclose and additional flexibility and guidance on how recipient institution fees could be disclosed. Proposed comment 31(b)(1)–1.ii would have provided additional examples to distinguish between fees that are specifically related to the remittance transfer and therefore required to be disclosed under § 1005.31(b)(1)(vi), including fees that are imposed by a recipient's institution for receiving a wire transfer, and other types of recipient institution fees that are not specifically related to a remittance transfer, such as a monthly maintenance fee, and therefore not required to be disclosed. For example, the proposed comment would have noted that fees that specifically relate to a remittance transfer may be structured on a flat per-transaction basis, or may be conditioned on other factors (such as account status or the quantity of remittance transfers received) in addition to the remittance transfer itself. Moreover, similar to the treatment of taxes imposed by a person other than the remittance transfer provider under the 2012 Final Rule, the Bureau proposed to add comment 31(b)(1)(vi)–4 to clarify that a provider could rely on a sender's representation regarding variables that affect the amount of fees imposed by the recipient's institution for receiving a transfer in an account where the provider did not have specific knowledge regarding such variables.
Additionally, the December Proposal proposed to allow all remittance transfer providers, not just insured institutions covered by the temporary exception, the flexibility to estimate on a permanent basis certain fees imposed by a designated recipient's institution for receiving a transfer into an account. Specially, where a provider did not have specific knowledge regarding variables that affect the amount of fees imposed by a designated recipient's institution for receiving a transfer in an account, proposed § 1005.32(b)(4)(i) would have permitted a provider to disclose the highest possible recipient institution fees that could be imposed on the remittance transfer with respect to any unknown variable, as determined based on either the recipient institution's fee schedules or information ascertained from prior transfers to that same institution.
The December Proposal additionally provided in proposed § 1005.32(b)(4)(ii) and its accompanying commentary that, if the remittance transfer provider could not obtain such fee schedules or did not have such information, the provider could rely on other reasonable sources of information, including fee schedules published by competitor institutions, surveys of financial institution fees, or information provided by the recipient institution's regulator or central bank as long as the provider disclosed the highest fees identified through the relied-upon source. The Bureau sought comment on all aspects of this proposal.
Although most industry commenters stated that they supported the Bureau's efforts to provide additional flexibility to remittance transfer providers to determine applicable recipient institution fees, many industry commenters argued that the December Proposal would not significantly reduce the burden of disclosing recipient institution fees that are not already known. Describing providers' efforts to come into compliance with the 2012 Final Rule, industry commenters stated that efforts to obtain fee information had largely been hampered by the difficulty of obtaining information from recipient institutions with whom providers had no direct relationship, particularly in cases in which fees were governed by contracts between recipient institutions and recipients,
Some industry participants stated that as a result of the difficulty in obtaining fee information from individual institutions, even with the flexibility that the December Proposal would have allowed, they anticipated that the challenges associated with obtaining fee schedules or conducting fee surveys might force them to limit services to countries where fee information was more readily obtainable or where the transfer volume was significant enough to warrant additional efforts to obtain fee information. Though the pertinent comment letters focused on the December Proposal, the arguments echoed concerns that industry participants had previously expressed prior to the 2012 Final Rule with regard to any requirement to disclose fees imposed by persons other than the remittance transfer provider. Industry commenters further opined more generally, as they had prior to the 2012 Final Rule, that a significant number of providers might choose to exit the market altogether, even if the Bureau were to adopt the December Proposal, due to the difficulty of disclosing recipient institution fees.
In addition, several industry commenters stated that compared to the 2012 Final Rule, the proposed estimation methodologies would not improve and instead could diminish the quality of the disclosures received by senders or senders' ability to comparison shop. With respect to the Bureau's proposal to add commentary clarifying that remittance transfer providers could rely in certain circumstances on senders' representations regarding the variables that affect the amount of fees to be imposed by a recipient's financial institution (
Many industry commenters also expressed concern with respect to the Bureau's proposal to allow remittance transfer providers to disclose an estimate of the highest possible recipient institution fee that could be imposed on the remittance transfer with respect to any unknown variable (
Commenters also suggested that under either the 2012 Final Rule or the December Proposal, smaller institutions would be at a disadvantage, compared to their larger competitors, because they would have fewer resources to collect and maintain extensive data sets regarding account fees for every location to which they did or could send a remittance transfer. Several industry commenters further opined that remittance transfer providers that could provide lower estimates could have a competitive advantage over providers that provided higher (but potentially more accurate) estimates because the providers with lower estimates would appear to be providing designated recipients with more funds, even though the actual fee imposed by the recipient institution for the same designated recipient should generally be the same for transfers sent by the same sender to the same recipient institution.
Finally, some industry commenters argued there was a significant risk that if the highest possible fee a recipient institution could impose on receiving a remittance transfer was disclosed, a sender might unnecessarily overfund a remittance transfer to ensure that the designated recipient received a certain amount. For example, a commenter explained, that a sender might want to send a remittance transfer to a merchant to pay for a purchase. The merchant, per its agreement with the receiving institution, might be charged an incoming wire transfer fee. Although the merchant would not expect the sender to pay this fee, as the merchant had incorporated such cost into its overhead, the sender might believe that he or she is responsible for covering this fee and might increase the amount transferred by the amount of the disclosed fee.
Because of the limitations they perceived with estimates disclosed under the Bureau's methodology described in the December Proposal, the majority of industry commenters requested that the Bureau eliminate the required disclosure of recipient institution fees altogether. Several of these industry commenters argued, as commenters had argued as part of the 2012 rulemakings, that section 1073 of the Dodd-Frank Act did not expressly require disclosure of recipient institution fees and urged the Bureau to eliminate the required disclosure of recipient institution fees. A few commenters went further and suggested that the Bureau should eliminate the required disclosure of intermediary fees as well. Alternatively, industry commenters suggested that the Bureau delay the implementation date for the disclosure of recipient institution fees until resources for ascertaining such fees could be developed, although such commenters did not indicate that such resources were being developed or that they would soon be available.
Consumer group commenters were divided in their reactions to the December Proposal's provisions regarding the disclosure of recipient institution fees. Although some
Among consumer group commenters who favored the disclosure of recipient institution fees, some opined that recipient institution fee information could become readily available given current technology, and they encouraged the Bureau to, at the very least, make any additional estimate provisions temporary in nature. This would, these commenters argued, provide strong incentives to industry to create databases with the necessary information for compliance. In addition, one comment letter argued that permitting “estimated” price disclosures essentially permits a continuation of the status quo that Congress intended to change by adopting section 1073 of the Dodd-Frank Act. The commenter further suggested that although a permanent exemption from any disclosure requirements would be premature, a delay in requiring disclosure of recipient institution fees may be needed to provide enough time and the proper incentives for some providers to update their information systems in order to capture this information.
By contrast, other consumer group commenters maintained that it was appropriate to eliminate the obligation to disclose recipient institution fees given the difficulty remittance transfer providers (or their partners) face in determining these fees. These commenters argued that, given the inaccuracies inherent in estimating the applicable fees to be applied, senders would be better served by an alternative generic disclosure noting that recipient institutions may charge account fees, rather than requiring the specific disclosure of such fees.
In light of information received through comment letters, additional outreach, and the Bureau's independent monitoring of efforts to implement the 2012 Final Rule, the Bureau believes that it is necessary and proper both to effectuate the purposes of the EFTA and to facilitate compliance to exercise its authority under EFTA section 904(c) to eliminate the requirement to disclose recipient institution fees for transfers into an account, except where the recipient institution is acting as an agent of the provider.
As stated in the February Final Rule, the Bureau believes that disclosures regarding the fees imposed by persons other than the remittance transfer provider can benefit senders by making them aware of the impact of these fees, helping to decide how much money to send, facilitating comparison shopping, and aiding in error resolution. As described in the February Final Rule, in recent years, a number of concerns with regard to the clarity and reliability of information provided to consumers sending remittance transfers have been identified. Congressional hearings prior to enactment of the Dodd-Frank Act focused on the need for standardized and reliable pre-payment disclosures, suggesting that disclosure of the amount of money to be received by the designated recipient is particularly critical. Research suggests that consumers place a high value on reliability to ensure that the promised amount is made available to recipients.
Despite the public interest in the disclosure of recipient interest fees, however, the Bureau believes that requiring disclosure of such fees in cases in which the recipient institution is not an agent of the provider would at this time either require a substantial delay in implementation of the overall Dodd-Frank Act regime for remittance transfers or produce a significant contraction in access to remittance transfers, particularly for less popular corridors. The Bureau believes that both of these results would substantially harm consumers and undermine the broader purposes of the statutory scheme. Accordingly, the Bureau has constructed the exception to relieve the obligation to disclose recipient institution fees absent an agency relationship between the remittance transfer provider and the recipient institution.
The Bureau believes that, in practice, this adjustment of the 2012 Final Rule will affect a minority of remittance transfers. While information on the volume of open-network transfers is limited, the Bureau believes that closed network transfers sent through agents—
For the minority of transfers where the exception applies because there is no agency relationship between the remittance transfer provider and the recipient institution, the Bureau has concluded that finalizing the proposed exception in § 1005.32(b)(4) (which would have permitted estimates in certain circumstances) would have significant risks and disadvantages to senders of remittance transfers. First, despite the greater flexibility that the December Proposal would have provided concerning estimation methodologies, the Bureau is concerned that many remittance transfer providers still would have curtailed services particularly outside of heavily used corridors. Second, the Bureau is concerned that the resulting estimates would have varied so widely that their use to consumers in calibrating transfer amounts and comparison shopping would have been limited.
The Bureau believes that given current limitations, it is appropriate to require use of a more generic disclaimer to warn consumers where recipient institution fees may apply and to change the model forms in a way that will reduce the risk of consumer confusion in attempting to make comparisons where estimates are provided. The Bureau also believes that it is important to encourage estimates and increasingly reliable methodologies over time, and will continue dialogue with interested stakeholders about how best to make progress toward this goal.
The Bureau's conclusion rests in large part on its understanding of the open network systems for sending remittance transfers. As described above, these networks allow remittance transfer providers to send to accounts at banks worldwide. However, providers have limited authority or ability to monitor or control the recipient institutions in such networks. Although the Bureau had expected that industry's implementation efforts would result in the development of the compilation of reliable and current information concerning fees imposed by many recipient institutions for most corridors, the process has been slower and harder than expected and the lack of comprehensive information could lead providers to limit their offerings. Given the current environment, the Bureau believes that estimating, or in some cases, determining the actual recipient institution fees for transfers to accounts consistent with the 2012 Final Rule would be difficult or impracticable given the myriad institutions to which such remittance transfers may be sent and the myriad fee schedules that may apply across these institutions.
Even under the Bureau's proposal to provide additional flexibility for remittance transfer providers in estimating certain recipient institution
Moreover, the Bureau is concerned that the estimate methodologies proposed in the December Proposal would have produced disclosures that varied so widely that their use to senders in calibrating transfer amounts and comparison shopping would have been limited. In many cases, the December Proposal would have required the remittance transfer provider to over-estimate recipient institution fees, by disclosing the highest possible fee that could be imposed on the remittance transfer with respect to any unknown variable. To the extent providers used differing methodologies upon which to base their estimates, the disclosed fees could vary significantly across institutions, making it difficult for senders to decide how much money to transmit.
In addition, because these fees would be separately disclosed and included within the total to recipient on the disclosure forms, differences in amounts disclosed among remittance transfer providers could lead senders to mistakenly focus on discrepancies within these fees when comparison shopping, even though the actual fee would likely be the same regardless of the provider so long as the sender transmitted the same amount to the same designated recipient at the same institution using the same transfer method. While the Bureau believes that it is important to encourage estimates and increasingly reliable methodologies over time, the Bureau has concluded that given current limitations it is appropriate to require use of a more generic disclaimer to alert senders where recipient institution fees may apply and to change the model forms in a way that will reduce the risk of consumer confusion in attempting to make comparisons where estimates are provided. By providing the disclaimer, senders themselves can investigate such fees. In addition, as discussed in the section-by-section analysis of § 1005.31(b)(1)(viii), providers may be incentivized to seek such information to better compete with providers providing more detailed price information. The Bureau believes this amendment to the disclosure requirements will best preserve senders' access to competitive remittance transfer markets, while facilitating continued information-gathering about such fees both by senders and providers.
Alternatively, the Bureau considered further delaying implementation of the section 1073 protections, to allow remittance transfer providers to continue to seek more reliable fee information in order to reduce implementation burdens and make fee-related disclosures more accurate and thus more useful for senders. However, the Bureau believes that it is critical to provide senders timely access to the important new consumer protection benefits of the 2012 Final Rule including rights to cancellation and error resolution.
Accordingly, the Bureau has tailored its amendments to § 1005.31(b)(1)(vi), and as discussed below, § 1005.31(b)(1)(vii), to focus on the third-party fees that the Bureau believes are most difficult for remittance transfer providers to disclose. Based on the Bureau's outreach, it appears that providers sending transfers through open network systems have had considerably more success in obtaining information needed to estimate or disclose accurately fees imposed by intermediary institutions, as compared to recipient institutions that maintain ongoing customer relationships with individual designated recipients. Some providers (or business partners) have changed or contemplated changing the methods they use to send transfers between bank accounts, in order to avoid the imposition of any intermediary fees. In addition, some providers have worked with correspondents to understand such intermediary fees. Thus, the Bureau is not eliminating the requirement to disclose pursuant to § 1005.31(b)(1)(vi) intermediary bank fees or to include such amount in the calculation of the amount required to be disclosed under § 1005.31(b)(1)(vii).
Similarly, although the Bureau is making an adjustment for recipient institution fees that it believes industry cannot reasonably disclose, it is not adjusting the required disclosures for transfers that a recipient picks up at a paying agent. As noted above, the additional guidance included in the December Proposal targeted situations in which providers did not have specific knowledge regarding variables that affect the amount imposed by the recipient's institution for receiving a transfer in an account. By contrast, where the designated recipient's institution is an agent of the remittance transfer provider, the Bureau believes the provider should have access to or be able to contract concerning the disclosure of any fees imposed by such institution. Consequently, the Bureau is maintaining the provider's obligation under the 2012 Final Rule to disclose a designated recipient institution's fees where such recipient institution is acting as an agent of the provider in the remittance transfer. Through a provider's contractual arrangements with its agents, the Bureau believes that such information should be readily available to or obtainable by a provider or that the provider can control such fees, based on the terms of the contract between the provider and such agent.
For similar reasons, the Bureau is maintaining the requirement to disclose fees assessed for remittance transfers to credit cards, prepaid cards, or virtual accounts held by an Internet-based or mobile phone company that is not a bank, credit union, or equivalent institution.
The Bureau does not believe that the same sort of evolution can happen as quickly or easily in existing open network systems, and in particular for the interbank wire transfer system. These systems use communication and settlement protocols that have been developed over decades (or longer) and assume that participating institutions will exercise little control over each other.
In light of these conclusions, to effectuate the purposes of the EFTA, the Bureau is exercising its authority under EFTA sections 904(a) and (c) to maintain in § 1005.31(b)(1)(vi) the remittance transfer provider's obligation to disclose covered third-party fees and that such fees be included in the amount disclosed pursuant to § 1005.31(b)(1)(vi), discussed further below. The Bureau believes that providing a total to recipient that reflects the impact of such fees, and separately disclosing these fees, will provide senders with a greater transparency regarding the cost of a remittance transfer.
Insofar as the Bureau is eliminating the required disclosure of non-covered third-party fees, the Bureau is also not adopting the suggestion of several industry and consumer group commenters that to facilitate compliance, the Bureau help develop and maintain a database of recipient institution fees that could be accessed by remittance transfer providers. The Bureau continues to believe that because providers are engaged in the business of sending remittance transfers and likely will develop relationships with recipient institutions over time, providers are in a better position than the Bureau is to determine applicable fee information. The Bureau will continue to monitor implementation of this rule and market developments, including whether better information about recipient institution fees becomes more readily available over time. The Bureau will also engage in stakeholder dialogue about methods to encourage improvements in communications methodologies and data gathering so as to promote the provision of increasingly accurate estimates and disclosures of actual fees over time.
Commenters' arguments regarding the disclosure of foreign taxes have largely paralleled their arguments regarding the disclosure of recipient institution fees. Notably, since the Board's proposal, industry has argued that the requirement to disclose foreign taxes is unduly burdensome given the number of jurisdictions that may impose taxes and the challenges of determining whether or how various tax exceptions or exclusions may apply. Although the Bureau recognized the challenges for remittance transfer providers in disclosing foreign taxes, the Bureau also believed that this disclosure would provide senders with greater transparency regarding the cost of a remittance transfer, which the Bureau believed was consistent with the purposes of the EFTA. Consequently, § 1005.31(b)(1)(vi) of the 2012 Final Rule generally would have required that providers disclose foreign taxes and take such taxes into account when calculating the disclosure of the amount to be received under § 1005.31(b)(1)(vii). This disclosure of taxes would have included foreign taxes imposed by a country's central government, as well as taxes imposed by regional, provincial, state, or other local governments.
After the Bureau published the 2012 Final Rule, industry continued to express concern about the ability of remittance transfer providers to disclose these foreign taxes in two respects. First, industry argued that it is significantly more burdensome to research and disclose subnational taxes than to research and disclose only foreign taxes imposed by a country's central government, with little commensurate benefit to consumers. Second, industry suggested that the existing guidance on the disclosure of foreign taxes is insufficient where variables that influence the applicability of foreign taxes are not easily knowable by the sender or the provider.
In light of these comments, in its December Proposal, the Bureau proposed two revisions to the 2012 Final Rule regarding foreign tax disclosures. First, the proposal would have revised § 1005.31(b)(1)(vi) to state that only foreign taxes imposed by a country's central government on the remittance transfer need to be disclosed. Proposed comment 31(b)(1)(vi)–3 would have further clarified that regional, provincial, state, or other local foreign taxes do not need to be disclosed, although the remittance transfer provider could choose to disclose them. In the event that the subnational taxes were not disclosed, the proposal would have required that a provider state that a disclosure is “Estimated.” Consistent with this amendment, regional, provincial, state, or other local foreign taxes would not have needed to be taken into account when calculating the disclosure of the amount to be received under § 1005.31(b)(1)(vii).
Second, the December Proposal also would have provided additional flexibility regarding the determination of foreign taxes imposed by a country's central government. Under § 1005.31(b)(1)(vi), if a remittance transfer provider did not have specific knowledge regarding variables that affect the amount of these taxes imposed by a person other than the provider, the provider could disclose the highest possible tax that could be imposed on the remittance transfer with respect to any unknown variable. Where a provider relied on this estimation method, the proposal would have required that a provider state that related disclosures are “Estimated.”
The Bureau sought comment on both aspects of these proposed changes, including whether the proposed revisions would facilitate compliance and how the revisions would impact senders. Similar to comments about the proposed revisions to the disclosure of recipient institution fees, the Bureau received numerous comments from industry and consumer groups on its proposed elimination of the subnational
With respect to the proposed change related to the elimination of the requirement to disclose subnational taxes and to include such taxes in the calculation of the amount to be received, there was uniform support from industry commenters. Nearly all industry commenters expressed concern that it was infeasible to attempt to research all potential jurisdictions that might impose a subnational tax. Further, industry commenters noted that there would be an ongoing and potentially significant cost required to maintain information related to all subnational tax laws throughout the world given the number of potential jurisdictions that could impose a tax. Additionally, in terms of the feasibility of the disclosure of subnational taxes, one money transmitter also stated that it would be difficult for it to disclose subnational taxes given that its customers were not required, when sending a transfer, to specify a sub-region within a country where the transfer would be picked up.
Another money transmitter also stated that, in its experience, it believed that subnational taxes were rare. Although this commenter did not cite any examples of tax practice in specific jurisdictions, this commenter argued that many localities wanted to encourage the inflow of transfers, and therefore, would be unlikely to impose subnational taxes. This commenter and others stated that the cost to determine, in every case, whether subnational taxes applied, a cost that might be passed on to all senders, would outweigh the benefits given that it appeared that such taxes rarely applied in practice.
In contrast to the uniform support by industry commenters for the elimination of the requirement to disclose subnational taxes, consumer group commenters were divided regarding their views about the proposed elimination of the requirement to disclose subnational taxes. Some consumer group commenters opposed the proposed change and stated that full disclosure of the exact amount of foreign taxes was critical in order for senders to be aware of exactly how much money would be received. They stated that elimination of the requirement to disclose subnational taxes would harm senders because they would not know with certainty how much money would ultimately be received. Other consumer group commenters, however, stated that the burden of researching and disclosing subnational taxes outweighed the relative benefit to senders. These consumer group commenters noted that some remittance transfer providers could withdraw from the market or increase prices if required to research and disclose subnational taxes.
With respect to the Bureau's proposal to allow remittance transfer providers increased flexibility to estimate the taxes imposed by a country's central government, many industry commenters expressed concern that the December Proposal did not sufficiently ease the burden of researching foreign taxes. These industry commenters raised several concerns with respect to the proposed estimated disclosure of taxes imposed by a foreign country's central government. Some industry participants commented that they did not have the capability to research the relevant tax laws in the first place because they did not have foreign contacts, or, alternatively, that they did not have the resources to expend to determine the applicable foreign tax laws. Thus, they asserted that an ability to estimate would not facilitate compliance since such estimation would require an underlying knowledge of the foreign tax laws.
Industry commenters, particularly smaller banks and credit unions, also noted that remittance transfer providers were reluctant to rely on information from third-party service providers (such as larger correspondent institutions) because they would have no means to verify the accuracy of the information provided by the third-parties. Further, even where the tax information was accurate, some industry commenters stated that there could be a high cost associated with relying on a third-party provider to obtain that foreign tax information. Similar to industry comments about the disclosure of subnational taxes, commenters stated that these costs not only included the upfront costs of acquiring the tax information but also ongoing costs required to maintain and update tax information. For example, commenters expressed concern that, even if a provider (or a third-party selling the tax information) determined that a particular country did not tax remittance transfers, the provider would need to continue to monitor that country's tax law to know whether any new tax laws were enacted in the future.
Industry commenters (as well as some consumer group commenters) stated that some of the burden resulting from the disclosure of foreign taxes imposed by a country's central government could be solved if the Bureau itself developed a tax database that was made available to remittance transfer providers. Industry commenters noted that a Bureau-provided database would eliminate the cost and potential inaccuracy that could result from each provider's individual attempts to determine the applicable foreign taxes.
Along similar lines, the Bureau learned through outreach that at least one trade association is developing a database containing information about foreign taxes imposed on remittance transfers by a country's central government. The trade association informed the Bureau that, by working with a third-party, it thought it could eventually determine the relevant tax laws for most countries. The trade association, however, stated that there were several challenges associated with determining and disclosing the applicable tax under the proposed estimation method. According to the trade association and other commenters, one concern was that many foreign taxes have exceptions and exclusions that are not imposed uniformly on all transfers. The trade association noted that, even if a database listed applicable tax laws, it might be difficult for remittance transfer providers, particularly smaller providers, to apply these exceptions and incorporate the exceptions into computer programs or onto forms to arrive at an accurate tax disclosure. Some industry commenters also noted that, if a provider did not apply an exception, that provider might appear to be imposing a higher tax than another provider that applied the exception, even if the tax is the same. Thus, these commenters stated that a sender might misidentify the cheapest provider.
Relatedly, several other industry commenters expressed concern that a tax law might be misinterpreted or misunderstood by the remittance transfer provider because of the challenges of interpreting foreign laws. As a result, several industry commenters and a trade association stated that the Bureau should provide a safe harbor for providers that use some reasonable processes to acquire the tax information. Other commenters stated that they would favor a safe harbor whereby, if the provider relied on some reasonable source of information in obtaining tax information, that provider would not be liable if the disclosed tax was incorrect.
Industry commenters also echoed similar comments to those made with respect to the December Proposal's provisions regarding the recipient institution fee disclosures, stating that the estimated tax disclosure would be of limited benefit to senders because they believed that in many instances the same tax likely would apply to all
In contrast to industry commenters and as with respect to the Bureau's proposal to eliminate the requirement to disclose subnational taxes, consumer groups were divided with respect to their comments about the proposed change to allow estimation to be used in the determination of the foreign country tax disclosure. Some consumer groups stated that the estimation of foreign taxes would harm senders because they would not know exactly how much money would be received. In contrast, other consumer groups supported the Bureau's proposed estimation method for those taxes imposed by a country's central government. These consumer groups stated that the Bureau's proposed estimation method would facilitate compliance, and thereby encourage providers to stay in the market or prevent providers from increasing prices.
Similar to its reasoning with respect to the elimination of the requirement to disclose certain recipient institution fees, as a result of comments received, additional outreach, and the Bureau's independent monitoring of efforts to implement the 2012 Final Rule, the Bureau believes it is necessary and proper both to further the purposes of the EFTA and to facilitate compliance to exercise its exception authority under EFTA section 904(c) to eliminate the requirement that remittance transfer providers include taxes collected by a person other than the provider—including both subnational taxes and taxes imposed by a foreign country's central government, in the calculation of the amount to be disclosed under § 1005.31(b)(1)(vii). Consistent with this revision, the Bureau is also eliminating the requirement to disclose taxes imposed by a person other than the remittance transfer provider under § 1005.31(b)(1)(vi) since such taxes are no longer necessary to clarify the calculation of the amount to be received under § 1005.31(b)(1)(vii). Under the 2013 Final Rule, a provider continues to be required to disclose any taxes collected by the provider, as described under § 1005.31(b)(ii), but providers are no longer required to disclose taxes collected by other persons.
As stated in the February Final Rule, the Bureau believes that disclosures regarding the taxes collected by a person other than the remittance transfer provider can benefit senders by making them aware of the impact of these taxes on the total amount transferred, deciding how much money to transfer, facilitating comparison shopping, and aiding in error resolution. Yet, while this foreign tax information is important for consumers, the Bureau is concerned that requiring disclosure of taxes collected by a person other than the provider could at this time produce increased costs for all transactions or result in a significant contraction in access to remittance transfers, particularly for less popular corridors. Similar to its decision about eliminating the requirement to disclose certain recipient institution fees, the Bureau believes that both of these results would substantially harm consumers and undermine the broader purposes of the statutory scheme. Accordingly, the Bureau has concluded that in the current environment, this amendment to the tax disclosure requirements will best preserve access to competitive prices for remittance transfers for a wide range of countries.
As with fees, one key factor in the Bureau's decision was a concern that the required tax disclosure might limit the availability of remittance services to certain countries or result in an increased cost for many transfers. With respect to cost increases, under the 2012 Final Rule and the December Proposal, most remittance transfer providers would have needed to conduct research to determine (or purchase information regarding) the relevant foreign tax laws, potentially for many countries. These providers would also need to expend resources to update this information on a regular basis. Although one industry association has been undertaken to develop a database of applicable central government taxes, that association acknowledged several challenges both in developing the database and with how individual providers would make use of the data contained in it. For example, validation and continuous updating of the information collected remains a substantial concern. As described above, the Bureau is concerned that many providers would pass the costs associated with these efforts on to senders in the form of increased prices that would affect remittance transfers across the board, even to countries in which no such taxes are actually imposed. The Bureau also remains concerned that the cost of maintaining the required tax information could cause providers to exit the market, or limit their offerings—even if the requirement was limited to taxes imposed by a foreign country's central government. Some providers, for example, might curtail their services and limit transfers only to the highest traffic corridors in order to minimize their necessary foreign tax law research. Because some providers might restrict their services to certain corridors with less volume, a sender might have limited ability to send transfers to those regions.
As a result, while the Bureau generally believes that senders can benefit from transparency regarding the foreign tax disclosure, in the present market, the cost of obtaining the necessary tax information may exceed the benefit of this information to many senders. As with recipient institution fees, the Bureau also recognizes that in many instances the benefit of the disclosure may be minimized because the actual foreign tax imposed is likely to be uniform across all remittance transfers to a particular person in a particular country (and, therefore, the same tax would apply).
In addition, as with the estimation of recipient institution fees, the disclosure of the highest tax estimates based on any unknown variable, as required in the December Proposal, could result in consumer confusion where providers disclosed different tax estimates. Even if third-party providers developed common databases of information, there is still a risk of inconsistent disclosures depending on providers' knowledge of potentially relevant variables, practices, and interpretations of foreign tax law. The Bureau believes that using the general disclaimer and moving any voluntarily provided estimates or actual numbers lower on the form will help to reduce the risk that senders mistakenly choose providers based on discrepancies in tax estimates. Further, rather than adopting a systematic rule that tends to overestimate tax rates, the Bureau believes that senders may prefer
The Bureau also does not believe that it is appropriate or feasible to create a safe harbor for remittance transfer providers that rely on a third-party database or some other third-party source for tax information. At this time, the Bureau is not aware of any data source whose accuracy it can guarantee, absent extensive monitoring. The Bureau is not currently positioned to evaluate the accuracy of each database that might be created nor can it determine whether providers are reasonably researching, interpreting, or applying the applicable foreign tax laws. Similarly, the Bureau does not believe that currently it is positioned to create a database itself. In addition, even if a database existed, as noted above, it would still be necessary to determine how the particular tax laws and exceptions or exclusions applied, and the Bureau believes that providers are better positioned to learn over time how foreign tax laws apply to individual transfers.
Overall, given the current burden of researching the foreign taxes and the potential risks of sender confusion, increased cost, and reduced transfer services, the Bureau believes that the best result at this time is to eliminate the obligation to disclose taxes collected by parties other than the remittance transfer provider and to eliminate the requirement to include this amount in the calculation of the amount to be received by the designated recipient. The Bureau, however, notes that its decision is based on the current feasibility and cost associated with determining or estimating such taxes imposed on a remittance transfer, as well as the potential impact on market structure and pricing practices. The Bureau intends to monitor whether the development and availability of information regarding taxes collected on a remittance transfer by a person other than the provider becomes more feasible in the future. The Bureau will also engage in stakeholder dialogue about methods to encourage improvements in communications methodologies and data gathering so as to promote the provision of increasingly accurate estimates and disclosures of foreign taxes over time.
In light of the changes the Bureau is making with respect to the disclosure of non-covered third-party fees and foreign taxes, § 1005.31(b)(1)(vi) in the 2013 Final Rule requires only the disclosure of covered third-party fees. The 2013 Final Rule also makes conforming edits to comment 31(b)(1)(vi)–1 to reflect that the disclosure of covered third-party fees must be made in the currency in which the funds will be received by the designated recipient. While the revised § 1005.31(b)(1)(vi) provides that only covered third-party fees be disclosed under this subsection, as discussed below, under § 1005.31(b)(1)(viii) a remittance transfer provider would remain free to disclose separately any non-covered third-party fees or taxes collected by a person other than the provider of which it is aware, to the extent consistent with the parameters of that section.
Section 1005.31(b)(1)(vi) of the 2012 Final Rule implements EFTA section 919(a)(2)(A)(i) by requiring that a remittance transfer provider disclose to the sender the amount that will be received by the designated recipient, in the currency in which the funds will be received. As adopted by the 2012 Final Rule, this disclosure must reflect all charges that would affect the amount to be received including any recipient institution fees and taxes imposed by a person other than the provider. As stated above, the Bureau is exercising its exception authority under EFTA section 904(c) to revise § 1005.31(b)(1)(vii) to eliminate the requirement to include non-covered third-party fees and taxes collected on a remittance transfer by a person other than the provider in the calculation of the amount received, consistent with the narrowed scope of § 1005.31(b)(1)(vi). Section 1005.31(b)(1)(vii) of the 2013 Final Rule thus provides that the disclosed amount must be disclosed in the currency in which the funds will be received, using the term “Total to Recipient” or a substantially similar term except that this amount shall not include any non-covered third party fee or tax collected by a person other than the provider, whether such fee or tax is disclosed pursuant to § 1005.31(b)(1)(viii).
While § 1005.31(b)(1)(viii) gives the provider the option to disclose non-covered third-party fees and taxes collected on a remittance transfer by a person other than the provider, as discussed below, a provider cannot, in any circumstance, include these amounts in the amount disclosed under § 1005.31(b)(1)(vii). The Bureau believes that eliminating the requirement to include non-covered third-party fees and taxes collected on the remittance transfer by a person other than the provider in the calculation of the disclosed amount to be received by the designated recipient is necessary and proper to facilitate compliance and further the purposes of the EFTA because the Bureau is concerned that requiring disclosure of such amounts within the amount disclosed under § 1005.31(b)(1)(vii) might hamper senders' ability to make informed comparisons across similar providers.
The 2013 Final Rule also makes conforming edits to comment 31(b)(1)(vii) to clarify that the amount disclosed pursuant to § 1005.31(b)(1)(vii) must reflect the exchange rate, all fees imposed and all taxes collected on the remittance transfer by the provider, as well as any covered third-party fees as provided by § 1005.31(b)(1)(vi). The Bureau recognizes that in some cases the amount disclosed pursuant to § 1005.31(b)(1)(vii) will not reflect the amount that the designated recipient will ultimately receive due to additional non-covered third-party fees and taxes collected on the remittance transfer by a person other than the provider.
In the December Proposal, the Bureau solicited comment on methods to reduce the burden of required disclosures of fees and taxes imposed on remittance transfers by persons other than the providers and alternative disclosures that could be provided. Several industry and consumer group commenters suggested that in place of requiring exact or estimated disclosures of recipient institution fees or foreign taxes, the Bureau could require a statement within the disclosure forms alerting senders that the total amount received may be reduced by recipient institution fees or foreign taxes. These commenters contended that such a disclosure would ensure that senders are aware of the potential for further reductions in the disclosed amount received, due to fees or taxes that are not disclosed, and would encourage senders and recipients to investigate the fees associated with a transfer to the recipient's financial institution, as compared to those associated with other mechanisms for sending a remittance transfer.
Although the Bureau is eliminating the requirement to calculate and disclose non-covered third-party fees and taxes collected on a remittance transfer by a person other than the
New comment 31(b)(1)(viii)–1 clarifies that if non-covered third-party fees or taxes collected on the remittance transfer by a person other than the remittance transfer provider apply to a particular remittance transfer, or if a provider does not know if such fees or taxes may apply to a particular remittance transfer, § 1005.31(b)(1)(viii) requires the provider to include the disclaimer with respect to such fees and taxes. Comment 31(b)(1)(viii)–1 additionally clarifies that required disclosures under § 1005.31(b)(1)(viii) may only be provided to the extent applicable. For example, if the designated recipient's institution is an agent of the provider and thus, non-covered third-party fees cannot apply to the transfer, the provider must disclose all fees imposed on the remittance transfer and may not provide the disclaimer regarding non-covered third-party fees. In this scenario, the commentary clarifies, the provider may only provide the disclaimer regarding taxes collected on the remittance transfer by a person other than the provider, as applicable.
New comment 31(b)(1)(viii)–2 explains that § 1005.31(b)(1)(viii) permits a provider to disclose the amount of any non-covered third-party fees or taxes collected on the remittance transfer by a person other than the provider. For example, when a remittance transfer provider knows that the designated recipient's institution imposes a fee or that a foreign tax will apply, the provider may choose to disclose the relevant fee or tax as part of the information disclosed pursuant to § 1005.31(b)(1)(viii). The comment also notes that § 1005.32(b)(3) permits the provider to disclose estimated amounts of such taxes and fees, provided any estimates are based on reasonable source of information.
Section 1005.31(b)(2)(i) in the 2012 Final Rule provides that the same disclosures included in the pre-payment disclosure must be disclosed on the receipt. As discussed above, the Bureau is adding a new requirement that pre-payment disclosures include disclaimers when non-covered third-party fees or taxes collected on a remittance transfer by a person other than the provider may apply. In addition, as stated above, to facilitate compliance and further the purposes of the EFTA, the Bureau believes it is necessary and proper to exercise its exception authority under EFTA section 904(c) to revise § 1005.31(b)(1)(vii) to eliminate the requirement to include non-covered third-party fees and taxes collected on the remittance transfer by a person other than the remittance transfer provider in the calculation of the amount received, disclosed on the receipt provided to the sender under § 1005.31(b)(2)(i), consistent with the narrowed scope of § 1005.31(b)(1)(vi). As discussed above, to further the purposes of the EFTA, the Bureau also believes that it is necessary and proper to exercise its authority under EFTA sections 904(a) and (c) to require providers to include disclaimers stating, as applicable, that non-covered third-party fees or taxes collected by a person other than the provider may apply to the remittance transfer and result in the designated recipient receiving less than the amount disclosed pursuant to § 1005.31(b)(1)(vii). Accordingly, the Bureau is amending the cross-reference in § 1005.31(b)(2)(i) to require that such disclaimers be provided on the receipt. These changes would also be reflected on a combined disclosure.
EFTA section 919(a)(3)(A) states that disclosures provided pursuant to EFTA section 919 must be clear and conspicuous. The 2012 Final Rule incorporates this requirement and sets forth grouping, proximity, prominence, size, and segregation requirements to ensure that it is satisfied. In particular, § 1005.31(c)(1) requires that information about the transfer amount, fees and taxes imposed by a person other than the provider, and amount received by the designated recipient be grouped together. The purpose of this grouping requirement is to make clear to the sender how the total amount to be transferred to the designated recipient, in the currency to be made available to the designated recipient, will be reduced by fees imposed or taxes collected on the remittance transfer by a person other than the remittance transfer provider. As previously discussed, under the 2013 Final Rule the disclosure of non-covered third-party fees and taxes collected on the remittance transfer by a person other than the provider is no longer required under § 1005.31(b)(1)(vi), or included in the calculation of the amount required to be disclosed under § 1005.31(b)(1)(vii), but instead is subject to new § 1005.31(b)(1)(viii). Consequently, the 2013 Final Rule amends § 1005.31(c)(1) to group the new § 1005.31(b)(1)(viii) disclosure requirement with the information required by §§ 1005.31(b)(1)(v), (vi), and (vii). The Bureau believes that this grouping will ensure that the sender
To effectuate EFTA section 919(a)(3)(A), § 1005.31(c)(2) of the 2012 Final Rule also requires that certain disclosures be placed in close proximity to each other. The purpose of this proximity requirement is to prevent such disclosures from being overlooked by a sender. As previously discussed, under the 2013 Final Rule the disclosure of non-covered third-party fees and taxes collected by a person other than the provider is no longer required under § 1005.31(b)(1)(vi); instead, remittance transfer providers are subject to the new disclosure provision of § 1005.31(b)(1)(viii). Consequently, the 2013 Final Rule amends § 1005.31(c) to require that the new § 1005.31(b)(1)(viii) disclaimers be in close proximity with the disclosure required by § 1005.31(b)(1)(vii) (the amount received by the designated recipient). Section 1005.31(c)(2) further notes that disclosures provided via mobile application or text message, to the extent permitted by § 1005.31(a)(5), generally need not comply with the proximity requirements of § 1005.31(c), except that information required or permitted by § 1005.31(b)(1)(viii) must follow the information required by § 1005.31(b)(1)(vii). The Bureau believes that it is important that the new disclaimers—which advise of potential additional fees and taxes—be grouped in close proximity to the disclosure of the amount to be received by the designated recipient. Insofar as the total amount to be received may not include certain items the disclosure of which is no longer required, the disclaimers should be placed in close proximity to, or in the case of disclosures provided via mobile application or text message follow, the disclosure required by § 1005.31(b)(1)(vii) in order to maximize the likelihood that senders will see the disclaimers and read them in conjunction with the amount disclosed pursuant to § 1005.31(b)(1)(vii).
Section 1005.31(c)(3) sets forth the requirements regarding the prominence and size of the disclosures required under subpart B of Regulation E. In light of the new disclaimer required by § 1005.31(b)(1)(viii), as well as the optional disclosures under that paragraph, the Bureau is making conforming edits to § 1005.31(c)(3) to note that the disclosures required or permitted by § 1005.31(b) when provided in writing or electronically must be provided on the front of the page on which the disclosure is printed, in a minimum eight-point font, except for disclosures provided via mobile application or text message, and must be in equal prominence to each other.
Section 1005.31(c)(4) provides that written and electronic disclosures required by subpart B must be segregated from everything else and contain only information that is directly related to the disclosures required under subpart B. Comment 31(c)(4)–2 in the 2012 Final Rule clarifies that, for purposes of § 1005.31(c)(4), the following is directly related information: (i) The date and time of the transaction; (ii) the sender's name and contact information; (iii) the location at which the designated recipient may pick up the funds; (iv) the confirmation or other identification code; (v) a company name and logo; (vi) an indication that a disclosure is or is not a receipt or other indicia of proof of payment; (vii) a designated area for signatures or initials; (viii) a statement that funds may be available sooner, as permitted by § 1005.31(b)(2)(ii); (ix) instructions regarding the retrieval of funds, such as the number of days the funds will be available to the recipient before they are returned to the sender; and (x) a statement that the provider makes money from foreign currency exchange. In light of new § 1005.31(b)(1)(viii) permitting certain optional disclosures, the Bureau is amending this list to clarify that the optional disclosure of non-covered third-party fees and taxes collected by a person other than the provider is directly related information.
Section 1005.31(f) of the 2012 Final Rule states that except as provided in § 1005.36(b), disclosures required by this section must be accurate when a sender makes payment for the remittance transfer, except to the extent estimates are permitted by § 1005.32. In light of the new disclaimer required by § 1005.31(b)(1)(viii), as well as the optional disclosures under that paragraph, the Bureau is making conforming edits to § 1005.31(f) and comment 31(f)–1 to note that the disclosures required by § 1005.31(b) or permitted by § 1005.31(b)(1)(viii) must be accurate when a sender makes payment for the remittance transfer, except to the extent estimates are permitted by § 1005.32. Comment 31(f)–1 further notes that while a remittance transfer provider is not required to guarantee the terms of the remittance transfer in the disclosures required or permitted by § 1005.31(b) for any specific period of time, if any of the disclosures required or permitted by § 1005.31(b) are not accurate when a sender makes payment for the remittance transfer, a provider must give new disclosures before accepting payment.
The Bureau believes that extending the accuracy requirement to the optional disclosures regarding non-covered third party fees and taxes collected by persons other than the remittance transfer provider is necessary in order to communicate accurately to the sender how confident the remittance transfer provider is concerning the information provided. As discussed above, the Bureau believes that such information can be useful to senders under certain circumstances and hopes to encourage use of increasingly reliable information over time. Although the vast majority of remittance transfer providers may choose to disclose any numbers provided as estimates due to the various uncertainties with regard to foreign taxes and fees discussed above, the Bureau believes it is important to preserve remittance transfer providers' ability to compete based on disclosure of actual figures.
Section 1005.31(g) of the 2012 Final Rule explains that disclosures required
Consistent with EFTA section 919, the 2012 Final Rule generally requires that disclosures provided to senders state the actual exchange rate, fees, and taxes that will apply to a remittance transfer and the actual amount that will be received by the designated recipient of a remittance transfer. Section 1005.32, as adopted in the 2012 Final Rule, includes only three specific exceptions to this requirement. First, consistent with EFTA section 919(a)(4), § 1005.32(a) of the 2012 Final Rule provides a temporary exception for certain transfers by insured institutions. Second, consistent with EFTA section 919(c), § 1005.32(b)(1) provides a permanent exception for transfers to certain countries. Third, the 2012 Final Rule also includes an exception under § 1005.32(b)(2) for transfers scheduled five or more business days before the date of the transfer. Thus, a remittance transfer provider is permitted to estimate exchange rates, fees, and taxes that are required by § 1005.31 to be disclosed to the extent permitted in § 1005.32(a) and (b). The December Proposal would have created additional exceptions to permit estimation with respect to certain recipient institution fees under proposed § 1005.32(b)(4) and national foreign taxes under proposed § 1005.32(b)(3). The proposed related commentary would have described the particular methods that could be used to estimate under these two methods. As discussed above, under § 1005.31(d), in both cases, the provider would have been required to disclose that the amount was estimated pursuant to § 1005.31(b)(1)(vi) and (vii).
Given that the 2013 Final Rule does not require the disclosure of non-covered third-party fees or taxes collected by a person other than the remittance transfer provider (see § 1005.31(b)(1)(vi)), the two proposed estimation methods are now unnecessary. As a result, the proposed changes to the 2012 Final Rule under § 1005.32(b)(3) and (4) are not being adopted nor is the Bureau adopting the related proposed changes to the commentary.
Instead, as described below, the Bureau is adopting a new § 1005.32(b)(3) to describe possible reasonable estimation methods that can be used where a remittance transfer provider elects to disclose non-covered third-party fees or taxes collected by a person other than the provider.
As described above, the Bureau is eliminating the requirement to disclose certain recipient institution fees and taxes collected on the remittance transfer by a person other than the provider and to include such amounts in the amount received, required to be disclosed under § 1005.31(b)(1)(vii) and (b)(2)(i). Nevertheless, the Bureau believes that where the remittance transfer provider knows or can reasonably estimate any applicable non-covered third-party fee or tax collected on the remittance transfer by a person other than the provider and elects to disclose one or both of such amounts, senders are likely to benefit from more accurate and informative disclosures. Consequently, § 1005.31(b)(1)(viii) permits a provider to disclose any applicable non-covered third-party fees or taxes collected on the remittance transfer by a person other than the provider applicable to a remittance transfer in conjunction with the required disclaimers.
In order to encourage the optional disclosure of such information, § 1005.32(b)(3) of the 2013 Final Rule permits remittance transfer providers latitude to estimate any applicable non-covered third-party fees or taxes collected on the remittance transfer by a person other than the provider. Such estimates may be based on reasonable sources of information. The Bureau acknowledges that permitting providers to estimate such amounts may result in providers providing disclosures that may not reflect the actual charge by individual recipient institutions or the taxes levied upon such transfers. Nonetheless, the Bureau believes that permitting a reasonable approximation of the amount of non-covered third-party fees and taxes collected on the remittance transfer by persons other than the remittance transfer provider that could be assessed based on reasonable sources would provide senders valuable information about the amount to be received while also allowing the provider sufficient flexibility to disclose such information.
New comment 32(b)(3)–1 further notes that reasonable sources of information may include, for example: Information obtained from recent transfers to the same institution or the same country or region; fee schedules from the recipient institution; fee schedules from the recipient institution's competitors; surveys of recipient institution fees in the same country or region as the recipient institution; information provided or surveys of recipient institutions' regulators or taxing authorities; commercially or publicly available databases, services or sources; and information or resources developed by international nongovernmental organizations or intergovernmental organizations. The 2013 Final Rule also includes new model forms that provides examples of how such information may be integrated within the disclaimers of § 1005.31(b)(1)(viii).
In addition, because of the changes made to the disclosure requirements under § 1005.31(b)(1)(vi), § 1005.32(b)(2)(ii) and (c)(3)(i) have been amended to conform with the requirements of § 1005.31(b)(1)(vi), as amended, which requires that a party disclose only covered third-party fees. Conforming changes have also been made to comments 32(a)(1)–1, (a)(1)–2.ii, 32(a)(1)–3.ii, and 32(b)(2)–1 so that these comments and related headings, as finalized, use the term “covered third-party fees” rather than “other fees.”
In § 1005.32(c)(3)(ii), however, the Bureau notes that it has retained a reference to fees imposed by both the intermediary and the final recipient's institution. Although fees imposed by the recipient institution are generally non-covered third-party fees, under § 1005.30(h), certain recipient institution fees may qualify as covered third-party fees if they are imposed by an agent of the provider.
In addition to the conforming changes related to the disclosure of covered third-party fees pursuant to § 1005.31(b)(1)(vi), references to taxes collected on the remittance transfer by
EFTA section 919(d) provides that remittance transfer providers shall investigate and resolve errors where a sender provides a notice of an error within 180 days of the promised date of delivery of a remittance transfer. The statute generally does not define what types of transfers and inquiries constitute errors, but rather gives the Bureau broad authority to set standards for remittance transfer providers with respect to error resolution relating to remittance transfers. The 2012 Final Rule implements such error resolution standards in § 1005.33.
Under § 1005.33, as adopted in the 2012 Final Rule, an error occurs in various situations including when the remittance transfer is not made available to a designated recipient by the date of availability stated in the disclosure provided by § 1005.31(b)(2) or (3) for the remittance transfer. Such an error may result from a sender's provision of an incorrect account or routing number to a remittance transfer provider. Industry expressed concern after the February Final Rule was published about the remedies available when a sender provides an incorrect account number to the provider. Providers have stated that in some cases, as a result of such errors, remittance transfers may be deposited into the wrong account and, despite reasonable efforts by the provider, cannot be recovered. Under § 1005.33(c)(2)(ii) of the 2012 Final Rule, a provider is obligated to resend to the designated recipient or refund to the sender the total amount of the remittance transfer regardless of whether it can recover the funds. Industry has noted that this problem is of particular concern with respect to transfers of large sums, particularly for smaller institutions that might have more difficulty bearing the loss of the entire transfer amount. In addition, providers have expressed concern that the remedy provisions of the 2012 Final Rule create a potential for fraud, despite an exception that excludes transfers with fraudulent intent from the definition of error.
In response to these concerns, in the December Proposal the Bureau proposed a new exception to the definition of error in § 1005.33. The exception set forth in proposed § 1005.33(a)(1)(iv)(D) would have excluded from the definition of error under § 1005.33(a)(1)(iv) the sender having given the remittance transfer provider an incorrect account number, provided the provider met certain specified conditions. The Bureau also proposed several other changes to the error resolution procedures in § 1005.33 to address questions of how remittance transfer providers should provide remedies to senders for errors that occurred because the sender provided incorrect or insufficient information.
Based on comments received, the Bureau is adopting the proposed exception and is further revising these procedures as detailed below. The Bureau is also adopting conforming changes to the error resolution procedures to reflect revisions to the disclosure requirements concerning non-covered third-party fees and taxes collected on a remittance transfer by a person other than the provider as well as making several technical, non-substantive changes.
Section 1005.33(a)(1) lists the types of remittance transfers or inquiries that constitute “errors” under the 2012 Final Rule. The types of errors relevant to this final rule are discussed below.
Section 1005.33(a)(1)(iii), as adopted in the 2012 Final Rule, defines as an error the failure to make available to a designated recipient the amount of currency stated in the disclosure provided to the sender under § 1005.31(b)(2) or (3) for the remittance transfer. The commentary to § 1005.33(a)(1)(iii) explains that this category includes situations in which the designated recipient may receive an incorrect amount of currency.
The Bureau is also making conforming edits to the related commentary. In the 2013 Final Rule, the examples in comment 33(a)–3.ii are revised to reflect the changes discussed above regarding the disclosure of non-covered third-party fees and taxes collected on a remittance transfer by a person other than the provider. Comment 33(a)–3.ii, as revised, discusses as an example a situation in which the remittance transfer provider provides the sender a receipt stating an amount of currency that will be received by the designated recipient, which does not reflect the additional foreign taxes that will be collected in Colombia on the transfer but includes the disclaimer required by § 1005.31(b)(1)(viii). The comment explains that because the designated recipient will receive less than the amount of currency disclosed on the receipt due solely to the additional foreign taxes that the provider was not required to disclose, no error has occurred. Comment 33(a)–3.iii, as revised, addresses a situation where the receipt provided by the remittance transfer provider does not reflect additional fees that are imposed by the receiving agent in Colombia on the transfer. Because the designated recipient in this example will receive less than the amount of currency disclosed in the receipt due to the additional covered third-party fees, an error under § 1005.33(a)(1)(iii) has occurred.
The Bureau is also adding new comment 33(a)–3.vi, which provides an example of a situation where a sender requests that his bank send US$120 to a designated recipient's account at an institution in a foreign country. The foreign institution is not an agent of the provider. Only US$100 is deposited into the designated recipient's account because the recipient institution imposed a US$20 incoming wire fee and deducted the fee from the amount deposited into the designated recipient's
Separately, in the December Proposal, the Bureau proposed to make technical corrections to comment 33(a)–4, which, as published in the
Section 1005.33(a)(1)(iv) of the 2012 Final Rule defines as an error a remittance transfer provider's failure to make funds available to the designated recipient by the date of availability stated on the receipt or combined disclosure, subject to three listed exceptions, including an exception for remittance transfers made with fraudulent intent by the sender or a person working in concert with the sender.
As explained under comment 33(c)–2 in the 2012 Final Rule, an error under § 1005.33(a)(1)(iv) would include situations where a remittance transfer provider failed to make funds in connection with a remittance transfer available to a designated recipient by the disclosed date of availability because the sender provided an incorrect account number to the remittance transfer provider. After issuance of the 2012 Final Rule, the Bureau received comments from industry that providers often have no means to verify designated recipients' account numbers for remittance transfers into foreign bank accounts. As a result, providers could have to bear the potentially significant costs of their customers' mistakes in cases in which funds were deposited in the wrong account and could not be recovered as a result of the sender's provision of an incorrect account number.
In the December Proposal, the Bureau proposed to revise the definition of error in § 1005.33(a)(1)(iv) by adding a fourth, conditional exception. Proposed § 1005.33(a)(1)(iv)(D) would have excluded from the definition of error a failure to make funds available to the designated recipient by the disclosed date of availability, where such failure resulted from the sender having given the remittance transfer provider an incorrect account number, provided that the provider met the conditions set forth in proposed § 1005.33(h). These proposed conditions, would have required providers to notify senders of the risk that their funds could be lost, to investigate reported errors, and to attempt to recover the missing funds. In addition, the exception would have been limited to situations in which the funds were actually deposited into the wrong account. Where these conditions were met, the proposed exception would not have required providers to bear the cost of refunding or resending transfers.
The Bureau sought comment on the proposed exception generally and whether it should be limited to mistakes regarding account numbers or expanded to include other incorrect information provided by senders in connection with remittance transfers, such as routing numbers. Each of these is discussed below.
Industry commenters uniformly supported the addition of the proposed exception to the definition of error where the error was caused by the sender's provision of an incorrect account number. They put forth a number of reasons why they favored the proposed change. In many respects, these comments expanded upon those received prior to the December Proposal.
Industry commenters reiterated earlier concerns about the large potential exposure given their general inability of remittance transfer providers to validate the accuracy of a designated recipient's account number provided in connection with a wire transfers and similar types of open network transfers sent to accounts at banks and other institutions abroad. These commenters argued that providers sending these transfers over open networks generally have limited ability to cross-check account numbers with the names of accountholders prior to sending transfers because they often have no direct relationships with recipient institutions and thus no means of accessing those institutions' account information. Commenters further stated that as a result, the only way for a provider to validate such numbers may be to contact the recipient institution manually, which may be time-consuming and difficult due to language and time zone issues. Such validation would necessitate manual handling of remittance transfers and limit the ability of providers to use automated systems, which are less costly than manual handling of each transfer. Commenters stated their concern that manual validation could substantially increase costs to senders and delay the processing of remittance transfers. Relatedly, several commenters claimed that it was infeasible to expect providers to develop account number verification systems, automated or otherwise, before the effective date of the 2012 Final Rule (which was scheduled to take effect on February 7, 2013) due to the number of institutions worldwide that would need to adjust their systems used for transmitting wires.
Industry commenters also reiterated concerns expressed prior to the issuance of the December Proposal regarding the potential for fraud if a sender's provision of an incorrect account number is considered an error under § 1005.33(a)(1)(iv). As discussed in the December Proposal, commenters had stated that the 2012 Final Rule could enable fraudulent activity to flourish because, if unscrupulous senders provided incorrect account numbers and funds were sent to a coconspirator, remittance transfer providers might have to send transfer amounts again to another coconspirator without first recovering them. Commenters argued that the fraud exception in the 2012 Final Rule—§ 1005.33(a)(1)(iv)(C)—is insufficient because for providers to use the exception would be difficult in most circumstances. Many industry commenters stated that providers in the United States typically have a limited ability to gather evidence of fraud from a recipient institution abroad or to mandate cooperation from foreign institutions with whom they have no direct relationship. Industry commenters also noted that even if a provider suspected fraud, the lack of evidence would cause providers to hesitate to accuse one of its own customers of fraud. Industry
Many industry commenters expressed concern that in light of the significant exposure under the 2012 Final Rule's sender error provisions, if the Bureau did not revise the error resolution procedures as it proposed to do in the December Proposal, many remittance transfer providers would curtail their remittance transfer offerings such as by limiting the amount permitted per transfer, limiting transfers to certain trusted customers, or by exiting the remittance transfer business altogether.
Industry commenters also argued that the Bureau should not have adopted the approach taken in the 2012 Final Rule to sender error because it was not mandated by statute. One of these commenters opined that because the Dodd-Frank Act was not specific with respect to who must bear the cost of a mis-directed remittance transfer, the Bureau's legal authority to require remittance transfer providers to bear the cost of mistakes made by senders was questionable.
In contrast to comments from industry, consumer group commenters were divided on whether the Bureau should adopt the proposed exception for certain sender errors. Two consumer groups supported the proposed change because, they contended, the proposed rule achieved the appropriate allocation of risk between senders and remittance transfer providers and incentivized providers to minimize the occurrence of errors. These commenters also stated that it would be difficult for providers, particularly small providers, to retrieve funds sent to the wrong account. They further asserted that it would be difficult for providers, and particularly credit unions, to accuse their customers or members of fraud in order to avail themselves of the fraud exception in § 1005.33(a)(1)(iv)(C). As a result, these consumer group commenters argued that absent the proposed revision, many providers might choose to exit the remittance transfer business altogether, resulting in a loss of access to senders.
Other consumer groups opposed the proposed changes and urged the Bureau not to amend the 2012 Final Rule with respect to sender mistakes regarding account numbers that result in the loss of the transfer amount. First, some of these groups argued that the Bureau would be undermining the intent of Congress, which, they argued, was to motivate industry to change existing practices to develop more secure means of sending remittance transfers. By adopting the proposed exception, these commenters argued, the Bureau would eliminate any incentive for remittance transfer providers to develop enhanced security procedures. Relatedly, some consumer groups also argued that the existing definition of error in subpart A of Regulation E, specifically § 1005.11(a)(ii), already addresses the situation in which a consumer provides an incorrect recipient account number by creating an error for “incorrect” electronic fund transfers.
Finally, some consumer group commenters suggested that the Bureau should not adopt the proposed exception to the definition of error, even if the 2012 Final Rule would result in some remittance transfer providers exiting the market because they are unable to implement adequate verification procedures today. Alternatively, these commenters suggested that, in order to reduce the risk of market exit, that the Bureau could adopt the proposed revisions, but limit the proposed exception to the definition of error to transfers over a certain dollar amount so that senders of smaller transfers would still benefit from the error provisions in the 2012 Final Rule.
Upon consideration of these comments and further consideration and to facilitate compliance, the Bureau is finalizing § 1005.33(a)(1)(iv)(D) with several changes from the proposed provision, which are discussed below. As in the December Proposal, the exception as finalized will only apply if a remittance transfer provider can meet certain conditions including warnings to senders and use of reasonable validation methods where available. These conditions are set forth in § 1005.33(h) and also are discussed in detail below. Where the exception applies, providers will not be required to bear the cost of refunding or resending transfers if funds ultimately cannot be recovered.
As it noted in the December Proposal, the Bureau believes that this exception appropriately allocates risk based on remittance transfer providers' existing methods for sending transfers, which often do not allow for or facilitate verification of designated recipients' account numbers. The Bureau continues to believe it is important for industry to develop improved security procedures and expects to engage in a dialogue with industry about how to encourage the growth of improved controls and communication mechanisms. But the Bureau understands that industry is unlikely to be reasonably able to implement such changes in the near future. Subpart B of Regulation E does not regulate most recipient institutions, and the Bureau has concluded that individual providers, and particularly those sending transfers through open networks have limited ability to influence the practices of financial institutions worldwide in the short term.
Absent such changes, the Bureau is concerned that remittance transfer providers will exit the market or reduce remittance offerings rather than risk having to bear the cost of the entire transfer amount where funds are deposited into the wrong account due to the sender's provision of an incorrect account number. The Bureau believes such an interim disruption would not be in consumers' best interests, and thus has finalized the proposed exception as discussed below. The Bureau, however, will continue to evaluate the development of procedures as it monitors providers' implementation of and compliance with the 2013 Final Rule.
The Bureau disagrees with those consumer group commenters that the 2012 Final Rule should be allowed to take effect absent the proposed exception for sender account number mistakes, and that the Bureau should instead monitor whether the concerns summarized in the December Proposal—such as increased fraud and remittance transfer providers exiting the market—actually materialize. As stated above and in the December Proposal, the Bureau is concerned that absent the proposed change, some providers would severely curtail their offerings or withdraw from the remittance transfer business altogether, and such a market change could have a negative impact on senders. The Bureau also does not believe, as commenters suggested, that it
With regard to commenters' arguments about the Bureau's statutory authority, the Bureau disagrees both with industry participant and consumer group arguments that the EFTA or section 1073 of the Dodd-Frank Act specifies which party must bear the cost of a sender's mistake with respect to remittance transfer. Rather, EFTA section 919 gives the Bureau broad discretion to set standards for remittance transfer providers with respect to error resolution, including to define errors, and does not mandate a specific result with regard to which party should bear the risk of loss under any particular circumstances. Nor does the Bureau believe that the definition of error in subpart A of Regulation E, which does not apply to all remittance transfers, precludes the Bureau from adopting more specifically tailored error resolutions, and corresponding definitions, applicable to all remittance transfers under subpart B of Regulation E.
As noted above the Bureau also sought comment on the scope of the proposed exception to the definition of error under § 1005.33(a)(1)(iv) and whether it should apply to incorrect information provided by senders in addition to designated recipients' account numbers and, in particular, whether the proposed exception should apply in cases in which senders make mistakes regarding routing numbers or similar institution identifiers in addition to mistakes regarding account numbers.
In response, many industry commenters suggested that the proposed exception be expanded to refer to sender mistakes regarding any information provided by a sender in connection with a remittance transfer rather than just mistaken account numbers, as proposed. Other commenters listed specific types of incorrect information that should be addressed by the exception to § 1005.33(a)(1)(iv), such as: Routing numbers, Business Identifier Codes (BICs), Society for Worldwide Interbank Financial Telecommunication codes (SWIFT codes), International Bank Account Numbers (IBANs), local bank codes, prepaid, debit or credit card account numbers, recipient institutions' names, designated recipients' names, escrow account numbers, currencies in which transfers will be received, incomplete wire instructions, and recipients' email addresses, phone numbers, and addresses. Commenters offered different reasons as to why the proposed exception should be expanded to include sender mistakes regarding each suggested type of information. In addition to considering these comments, the Bureau conducted additional outreach to understand the nature of errors related to the suggested types of information and why remittance transfer providers thought they should be included in any exception to an error under § 1005.33(a)(1)(iv) in the 2012 Final Rule.
Many of the industry commenters that urged that the proposed exception should be extended to all mistakes made by senders argued, as noted above, that there is no statutory basis to make remittance transfer providers bear the cost of all senders' mistakes. Relatedly, one commenter argued that no other consumer finance statute protects consumers from their own errors and that there is a distinction between allocating risk to a provider for mistakes by third parties, or where fault cannot be determined, and requiring providers to bear the cost of senders' mistakes.
As for the specific types of information provided by senders, nearly all industry commenters and some consumer group commenters favored expanding the proposed exception to apply to sender mistakes regarding routing numbers and other recipient institution identifiers. Commenters explained that for many remittance transfers into accounts, remittance transfer providers request, in addition to the number of the designated recipient's account, an alphanumeric identifier of the recipient institution, similar to the routing numbers used to identify depository institutions in the United States.
In addition to sender mistakes regarding account numbers and recipient institution identifiers, several commenters asked that the Bureau exclude from the definition of error under § 1005.33(a)(1)(iv) senders' mistakes regarding correspondent routing instructions (
Finally, several industry commenters argued that the proposed exception should be expanded to apply to senders' mistakes regarding designated recipients' names and information that the designated recipient themselves might need to apply the proceeds of remittance transfers after receipt. For example, a trade association commenter asked that the Bureau expand the proposed exception to include sender mistakes about additional information a designated recipient needs to process a transfer it receives. The commenter stated that if, for example, the designated recipient is an insurer, it might need the designated recipient's policy number to process the funds received. Similarly, one commenter stated that if a designated recipient is a property lessor, the lessor might need an identifying apartment number in order
After careful consideration of the comments received and upon further consideration, the Bureau is expanding the exception to the definition of error in § 1005.33(a)(1)(iv)(D) to include situations where a sender has provided an incorrect recipient institution identifier in addition to situations where a sender provides an incorrect account number, as long as the error results in a mis-deposit of the funds and that the remittance transfer provider meets the conditions set forth in § 1005.33(h). As discussed below, the 2013 Final Rule includes as one such condition, that the provider use reasonably available means to verify the recipient institution identifier provided by the sender.
Based on its monitoring of the remittance market, review of comment letters, and other outreach, the Bureau believes that situations in which an incorrect recipient institution identifier could result in a transfer being deposited into the wrong account are exceedingly rare but not unheard of. More typically, the Bureau understands, a mistaken identifier will result in a transfer that is returned to the remittance transfer provider because either the identifier does not match any institution or the account number does not match an account at the institution to which the transfer is mistakenly directed. Nevertheless, the Bureau is expanding the exception in the 2013 Final Rule beyond what was proposed because, upon further consideration, it believes that it is appropriate to treat mistakes in recipient institution identifiers similarly to mistakes in account numbers. The two types of identifiers are similar in purpose and, in some cases, are combined into one. In addition, these identifiers may not be easily verifiable by providers sending remittance transfers over an open network and are used in straight-through, automated processing of transfers. Additionally, although less likely than as with respect to account numbers, under the 2012 Final Rule an unscrupulous sender could potentially provide an incorrect routing number to perpetrate a fraud with a coconspirator abroad.
Contrary to requests by commenters that the Bureau extend the proposed exception for sender mistakes regarding account numbers to mistakes regarding all types of information, the Bureau is limiting the exception in § 1005.33(a)(1)(iv)(D) to sender mistakes regarding account numbers and recipient institution identifiers because it does not believe it is appropriate to extend the exception to all mistakes a sender might make in connection with a remittance transfer for several reasons. While the chance of mis-deposit is limited for all sender mistakes, the Bureau believes there is a greater risk for mistakes regarding account numbers and recipient institution identifiers. However, for most other types of sender mistakes identified by commenters, such as mistakes regarding the recipient's address or wire instructions, the Bureau does not believe that the incorrect information would usually result in a mis-deposit of a remittance transfer. Instead, the Bureau believes that these mistakes will at most result in a delay of delivery or in non-delivery of the remittance transfer. In situations where the recipient institution identifies a customer with the same name as the designated recipient but is unable to match that customer's name to the provided account number, the Bureau believes that the recipient institution will generally be unable to apply the funds and that the transfer will be returned or otherwise delayed but that the funds will not be mis-deposited.
The Bureau does not believe that it is warranted to extend the exception to those sender mistakes that are likely to result only in either a delay or a return of the transfer to the remittance transfer provider, and not the loss of funds, because the cost to the provider of delay or non-delivery differs markedly from the cost of lost transfers. Under the 2012 Final Rule, when a transfer is delayed or returned to the provider, the provider must refund its fee to the sender.
Several industry commenters suggested that the Bureau should make senders, rather than providers, bear the costs of their own mistakes because no other consumer protection regimes makes the regulated entities bear the costs of consumers' mistakes. The Bureau does not think it is necessary or appropriate that the remittances rules' remedy provisions match perfectly those in other consumer protection regimes, given the unique statutory structure and nature of the transactions at issue. The Bureau is maintaining the 2012 Final Rule's error provisions regarding sender mistakes other than those covered by the exception in § 1005.33(a)(1)(iv)(D), because it believes providers are generally in the best position to institute systems to limit their occurrence and to work with other industry participants to resolve particular mistakes in transmissions.
With respect to those mistakes that are likely to result only in a delay or non-delivery of a remittance transfer (
The Bureau also does not believe that a sender's provision of an incorrect name would result in an error under the 2013 Final Rule, and thus a sender's provision of an incorrect name need not be included in the exception from the term error under § 1005.33(a)(1)(iv)(D). As defined under § 1005.30(c), a designated recipient is “any person specified by the sender as the authorized recipient of a remittance transfer to be received at a foreign country.” As noted above, comment 30(c)–1 in the 2012 Final Rule stated that a designated recipient can be either a natural person or an organization, such as a corporation. The Bureau is further clarifying this comment in the 2013 Final Rule to explain that the designated recipient is identified by the name of the person provided by the sender to the remittance transfer provider and disclosed by the provider to the sender pursuant to § 1005.31(b)(1)(iii).
In some cases, however, a sender's name can result in an error. If, for example, the recipient institution could not deliver the remittance transfer described above because no one named “Jane Doe” had an account at the recipient institution, or more than one person named “Jane Doe” had an account at that institution such that the funds could not be applied, the transfer would be delayed or rejected resulting in an error because the sender provided incorrect or insufficient information. Insofar as this would not lead to the deposit of the transfer in the wrong account, the Bureau is not inclined to include these mistakes in the exception.
Commenters also urged the Bureau to include in the exception to § 1005.33(a)(1)(iv) to mistakes regarding mobile phone numbers, email addresses, and debit, credit and prepaid card numbers, arguing that these additional categories of identifiers warrant the same treatment as those covered by proposed § 1005.33(a)(1)(iv)(D). Commenters supporting expansion of the exception to include these identifiers generally put forth the same reasons as those discussed above regarding account numbers and recipient institution identifiers. These commenters generally did not address the practical differences between transfers sent between bank accounts and those sent to other types of accounts.
The Bureau does not think it appropriate to extend the exception to § 1005.33(a)(1)(iv)(D) to these sorts of identifiers for several reasons. First, § 1005.31(b)(2)(iii) requires that a remittance transfer provider disclose the name of the designated recipient to the sender and comment 30(c)–1 now clarifies that the designated recipient is identified by the name of the person stated on the disclosure provided pursuant to § 1005.31(b)(1)(iii) regardless of what other identifying information that the sender may also have provided to the provider. Insofar as a provider must disclose the name of the designated recipient on the receipt provided to the sender, the provider is not permitted to process a remittance transfer under the 2013 Final Rule by only disclosing a non-name identifier, such as a card number, email address, or mobile number. To the extent providers currently send transfers without disclosing a name to the sender, they will not be able to continue doing so once the 2013 Final Rule takes effect.
Second, the Bureau believes that in the current market, only a small number of providers send remittance transfers to designated recipients who are identified by mobile phone numbers, email addresses, and debit, credit and prepaid card numbers. These providers are often conducting transfers between two of their own customers through a closed network, and thus are in position to verify designated recipients' identities. In other words, for transfers conducted through these closed-networks, both the sender and recipient will have agreed to sign on to the provider's network in order to send or receive funds. The Bureau understands that, today, a number of the providers using these identifiers may not verify that the identifier matches the name of the designated recipient in every instance. However, the Bureau believes that unlike providers using account numbers to identify designated recipients in transfers through the open network system, these providers have a reasonable ability to implement security measures in order to limit the possibility that senders make mistakes regarding designated recipients' mobile phone numbers, email addresses, and debit, credit and prepaid card numbers. These measures might include confirmation codes, test transactions, or other methods to prevent transfers from being sent to the wrong person.
Third, the Bureau believes that the systems are still limited and nascent for transfers in which the mobile phone numbers, email addresses, and debit, credit and prepaid card numbers are used to identify designated recipients and the transfer is not sent entirely over the remittance transfer provider's own network. As these systems grow, the Bureau expects that providers can proactively design systems in such a way as to allow for the development of better verification protocols. If, in the future, providers intend to develop new systems to allow transfers using only names and mobile phone numbers to identify designated recipients, for example, the Bureau believes that such systems should be designed to verify that the provided names and numbers match before recipients can receive transfers. The Bureau does not believe that such methods can be implemented for most transfers sent to bank accounts. As described above, such transfers are generally sent as wire transfers, through an open network system.
As noted, the Bureau has limited the exception in § 1005.33(a)(1)(iv)(D) to account numbers and recipient institution identifiers in order to encourage the growth of improved controls and communication mechanisms that may generally limit the possibility of other errors in the transmission of remittance transfers. Furthermore, the Bureau intends to monitor closely industry's ability to verify account numbers and recipient institution identifiers and will consider modifying this exception if it thinks such verification methods become reasonably available and are able to prevent most errors from occurring.
In the December Proposal, the Bureau proposed comment 33(a)–7 to explain further when the proposed exception in § 1005.33(a)(1)(iv)(D) would apply. The Bureau received no comments on this proposed comment and it is adopted with minor clarifying changes in light of the conditions in § 1005.33(h) in the 2013 Final Rule, which are discussed further below. Comment 33(a)–7 in the 2013 Final Rule now states that the exception in § 1005.33(a)(1)(iv)(D) applies where a sender gives the remittance transfer provider an incorrect account number or recipient institution identifier and all five conditions in § 1005.33(h) are satisfied. The exception does not apply, however, where the
To clarify what the Bureau means by account number and recipient institution identifier, the Bureau is also adopting new comment 33(a)–8. Comment 33(a)–8 states that, for purposes of the exception in § 1005.33(a)(1)(iv)(D), the terms account number and recipient institution identifier refer to alphanumerical account or institution identifiers other than names or addresses, such as account numbers, routing numbers, Canadian transit numbers, ISO 9362 or 13616 codes (including International Bank Account Numbers (IBANs) and Business Identifier Codes (BICs)) and other similar account or institution identifiers. In addition, for purposes of this exception, the term designated recipient's account refers only to an account held in the recipient's name at a bank, credit union, or equivalent institution that maintains savings or checking accounts or accounts used for the purchase or sale of securities. An account for purposes of this definition is not limited to accounts held by consumers. For the reasons discussed above, the comment states that the term does not, however, refer to a credit card, prepaid card, or a virtual account held by an Internet-based or mobile phone company that is not a bank, credit union, or equivalent institution.
The Bureau proposed to renumber comment 33(a)–7 in the 2012 Final Rule as comment 33)(a)–8. Due to the addition of both comments 33(a)–7 and –8 in the 2013 Final Rule, this comment will be renumbered as comment 33(a)–9 but is otherwise unchanged from the 2012 Final Rule.
Section 1005.33(a)(2) and the accompanying commentary address circumstances that do not constitute errors under the 2012 Final Rule. Section 1005.33(a)(2)(iv) provides that an error does not include a change in the amount or type of currency stated in the disclosure provided to the sender under § 1005.31(b)(2) or (3), if the remittance transfer provider relied on information provided by the sender as permitted by the commentary accompanying § 1005.31 in making such disclosure. Comment 33(a)–8 of the 2012 Final Rule provides two illustrative examples.
The December Proposal would have made revisions to § 1005.33(a)(2)(iv) in accordance with the proposed revisions to §§ 1005.31(b)(1)(vi) and (vii) and the accompanying commentary to make clear that an error does not include a change in the amount of currency received by the designated recipient from the amount disclosed because the remittance transfer provider did not disclose foreign taxes other than those imposed by a central government. This proposed change would have been consistent with the proposed elimination of the requirement to disclose subnational taxes pursuant to proposed § 1005.31(b)(1)(vi). Insofar as the Bureau is not adopting this part of the proposal these proposed changes to § 1005.33(a)(1)(iii) are not being adopted in the 2013 Final Rule.
The Bureau also proposed revisions to renumber and revise comment 33(a)–8 in the 2012 Final Rule in light of the revisions proposed to § 1005.31(b)(1)(vi) and (vii) to explain that a remittance transfer provider need not disclose regional, provincial, state or other local foreign taxes. Proposed comment 33(a)–9 would have revised the comment to explain that a provider need not disclose regional, provincial, state or other local foreign taxes. The proposed revisions also would have made clear that where, under the proposal, a provider was permitted to rely on a sender's representations, no error would have occurred. As proposed, comment 33(a)–9 would additionally have explained that any discrepancy between the amount disclosed and the actual amount received resulting from the provider's reliance upon the proposed provision that would not have required the disclosure of subnational taxes would not constitute an error under § 1005.33(a)(2)(iv). Insofar as the Bureau is not adopting the proposed changes regarding subnational taxes, the proposed revisions to the comment are no longer relevant and are not being adopted. The Bureau is, however, removing language from comment 33(a)–8 that referred to a provider's reliance on the sender's representations regarding variables that affect the amount of taxes imposed by a person other than the provider because such taxes are no longer required to be disclosed. The comment is finalized as comment 33(a)–10. In the 2013 Final Rule comment 33(a)–10 states that under the commentary accompanying § 1005.31, the remittance transfer provider may rely on the sender's representations in making certain disclosures.
Section 1005.33(c)(2) of the 2012 Final Rule implements EFTA section 919(d)(1)(B) and establishes procedures and remedies for correcting an error under the rule. In particular, where there has been an error under § 1005.33(a)(1)(iv) for failure to make funds available to a designated recipient by the disclosed date of availability, § 1005.33(c)(2)(ii) of the 2012 Final Rule permits a sender to choose either to: (1) Obtain a refund of the amount tendered in connection with the remittance that was not properly transmitted, or an amount appropriate to resolve the error; or (2) have the remittance transfer provider resend to the designated recipient the amount appropriate to resolve the error, at no additional cost to the sender or designated recipient.
The December Proposal would have allowed for additional flexibility in providing the required disclosures when funds are resent following errors that occurred because the sender provided incorrect or insufficient information. The December Proposal was intended to address concerns expressed by industry participants that the approach taken in
To reduce this tension, the December Proposal would have created a new § 1005.33(c)(3), revised comment 33(c)–2 and added a new comment 33(c)–11. Proposed § 1005.33(c)(3) would have provided new remedy procedures for errors that occurred pursuant to § 1005.33(a)(1)(iv) where a sender provides incorrect or insufficient information. These proposed procedures would have allowed remittance transfer providers to provide oral, streamlined disclosures. The proposed commentary would have made clear that providers need not treat resends of remittance transfers as entirely new remittance transfers. Under proposed § 1005.33(c)(3)(i), a provider would have been able to set a future date of transfer and to disclose an estimated exchange rate pursuant to § 1005.32(b)(2) if the provider did not make direct contact with the sender. If a provider had disclosed an estimated exchange rate under proposed § 1005.33(c)(3)(i), the rule would have required the sender to disclose the cancellation period pursuant to § 1005.36(c), as well as the date the provider will complete the resend, using the term “Transfer Date” or a substantially similar term. A sender would have been allowed to cancel the resend up to three business days before the date of transfer. In the alternative, proposed § 1005.33(c)(3)(ii) would have required a provider that made direct contact with the sender to disclose and apply the exchange rate used for remittance transfers on the date of resend, rather than providing an estimate.
Under § 1005.33(c)(2)(ii)(A)(
With respect to the appropriate remedy for errors that occurred because a sender provided incorrect or insufficient information, industry commenters generally stated that they appreciated the Bureau's attempt to revise the resend procedures in the 2012 Final Rule. However, those who commented on this issue stated that the Bureau's proposed approach was too complicated because proposed § 1005.33(c)(3) required disclosures with distinct content, timing and accuracy requirements that did not necessarily apply to other disclosures required by the 2012 Final Rule, particularly if the provider was not otherwise providing the disclosures unique to transfer scheduled before the date of transfer.
Commenters further suggested that the Bureau should not allow a sender to designate a resend remedy prior to the remittance transfer provider's investigation of the error, permitted under § 1005.33(c)(2) as explained by comment 33(c)–2. Instead, regardless of the sender's prior remedy election, the commenters advocated requiring the sender to elect affirmatively to resend funds after the provider completed its investigation and the sender received notice of that investigation and the related refund.
As for the amount appropriate to refund or resend, industry commenters generally urged the Bureau to revise the 2012 Final Rule so that remittance transfer providers are permitted to deduct from the amount refunded or resent the fees imposed or taxes collected on the first unsuccessful transfer by a party other than the provider both when the transfer was initially sent and when it was returned to the provider. These commenters contended that it was unfair that providers would also have to refund to senders any amounts actually deducted from the transfer amount when a mis-delivered transfer is returned to the provider (
Based on comments received and upon further consideration, the Bureau adopts new § 1005.33(c)(2)(iii), which states that in the case of an error under § 1005.33(a)(1)(iv) that occurred because the sender provided incorrect or insufficient information in connection with the remittance transfer, the remittance transfer provider shall refund to the sender the amount of funds provided by the sender in connection with the remittance transfer that was not properly transmitted, or the amount appropriate to resolve the error, within three business days of providing the report required by § 1005.33(c)(1) or (d)(1) except that the provider may agree to the sender's request, upon receiving the results of the error investigation, that the funds be applied towards a new remittance transfer, rather than be refunded, if the provider has not yet processed a refund. The provider may deduct from the amount refunded or applied towards a new transfer any fees actually imposed on or, to the extent not prohibited by law, taxes actually collected on the remittance transfer as part of the first unsuccessful remittance transfer attempt.
The Bureau is adopting this approach because it has concluded that for the small number of transactions to which these provisions would likely apply, the Bureau's proposed alternative to the 2012 Final Rule's approach could be complicated for remittance transfer providers to implement. The Bureau is adopting the revised provision in § 1005.33(c)(2)(iii) rather than in § 1005.33(c)(3), as originally proposed, because the Bureau believes it more appropriate to put all remedies for errors arising under § 1005.33(a)(1)(iv) under subsection § 1005.33(c)(2). Accordingly, the Bureau is revising §§ 1005.33(c)(2) and (c)(2)(ii) to make
Specifically, the Bureau is adopting this new approach because of the challenges associated with both resending a transfer at a new exchange rate and timely disclosing such rate to the sender. The Bureau is convinced by commenters' assertions that the Bureau's attempts to make disclosures more streamlined and reduce the number of paper disclosures provided could potentially increase the cost of compliance for remittance transfer providers, by necessitating changes in disclosures and procedures. Furthermore, the Bureau believes that the new § 1005.33(c)(2)(iii) will preserve the 2012 Final Rule's protections for senders in event of a resend that follows an error that occurred due to a sender's mistake.
Although commenters suggested that an alternative where funds could be credited instantly to a sender's account, not all remittance transfers are made from an account. In some cases, a sender may not receive notice immediately or the sender would have to wait to resend funds until receiving the refund check.
Additionally, the Bureau agrees with commenters that it is not appropriate, in situations where funds are returned because of a sender's mistake, for the remittance transfer provider to have to bear the cost of fees imposed by third parties and taxes that have been collected in connection with the unsuccessful remittance transfer and, if applicable, when the undelivered funds are returned to the provider.
Finally, although the Bureau had also sought comment on the exchange rate that should apply when transfers are resent following an error that occurred because the sender provided incorrect or insufficient information, that issue is largely moot insofar as the 2013 Final Rule requires these transactions to be treated as new remittance transfers. As explained by comment 33(c)–2 in the 2012 Final Rule, if a remittance transfer was to be resent because an error occurred following a sender's mistake, the original exchange rate applied to the resend of the transfer. Thus, the recipient would have received the same amount and type of currency that the sender had provided to fund the transfer. Industry commenters generally had argued that a sender should not benefit from an exchange rate that has changed in the sender's favor due to an error that occurred because of the sender's mistake and thus the same exchange rate that applied to the original transfer should apply to the resent transfer. Insofar as the Bureau is revising the remedy in the 2013 Final Rule for errors that occurred because of a sender's mistake, if a sender chooses to resend a remittance transfer under the revised rule and the remittance transfer provider agrees, the remittance transfer will be treated as a new remittance transfer, and thus the exchange rate used for transfers on the date of resend will necessarily apply to it. Insofar as providers are concerned with the exchange rate used when funds are refunded to the sender in the original currency, the Bureau believes it appropriate to maintain the originally disclosed exchange rate insofar as the refund should put the parties in the same position they were in prior to the transfer, less the taxes and fees that the provider may deduct.
As noted above, in the December Proposal, the Bureau proposed to modify comment 33(c)–2 to eliminate a phrase stating that requests to resend (following an error that occurred because the sender provided incorrect or insufficient information) are considered requests for remittance transfers. Relatedly, proposed comment 33(c)–11 would have clarified how to provide the disclosures required by proposed § 1005.33(c)(3). Insofar as resends, as they existed in the 2012 Final Rule, will no longer be permitted as remedies for errors pursuant to § 1005.33(a)(1)(iv) where a sender provided incorrect or insufficient information, the Bureau is not adopting these proposed revisions to comment 33(c)–2. The December Proposal also would have revised comment 33(c)–2 to correspond with the proposed exception in § 1005.33(a)(1)(iv)(D) by removing the comment's reference to senders' mistakes about an account number and to make clear that no error would have occurred in this situation if the remittance transfer provider satisfied the requirements of proposed § 1005.33(h). The Bureau received no comments regarding the specific amendments to proposed § 1005.33(c)(2) and comment 33(c)–2, with respect to the proposed adjustments necessary to correspondent to the proposed exception in § 1005.33(a)(1)(iv)(D). Consequently, those portions of proposed comment 33(c)–2 are adopted as proposed with some alterations to improve clarity.
Comment 33(c)–2, as finalized in the 2013 Final Rule, now states that the remedy in § 1005.33(c)(2)(iii) applies if a remittance transfer provider's failure to make funds in connection with a remittance transfer available to a designated recipient by the disclosed date of availability occurred because the sender provided incorrect or insufficient information in connection with the transfer, such as by erroneously identifying the designated recipient's address or by providing insufficient information such that the entity distributing the funds cannot identify the correct designated recipient. A sender is not considered to have provided incorrect or insufficient information for purposes of § 1005.33(c)(2)(iii) if the provider discloses the incorrect location where the transfer may be picked up, gives the wrong confirmation number/code for the transfer, or otherwise miscommunicates information necessary for the designated recipient to pick-up the transfer. The remedies in § 1005.33(c)(2)(iii) do not apply if the sender provided an incorrect account number or recipient institution identifier and the provider has met the requirements of § 1005.33(h) because under § 1005.33(a)(1)(iv)(D) no error would have occurred.
The Bureau is also adopting a new comment 33(c)–11, which reflects the new refund procedure, and which replaces language regarding resends from comment 33(c)–2. As revised in the 2013 Final Rule, comment 33(c)–11 states that § 1005.33(c)(2)(iii) generally requires a remittance transfer provider to refund the transfer amount to the sender even if the sender's previously designated remedy was a resend or if the provider's default remedy in other
Section 1005.33(c)(2)(iii), as adopted in the 2013 Final Rule, applies in situations where an error occurs because the sender provided incorrect or insufficient information, and overrides provisions that generally permit both a sender's prior selection of a resend remedy,
As to comment 33(c)–3 in the 2012 Final Rule, which explains how a sender designates a preferred remedy insofar as the revisions to § 1005.33(c)(2) will no longer allow a sender to designate a remedy (or will nullify a designation of a resend remedy prior to the conclusion of an investigation) when an error occurs because the sender provided incorrect or insufficient information, the portion of the comment discussing advance designation of a remedy is revised in the 2013 Final Rule. Comment 33(c)–3 now states, like the 2012 Final Rule, that the provider may also request that the sender indicate the preferred remedy at the time the sender provides notice of the error. However, as finalized, the comment states that if the provider does so, it should indicate that if the sender chooses a resend at that time, the remedy may be unavailable if the error occurred because the sender provided incorrect or insufficient information. This will prevent senders from being confused as to why they did not receive their requested remedy. However, if the sender does not indicate the desired remedy at the time of providing notice of error, the provider must notify the sender of any available remedies in the report provided under § 1005.33(c)(1) or (d)(1) if the provider determines an error occurred.
Similarly, the Bureau is revising comment 33(c)–4 to explain that a remittance transfer provider's default remedy is overridden by the requirements of § 1005.33(c)(2)(iii), which sets forth a specific remedy that applies when an error occurs because a sender provides incorrect or insufficient information. The Bureau is also making conforming changes to comment 33(c)–5 to reflect the renumbering in § 1005.33(c)(2).
Finally, in light of the changes described above to § 1005.33(c)(2)(ii), the Bureau is adopting new comment 33(c)–12, which provides guidance on how a remittance transfer provider should determine the amount to refund to the sender, or to apply to a new transfer, pursuant to § 1005.33(c)(2)(iii). Comment 33(c)–12 explains that although § 1005.33(c)(2)(iii) permits the provider to deduct from the amount refunded, or applied towards a new transfer, any fees or taxes actually deducted from the transfer amount by a person other than the provider as part of the first unsuccessful remittance transfer attempt or that were deducted in the course of returning the transfer amount to the provider following a failed delivery. However, a provider may not deduct those fees and taxes that will ultimately be refunded to the provider. When the provider deducts fees or taxes from the amount refunded pursuant to § 1005.33(c)(2)(iii), the provider must inform the sender of the deduction as part of the notice required by either § 1005.33(c)(1) or (d)(1) and the reason for the deduction. Comment 33(c)–12 also contains several illustrative examples.
Proposed § 1005.33(h) contained several conditions that a remittance transfer provider would have been required to satisfy in order to benefit from the proposed exception in § 1005.33(a)(1)(iv)(D). Specifically, proposed § 1005.33(h)(1) through (4) would have provided four conditions, including: That the provider be able to demonstrate that the sender did in fact provide an incorrect account number, that the provider gave the sender notice that if the sender provided an incorrect account number that the transfer could be lost, that the incorrect account number resulted a deposit of the transfer into the wrong account, and that the provider used reasonable efforts to attempt to retrieve the mis-deposited funds.
In response to proposed § 1005.33(h), many industry commenters sought more specificity in the conditions, especially with respect to the form of notice required to inform senders that the transfer amount could be lost, what would satisfy as a reasonable effort to retrieve lost funds, and the timeframe in which such efforts would be deemed prompt. Other industry participants, however, supported the generality in the proposed conditions because the commenters believed that the conditions provided flexibility and accommodated existing practice. In addition, some industry commenters expressed concern with the proposed condition that funds actually be mis-deposited into the wrong account for the proposed exception to apply. These commenters argued that often it is difficult for remittance transfer providers to know whether funds have in fact been mis-deposited. The Bureau has considered these comments and is finalizing the rule with five conditions in § 1005.33(h)(1) through (5), each of which is discussed below.
Generally speaking, the Bureau believes that the conditions set forth in § 1005.33(h) are consistent with industry best practices today and will provide further incentive to continue improving safeguards against mis-deposit over time. Where a remittance transfer is deposited into the wrong account today, the Bureau believes that many, if not most, providers already attempt to recover the principal amount of the transfer. However, because providers have reported that they often do not have direct relationships with receiving institutions, and that in some instances those institutions may be unresponsive to requests for assistance, providers may face difficulties in recovering funds from the wrong account. The Bureau believes that, in many instances, to reverse these transactions requires the accountholder to authorize a debit from the account and, thus, the lack of this authority may prohibit a recipient institution from debiting the account in the amount of the incorrect deposit absent an authorization. Relatedly, a provider in the United States may be able to do little to assist the foreign institution in its attempt to persuade its accountholder to provide debit authorization due to the lack of privity between the provider and the recipient institution or the accountholder.
Thus, the 2013 Final Rule strikes an appropriate balance by limiting the exception in § 1005.33(a)(1)(iv)(D) to circumstances of actual mis-deposits and by requiring reasonable verification methods, without holding remittance transfer providers responsible for circumstances beyond their control.
Proposed § 1005.33(h)(1) would have required that a remittance transfer provider be able to demonstrate that the sender provided an incorrect account number in connection with the remittance transfer. The Bureau explained that it did not believe that this proposed condition represented a substantial change from the 2012 Final Rule, which incentivized providers to document whether the sender had provided inaccurate information in order to invoke the right to charge certain related fees in connection with a resent transaction.
In the December Proposal, the Bureau noted that typically remittance transfer providers have no means to verify whether a sender provided account number for the designated recipient is accurate. Thus, the Bureau did not propose, as a condition of the proposed exception in § 1005.33(a)(1)(iv)(D), that providers verify account numbers before sending a remittance transfer to an account. However, and as noted above, the Bureau is expanding the exception to § 1005.33(a)(1)(iv) to include senders' mistakes regarding recipient institution identifiers, as well as mistakes regarding account numbers.
In response to the Bureau's request for comment on sender mistakes generally, some industry commenters acknowledged that, in some instances, institution identifier information provided by senders may be at least partially verifiable. Foremost among these are BICs (sometimes referred to as SWIFT codes) and other recipient institution identifiers. Commenters noted, however, that verification is neither ubiquitous nor perfect. Several consumer group commenters argued, on the other hand, that the Bureau should not expand the exception to mistakes regarding recipient institution identifiers because remittance transfer providers should be able to verify such identifiers.
As a result of the Bureau's inclusion of recipient institution identifiers in the exception to the definition of error under § 1005.33(a)(1)(iv)(D), the Bureau is adopting new § 1005.33(h)(2), which provides that for any instance in which the sender provided the incorrect recipient institution identifier, prior to or when sending the transfer, the provider used reasonably available means to verify that the recipient institution identifier provided by the sender corresponded to the recipient institution name provided by the sender.
As adopted, § 1005.33(h)(2) will permit remittance transfer providers to rely on the exception in § 1005.33(a)(1)(iv)(D) only in situations where no reasonable verification is possible or where reasonably available means were applied but were unable to prevent a mis-deposit that occurred because the sender provided an incorrect recipient institution identifier. The exception does not apply to account number mistakes insofar as the Bureau continues to believe that no reasonable means to verify that an account number matches the name of the designated recipient disclosed to the sender exists today for most transfers. The Bureau will continue to monitor whether expansion of the condition is appropriate. Furthermore, § 1005.33(h)(2) requires that the verification occur prior to or when the provider is sending the transfer because if the verification occurs later it may be too late to prevent a mis-deposit.
The Bureau is adopting new comment 33(h)–1, which explains that the exception in § 1005.33(a)(1)(iv)(D) applies only when a sender provides an incorrect recipient institution identifier, § 1005.33(h)(2) limits the exception in § 1005.33(a)(1)(iv)(D) to situations where the provider used reasonably available means to verify that the recipient institution identifier provided by the sender did correspond to the recipient institution name provided by the sender. Reasonably available means may include accessing a directory of Business Identifier Codes and verifying that the code provided by the sender matches the provided institution name, and, if possible, the specific branch or location provided by the sender. Comment 33(h)–1 explains that providers may also rely on other commercially available databases or directories to check other recipient institution identifiers. If reasonable verification means fail to identify that the recipient institution identifier is incorrect, the exception in § 1005.33(a)(1)(iv)(D) will apply, assuming that the provider can satisfy the other conditions in § 1005.33(h). Similarly, if no reasonably available means exist to verify the accuracy of the recipient institution identifier, § 1005.33(h)(2) would be satisfied and thus the exception in § 1005.33(a)(1)(iv)(D) also will apply, again assuming the provider can satisfy the other conditions in § 1005.33(h). However, where a provider does not employ reasonably available means to verify a recipient institution identifier, § 1005.33(h)(2) is not satisfied and the exception in § 1005.33(a)(1)(iv)(D) will not apply.
The Bureau is adopting this provision because upon further consideration, it concludes that if remittance transfer providers want to avail themselves of the exception to § 1005.33(a)(1)(iv) for mistakes regarding recipient institution identifiers, they must take reasonable steps to limit the occurrence of these mistakes. The Bureau believes that, in many instances providers can and currently do verify the accuracy of some identifiers, and that in many other instances verification is not feasible. For example, many providers require, and senders provide, BICs to identify recipient institutions. Providers, or their third-party partners, typically have access to a directory in which they can match the BIC with the institution name (and possibly location), and the Bureau believes many providers (or their business partners) perform such verifications today. The Bureau also recognizes, however, that some providers may not conduct such verification. In other instances, precise verification that the sender has identified the proper institution may be challenging, particularly if a recipient institution has no BIC code or other type of identifier for which there is an internationally accessible directory, or if a sender has not given all the information about the recipient institution that may be reflected in a numerical identifier, such as the branch location.
Finally, the Bureau notes that it intends to monitor the availability of other means to verify account numbers and recipient institution identifiers and it may propose to revise § 1005.33(a)(1)(iv)(D) and (h)(2) and the related commentary if such means become reasonably available.
Proposed § 1005.33(h)(2) would have required a remittance transfer provider to demonstrate that the sender had notice that, if the sender provided an incorrect account number, the sender could lose the transfer amount. Although the Bureau did not propose a specific form of notice under proposed § 1005.33(h)(2), it requested comment on whether the Bureau should specify the form of the notice and when and how such notice should be delivered.
Industry commenters were largely divided on whether the Bureau should provide specific form and content instructions for the required notice. However, no commenter objected to the basic requirement of notice, and several commenters affirmatively agreed that notice would be beneficial. Those commenters who preferred that the Bureau specify a specific form for the required notice, including several smaller depository institutions, argued that model language provided by the Bureau would ease their compliance burden, particularly if there were a safe harbor for its use. Those commenters who preferred the flexibility of the proposed notice provisions argued that remittance transfer providers may already provide this sort of notice in a number of different forms. To require, or encourage through a safe harbor, specific model language or a form, these commenters contended, would cause remittance transfer providers to incur additional compliance costs as they would be required to alter existing forms and practices to match whatever the Bureau has established. In addition, these commenters argued, providers would need additional time to comply with this final rule if they were required to use specific language to provide the proposed notice.
Several consumer group commenters argued that the proposed notice should be provided in a clear and conspicuous manner and in the same language that the rest of the transfer is conducted. These commenters urged the Bureau to adopt a notice that comports with the clarity and language requirements of similar disclosures in other consumer statutes.
The Bureau adopts proposed § 1005.33(h)(2) with three changes as § 1005.33(h)(3). New § 1005.33(h)(3) provides as a condition of § 1005.33(a)(1)(iv)(D) exception, a requirement that the remittance transfer provider provided notice to the sender before the sender made payment for the remittance transfer that, in the event the sender provided an incorrect account number or recipient institution identifier, the sender could lose the transfer amount. The provision also provides that for purposes of providing the § 1005.33(h)(3) notice, § 1005.31(a)(2) applies to this notice unless the notice is given at the same time as other disclosures required by subpart B for which information is permitted to be disclosed orally or via mobile application or text message, in which case this disclosure may be given in the same medium as the other disclosures
This provision reflects three changes from the December Proposal: (1) Mention of recipient institution identifiers in light of the expanded scope of § 1005.33(a)(1)(iv)(D); (2) clarification that the notice must be provided before the sender authorizes the remittance transfer; (3) clarification that this notice may be given orally if provided along with a prepayment disclosure provided orally in accordance with § 1005.31(a)(2).
The Bureau notes that, pursuant to the revisions to § 1005.31(a)(1) discussed above, the notice provided pursuant to § 1005.33(h)(3), like all disclosures required by subpart B of Regulation E, in § 1005.33(h)(3) must be clear and conspicuous.
As explained in the December Proposal, the Bureau's goal is to ensure that senders are informed of the risks of a mistake. Given that many remittance transfer providers are already providing notices of this risk through various means, the Bureau wants to ensure that the practice is adopted across the remainder of the industry while minimizing the need to change existing notices if they were already sufficient for the purposes of proposed § 1005.33(h)(2). While the Bureau understands that providing model language might make compliance easier for some providers, the Bureau believes that there are sufficient models available in providers' existing materials that it is inappropriate to delay adoption of this condition while the Bureau designs and tests appropriate model language.
Proposed 33(h)(3) would have stated that for a remittance transfer provider to avail itself of the exception in proposed § 1005.33(a)(1)(iv)(D), the provider would be required to demonstrate that the incorrect account number resulted in the deposit of the remittance transfer into a customer's account that is not the designated recipient's.
The Bureau received a number of comments from industry commenters and some consumer group commenters encouraging the Bureau to eliminate this proposed condition. These commenters stated that even if funds are not deposited into another customer's account, other forms of improper routing due to erroneous information provided by a sender could cause transferred funds to be lost or, at the very least, delayed beyond the original date of availability. Other consumer group commenters disagreed, however, asserting that, in their opinion, remittance transfer providers typically can retrieve funds that have been misrouted unless the funds are deposited into the wrong customer's account. These consumer group commenters opined that so long as the funds remain in an institution's control, there is generally no concern that those funds will disappear.
The Bureau is adopting proposed § 1005.33(h)(3) substantially as proposed as § 1005.33(h)(4). The Bureau believes, as stated in the December Proposal, that when a remittance transfer is sent with the wrong account number for the designated recipient, a remittance transfer provider will be far more likely to recover the funds in situations where the funds are either rejected by another institution or otherwise reversed before they are deposited into the wrong account. To the extent that commenters' concerns related to the delay of funds rather than their disappearance, as noted above, the Bureau declines to expand the exception in § 1005.33(a)(1)(iv)(D) to cover delayed transfers rather than actual mis-deposited transfers.
Proposed 33(h)(4) would have required a remittance transfer provider
Several industry commenters and consumer groups agreed with this proposed condition. These commenters approved of its flexibility and one industry commenter noted that it was in accordance with its preexisting practice, which is to exercise best efforts to recover missing funds. Two other commenters—a trade association and credit union—asked that the Bureau provide more explanation regarding the timeframe to meet the promptness requirement and the number of attempts to recover the funds required. These commenters were concerned that the lack of clarity would invite litigation as to whether a particular remittance transfer provider's efforts were in fact reasonable and prompt.
Finally, one commenter asked that the Bureau clarify that a recipient institution, even if also the remittance transfer provider, not be required to debit an account that has a zero balance. In other words, this commenter sought clarity on whether it would be required to advance funds on behalf of a customer if that customer has withdrawn the transfer amount from the customer's account. The Bureau does not believe clarification on this point is necessary, insofar as nothing in the 2013 Final Rule states that a provider is required to advance funds that the recipient institution cannot retrieve from a customer if the exception in § 1005.33(a)(1)(iv)(D) applies. Rather, the 2013 Final Rule has the opposite intent—the exception is intended to apply when funds cannot be retrieved.
Accordingly, the Bureau is finalizing proposed § 1005.33(h)(4) substantially as proposed as § 1005.33(h)(5). The Bureau continues to believe—as it explained in the December Proposal—that it is not appropriate to mandate specific methods that a remittance transfer provider must use to attempt to recover funds. The Bureau believes the circumstances around individual transfers can vary greatly and that what may be reasonable in one circumstance may be unreasonable in another.
In addition, the Bureau is adopting proposed comment 33(h)–1 substantially as proposed as comment 33(h)–2 with minor revisions to improve clarity and to replace one of the proposed examples. The Bureau is also incorporating proposed comment 33(h)–1.iii to comment 33(h)–1, which now states that § 1005.33(h)(5) requires a remittance transfer provider to use reasonable efforts to recover the amount that was to be received by the designated recipient. Whether a provider has used reasonable efforts does not depend on whether the provider is ultimately successful in recovering the amount that was to be received by the designated recipient. Under § 1005.33(h)(5), if the remittance transfer provider is requested to provide documentation or other supporting information in order for the pertinent institution or authority to obtain the proper authorization for the return of the incorrectly credited amount, reasonable efforts to recover the amount include timely providing any such documentation to the extent that it is available and permissible under law. The two examples in proposed comments 33(h)–1.i and .ii are finalized as proposed as comments 33(h)–2.i. and .ii.
Proposed comment 33(h)–2 would have explained that the proposed condition requires a remittance transfer provider to act promptly in using reasonable efforts to recover the amount that was to be received by the designated recipient. The Bureau received comments from industry that it should clarify when exactly reasonable efforts are considered to be prompt and also that it should create a safe harbor time period in which efforts would be deemed prompt. The Bureau continues to believe that whether a particular provider's efforts are prompt depends on the facts and circumstances, for instance when the fact of an error is first identified. In general, the Bureau believes a provider acts promptly where it acts before the date that the funds are expected to be made available to the recipient, but a provider may not have notice that there is a problem with the transfer that early. Accordingly, the Bureau has adopted proposed comment 33(h)–2 as comment 33(h)–3 and is expanding its discussion. The comment adopts the proposed language explaining that § 1005.33(h)(5) requires that a remittance transfer provider act promptly in using reasonable efforts to recover the amount that was to be received by the designated recipient and that whether a provider acts promptly to use reasonable efforts depends on the facts and circumstances. The comment also provides an example stating that where a sender informs the provider that he or she had provided a mistaken account number before the date of availability disclosed pursuant to § 1005.31(b)(2)(ii), the provider has acted promptly if it attempts to contact the institution that received the incorrect remittance transfer before the disclosed date of availability.
Under § 1005.36 of the 2012 Final Rule, the Bureau established disclosure requirements specifically applicable to remittance transfers scheduled before the date of transfer. Section 1005.36(a) and (b) address specific requirements for the timing and accuracy of disclosures for these remittance transfers. Section 1005.36(c) addresses the cancellation requirements applicable to any remittance transfer scheduled by the sender at least three business days before the date of the transfer, including preauthorized remittance transfers. As described above, there is no longer a requirement to disclose taxes collected by a person other than the provider.
In Appendix A of the 2012 Final Rule, the Bureau provides twelve model forms that a remittance transfer provider may use in connection with remittance transfers. The 2012 Final Rule also provides instructions related to the use of these model forms. In particular, Instruction 4 to Appendix A provides general instructions for how providers may use the model forms, including instructions as to formatting and necessary disclosures. Instruction 4 also describes what portions of the disclosures are optional, and states that the Bureau will not review or approve providers' disclosure forms.
In light of the changes to the 2012 Final Rule's disclosure requirements discussed above, the 2013 Final Rule amends the model forms, as well as the related instructions in Appendix A, and includes several additional model forms reflecting the new requirements. First, the Bureau is removing from all of the model forms references to “Other Taxes” because the Bureau has eliminated this disclosure requirement.
Third, insofar as § 1005.31(b)(1)(viii) requires a remittance transfer provider to include disclaimers on the required disclosures where non-covered third-party fees or taxes collected on the remittance transfer by a person other than the provider may apply, the model forms have been amended to include versions of these disclaimers. These disclaimers are required unless a provider knows that neither non-covered third-party fees nor taxes collected on the remittance transfer by a person other than the provider apply.
In addition to the requirement to include these disclaimers, a remittance transfer provider may also elect to disclose the actual or estimated amounts of non-covered third-party fees and taxes collected by a person other than the provider.
Specifically, Model Form A–30(a) provides sample disclaimer language that “a recipient may receive less due to fees charged by the recipient's bank and foreign taxes.” Model Forms A–30(b) through (d) include examples of how a remittance transfer provider could include the optional estimates of non-covered third-party fees and taxes collected on the remittance transfer by a person other than the provider. Specifically, Model Form A–30(b) includes a sample disclaimer that shows a parenthetical containing an estimate of the applicable non-covered third-party fees that may apply to the sample transfer, while Model Form A–30(c) includes a sample disclaimer that shows a parenthetical with an estimate for the taxes collected on the remittance transfer by a person other than the provider that may apply. Model Form A–30(d) includes an example for how a provider could provide an estimate for both non-covered third-party fees and taxes collected on the remittance transfer by a person other than the provider. Finally, although not included in a model form, if a provider knows that fees or taxes will be deducted, the disclaimer could indicate that the recipient “will receive less,” rather than “may receive less,” due to non-disclosed fees and taxes. A provider also may elect to include the precise amounts for fees and/or taxes.
Instruction 4 also has been amended to indicate that the disclosure of the actual or estimated amounts for non-covered third-party fees and taxes collected by a person other than the provider is optional as provided in § 1005.31(b)(1)(viii) in the 2013 Final Rule. Instruction 4 also now includes language that a remittance transfer provider cannot include disclaimers that cannot apply to the particular transfer. For example, if the provider knows that the only fees that can apply to the transfer are covered third-party fees, a provider should not include a fee disclaimer.
Finally, because additional model forms have been added, the Appendix and Instructions are revised to indicate that there are now 15 model forms.
This final rule is effective on October 28, 2013. As discussed below, the Bureau believes that this effective date will, on balance, facilitate the implementation of both the remaining requirements of the 2012 Final Rule and the new requirements of the 2013 Final Rule.
In the December Proposal, the Bureau proposed to temporarily delay the effective date of the 2012 Final Rule from February 7, 2013, until 90 days after the publication of the 2013 Final Rule in the
All commenters—including consumer group commenters—generally agreed that the Bureau should extend the effective date of the 2013 Final Rule until at least 90 days after it is published in the
Separately, commenters representing smaller insured institutions in particular requested a longer implementation period, stating that many of these remittance transfer providers depend on larger third-parties to aid their compliance. These commenters uniformly stated that smaller providers might face particular challenges with implementing necessary changes over a short time period because smaller providers will only be able to integrate compliance solutions after the third parties have incorporated necessary updates and conduct testing, and include the changes in their scheduled releases. Relatedly, a number of these commenters referenced the Bureau's recent rulemakings pursuant to
The industry commenters' concerns regarding the implementation period, particularly those relating to necessary system changes, were largely focused around three expected results of the 2012 Final Rule, as it would have been modified by the December Proposal: (1) The need to build and maintain a database of applicable taxes imposed by foreign countries' central governments; (2) the need to obtain fee schedules or other information regarding applicable recipient institution fees in order to compute estimates of the applicable fees; and (3) the need to adjust systems and processes to accommodate the provisions discussing resends to correct errors that occurred because the sender provided incorrect or insufficient information. Furthermore, some industry commenters suggested that the appropriate effective date would depend on the scope of the final rule. Noting the difficulty of collecting certain information concerning recipient institution fees and foreign taxes, as indicated above, one industry trade association commenter indicated that if the Bureau eliminated the requirement to disclose recipient institution fees and foreign taxes and simplified the procedure for resends, then this commenter thought that a 90-day implementation period could be workable.
The Bureau is adopting an effective date of October 28, 2013. In light of the way the Bureau has streamlined the requirements of the 2012 Final Rule, the Bureau believes that an effective date of October 28, 2013 (or approximately 180 days after the release of the 2013 Final Rule) will allow sufficient time for providers, both large and small, to implement any necessary changes to their systems in order to comply with the 2013 Final Rule. The Bureau is adopting a date certain in order to eliminate the risks of delay and provide greater assurances to both consumers and industry as to when to expect the valuable protections of the new rule. The Bureau also believes that this implementation period allows sufficient time because the Bureau is not adopting the aspects of the December Proposal that commenters identified as requiring the most time to implement.
The primary additional substantive requirements in the 2013 Final Rule are the requirement that remittance transfer providers include disclaimers regarding non-covered third-party fees and taxes collected by a person other than the provider and adopt additional verification measures and provide notice to senders of the potential loss of funds to take advantage of the Bureau's expansion of the exception to the definition of the term error under § 1005.33(a)(1)(iv)(D). The Bureau believes that any programmatic changes required by these provisions should not take most providers a particularly long period of time to implement. To the extent providers need to change the terms of their consumer contracts or other communications to provide senders the notice contemplated by § 1005.33(h)(3), the Bureau expects the required time to produce this notice will be modest, particularly because the 2013 Final Rule does not mandate any particular notice form, or format apart from requiring that such notice be clear and conspicuous and meet certain foreign language requirements. Although translating such notice may require testing and certain systems changes, and the Bureau expects that many providers will integrate any such notice into existing communications or the required prepayment disclosures.
Moreover, based on its outreach and monitoring of the market, the Bureau believes that responsible providers and correspondents are already using reasonable methods of verification to reduce the risk of errors. Nonetheless, recognizing that the 2013 Final Rule will likely require changes to informational technology and operational procedures and that small providers may benefit from additional time in order to test compliance solutions for their customers, the Bureau believes a modest increase in the implementation period from what was proposed may limit potential disruptions in the remittance transfer market.
For these reasons, the Bureau is expanding the implementation period for this final rule beyond what was proposed by making it effective October 28, 2013.
In developing the 2013 Final Rule, the Bureau has considered potential benefits, costs, and impacts
The analysis below considers the benefits, costs, and impacts of the key provisions of the 2013 Final Rule against the baseline provided by the 2012 Final Rule. Those provisions regard: The disclosure of non-covered third-party fees and taxes collected by a person other than the remittance transfer provider, error resolution requirements with respect to situations in which senders provide incorrect or insufficient information regarding remittance transfers (including account numbers and recipient institution identifiers), and the effective date. With respect to these provisions, the analysis considers the benefits and costs to senders (consumers) and remittance transfer providers (covered persons).
The Bureau notes at the outset that quantification of the potential benefits, costs, and impacts of the 2013 Final Rule is not possible due to the lack of available data. As discussed in the February Final Rule, there is a limited
Compared to the 2012 Final Rule, the 2013 Final Rule benefits remittance transfer providers by eliminating some of the information that they were previously required to disclose, which will likely reduce the cost of providing required disclosures for most providers. The changes regarding fee and tax disclosures might additionally benefit providers by facilitating their continued participation in the market. Industry commenters suggested that due in part to the 2012 Final Rule's third-party fee and foreign tax disclosure requirements, some providers might eliminate or reduce their remittance transfer offerings, such as by not sending transfers to markets where tax or fee information is particularly difficult to obtain in light of the lack of ongoing reliable and complete information sources. By reducing the amount of information needed to provide disclosures, the Bureau expects that the 2013 Final Rule will encourage more providers to retain their current services (and thus any associated profit, revenue, and customers).
The 2013 Final Rule requires remittance transfer providers to add an additional disclaimer to disclosure forms in instances where non-covered third-party fees imposed and taxes collected by a person other than the provider may apply. The Bureau believes that the cost of adding these disclaimers will be small, particularly compared to the costs of complying with the disclosure requirements of the 2012 Final Rule. Affected providers will also have to reprogram systems to conform to the new requirements for calculating “Other Fees” (pursuant to § 1005.31(b)(1)(vi)) and the amount to be disclosed pursuant to § 1005.31(b)(1)(vii)). All providers will have to remove references to “Other Taxes” from their forms, and make any necessary system changes, insofar as the Bureau has eliminated this disclosure. The modification to existing forms and systems changes may be minimal for many providers whose processes allow for them to adjust forms and systems more easily, and the Bureau expects that some providers may not have finished any systems modifications necessary to comply with the 2012 Final Rule, and thus may be able to incorporate any changes into previously planned work. Furthermore, to the extent any provider elects to provide optional disclosures of non-covered third-party fees or taxes collected on the remittance transfer by a person other than the provider, providers may bear some costs in determining these amounts and programming disclosures to allow for the dynamic disclosure of this information.
The Bureau expects that the provisions regarding fee and tax disclosures will have the largest impact on depository institutions, credit unions, and broker-dealers that are remittance transfer providers. These types of providers tend to send most or all of their remittances transfers to foreign accounts, for which non-covered third-party fees could be charged. Furthermore, due to the mechanisms these providers use to send money, they generally have the ability to send transfers to virtually any destination country (for which tax research might be required) and thus many different recipient institutions. By contrast, money transmitters that are providers are more likely to send remittance transfers to be received by agents, for which non-covered third-party fees will not be relevant. Furthermore, with some exceptions, most money transmitters, and particularly small ones, generally send transfers to a limited number of countries and institutions; consequently, the benefits, in terms of avoided costs, of eliminating the requirement that taxes be disclosed may not be as large for these money transmitters as for other remittance transfer providers.
The changes regarding the disclosure of non-covered third-party fees and taxes collected on the remittance transfer by a person other than the provider may allow senders to avoid increased costs to the extent that remittance transfer providers pass along any cost savings from the new requirements in the form of lower prices. Also, if the 2013 Final Rule facilitates providers' continued participation in the market, it will prevent senders from having their access to remittance transfers limited, by giving them a wider set of options for sending transfers.
The Bureau believes that a minority of transfers will be affected by the refinements in the 2013 Final Rule concerning non-covered third-party fees insofar as a minority of remittance transfers are deposited into accounts. The Bureau is retaining the requirement to disclose covered third-party fees and, therefore, senders will retain the benefits derived from the disclosure of such fees. Specifically, the Bureau believes that the majority of remittance transfers are received in cash; therefore, the senders of those transfers will generally receive complete information about the fees applicable to the transfer. The Bureau, however, believes that most, if not all, transfers will be affected by the refinements concerning taxes collected on a remittance transfer by a person other than the provider, as providers may not be able to verify whether taxes may apply to particular transactions. It is important to note that the Bureau expects that fee and tax disclosures that would have been required by the 2012 Final Rule but that will not be required by the 2013 Final Rule will generally not vary across providers sending money to the same recipient account using the same mechanism.
The 2013 Final Rule may impose costs on senders that want a guarantee that the designated recipient receives a particular amount, to the extent that it makes disclosures for a particular transfer less accurate because disclosures will now contain disclaimers in lieu of actual figures regarding non-covered third-party fees, for transfer that could involve such fees, and taxes collected on the remittance transfer by a person other than the provider.
In addition, without the tax and fee disclosures, senders may have a more difficult time ensuring that an exact amount of money reaches a designated recipient and thus also may have difficulty determining if an error occurred because the designated recipient did not receive the amount disclosed. However, this difficulty should be mitigated when a sender
Eliminating the requirement that non-covered third-party fees be disclosed also may have varied effects on the ability of senders to comparison shop. As to those senders who are only shopping between providers that can send remittance transfers to a particular account via the same method, the 2013 Final Rule should not significantly reduce the ability of senders to compare costs across remittance transfer providers that can send remittances to this account. In fact, to the extent that providers are not providing differing estimates of the same recipient institution fees, consumers may benefit because comparisons will be easier. However, senders may have a more difficult time comparing costs across providers sending funds via different mechanisms. For example, if a sender is agnostic as to whether the designated recipient should receive the transfer in cash verses the transfer being deposited in the designated recipient's account, to the extent non-covered third-party fees are not disclosed, the sender may not appreciate the full costs of the latter option for sending the remittance transfer, or understand which method of transfer is likely to be most cost effective. For the transfer to an account, the pre-payment disclosure may not contain a disclosure of non-covered third-party fees, while the disclosure for the transfer to be received in cash must disclose all fees. Therefore, whether a sender's ability to comparison shop has been impaired by the changes in the 2013 Final Rule may depend on the type of comparison undertaken by the sender.
Nevertheless, as important as this information is for senders, requiring disclosure of non-covered third-party fees and taxes collected on the remittance transfer by a person other than the provider would likely require a substantial delay in implementation of all of the 2012 Final Rule or would produce a significant contraction in senders' access to remittance transfer services, particularly in smaller corridors. The Bureau believes that both of these results would impose significant costs on consumers and undermine the broader purposes of the statutory scheme.
The 2013 Final Rule includes two sets of changes related to errors caused by the sender's provision of incorrect or insufficient information in connection with a remittance transfer. First, the 2013 Final Rule creates a new exception to the definition of error for situations in which a sender provides an incorrect account number or recipient institution identifier, and the remittance transfer provider meets certain conditions. Second, the 2013 Final Rule also adjusts the remedy in certain situations, other than those covered by this new exception, in which an error occurred because the sender provided incorrect or insufficient information.
The exception to the definition of error benefits remittance transfer providers in instances in which senders' mistakes regarding account numbers or recipient institution identifiers, which would have resulted in errors under the 2012 Final Rule, will not constitute errors under the 2013 Final Rule, provided that providers satisfies the conditions enumerated in § 1005.33(h). There are several cumulative benefits of these changes to providers. First, to the extent that the new exception applies, providers will no longer bear the costs of funds that they cannot recover. The magnitude of the benefit will depend on the frequency of senders' mistakes regarding account numbers or recipient institution identifiers that result in funds being deposited in the wrong account with the provider unable to recover funds, and the sizes of those lost transfers.
Second, remittance transfer providers may derive additional benefit if the 2013 Final Rule reduces the potential for fraudulent account number mistakes made by unscrupulous senders, which providers have cited as a risk under the 2012 Final Rule. By eliminating the requirement, in some circumstances, that the provider resend or refund the transfer amount, the 2013 Final Rule reduces the direct costs of fraud and the indirect costs of fraud prevention and facilitates providers' continued participation in the remittance transfer market, without (or with fewer) new limitations on service. Industry commenters indicated that, at least in part, due to the risk of such fraud under the 2012 Final Rule, providers might exit the market or limit the size or type of transfers sent. The cumulative magnitude of these benefits will depend on the magnitude of the actual and perceived risk of account number- or recipient institution identifier-related fraud under the 2012 Final Rule.
The new exception to the definition of error does not impose any new requirements on remittance transfer providers and therefore will not directly impose costs on providers. But, to ensure that they can satisfy the conditions enumerated in § 1005.33(h) and thus trigger the new exception, providers may choose to bear some costs. For instance, providers may change their customer contracts or other communications to provide to senders the notice contemplated by § 1005.33(h)(3). However, the Bureau expects that the cost of doing so will be modest, particularly because the 2013 Final Rule does not mandate any particular notice wording, form, or format (apart from being clear and conspicuous and meeting certain foreign language requirements), and the Bureau expects that many providers already have included any such notice in their existing communications or the required prepayment disclosures. While the notice required by § 1005.33(h)(3) must generally be in writing, the Bureau believes that providers typically provide this notice in writing today. Relatedly, providers may change their existing procedures to implement the verification procedures contemplated by § 1005.33(h)(2). Again, however, insofar as most providers are already implementing verification methods like those contemplated by the 2013 Final Rule, most providers will bear minimal cost in complying with this requirement.
The Bureau expects that remittance transfer providers will generally not experience any other costs if they choose to satisfy the remainder of the conditions in § 1005.33(h), because their existing practices generally will already satisfy those conditions. In particular, based on outreach, the Bureau believes that keeping records or other documents that can satisfy the conditions described in § 1005.33(h) will generally match providers' usual and customary practices to serve their customers, to manage their risk, and to satisfy the requirements under the 2012 Final Rule to retain records of the findings of investigations of alleged errors.
The extent to which remittance transfer providers will choose to bear any costs related to § 1005.33(h) and the magnitude of such costs will depend on providers' existing business practices, their expectations about the frequency
The changes regarding remedies for certain errors that occurred because the sender provided incorrect or insufficient information (other than those errors covered by the exception in § 1005.33(a)(1)(iv)(D)) will also benefit remittance transfer providers. In instances in which they are applicable, as discussed above, the changes will allow a provider to refund the transfer amount to the sender without having to meet the timing and other requirements of the 2012 Final Rule. In addition, insofar as the 2013 Final Rule permits providers, for errors that occurred because the sender provided incorrect or insufficient information, to deduct from the amount refunded any fees or taxes actually deducted from the transfer amount as part of the first unsuccessful transfer attempt, providers will no longer have to bear the cost of these fees and taxes, which previously providers could not pass on to senders. The changes regarding these remedies could impose a cost on remittance transfer providers to revise their procedures. Providers may need to arrange to send refunds when previously they were going to resend funds. Providers may also have to bear costs from the need to adjust their default remedies, procedures for requesting senders' preferred remedies, and error resolution reports, but the Bureau believes these costs should be minimal.
The new exception to the definition of error will allow senders to avoid increased prices, compared to the 2012 Final Rule, to the extent that remittance transfer providers pass along any cost savings in the form of lower prices. The new exception will also allow senders to avoid disruptions in available remittance transfer services, to the extent it would enable more providers to stay in the market or preserve the breadth of their current offerings, thus preserving competition.
Under certain conditions, a sender who provides an incorrect account or recipient institution identifier resulting in funds being delivered to the wrong account will bear the costs of those mis-deposited funds. However, as discussed above, the Bureau expects that the incidence of such losses will be rare; furthermore, the risk of incurring such costs may be mitigated, because senders will have stronger incentives to ensure the accuracy of account number and recipient institution identifier information to the extent possible. In addition, with respect to recipient institution identifiers, the exception is limited to situations in which the provider could not reasonably be expected to verify that the recipient institution identifier matches the institution's name or location or in which the verification does not prevent an error from occurring.
The Bureau expects that the changes regarding remedies for errors that occur because a sender provided incorrect or insufficient information will have very small impacts on senders. As described above, the Bureau expects that the circumstances in which the changes apply will arise infrequently. However, the changes impose a modest cost on senders for two reasons. First, for those senders that want to resend funds, they will be unable ask the provider to do so until the provider's investigation is complete (and the provider is not obligated to resend the funds at all). Second, insofar as the 2013 Final Rule permits providers to deduct from the amount refunded any fees or taxes actually deducted from the transfer amount by a person other than the provider as part of the first unsuccessful remittance transfer, this provision will impose a cost for senders in that they will now have to bear the cost of these fees and taxes that were to be absorbed by the provider under the 2012 Final Rule.
The extension of the 2012 Final Rule's effective date generally benefits remittance transfer providers by delaying the start of any ongoing compliance costs. The additional time may also enable providers (and their vendors) to build solutions that cost less than those that might otherwise have been possible. Senders also benefit to the extent that the changes eliminate any disruptions in the provision of remittance transfer services. But the delay also imposes costs on senders by delaying the time when they will receive the benefits of the 2012 Final Rule.
As discussed above, the Bureau expects that the 2013 Final Rule will not decrease consumers' (senders') access to consumer financial products and services relative to the 2012 Final Rule and may significantly preserve access by refining certain provisions of the rule that were likely to drive some remittance transfer providers to suspend or curtain their remittance services. By avoiding some of the costs that providers might otherwise have had to bear in order to provide disclosures and resolve errors under the 2012 Final Rule, the 2013 Final Rule may lead providers to reduce their prices and may reduce the likelihood that providers will exit the remittance market, compared to what might have occurred under the 2012 Final Rule. By facilitating providers' participation in the market, the 2013 Final Rule may give senders a wider set of options for sending transfers, as well as preserve competition within this market.
Given the lack of data on the characteristics of remittance transfers, the ability of the Bureau to distinguish the impact of the 2013 Final Rule on depository institutions and credit unions with $10 billion or less in total assets (as described in section 1026 of the Dodd-Frank Act) from the impact on depository institutions and credit unions in general is quite limited. Overall, the impact of the 2013 Final Rule on depository institutions and credit unions will depend on a number of factors, including whether they are remittance transfer providers, the importance of remittance transfers for the institutions, how many institutions or countries they send to, the cost of complying with the 2012 Final Rule, and the progress made toward compliance with the 2012 Final Rule.
However, information that the Bureau obtained prior to finalizing the August Final Rule suggests that among depository institutions and credit unions that provide any remittance transfers, an institution's asset size and
Additionally, the Bureau believes that the magnitude of the 2013 Final Rule's impact on smaller depository institutions and credit unions will be affected by these institutions' likely tendency to rely on correspondents or other service providers to obtain recipient institution fee and foreign tax information, as well as provide standard disclosure forms. In some cases, this reliance will mitigate the impact on these providers of 2013 Final Rule's provisions regarding such information because those third parties will likely spread the cost of any required work (or cost savings) across its customer institutions.
Senders in rural areas may experience different impacts from the 2013 Final Rule than other senders. The Bureau does not have data with which to analyze these impacts in detail. However, to the extent that the 2013 Final Rule leads to more remittance transfer providers to continue to provide remittance transfers, the 2013 Final Rule may disproportionately benefit senders living in rural areas. Senders in rural areas may have fewer options for sending remittance transfers, and therefore may benefit more than other senders from changes that keep more providers in the market.
The Regulatory Flexibility Act (RFA) generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule subject to notice-and-comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. The Bureau also is subject to certain additional procedures under the RFA involving the convening of a panel to consult with small business representatives prior to proposing a rule for which an IRFA is required. 5 U.S.C. 609.
The Bureau is certifying the 2013 Final Rule. Therefore, a FRFA is not required for this rule because it will not have a significant economic impact on a substantial number of small entities.
The analysis below evaluates the potential economic impact of the 2013 Final Rule on small entities as defined by the RFA.
This analysis examines the benefits, costs, and impacts of the key provisions of the 2013 Final Rule relative to the baseline provided by the 2012 Final Rule. The Bureau has discretion in future rulemakings to choose the most appropriate baseline for that particular rulemaking.
The 2013 Final Rule eliminates the requirement that remittance transfer providers disclose non-covered third-party fees imposed and taxes collected on the remittance transfer by a person other than the provider. Under the 2013 Final Rule, providers are required to provide disclaimers, where applicable, noting that additional fees and taxes may apply and reduce the amount disclosed pursuant to § 1005.31(b)(1)(vii). The Bureau believes that the cost of adding these disclaimers will be small. Affected providers will also have to reprogram systems to conform to the new requirements for calculating “Other Fees” (pursuant to § 1005.31(b)(1)(vi)) and the amount to be disclosed (pursuant to § 1005.31(b)(1)(vii)). All providers will have to remove references to “Other Taxes” from their forms, and make any necessary systems changes, insofar as the Bureau has eliminated this disclosure. The modifications to existing forms and systems changes may be minimal for many providers whose processes allow for them to adjust forms and systems more easily, and the Bureau expects that some providers may not have finished any systems modifications necessary to comply with the 2012 Final Rule, and thus may be
The 2013 Final Rule's elimination of the requirement to disclose non-covered third-party fees and taxes collected on the remittance transfer by a person other than the provider may provide meaningful benefits to remittance transfer providers. The benefits include a reduced cost to prepare required disclosures. Furthermore, industry has suggested that due in part to the 2012 Final Rule's third party fee and foreign tax disclosure requirements, some providers might have eliminated or reduced their remittance transfer offerings, such as by not sending to countries where tax or fee information is particularly difficult to obtain, due to the lack of ongoing reliable and complete information sources. By reducing the amount of information needed to provide disclosures, the 2013 Final Rule will encourage more providers (including small entities) to retain their current services (and thus any associated profit, revenue, and customers).
The Bureau expects that, amongst small entities, the revised provisions regarding recipient institution fees will have the largest effect on remittance transfer providers that are depository institutions, credit unions, and broker-dealers that are remittance transfer providers. These types of providers tend to send most or all of their remittances transfers to foreign accounts, for which recipient institution fees may be charged. Furthermore, due to the mechanisms these providers use to send money, they generally have the ability to send transfers to virtually any destination country for which tax research might be required. By contrast, money transmitters that are providers are more likely to send remittance transfers to be received by agents, for which non-covered third-party fees will not be relevant. Furthermore, with some exception, most money transmitters, and particularly small ones, generally send transfers to a limited number of countries and institutions, so the benefits, in avoided costs, of eliminating the requirement that taxes be disclosed may not be as large for money transmitters as for other providers.
The 2013 Final Rule includes two sets of changes related to errors caused by the sender's provision of incorrect or insufficient information. First, the 2013 Final Rule creates a new exception to the definition of the error for situations in which a sender provides an incorrect account number or recipient institution identifier, and the remittance transfer provider meets certain conditions. Second, the 2013 Final Rule also adjusts the remedy in certain situations in which an error occurred because the sender provided incorrect or insufficient information (other than those covered by the new exception).
The Bureau expects that a number of small remittance transfer providers will be unaffected by the changes regarding the definition of error as they only apply to remittance transfers that are received in accounts. Though some money transmitters send money to be deposited into bank accounts, the Bureau's outreach suggests that, unlike most small depository institutions, credit unions, and broker-dealers, many small money transmitters only send money to be received in cash, and some of those that do send money to be deposited into accounts may be doing so through agent relationships.
With regard to small remittance transfer providers that do send money to accounts at recipient institutions that are not agents, the new exception to the definition of error does not impose any mandatory costs. Under the 2013 Final Rule, certain account number and recipient institution identifier mistakes will no longer generate “errors” if the provider satisfied certain conditions enumerated in § 1005.33(h). Instead of satisfying these conditions, providers can continue under the 2012 Final Rule's definition of error.
If remittance transfer providers choose to satisfy the conditions enumerated in § 1005.33(h), they may incur some costs for implementing certain verification procedures pursuant to § 1005.33(h)(2) and changing the terms of their consumer contracts or other communications to provide senders the notice contemplated by § 1005.33(h)(3). However, the Bureau expects that the cost of providing this notice will be modest, particularly because the 2013 Final Rule does not mandate any particular notice, form, or format (apart from requiring that the notice be clear and conspicuous and meeting certain foreign language requirements), and the Bureau expects that many providers already have included any such notice into existing communications or the required prepayment disclosures. While the notice required by § 1005.33(h)(3) must generally be in writing, the Bureau also believes that providers already provide this notice in writing.
The Bureau believes that satisfying the remainder of the conditions in § 1005.33(h) will not impose new costs on remittance transfer providers because their existing practices generally will already satisfy those conditions. In particular, based on outreach, the Bureau believes that that keeping records or other documents that can satisfy the conditions described in § 1005.33(h) will generally match providers' usual and customary practices to serve their customers, to manage their risk, and to satisfy the requirements under the 2012 Final Rule to retain records of the findings of investigations of alleged errors.
In any case, the Bureau expects that remittance transfer providers will only develop their practices to comply with § 1005.33(h), and thus take advantage of the new exception to the definition of error, if doing so will reduce the costs of losses due to account number and recipient institution identifier mistakes by senders or fraud by more than the costs of implementing these practices. The Bureau believes that for most providers, including small ones, the changes to the definition of error likely will provide greater benefits than implementation costs. If the new exception applies, providers will no longer bear the cost of funds that they could not recover if they are able to satisfy the conditions of § 1005.33(h). Providers will further benefit if the 2013 Final Rule reduces the potential for fraudulent account number and recipient institution identifier mistakes made by unscrupulous senders, which providers have cited as a risk under the 2012 Final Rule. By reducing the remedies available in such cases, the 2013 Final Rule will reduce the direct costs of fraud and the indirect costs of fraud prevention and facilitate providers' continued participation in the remittance transfer market, without (or with fewer) new limitations on service. Industry commenters indicated that, at least in part, due to the risk of such fraud under the 2012 Final Rule, providers might exit the market or limit the size or type of transfers sent.
The change regarding remedies for certain errors that occurred because the
The 2013 Final Rule will not take effect until October 28, 2013. This change will generally benefit small remittance transfer providers, by delaying the start of any ongoing compliance costs. The additional time might also enable providers (and their vendors) to build solutions that cost less than those that might otherwise have been possible.
The 2013 Final Rule does not apply to credit transactions or to commercial remittances. Therefore, the Bureau does not expect this rule to increase the cost of credit for small businesses. With a few exceptions, the 2013 Final Rule generally does not change or lowers the cost of compliance for depositories and credit unions, many of which offer small business credit. Any effect of the 2013 Final Rule on small business credit, however, would be highly attenuated. The 2013 Final Rule also generally does not change or lowers the cost of compliance for money transmitters. Money transmitters typically do not extend credit to any entity, including small businesses.
Accordingly, the undersigned hereby certifies that this rule will not have a significant economic impact on a substantial number of small entities.
Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The title of these information collections is Electronic Fund Transfer Act (Regulation E) 12 CFR part 1005. The frequency of collection is on occasion. As described below, the 2013 Final Rule amends portions of the collections of information currently in Regulation E. Some portions of these information collections are required to provide benefits for consumers and are mandatory. However, some portions are voluntary because certain information collections under the 2013 Final Rule would simply give remittance transfer providers optional methods of compliance. Because the Bureau does not collect any information under the 2013 Final Rule, no issue of confidentiality arises. The likely respondents are providers, including small businesses. Respondents are required to retain records for 24 months, but this regulation does not specify the types of records that must be maintained.
Under the 2013 Final Rule, the Bureau generally accounts for the paperwork burden associated with Regulation E for the following respondents pursuant to its administrative enforcement authority: Insured depository institutions and insured credit unions with more than $10 billion in total assets, and their depository institution and credit union affiliates (together, “the Bureau depository respondents”), and certain non-depository remittance transfer providers, such as certain state-licensed money transmitters and broker-dealers (“the Bureau non-depository respondents”).
Using the Bureau's burden estimation methodology, the Bureau estimates that the total one-time burden for the estimated 5,915 respondents potentially affected by the 2013 Final Rule would be approximately 385,000 hours.
For the 153 Bureau depository respondents, the Bureau estimates for the purpose of this PRA analysis that the 2013 Final Rule will increase one-time burden by approximately 9,900 hours and reduce ongoing burden by approximately 7,300 hours per year. For the estimated 300 Bureau non-depository respondents, the Bureau estimates that the 2013 Final Rule will increase one-time burden by approximately 20,000 hours and reduce ongoing burden by 6,300 hours per year.
As described in parts V and VI above, in lieu of disclosing certain recipient institution fees and foreign taxes, remittance transfer providers will be required to bear some cost of modifying their systems to include the disclaimer required by § 1005.31(b)(1)(viii). Effected providers will also have to reprogram systems to conform to the new requirements for calculating “Other Fees” (pursuant to § 1005.31(b)(1)(vi)) and the amount to be disclosed (pursuant to § 1005.31(b)(1)(vii)). In addition, certain providers may choose to program their systems to include the option to disclose non-covered third-party fees and taxes collected by a person other than the provider pursuant to § 1005.31(b)(1)(viii). All providers will have to remove references to “Other Taxes” from their forms. The Bureau also expects that many depository institutions and credit unions are relying on correspondent institutions or other service providers to provide recipient institution fee and foreign tax information, as well as standard disclosure forms; as a result, any development cost associated with the 2013 Final Rule will be spread across multiple institutions.
Furthermore, the Bureau expects that some remittance transfer providers may not have finished any systems modifications necessary to comply with the 2012 Final Rule, and thus may be able to incorporate any changes into previously accounted-for work. In the interest of providing a conservative estimate, however, the Bureau assumes that all providers will need to modify their systems to calculate disclosures and to add the new disclaimers. The Bureau estimates that making revisions to systems to adjust to the new disclosure requirements will take, on average, 40 hours per provider. Because the forms to be modified are existing forms, the Bureau estimates that adding the disclaimer will require eight hours per form per provider.
On the other hand, the 2013 Final Rule will eliminate remittance transfer providers' ongoing cost of obtaining and updating information on foreign taxes and, for some providers, eliminate the ongoing cost of obtaining and updating information on recipient institution fees. By eliminating these ongoing costs, the Bureau estimates that insured depository institutions and credit unions will save, on average, 48 hours per year and non-depository institutions will save, on average, 21 hours per year. The Bureau cannot estimate the number of providers that will choose to provide optional disclosures of foreign taxes and non-covered third-party fees. The Bureau believes even for such providers there will be significant time savings as providers may choose to focus on heavily trafficked corridors where information may be more easily obtainable.
As described in parts V and VI above, the Bureau expects that remittance transfer providers that send money to accounts, in order to benefit from the changes to the definition of the term error, may choose to provide senders with notice that if they provide incorrect account numbers, they could lose the transfer amount, and providers may also choose to maintain sufficient records to satisfy, wherever possible, the conditions enumerated in § 1005.33(h) (though no such recordkeeping is required). These enumerated conditions include: Being able to demonstrate facts regarding senders' responsibility for any account number or recipient institution identifier mistake; verification of recipient institution identifiers; the above-referenced notice; the results of an incorrect account number or recipient institution identifier; and the provider's effort to recover funds. In addition, § 1005.33(h) may encourage providers to implement security procedures for verifying account and recipient institution identifiers that they did not previously utilize.
Because this will likely involve modifications to existing communications, the Bureau estimates that providing senders with the notice described above will require a one-time burden of eight hours per remittance transfer provider and will not generate any ongoing burden. With regard to satisfying compliance with the conditions enumerated in § 1005.33(h), the Bureau believes that any related record retention will be a usual and customary practice by providers under the 2012 Final Rule, and that therefore there will be no additional burden associated with these aspects of the 2013 Final Rule. Many commenters indicated that their existing disclosures to consumers already contain a notice of the sort contemplated by this provision.
Under the 2013 Final Rule, to correct an error caused by incorrect or insufficient information provided by a sender, a remittance transfer provider must refund a transfer amount to the sender, unless the sender specifically requests that the provider resend the funds as a new remittance transfer and the provider agrees to do so. When a sender and provider agree to send a new transfer, the procedures for sending that new transfer should not result in any increased burden.
The Bureau also estimates that to reflect the changes regarding certain errors, remittance transfer providers will
The Bureau expects that the revised remedy for certain errors will also reduce remittance transfer providers' ongoing burden, by eliminating the need to provide both a pre-payment disclosure and a receipt under covered circumstances. However, because the Bureau expects that the covered circumstances will arise very infrequently, the Bureau expects that this burden reduction would be minimal.
In summary, the 2013 Final Rule will result in an increase in one-time burden for CFPB respondents of approximately 20,000 hours and a decrease in ongoing burden for CFPB respondents of 10,000 hours per year. The current total annual burden for OMB No. 3170–0014 is 4,005,122 hours. As a result of the 2013 Final Rule, the new burden for OMB No. 3170–0014 will be 4,014,323 hours.
Banking, Banks, Consumer protection, Credit unions, Electronic fund transfers, National banks, Remittance transfers, Reporting and recordkeeping requirements, Savings associations.
For the reasons stated in the preamble, the Bureau further amends 12 CFR part 1005, as amended February 7, 2012 (77 FR 6194) and August 20, 2012 (77 FR 50244) and delayed January 29, 2013 (78 FR 6025), as set forth below:
12 U.S.C. 5512, 5581; 15 U.S.C. 1693b.
Subpart B is also issued under 12 U.S.C. 5601.
Except as otherwise provided, for purposes of this subpart, the following definitions apply:
(h)
(2) “Non-covered third-party fees.” The term “non-covered third-party fees” means any fees imposed by the designated recipient's institution for receiving a remittance transfer into an account except if the institution acts as an agent of the remittance transfer provider.
(a)
(b) * * *
(1) * * *
(ii) Any fees imposed and any taxes collected on the remittance transfer by the provider, in the currency in which the remittance transfer is funded, using the terms “Transfer Fees” for fees and “Transfer Taxes” for taxes, or substantially similar terms;
(v) The amount in paragraph (b)(1)(i) of this section, in the currency in which the funds will be received by the designated recipient, but only if covered third-party fees are imposed under paragraph (b)(1)(vi) of this section, using the term “Transfer Amount” or a substantially similar term. The exchange rate used to calculate this amount is the exchange rate in paragraph (b)(1)(iv) of this section, including an estimated exchange rate to the extent permitted by § 1005.32, prior to any rounding of the exchange rate;
(vi) Any covered third-party fees, in the currency in which the funds will be received by the designated recipient, using the term “Other Fees,” or a substantially similar term. The exchange rate used to calculate any covered third-party fees is the exchange rate in paragraph (b)(1)(iv) of this section, including an estimated exchange rate to the extent permitted by § 1005.32, prior to any rounding of the exchange rate;
(vii) The amount that will be received by the designated recipient, in the currency in which the funds will be received, using the term “Total to Recipient” or a substantially similar term except that this amount shall not include non-covered third party fees or taxes collected on the remittance transfer by a person other than the provider regardless of whether such fees or taxes are disclosed pursuant to paragraph (b)(1)(viii) of this section. The exchange rate used to calculate this amount is the exchange rate in paragraph (b)(1)(iv) of this section, including an estimated exchange rate to the extent permitted by § 1005.32, prior to any rounding of the exchange rate.
(viii) A statement indicating that non-covered third-party fees or taxes collected on the remittance transfer by a person other than the provider may apply to the remittance transfer and result in the designated recipient receiving less than the amount disclosed pursuant to paragraph (b)(1)(vii) of this section. A provider may only include this statement to the extent that such fees or taxes do or may apply to the transfer, using the language set forth in Model Forms A–30(a) through (c) of Appendix A to this part, as appropriate, or substantially similar language. In this statement, a provider also may, but is not required, to disclose any applicable non-covered third-party fees or taxes collected by a person other than the provider. Any such figure must be disclosed in the currency in which the funds will be received, using the language set forth in Model Forms A–30(b) through (d) of Appendix A to this part, as appropriate, or substantially similar language. The exchange rate used to calculate any disclosed non-covered third-party fees or taxes collected on the remittance transfer by a person other than the provider is the exchange rate in paragraph (b)(1)(iv) of this section, including an estimated exchange rate to the extent permitted by § 1005.32, prior to any rounding of the exchange rate;
(2) * * *
(i) The disclosures described in paragraphs (b)(1)(i) through (viii) of this section;
(c)
(2)
(3)
(f)
(g)
(b) * * *
(2) * * *
(ii) Covered third-party fees described in § 1005.31(b)(1)(vi) may be estimated under paragraph (b)(2)(i) of this section only if the exchange rate is also estimated under paragraph (b)(2)(i) of this section and the estimated exchange rate affects the amount of such fees.
(3)
(c) * * *
(3)
(ii)
(4) Amount of currency that will be received by the designated recipient. In disclosing the amount of currency that will be received by the designated recipient as required under § 1005.31(b)(1)(vii), an estimate must be based on the information provided in accordance with paragraphs (c)(1) through (3) of this section, as applicable.
(a) * * *
(1) * * *
(iii) The failure to make available to a designated recipient the amount of currency disclosed pursuant to § 1005.31(b)(1)(vii) and stated in the disclosure provided to the sender under § 1005.31(b)(2) or (3) for the remittance transfer, unless:
(A) The disclosure stated an estimate of the amount to be received in accordance with § 1005.32(a), (b)(1) or (b)(2) and the difference results from application of the actual exchange rate, fees, and taxes, rather than any estimated amounts; or
(B) The failure resulted from extraordinary circumstances outside the remittance transfer provider's control that could not have been reasonably anticipated; or
(C) The difference results from the application of non-covered third-party fees or taxes collected on the remittance transfer by a person other than the provider and the provider provided the disclosure required by § 1005.31(b)(1)(viii).
(iv) * * *
(B) Delays related to the remittance transfer provider's fraud screening procedures or in accordance with the Bank Secrecy Act, 31 U.S.C. 5311
(D) The sender having provided the remittance transfer provider an incorrect account number or recipient institution identifier for the designated recipient's account or institution, provided that the remittance transfer provider meets the conditions set forth in paragraph (h) of this section;
(c) * * *
(2)
(ii) Except as provided in paragraph (c)(2)(iii) of this section, in the case of an error under paragraph (a)(1)(iv) of this section
(A) * * *
(
(B) Refunding to the sender any fees imposed and, to the extent not prohibited by law, taxes collected on the remittance transfer;
(iii) In the case of an error under paragraph (a)(1)(iv) of this section that occurred because the sender provided incorrect or insufficient information in connection with the remittance transfer, the remittance transfer provider shall refund to the sender the amount of funds provided by the sender in connection with the remittance transfer that was not properly transmitted, or the amount appropriate to resolve the error, within three business days of providing the report required by paragraph (c)(1) or (d)(1) of this section except that the provider may agree to the sender's request, upon receiving the results of the error investigation, that the funds be applied towards a new remittance transfer, rather than be refunded, if the provider has not yet processed a refund. The provider may deduct from the amount refunded or applied towards a new transfer any fees actually imposed on or, to the extent not prohibited by law, taxes actually collected on the remittance transfer as part of the first unsuccessful remittance transfer attempt.
(h)
(1) The remittance transfer provider can demonstrate that the sender provided an incorrect account number or recipient institution identifier to the provider in connection with the remittance transfer;
(2) For any instance in which the sender provided the incorrect recipient institution identifier, prior to or when sending the transfer, the provider used reasonably available means to verify that the recipient institution identifier provided by the sender corresponded to the recipient institution name provided by the sender;
(3) The provider provided notice to the sender before the sender made payment for the remittance transfer that, in the event the sender provided an incorrect account number or recipient institution identifier, the sender could lose the transfer amount. For purposes of providing this disclosure, § 1005.31(a)(2) applies to this notice unless the notice is given at the same time as other disclosures required by this subpart for which information is permitted to be disclosed orally or via mobile application or text message, in which case this disclosure may be given in the same medium as those other disclosures;
(4) The incorrect account number or recipient institution identifier resulted in the deposit of the remittance transfer into a customer's account that is not the designated recipient's account; and
(5) The provider promptly used reasonable efforts to recover the amount that was to be received by the designated recipient.
The additions and revisions read as follows:
1.
1.
2.
ii. Examples of covered third-party fees include:
A. Fees imposed on a remittance transfer by intermediary institutions in connection with a wire transfer (sometimes referred to as “lifting fees”).
B. Fees imposed on a remittance transfer by an agent of the provider at pick-up for receiving the transfer.
3.
1.
2.
1.
ii. The fees and taxes required to be disclosed by § 1005.31(b)(1)(ii) include all fees imposed and all taxes collected on the remittance transfer by the provider. For example, a provider must disclose any service fee, any fees imposed by an agent of the provider at the time of the transfer, and any State taxes collected on the remittance transfer at the time of the transfer. Fees imposed on the remittance transfer by the provider required to be disclosed under § 1005.31(b)(1)(ii) include only those fees that are charged to the sender and are specifically related to the remittance transfer.
iii. The term used to describe the fees imposed on the remittance transfer by the provider in § 1005.31(b)(1)(ii) and the term used to describe covered third-party fees under § 1005.31(b)(1)(vi) must differentiate between such fees. For example the terms used to describe fees disclosed under § 1005.31(b)(1)(ii) and (vi) may not both be described solely as “Fees.”
2.
3.
1.
1.
2.
1.
2.
xi. Disclosure of any non-covered third-party fees and any taxes collected by a person other than the provider pursuant to § 1005.31(b)(1)(viii).
1.
1.
2. * * *
ii.
3. * * *
ii.
1.
1.
3. * * *
ii. A consumer requests to send funds to a relative in Colombia to be received in local currency. The remittance transfer provider provides the sender a receipt stating an amount of currency that will be received by the designated recipient, which does not reflect the additional foreign taxes that will be collected in Colombia on the transfer but does include the statement required by § 1005.31(b)(1)(viii). If the designated recipient will receive less than the amount of currency disclosed on the receipt due solely to the additional foreign taxes that the provider was not required to disclose, no error has occurred.
iii. Same facts as in ii., except that the receipt provided by the remittance transfer provider does not reflect additional fees that are imposed by the receiving agent in Colombia on the transfer. Because the designated recipient will receive less than the amount of currency disclosed in the receipt due to the additional covered third-party fees, an error has occurred.
vi. A sender requests that his bank send US$120 to a designated recipient's account at an institution in a foreign country. The foreign institution is not an agent of the provider. Only US$100 is deposited into the designated recipient's account because the recipient institution imposed a US$20 incoming wire fee and deducted the fee from the amount transferred. Because this fee is a non-covered third-party fee that the provider is not required to disclose under § 1005.31(b)(1)(vi), no error has occurred if the provider provided the disclosure required by § 1005.31(b)(1)(viii).
4.
7.
8.
10.
2.
3.
4.
5.
11.
12.
i. A sender instructs a remittance transfer provider to send US$100 to a designated recipient in local currency, for which the provider charges a transfer fee of US$10 and its correspondent imposes a fee of US$15. The sender provides incorrect or insufficient information that results in non-delivery of the remittance transfer as requested. Once the provider determines that an error occurred because the sender provided incorrect or insufficient information, the provider must provide the report required by § 1005.33(c)(1) or (d)(1) and inform the sender, pursuant to § 1005.33(c)(1) or (d)(1), that it will refund US$85 to the sender within three business days unless the sender chooses to apply the US$85 towards a new remittance transfer. The provider is required to refund its own $10 fee but not the US$15 fee imposed by the correspondent (unless the $15 will be
ii. A sender instructs a remittance transfer provider to send US$100 to a designated recipient in a foreign country, for which the provider charges a transfer fee of US$10 (and thus the sender pays the provider US$110) and an intermediary institution charges a lifting fee of US$5, such that the designated recipient is expected to receive only US$95, as indicated in the receipt. If an error occurs because the sender provides incorrect or insufficient information that results in non-delivery of the remittance transfer by the date of availability stated in the disclosure provided to the sender for the remittance transfer under § 1005.31(b)(2) or (3), the provider is required to refund, or reapply if requested and the provider agrees, $105 unless the intermediary institution refunds to the provider the US$5 fee. If the sender requests to have the transfer amount applied to a new remittance transfer pursuant to § 1005.33(c)(2)(iii) and provides the corrected or additional information, and the remittance transfer provider agrees to a resend remedy, the remittance transfer provider may charge the sender another transfer fee of US$10 to send the remittance transfer again with the corrected or additional information necessary to complete the transfer. Insofar as the resend is an entirely new remittance transfer, the provider must provide a prepayment disclosure and receipt or combined disclosure in accordance with, among other provisions, the timing requirements of § 1005.31(f) and the cancellation provision of § 1005.34(a).
iii. In connection with a remittance transfer, a provider imposes a $15 tax that it then remits to a State taxing authority. An error occurs because the sender provided incorrect or insufficient information that resulted in non-delivery of the transfer to the designated recipient. The provider may deduct $15 from the amount it refunds to the sender pursuant to § 1005.33(c)(2)(iii) unless the relevant tax law will result in the $15 tax being refunded to the provider by the State taxing authority because the transfer was not completed.
1.
2.
i. The remittance transfer provider promptly calls or otherwise contacts the institution that received the transfer, either directly or indirectly through any correspondent(s) or other intermediaries or service providers used for the particular transfer, to request that the amount that was to be received by the designated recipient be returned, and if required by law or contract, by requesting that the recipient institution obtain a debit authorization from the holder of the incorrectly credited account.
ii. The remittance transfer provider promptly uses a messaging service through a funds transfer system to contact institution that received the transfer, either directly or indirectly through any correspondent(s) or other intermediaries or service providers used for the particular transfer, to request that the amount that was to be received by the designated recipient be returned, in accordance with the messaging service's rules and protocol, and if required by law or contract, by requesting that the recipient institution obtain a debit authorization from the holder of the incorrectly credited account.
3.
1.
2.
4.
i. The model forms contain information that is not required by subpart B, including a confirmation code, the sender's name and contact information, and the optional disclosure of the estimated amount of these non-covered third-party fees and taxes collected by a person other than the provider as part of the disclaimer. Additional information not required by subpart B may be presented on the model forms as permitted by § 1005.31(b)(1)(viii) and (c)(4). Any additional information must be presented consistent with a remittance transfer provider's obligation to provide required disclosures in a clear and conspicuous manner.
ii. Use of the model forms is optional. A remittance transfer provider may change the forms by rearranging the format or by making modifications to the language of the forms, in each case without modifying the substance of the disclosures. Any rearrangement or modification of the format of the model forms must be consistent with the form, grouping, proximity, and other requirements of § 1005.31(a) and (c). Providers making revisions that do not comply with this section will lose the benefit of the safe harbor for appropriate use of Model Forms A–30 to A–41.
iii. Permissible changes to the language and format of the model forms include, for example:
A. Substituting the information contained in the model forms that is intended to demonstrate how to complete the information in the model forms—such as names, addresses, and Web sites; dates; numbers; and State-specific contact information—with information applicable to the remittance transfer. In addition, if the applicable non-covered third-party fees are imposed by an institution other than a bank, a provider could modify the disclaimer accordingly.
B. Eliminating disclosures that are not applicable to the transfer, as described under § 1005.31(b). For example, if only covered third-party fees are imposed, a provider would not use a disclaimer related to additional fees that may apply because all applicable fees are covered and included in the disclosure as required under § 1005.31(b)(1)(vi).
C. Correcting or updating telephone numbers, mailing addresses, or Web site addresses that may change over time.
D. Providing the disclosures on a paper size that is different from a register receipt and 8.5 inch by 11 inch formats.
E. Adding a term substantially similar to “estimated” in close proximity to the specified terms in § 1005.31(b)(1) and (2), as required under § 1005.31(d).
F. Providing the disclosures in a foreign language, or multiple foreign languages, subject to the requirements of § 1005.31(g).
G. Substituting cancellation language to reflect the right to a cancellation made pursuant to the requirements of § 1005.36(c).
iv. Changes to the model forms that are not permissible include, for example, adding information that is not segregated from the required disclosures, other than as permitted by § 1005.31(c)(4).
(b) Through an interagency process, coordinated by the CPO and working closely with CEQ and OIRA, the Steering Committee shall conduct the following modernization efforts:
(1) institutionalize or expand best practices or process improvements that agencies are already implementing to improve the efficiency of reviews, while improving outcomes for communities and the environment;
(2) revise key review and permitting regulations, policies, and procedures (both agency-specific and Government-wide);
(3) identify high-performance attributes of infrastructure projects that demonstrate how the projects seek to advance existing statutory and policy objectives and how they lead to improved outcomes for communities and the environment, thereby facilitating a faster and more efficient review and permitting process;
(4) create process efficiencies, including additional use of concurrent and integrated reviews;
(5) identify opportunities to use existing share-in-cost authorities and other non-appropriated funding sources to support early coordination and project review;
(6) effectively engage the public and interested stakeholders;
(7) expand coordination with State, local, and tribal governments;
(8) strategically expand the use of information technology (IT) tools and identify priority areas for IT investment to replace paperwork processes, enhance effective project siting decisions, enhance interagency collaboration, and improve the monitoring of project impacts and mitigation commitments; and
(9) identify improvements to mitigation policies to provide project developers with added predictability, facilitate landscape-scale mitigation based on conservation plans and regional environmental assessments, facilitate interagency mitigation plans where appropriate, ensure accountability and
(c) Infrastructure sectors covered by the modernization effort include: surface transportation, such as roadways, bridges, railroads, and transit; aviation; ports and related infrastructure, including navigational channels; water resources projects; renewable energy generation; conventional energy production in high-demand areas; electricity transmission; broadband; pipelines; storm water infrastructure; and other sectors as determined by the Steering Committee.
(d) The following agencies or offices and their relevant sub-divisions shall engage in the modernization effort:
(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This memorandum shall be implemented consistent with Executive Order 12898 of February 11, 1994 (Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations), Executive Order 13175 of November 6, 2000 (Consultation and Coordination with Indian Tribal Governments), and my memorandum of November 5, 2009 (Tribal Consultation).
(d) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(e) The Director of the Office of Management and Budget is hereby authorized and directed to publish this memorandum in the