Historic Preservation, Advisory Council
Forest Service
National Institute of Food and Agriculture
Procurement and Property Management Office, Agriculture Department
Rural Utilities Service
Foreign-Trade Zones Board
Industry and Security Bureau
International Trade Administration
National Oceanic and Atmospheric Administration
Army Department
Federal Energy Regulatory Commission
Management and Budget Office
Agency for Toxic Substances and Disease Registry
Food and Drug Administration
National Institutes of Health
Coast Guard
Federal Emergency Management Agency
U.S. Customs and Border Protection
National Park Service
Labor Statistics Bureau
Occupational Safety and Health Administration
Management and Budget Office
Agency for Toxic Substances and Disease Registry
Federal Aviation Administration
Federal Motor Carrier Safety Administration
National Highway Traffic Safety Administration
Surface Transportation Board
Internal Revenue Service
Consult the Reader Aids section at the end of this page for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws.
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Federal Aviation Administration (FAA), DOT.
Final rule, correction.
This action amends a typographical error in a final rule correction published in the
Effective date: 0901 UTC, May 29, 2014. The Director of the Federal Register approves this incorporation by reference action under 1 CFR Part 51, subject to the annual revision of FAA Order 7400.9 and publication of conforming amendments.
Scott Enander, Central Service Center, Operations Support Group, Federal Aviation Administration, Southwest Region, 2601 Meacham Blvd., Fort Worth, TX 76137; telephone 817–321–7716.
On May 8, 2014, a final rule, correction was published in the
Federal Aviation Administration (FAA), DOT.
Final rule.
This action establishes Class E airspace at Bois Blanc Island, MI. Controlled airspace is necessary to accommodate new Area Navigation (RNAV) Standard Instrument Approach Procedures at Bois Blanc Island Airport. The FAA is taking this action to enhance the safety and management of Instrument Flight Rule (IFR) operations at the airport.
Raul Garza, Jr., Central Service Center, Operations Support Group, Federal Aviation Administration, Southwest Region, 2601 Meacham Blvd., Fort Worth, TX 76137; telephone 817–321–7654.
On March 14, 2014, the FAA published in the
This action amends Title 14 Code of Federal Regulations (14 CFR) Part 71 by establishing Class E airspace extending upward from 700 feet above the surface within a 6.3-mile radius of Bois Blanc Island Airport, Bois Blanc Island, MI, for new standard instrument approach procedures developed at the airport. Controlled airspace is needed for the safety and management of IFR operations at the airport.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the U.S. Code. Subtitle 1, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes controlled airspace at Bois Blanc Island Airport, Bois Blanc Island, MI.
The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1E, “Environmental Impacts: Policies and Procedures,” paragraph 311a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:
49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–1963 Comp., p. 389.
That airspace extending upward from 700 feet above the surface within a 6.3-mile radius of Bois Blanc Island Airport.
Federal Aviation Administration (FAA), DOT.
Final rule: correction
This action corrects the effective date of a final rule, published in the
Effective 0901 UTC, The effective date of the final rule published on April 2, 2014 is corrected from May 27, 2014, to May 29, 2014. The Director of the Federal Register approves this incorporation by reference action under title 1, Code of Federal Regulations, part 51, subject to the annual revision of FAA Order 7400.9 and publication of conforming amendments.
John Fornito, Operations Support Group, Eastern Service Center, Federal Aviation Administration, P.O. Box 20636, Atlanta, Georgia 30320; telephone (404) 305–6364.
On April 2, 2014, the FAA published a final rule in the
Accordingly, pursuant to the authority delegated to me, the effective date listed under
Environmental Protection Agency (EPA).
Direct final rule.
The Environmental Protection Agency (EPA) is approving Illinois' March 28, 2014, state implementation plan (SIP) revision to the 1997 8-hour ozone maintenance plan for the Illinois portion of the Chicago-Gary-Lake County, Illinois-Indiana area (the Greater Chicago Area). This SIP revision establishes new Motor Vehicle Emissions Budgets (MVEB) for volatile organic compounds (VOC) and oxides of nitrogen (NO
This direct final rule is effective July 21, 2014, unless EPA receives adverse comments by June 23, 2014. If adverse comments are received, EPA will publish a timely withdrawal of the direct final rule in the
Submit your comments, identified by Docket ID No. EPA–R05–OAR–2014–0274, by one of the following methods:
1.
2.
3.
4.
5.
Michael Leslie, Environmental Engineer, Control Strategies Section, Air Programs Branch (AR–18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 353–6680,
Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:
On August 13, 2012 (77 FR 48062), EPA approved a request from the State of Illinois to redesignate the Illinois portion of the Greater Chicago Area to attainment of the 1997 8-hour ozone national ambient air quality standard (NAAQS). In addition to approving the ozone redesignation request, EPA approved the State's plan for maintaining the 1997 8-hour ozone standard in the Illinois portion of the Greater Chicago Area through 2025. The ozone maintenance plan established MVEBs for VOC and NO
MVEBs are the projected levels of controlled emissions from the transportation sector (mobile sources) that are estimated in the SIP to provide for maintenance of the ozone standard. The transportation conformity rule allows the MVEB to be changed as long as the total level of emissions from all sources remains below the attainment levels.
A “safety margin”, as defined in the transportation conformity rule (40 CFR part 93 subpart A), is the amount by which the total projected emissions from all sources of a given pollutant are less than the total emissions that would satisfy the applicable requirement for reasonable further progress, attainment, or maintenance. The attainment level of emissions is the level of emissions during one of the years in which the area met the NAAQS. Table 1 gives detailed information on the safety margin for the Illinois portion of the Greater Chicago Area. Table 1 includes a comparison of the VOC and NO
Illinois has requested the allocation of 12 tons/day of the VOC and 25 tons/day of NO
This action changes the MVEBs for mobile sources. The maintenance plan is designed to provide for future growth while still maintaining the ozone NAAQS. Growth in industries, population, and traffic is offset by reductions from cleaner cars and other emission reduction programs. Through the maintenance plan, the State and local agencies can manage and maintain clean air quality while providing for growth.
In the submittal, Illinois requested to allocate a portion of the safely margins for VOC and NO
EPA is approving a revision to the 1997 8-hour ozone maintenance plan for the Illinois portion of the Greater Chicago Area. The revision will change the MVEBs for VOC and NO
We are publishing this action without prior proposal because we view this as a noncontroversial amendment and anticipate no adverse comments. However, in the proposed rules section of this
Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Clean Air Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• Does not provide EPA with the discretionary authority to address, 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 Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by
Environmental protection, Air pollution control, Oxides of Nitrogen, Ozone, Volatile organic compounds, Incorporation by reference.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(oo)
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is approving a State implementation plan (SIP) revision submitted by California that corrects deficiencies in the Clean Air Act (CAA) contingency measures for the 1997 annual and 24-hour national ambient air quality standards (NAAQS) for fine particulate matter (PM
This rule is effective on June 23, 2014.
You may inspect the supporting information for this action, identified by docket number EPA–R09–OAR–2013–0534, by one of the following methods: Federal eRulemaking portal,
Frances Wicher, EPA Region 9, (415) 972–3957,
Throughout this document, “we,” “us” and “our” refer to the EPA.
On November 9, 2011, the EPA partially approved and partially disapproved the San Joaquin Valley PM
On July 3, 2013, CARB submitted the Contingency Measure SIP as a revision to the California State Implementation Plan. The Contingency Measure SIP addresses the SIP deficiencies identified in the EPA's 2011 partial disapproval of the SJV PM
On August 28, 2013, we proposed to approve the Contingency Measure SIP as correcting the deficiency in the SJV PM
The EPA provided a 30-day period for the public to comment on our proposed rule. During this comment period, which ended on September 28, 2013, we received four public comments. A copy of these comment letters can be found in the docket. We provide our responses to these comments below.
Earthjustice argues that the most significant defect in the SJV PM
Earthjustice further contends that because the SJV area has failed to attain the PM
We nonetheless respond below to the substance of Earthjustice's claims. In
Earthjustice's arguments rest on the premise that the
Additionally, we do not believe that the
Over a year later, on January 4, 2013, the D.C. Circuit issued its decision remanding the EPA's 2007 PM
Moreover, it is not clear what RFP projections would result from the new subpart 4 plan that Earthjustice calls for and, consequently, it is impossible for the State to quantify a contingency measure obligation based on such a new plan before it is developed.
In separate rulemakings, the EPA has taken steps to respond to the
Accordingly, California is obligated to consider whether and to what extent any additional SIP submissions may be required to satisfy the applicable requirements of subpart 4 for the 1997 and/or 2006 PM
The commenter does not appear to challenge our position that the general contingency measure requirement in subpart 1 (CAA section 172(c)(9)) continues to govern our evaluation of
Our approval of the Contingency Measure SIP today does not rest on a conclusion that compliance with the 2007 PM
Second, the EPA's discretionary “SIP call” authority in CAA section 110(k)(5) is not relevant to this action as we have not made any of the findings that would obligate us to “call” the SJV PM
Finally, the Ninth Circuit Court of Appeal's decision in
The circumstances here are significantly different from those in
For these reasons, we disagree with the commenter's claim that our approval of the Contingency Measure SIP would “compound” or “add to” existing legal defects in the SJV PM
As discussed above, the November 2011 final action on the SJV PM
Even if the EPA takes the view that
Under the commenter's read of
We nonetheless respond below to the substance of the commenter's claims. To the extent the commenter is arguing that our action today on the Contingency Measure SIP constitutes a determination that the contingency provision in Rule 4901 is “beyond BACM,” this is incorrect. We have not yet made any determination concerning BACM for PM
Likewise, we disagree with the commenter's contention that our November 2011 rationale for not requiring implementation of this measure as a basic control measure (i.e., on the basis that it would not “advance attainment” by at least a year) is no longer sufficient because the area has failed to attain within four years of its designation as nonattainment for PM
We note also that the commenter's reference to CAA section 188(c)(1) to support its contention that “[u]nder subpart 4, nonattainment areas relying on reasonably available controls have four years to attain” is not accurate. Section 188(c)(1) states that “[f]or a Moderate Area, the attainment date shall be as expeditiously as practicable but no later than the end of the sixth
If and when the EPA reclassifies the SJV area from “moderate” to “serious” nonattainment for a PM
We note that the possibility that a measure may be required as RACM or BACM in the future does not preclude its use as a contingency measure now. Likewise, an approval of a measure as a contingency measure now does not preclude a future determination that it is a required RACM or BACM under subpart 4. As the EPA explained in the Addendum, “if all or part of the moderate area plan contingency measures become part of the required serious area control measures (i.e., BACM), then additional contingency measures must be submitted whether or not the previously submitted contingency measures had already been implemented.” Addendum at 42015.
As Earthjustice correctly states, the EPA has stated in long-standing policy that it would not approve into a SIP any “director discretion” or “affirmative defense” provision that would bar the EPA or citizens from enforcing applicable SIP requirements, as such provisions would be inconsistent with the regulatory scheme established in title I of the Act.
Nothing in the Contingency Measure SIP authorizes either CARB or the District to modify the requirements of the SIP. As explained below in Response 13, the District has submitted enforceable commitments to account for specified amounts of NO
In addition, the EPA disagrees with the commenter's assertion that the CARB mobile source control measures relied upon in the Contingency Measure SIP are not creditable as contingency measures. As explained in Response 9 below, the EPA has historically allowed emission reduction credit for California motor vehicle emissions standards that have received waivers of federal preemption pursuant to the waiver approval process of CAA section 209 (“waiver measures”), without requiring California to submit the standards themselves to the EPA for approval as part of the California SIP.
First, with respect to permanence, we note that, to maintain a waiver, CARB's on-road waiver measures can be relaxed only to a level of aggregate equivalence to the Federal Motor Vehicle Control Program (FMVCP) (CAA section 209(b)(1)). In this respect, the FMVCP acts as a partial backstop to California's on-road waiver measures (i.e., absent a waiver, the FMVCP would apply in California). Likewise, Federal nonroad vehicle and engine standards act as a partial backstop for corresponding California nonroad waiver measures. The constraints of the waiver process thus serve to limit the extent to which CARB can relax the waiver measures for which there are corresponding the EPA standards, and thereby serve an anti-backsliding function similar in substance to those established for SIP revisions in CAA sections 110(l) and 193. Meanwhile, the growing convergence between California and EPA mobile source standards diminishes the difference in the emission reductions reasonably attributed to the two programs and strengthens the role of the Federal program in serving as an effective backstop to the State program. In other words, with the harmonization of EPA mobile source standards with the corresponding State standards, the Federal program is becoming essentially a full backstop to most parts of the California program.
Second, as to enforceability, we note that the waiver process itself bestows enforceability onto California to enforce the on-road or nonroad standards for which the EPA has issued the waiver. CARB has as long a history of enforcement of vehicle/engine emissions standards as the EPA, and CARB's enforcement program is equally as rigorous as the corresponding EPA program. The history and rigor of CARB's enforcement program lends assurance to California SIP revisions that rely on the emission reductions from CARB's rules in the same manner as the EPA's mobile source enforcement program lends assurance to other state's SIPs in their reliance on emission reductions from the FMVCP. While it is true that citizens and the EPA are not authorized to enforce California waiver measures under the Clean Air Act (i.e., because they are not in the SIP), citizens and the EPA are authorized to enforce EPA standards in the event that vehicles operate in California without either California or EPA certification.
As to quantifiability, the EPA's historical practice has been to give SIP credit for motor-vehicle-related waiver measures by allowing California to include motor vehicle emissions estimates made by using California's EMFAC (and its predecessors) motor vehicle emissions factor model in SIP inventories. The EPA verifies the emission reductions from motor-vehicle-related waiver measures through review and approval of EMFAC, which is updated from time to time by California to reflect updated methods and data, as well as newly-established emissions standards. (Emission reductions from the EPA's motor vehicle
Moreover, the EPA's waiver review and approval process is analogous to the SIP approval process. First, CARB adopts its emissions standards following notice and comment procedures at the state level, and then submits the rules to the EPA as part of its waiver request. When the EPA receives new waiver requests from CARB, the EPA publishes a notice of opportunity for public hearing and comment and then publishes a decision in the
In the 2011 Final TSD (pp. 102–103), we indicated that we believe that section 193 of the CAA, the general savings clause added by Congress in 1990, effectively ratified our long-standing practice of granting credit for the California waiver rules because Congress did not insert any language into the statute rendering the EPA's treatment of California's motor vehicle standards inconsistent with the Act. Rather, Congress extended the California waiver provisions to most types of nonroad vehicles and engines, once again reflecting Congressional intent to provide California with the broadest possible discretion in selecting the best means to protect the health of its citizens and the public welfare. Requiring the waiver measures to undergo SIP review in addition to the statutory waiver process is not consistent with providing California with the broadest possible discretion as to on-road and nonroad vehicle and engine standards, but rather, would add to the regulatory burden California faces in establishing and modifying such standards, and thus would not be consistent with Congressional intent. In short, we believe that Congress intended California's mobile source rules to undergo only one the EPA review process (i.e., the waiver process), not two.
In summary, the EPA has historically given SIP credit for waiver measures in our approval of attainment demonstrations and other planning requirements such as reasonable further progress and contingency measures submitted by California. We continue to believe that section 193 ratifies our long-standing practice of allowing credit for California's waiver measures notwithstanding the fact they are not approved into the SIP, and correctly reflects Congressional intent to provide California with the broadest possible discretion in the development and promulgation of on-road and nonroad vehicle and engine standards. Further, even without considering section 193, the Act's structure, evolution, and provision for the waiver of federal preemption for California mobile source emissions standards all support the EPA's long-standing interpretation of the CAA to allow California to rely on emission reductions resulting from waiver measures when developing SIP emission inventories, related attainment demonstrations, and contingency measures, even though the waiver measures are not in the SIP itself.
We also disagree with the commenter's characterization of the District's SIP commitments as a “duty to adopt” emission limits or control measures that violates the requirements of CAA section 110(a)(2)(A). CAA section 110(a)(2)(A) requires that each SIP “include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), . . . as may be necessary or appropriate to meet the applicable requirements of [the Act].” CAA section 110(a)(2)(A);
The incentive programs relied upon in the Contingency Measure SIP provide emission reductions in excess of those relied on for RFP or for expeditious attainment in the SJV PM
Additionally, consistent with the EPA's longstanding interpretation of the contingency measure requirement in CAA section 172(c)(9) as requiring that all actions needed to effect full implementation of contingency measures occur within 60 days after the EPA notifies the State of a failure to attain the NAAQS by the applicable attainment date,
Earthjustice suggests that only those “substitute” measures that the District would be obligated to implement in the event of an emission reduction shortfall constitute enforceable contingency measures, and that the EPA's approval of this SIP commitment therefore impermissibly allows the District to delay adoption of required measures. As discussed above, however, the enforceable contingency measure here is the District's SIP commitment in its entirety, which includes a current obligation to monitor, assess, and report on the District's ongoing implementation of the Prop 1B and Carl Moyer Program requirements with respect to specified projects which collectively are expected to achieve 4.15 tpd of NO
In sum, the District's SIP commitments establish current obligations on the District to take action well before the applicable attainment date to achieve the required emission reductions by December 5, 2015, whether through annual demonstration reports submitted in 2014 and 2015 or through adoption and submission of substitute measures to be implemented by December 5, 2015. Given the District's long history of successful implementation and enforcement of Prop 1B and Carl Moyer Program grants and the detailed requirements in the associated incentive program guidelines, as discussed in our technical support document for the proposed rule (
The EPA believes that it is appropriate and consistent with the Act to allow a limited percentage of the total emission reductions needed to satisfy any statutory requirement to come from “voluntary” or “emerging” measures or other nontraditional measures and programs, where the State commits to certain safeguards and satisfies the statutory criteria for SIP approval.
In light of the increasing incremental cost associated with further stationary and mobile source emission reductions and the difficulty of identifying such additional sources of emission reductions, the EPA encourages innovative approaches to generating emission reductions through voluntary and emerging measures and other nontraditional measures and programs.
Given the innovative nature of these nontraditional measures, the EPA has recommended “presumptive” limits on the amounts of emission reductions from such measures that may be credited in a SIP. Specifically, for VMEPs, the EPA has identified a presumptive limit of three percent (3%) of the total projected future year emission reductions required to attain the appropriate NAAQS, and for any particular SIP submittal to demonstrate attainment or maintenance of the NAAQS or progress toward attainment (RFP), 3% of the specific statutory
The incentive-based emission reductions in the Contingency Measure SIP are consistent with the EPA's recommendations in the 1997 VMEP. First, the Contingency Measure SIP and related support documents contain the State's and District's demonstrations that the claimed incentive-based emission reductions are quantifiable, surplus, enforceable and permanent consistent with EPA policy.
Additionally, as explained in our proposed rule, the EPA evaluated the incentive-based emission reductions in the Contingency Measure SIP in accordance with the Agency's guidance on discretionary economic incentive programs (EIPs),
A “financial mechanism EIP” is an EIP that indirectly reduces emissions by increasing costs for high emitting activities—e.g., through subsidies targeted at promoting pollution-reducing activities or products.
As explained further below, the incentive-based emission reductions in the Contingency Measure SIP are consistent with the EPA's recommendations for “financial mechanism EIPs” in the 2001 EIP Guidance. First, CARB and the District are directly responsible for ensuring that the Prop 1B program and Carl Moyer Program are implemented in accordance with State law.
In sum, although the incentive-based emission reductions in the Contingency Measure SIP are not directly enforceable against individual sources by the EPA or citizens, the
Based on this evaluation, we disagree with the commenter's assertion that the incentive-based emission reductions in the Contingency Measure SIP fail to adequately address the enforceability recommendations provided in EPA policy. As the commenter notes, the 2001 EIP Guidance identifies enforceability considerations that are substantively identical to the recommendations in the 2004 Emerging and Voluntary Measures Policy. According to the 2001 EIP Guidance, emission reductions use, generation, and other required actions are enforceable if: (1) They are independently verifiable; (2) program violations are defined; (3) those liable for violations can be identified; (4) the State and the EPA maintain the ability to apply penalties and secure appropriate corrective actions where applicable; (5) citizens have access to all the emissions-related information obtained from the source; (6) citizens can file suits against sources for violations; and (7) they are practicably enforceable in accordance with other EPA guidance on practicable enforceability.
The actions required of grantees under the applicable portions of the Prop 1B and Carl Moyer Program guidelines, as discussed in our proposed rule, the Proposal TSD, and further below, adequately address these enforceability recommendations. First, the required actions are independently verifiable through (1) pre-project and post-project on-site inspections (with photographic documentation) that the District and/or CARB must carry out pursuant to the applicable guidelines, and (2) documents that each grantee is required to maintain and/or submit to the District in accordance with detailed contract provisions.
For example, the 2008 and 2010 Prop 1B guidelines require, among other things, that (1) all project applications
Similarly, the 2011 Carl Moyer Program Guidelines require, among other things, that (1) all project applications
Second, the applicable portions of the 2008 and 2010 Prop 1B guidelines and the 2011 Carl Moyer Program guidelines specifically define the required elements of each contract and the types of actions that constitute violations of such contracts. For example, under the 2008 and 2010 Prop 1B guidelines, each equipment project contract must include: (1) A unique “tracking number”; (2) the equipment owner's contact information; (3) the original application submitted by the equipment owner; (4) requirements for the equipment owner to submit reports to the local agency annually or biennially
Similarly, under the 2011 Carl Moyer Program Guidelines, each equipment project contract must include: (1) The name and contact information of the grantee; (2) specified timeframes for “project completion” (the date the project post-inspection confirms that the project has become operational) and “project implementation” (the project life used in the project cost-effectiveness calculation); (3) detailed information on both baseline and new vehicles, equipment, and/or engines, including documentation adequate to establish historical annual usage; (4) requirements for the grantee to maintain the vehicle, equipment and/or engine according to the manufacturer's specifications for the life of the project; (5) annual reporting requirements; (6) a provision authorizing the District, CARB, and their designees to conduct fiscal audits and to inspect the project engine, vehicle, and/or equipment and
Third, grantees that are liable for violations of these contract provisions can be identified by the State and/or District and, through the annual demonstration reports submitted to the EPA, by the EPA and citizens as well. Specifically, as discussed above, under the 2008 Prop 1B guidelines, the 2010 Prop 1B guidelines, and the 2011 Carl Moyer Program guidelines, each contract executed by the District must require the grantee to maintain project records for at least two years after contract expiration or three years after final project payment, whichever is later, and to submit annual or biennial reports to the District.
The EPA and citizens, in turn, can identify violators through the annual demonstration reports that the District is obligated under its SIP commitment to make publicly available (on the District's Web site) and to submit to the EPA by August 31 of each year.
Fourth, the State maintains the ability to apply penalties and secure appropriate corrective actions where contract terms are violated, and the EPA maintains the ability to require appropriate corrective actions of the District where projected emission reductions are not achieved. For example, under the 2008 and 2010 Prop 1B guidelines, where the District finds that a grantee has violated a contract term, the District is authorized to recover all or a portion of program funds, assess fiscal penalties on equipment owners based on the severity of the non-performance, and prohibit the equipment owner from participating in future State incentive programs, among other things.
Fifth, citizens have access to all of the emissions-related information obtained from the source. As explained in our proposed rule, the Board commitments submitted with the Contingency Measure SIP obligate the District to “account for” its claimed NO
Sixth, although citizens cannot file suits against sources for violations, both the EPA and citizens may file suits against the
Finally, the emission reductions to be achieved through the identified Prop 1B and Carl Moyer Program projects are practicably enforceable consistent with EPA policy on enforceability requirements. The EPA generally considers a requirement to be “practically enforceable” if it contains a clear statement as to applicability; specifies the standard that must be met; states compliance timeframes sufficient to meet the standard; specifies sufficient methods to determine compliance, including appropriate monitoring, record keeping and reporting provisions; and recognizes relevant enforcement consequences.
Second, the actions required of the
Taking into account all of these provisions of the applicable incentive program guidelines and the District's SIP commitments, we find the incentive-based emission reductions relied upon in the Contingency Measure SIP to be practically enforceable consistent with EPA policy.
Second, although the commenter correctly states that the EPA is not authorized to inspect sources for compliance with their funding contracts or to apply penalties or secure corrective actions against individual sources, we do not believe such authorities are necessary in order to enforce these emission reductions under the CAA. As discussed in Response 13 above, both the District and CARB are authorized to inspect sources for compliance with their funding contracts and to apply penalties or secure corrective actions against sources that violate their contracts. Rule 9610 requires the District to maintain records of all such inspections and enforcement actions (
Finally, although we agree with the commenter's claim that neither the EPA nor citizens can enforce compliance with the contracts between sources and the District, we disagree with the claim that the District has discretion to “redefine violations without any EPA or public oversight.” As explained above, upon approval into the SIP the District's commitments become federally enforceable by the EPA and by citizens under sections 113 and 304 of the Act, respectively.
We have, however, evaluated the incentive-based emission reductions in the Contingency Measure SIP for consistency with the EPA's recommendations in the 2001 EIP Guidance and find them generally consistent with the general programmatic and source-specific definitions of “enforceable” in this document. As Earthjustice notes, the “programmatic” definition of enforceable highlights seven key factors that should be considered in determining whether an EIP is enforceable.
We also disagree with Earthjustice's assertion that the EPA cannot collect the
All SIP measures have some level of uncertainty, whether it comes from the uncertainty associated with the emissions factors for certain sources, the level of compliance with existing SIP measures, or the modeling for an attainment demonstration. The issue is how best to apply assumptions and tools to reduce the uncertainty to a manageable factor.
It appears the District may have misunderstood the EPA's intent in discussing this presumptive 3% limit on the emission reduction credit allowed in a SIP for VMEPs. In the proposed rule (78 FR 53113, 53118), we discussed the presumptive 3% limit both to provide context on the applicable EPA guidance to date and to indicate that the incentive-based emission reductions in the Contingency Measure SIP adequately address the EPA's recommendations in the 1997 VMEP, as applicable (78 FR 53113, 53118 and 53121). Our proposed rule made clear, however, that we were evaluating the Contingency Measure SIP in accordance with the fundamental integrity elements identified in several EPA guidance documents, as applied not only to VMEPs but also to discretionary “financial mechanism EIPs.”
We agree, however, with the District's suggestion that it is not necessarily limited to a 3% cap on the amount of SIP emission reduction credit allowed for incentive programs. As the District correctly notes, the 2001 EIP Guidance sets forth only non-binding policy and does not represent final EPA action on the requirements for EIPs.
As the District correctly notes, Rule 9610 specifically prohibits the District from using a case-by-case determination to quantify emission reductions under the rule “unless such determination is reviewed through a public process and submitted to EPA in accordance with Section 7.0.” Rule 9610, Section 3.2.2. Section 7.0 of the rule states, in relevant part, that “[e]ach SIP submission in which the District relies on [projections of SIP-creditable emission reductions] shall contain a demonstration that the applicable incentive program guideline(s) continues to provide for SIP-creditable emission reductions. . . .” Read together, these provisions require the District to submit any case-by-case determination that it
In sum, case-by-case determinations under the Carl Moyer Program are not currently eligible for SIP credit but may become eligible for credit through the EPA's approval of SIP submissions going forward. Should the District intend to rely on emission reductions from a project subject to a case-by-case determination to satisfy a SIP requirement, it may do so only following its submission of the determination to the EPA as part of a SIP that meets the requirements of Rule 9610, Section 7.0 and the EPA's approval of such SIP consistent with the requirements of the CAA.
The EPA appreciates the District's statement confirming that projects subject to case-by-case determinations are not included in the 2013 Annual Demonstration Report and is approving the incentive-based emission reductions in the Contingency Measure SIP based on our understanding that it does not rely on any case-by-case determination.
We disagree with the claim that the approval of this Contingency Measure SIP would leave SJV residents “without meaningful air quality protections” should the SJV fail to meet the 1997 PM
The purpose of contingency measures is to continue progress in reducing emissions while the SIP is being revised to meet a missed RFP milestone or correct continuing nonattainment. Should the EPA determine that the SJV has failed to attain the 1997 standards by the applicable attainment date (April 5, 2015), the State and District will be required to implement these contingency measures and to revise the SIP to assure expeditious attainment consistent with applicable CAA requirements.
We appreciate the list of control measures and will forward it to the District for its consideration during development of the next PM
The EPA is approving the Contingency Measure SIP (adopted June 20, 2013 and submitted July 3, 2013) based on the Agency's conclusion that this SIP submission corrects the deficiency in the CAA section 172(c)(9) attainment contingency measures that was one of two bases for the EPA's partial disapproval of the SJV PM
The EPA also finds that the CAA section 172(c)(9) RFP contingency measure requirement for the 2012 RFP milestone year is moot as applied to the SJV nonattainment area because the area has achieved its SIP-approved emission reduction benchmarks for the 2012 RFP milestone year. This finding corrects the deficiency in the CAA section 172(c)(9) RFP contingency measures that was the second of two bases for the EPA's partial
Finally, the EPA is approving enforceable commitments by the District to monitor, assess, and report on actual NO
Today's final actions lift the CAA section 179(b)(2) offset sanctions and terminate the CAA section 179(b)(1) highway funding sanction clock triggered by the 2011 partial disapproval of the SJV PM
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve State choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves State law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• does not provide the 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 it does not apply in Indian country located in the State, and the 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 21, 2014. 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, Intergovernmental relations, Incorporation by reference, Nitrogen dioxide, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides.
42 U.S.C. 7401
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(c) * * *
(438) The following plan was submitted on July 3, 2013, by the Governor's Designee.
(i) [Reserved]
(ii) Additional materials.
(A) San Joaquin Valley Unified Air Pollution Control District.
(
(
(
(B) State of California Air Resources Board.
(
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is taking final action to approve a source-specific State Implementation Plan (SIP) revision submitted to EPA by the Commonwealth of Kentucky, through the Kentucky Division for Air Quality (KDAQ) on January 17, 2014, for the purpose of exempting a Hertz Corporation facility from the Clean Air Act (CAA or Act) Stage II vapor control requirements. The subject Hertz Corporation facility is currently being constructed at the Cincinnati/Northern Kentucky International Airport in Boone County, Kentucky. EPA's approval of this revision to Kentucky's SIP is based on the December 12, 2006, EPA policy memorandum from Stephen D. Page, entitled “
This rule will be effective June 23, 2014.
EPA has established a docket for this action under Docket Identification No. EPA–R04–OAR–2013–0794. All documents in the docket are listed on the
For information regarding this source specific SIP revision, contact Ms. Kelly Sheckler, Air Quality Modeling and Transportation Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303–8960. Ms. Sheckler's telephone number is (404) 562–9222; email address:
Under the CAA Amendments of 1990, EPA designated and classified three Kentucky Counties (Boone, Campbell and Kenton) and four Ohio Counties (Butler, Clermont, Hamilton and Warren) (collectively referred to as the “Cincinnati/Northern Kentucky Area”) as a “moderate” nonattainment area for the 1-hour ozone national ambient air quality standards (NAAQS).
Pursuant to the requirements of section 182(b)(3) of the CAA, KDAQ developed the Kentucky Administrative Regulation (KAR) 401 KAR 59:174
On October 29, 1999, KDAQ submitted to EPA an ozone maintenance plan and request for redesignation to attainment for the Kentucky portion of the Cincinnati/Northern Kentucky Area. At that time the Kentucky portion of the Cincinnati/Northern Kentucky Area had three years of attaining data (1996–1998) and Kentucky had implemented all measures then required by the CAA for a moderate 1-hour ozone nonattainment area. The maintenance plan, as required under section 175A of the CAA, showed that nitrogen oxides and volatile organic compounds (VOC) emissions in the Kentucky portion of the Cincinnati/Northern Kentucky Area would remain below the 1990 “attainment year's” levels. In making these projections, KDAQ factored in the emissions benefit (primarily VOC) of the Kentucky portion of the Cincinnati/Northern Kentucky Area's Stage II program, and did not remove this program from the Kentucky SIP. The redesignation request and maintenance plan were approved by EPA, effective June 19, 2000 (65 FR 37879). Since the Kentucky Stage II program was already in place and had been included in the Commonwealth's October 29, 1999, redesignation request and 1-hour ozone maintenance plan for the Kentucky portion of the Cincinnati/Northern Kentucky Area, KDAQ elected not to remove the program from the SIP at that time.
On April 6, 1994, EPA promulgated regulations requiring the phase-in of onboard refueling vapor recovery (ORVR) systems on new motor vehicles. Under section 202(a)(6) of the CAA, moderate ozone nonattainment areas are not required to implement Stage II vapor recovery programs after promulgation of ORVR standards.
KDAQ submitted a SIP revision on January 17, 2014, to exempt Stage II vapor control requirements for the Hertz Corporation facility located at the Cincinnati/Northern Kentucky International Airport in Boone County. On February 14, 2014, EPA published a proposed rulemaking to approve Kentucky's January 17, 2014, SIP revision related to Stage II requirements at the Hertz Corporation facility. Detailed background for today's final rulemaking can be found in EPA's February 14, 2014, proposed rulemaking.
EPA is taking final action to approve the aforementioned source-specific SIP revision request from Kentucky. VOC emissions from vehicles at the Cincinnati/Northern Kentucky International Airport Hertz Corporation facility are controlled by ORVR, therefore, EPA has concluded that removal of Stage II requirements at this facility would not result in an increase of VOC emissions, and thus would not contribute to ozone formation. The Commonwealth has requested removal of this requirement for this facility and
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the 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).
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 21, 2014. 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, Incorporation by reference, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(c) * * *
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is finding that the State of Arkansas has not made a necessary Prevention of Significant Deterioration (PSD) State Implementation Plan (SIP) submission to address the PSD permitting of PM
The effective date of this rule is May 22, 2014.
Ms. Adina Wiley, Air permits Section (6PD–R), Environmental Protection Agency, Region 6, 1445 Ross Avenue, Suite 1200, Dallas, TX 75202–2733. The telephone number is (214) 665–2115. Ms. Wiley can also be reached via electronic mail at
Section 553 of the Administrative Procedures Act (APA), 5 U.S.C. 553(b)(B), provides that, when an agency for good cause finds that notice and public procedure are impracticable, unnecessary, or contrary to the public interest, the agency may issue a rule without providing notice and an opportunity for public comment. The EPA has determined that there is good cause for making this rule final without prior proposal and opportunity for comment because no significant EPA judgment is involved in making a finding of failure to submit SIPs, or elements of SIPs, required by the CAA, where states have made no submissions to meet the requirement. No additional fact gathering is necessary. Thus, notice and public procedure are unnecessary. Furthermore, providing notice and comment would be impracticable because of the limited time provided under the CAA for making such determinations. EPA believes that because of the limited time provided to make findings of failure to submit regarding SIP submissions, Congress did not intend such findings to be subject to notice-and-comment rulemaking. Finally, notice and comment would be contrary to the public interest because it would divert Agency resources from the critical substantive review of submitted SIPs. See 58 FR 51270, 51272, note 17 (October 1, 1993); 59 FR 39832, 39853 (August 4, 1994). The EPA finds that these constitute good cause under 5 U.S.C. 553(b)(B).
EPA has also determined that today's Finding of Failure to Submit for Arkansas is effective immediately upon publication because this final action falls under the good cause exemption in 5 U.S.C. 553(d)(3) of the APA. The expedited effective date for this action is authorized under 5 U.S.C. 553(d)(3), which allows an effective date less than 30 days after publication “as otherwise provided by the agency for good cause found and published with the rule.” The EPA has determined that there is good cause for making this rule effective upon publication because the PSD SIP element is already overdue and the state has been made aware of applicable provisions of the CAA relating to overdue SIP revisions. The State of Arkansas failed to submit a required PSD SIP revision by the mandated deadline of July 20, 2012. We have previously alerted Arkansas through meetings that it has failed to make the submittal by the deadline. Also on May 9, 2014, we sent a letter to Arkansas, explaining that we were planning to take the action we are finalizing today. Consequently, the State has been on notice that today's action was pending. The State and general public are aware of applicable provisions of the CAA that relate to failure to submit a required implementation plan. In addition, this action only starts a 24-month “clock” wherein the EPA must promulgate a Federal Implementation Plan. Furthermore, the purpose of the 30-day waiting period prescribed in 5 U.S.C. 553(d) is to give affected parties a reasonable time to prepare before the final rule takes effect. Whereas here, the affected parties, such as the State of Arkansas and sources within the State, do not need time to adjust and prepare before the Finding of Failure to Submit takes effect. After numerous discussions with the Arkansas Department of Environmental Quality to resolve outstanding issues, the EPA has determined that moving as expeditiously as practicable on this finding is in the best interest of the implementation of the required PSD permitting program. The EPA finds that the above reasons support an effective date prior to thirty days after the date of publication and constitute good cause under 5 U.S.C. 553(d)(3).
Throughout this document wherever “we,” “us,” or “our” is used, we mean the EPA.
The EPA initially established National Ambient Air Quality Standards (NAAQS) for particulate matter (PM) under section 109 of the CAA in 1971. Since then, the EPA has made a number of changes to these standards to reflect
• In 1971, the EPA established NAAQS for PM, measured as Total Suspended Particles (TSP) (36 FR 8186). The primary standards were 260 μg/m
• In July 1987, the EPA changed the indicator for PM from TSP to PM
• In July 1997, the EPA determined that although the PM NAAQS should continue to focus on PM
• On October 17, 2006, the EPA promulgated revisions to the NAAQS for PM
• On January 15, 2013, the EPA promulgated revisions to the NAAQS for PM
To implement the PM NAAQS for PSD purposes, EPA issued two separate final rules that establish the New Source Review (NSR) permitting requirements for PM
EPA's final NSR PM
The PM
The PM
The EPA is making a finding that the State of Arkansas has failed to submit a required PSD SIP revision to address the implementation and permitting of PM
This action also does not make a finding of failure to submit for Arkansas regarding the required PM
EPA recognizes that the PM
This action is not a “significant regulatory action” under the terms of Executive Order (EO) 12866 (58 FR 51735, October 4, 1993) and is therefore not subject to review under EO 12866 and 13563 (76 FR 3821, January 21, 2011).
This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501
The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the APA or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations and small governmental jurisdictions. For the purpose of assessing the impacts of this final rule on small entities, small entity is defined as: (1) A small business that is a small industry entity as defined in the U.S. Small Business Administration (SBA) size standards
After considering the economic impacts of this final rule on small entities, I certify that this rule will not have a significant economic impact on a substantial number of small entities. This final rule will not impose any requirements on small entities. This action relates to the requirement in the CAA for states to submit PSD SIPs under section 166(b) to satisfy certain prevention of significant deterioration requirements of the CAA for the PM
This action contains no federal mandate under the provisions of Title II of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531–1538 for state, local and tribal governments and the private sector. The action imposes no enforceable duty on any state, local or tribal governments or the private sector. Therefore, this action is not subject to the requirements of section 202 and 205 of the UMRA. This action is also not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. This action relates to the requirement in the CAA for states to submit PSD SIPs under section 166(b) to satisfy certain prevention of significant deterioration requirements under the CAA for the PM
Additionally, because EPA has made a “good cause” that this action is not subject to notice-and-comment requirements under the APA or any other statute, it is not subject to sections 202 and 205 of the UMRA.
EO 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires the EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is
EO 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires the EPA to develop an accountable process to ensure “meaningful and timely input by Tribal officials in the development of regulatory policies that have Tribal implications.” This final rule does not have tribal implications, as specified in EO 13175. This rule responds to the requirement in the CAA for states to submit PSD SIPs under section 166(b) to satisfy certain prevention of significant deterioration requirements under the CAA for PM
The EPA interprets EO 13045 (62 FR 19885, April23, 1997) as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5–501 of the EO has the potential to influence the regulation. This action is not subject to EO 13045 because it merely finds that Arkansas has failed to make a submission that is required under the Act to implement the PM
This rule is not a “significant energy action” as defined in EO 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), because it is not likely to have a significant adverse effect on the supply, distribution or use of energy.
Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104–113, section 12(d) (15 U.S.C. 272 note), directs the EPA to use voluntary consensus standards (VCS) in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impracticable. VCS are technical standards (e.g., materials specifications, test methods, sampling procedures and business practices) that are developed or adopted by VCS bodies. The NTTAA directs the EPA to provide Congress, through OMB, explanations when the agency decides not to use available and applicable VCS. This action does not involve technical standards. Therefore, the EPA did not consider the use of any VCS.
EO 12898 (59 FR 7629, February 16, 1994) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies and activities on minority populations and low-income populations in the United States. The EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not directly affect the level of protection provided to human health or the environment. This notice is making a finding that the State of Arkansas failed to submit a SIP revision that provides certain basic permitting requirements for the PM
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. Section 808 allows the issuing agency to make any rule effective “at such time as the Federal agency promulgating the rule determines” if the agency makes a good cause finding that notice and public procedure is impracticable, unnecessary or contrary to the public interest. This determination must be supported by a brief statement. 5 U.S.C. 808(2). As stated previously, EPA has made such a good cause finding, including the reasons therefor, and established an effective date of May 22, 2014. EPA submitted a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 21, 2014. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposed 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, Administrative practices and procedures, Air pollution control, Incorporation by reference, Intergovernmental Relations, Nitrogen dioxide, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides.
42 U.S.C. 7401
Environmental Protection Agency (EPA).
Final rule.
The EPA is approving the February 14, 2012, State Implementation Plan (SIP) submittal from Idaho demonstrating that the SIP meets the infrastructure requirements of the Clean Air Act (CAA) for the National Ambient Air Quality Standards (NAAQS) promulgated for lead (Pb) on October 15, 2008. The CAA requires that each state, after a new or revised NAAQS is promulgated, review their SIP to ensure that it meets the infrastructure requirements necessary to implement the new or revised NAAQS. The EPA finds that the Idaho SIP meets the CAA infrastructure requirements for the 2008 Pb NAAQS.
This final rule is effective on June 23, 2014.
The EPA has established a docket for this action under Docket Identification No. EPA–R10–OAR–2012–0183. All documents in the docket are listed on the
Kristin Hall at: (206) 553–6357,
Throughout this document wherever “we,” “us” or “our” is used, it is intended to refer to the EPA. Information is organized as follows:
Section 110 of the CAA specifies the general requirements for states to submit SIPs to attain and maintain the NAAQS and the EPA's actions regarding approval of those SIPs. On February 14, 2012, Idaho submitted a SIP revision to the EPA demonstrating that the SIP meets the infrastructure requirements of the CAA for the 2008 Pb NAAQS. On March 26, 2014, we proposed approval of Idaho's February 14, 2012, submittal (79 FR 16722). An explanation of the CAA requirements and implementing regulations that are met by this SIP revision, a detailed explanation of the revision, and the EPA's reasons for the proposed action were provided in the notice of proposed rulemaking on March 26, 2014, and will not be restated here (79 FR 16722). The public comment period for our proposed action ended on April 25, 2014, and we received no comments.
The EPA is approving the February 14, 2012, submittal from Idaho demonstrating that the SIP meets the requirements of sections 110(a)(1) and (2) of the CAA for the 2008 Pb NAAQS. Specifically, we find that the Idaho SIP meets the following CAA section 110(a)(2) infrastructure elements for the 2008 Pb NAAQS: (A), (B), (C), (D), (E), (F), (G), (H), (J), (K), (L), and (M). This action is being taken under section 110 of the CAA.
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because this action does not involve technical standards; and does not provide the 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 the 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 21, 2014. 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, Lead, Particulate matter, and Reporting and recordkeeping requirements.
42 U.S.C. 7401
40 CFR part 52 is amended as follows:
42 U.S.C. 7401 et seq.
The addition reads as follows:
(e) * * *
Environmental Protection Agency (EPA).
Final rule; notice of administrative change.
The Environmental Protection Agency (EPA) is making an administrative change to update the Code of Federal Regulations (CFR) to reflect a change made to the Oregon State Implementation Plan (SIP) on December 11, 2013. The EPA has concurred on a substitute transportation control measure (TCM) for the Portland Area Carbon Monoxide Maintenance Plan portion of the Oregon SIP. On January 14, 2014, the Oregon Department of Environmental Quality (ODEQ) submitted a revision to the Oregon SIP requesting that the EPA update its SIP to reflect a substitution of a TCM. The substitution was made pursuant to the TCM substitution provisions contained in the Clean Air Act (CAA). The EPA concurred with this substitution on April 16, 2014. In this administrative action, the EPA is updating the non-regulatory provisions of the Oregon SIP to reflect the substitution. The substitution that the EPA concurred with is an equivalent method for assessing the transit service increase TCM.
This action is effective May 22, 2014.
SIP materials which are incorporated by reference into 40 CFR part 52 are available for inspection at the following location: US Environmental Protection Agency, Region 10, Office of Air, Waste, and Toxics (OAWT–107), 1200 Sixth Avenue, Seattle, Oregon 98101. Publicly available docket materials are available either electronically at
Justin A. Spenillo, EPA Region 10, (206) 553–6125,
Throughout this document, wherever “we”, “us” or “our” are used, it is intended to refer to the EPA.
On April 16, 2014, the EPA concurred with a determination by the ODEQ and Metro, the metropolitan planning organization for the Portland area, that the replacement of a transit service increase TCM with an equivalent substitute transit service increase TCM met the requirements of CAA section 176(c)(8). (See also EPA's Guidance for Implementing the CAA section 176(c)(8) Transportation Control Measure Substitution and Addition Provision contained in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users which was signed into law on August 10, 2005, dated January 2009.) This action provides notice of the EPA's concurrence with this substitution, and codifies the substitute transportation control measure in the Federally approved Oregon SIP. The substitution replaces the existing transit service increase TCM with a TCM containing an equivalent method for assessing the transit service increase. The substituted TCM is: “Transit Service Increase: Regional transit service revenue hours (weighted by capacity) shall be increased 1.0% per year. The increase shall be assessed on the basis of
The TCM substitution process is collaborative, and includes participation by all affected jurisdictions and agencies, consultation with the EPA, and reasonable notice and opportunity for public comment. To develop a substitute TCM, the ODEQ and Metro consulted with the Transportation Policy Advisory Committee (TPAC), a technical advisory committee of the Joint Policy Advisory Committee on Transportation (JPACT) that is comprised of elected officials and representatives of agencies involved in transportation in the Portland area and includes representatives from the community, state and regional partners, and local jurisdictions. Public notice and comment was provided by Metro in coordination with the ODEQ. The public notice was published in
Through the concurrence process, the EPA determined that the requirements of CAA section 176(c)(8) were satisfied, including the requirements that the substitute measures (1) achieve equivalent or greater emissions reductions than the control measure to be replaced, (2) are implemented on a schedule consistent with the schedule for the existing TCM, (3) have adequate personnel, funding and authority under state or local law to implement, monitor and enforce, and (4) are jointly concurred upon by the ODEQ, the EPA and Metro. Upon the EPA's concurrence, the transit service increase TCM substitution took effect as a matter of Federal law. A copy of the EPA's concurrence letter along with the ODEQ's letter submittal and additional support material is included in the Docket for this action. This letter can be accessed at
This action does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. Thus, Executive Order 13132 does not apply to this action.
Although section 6 of Executive Order 13132 does not apply to this action, the EPA did consult with representatives of state and local governments in taking this action. This action does not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000), as it does not affect any tribal groups. Thus, Executive Order 13175 does not apply to this action.
Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. The EPA has determined that this administrative action will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not affect the level of protection provided to human health or the environment.
Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference.
Part 52 of chapter I, title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401 et seq.
(e) * * *
Environmental Protection Agency (EPA).
Correcting amendments.
The Environmental Protection Agency (EPA) published a final rule regarding reasonably available control technology requirements for Massachusetts in the
This rule is effective on June 23, 2014.
Bob McConnell, Air Quality Planning Unit, U.S. Environmental Protection Agency, EPA New England Regional Office, 5 Post Office Square, Suite 100 (mail code: OEP05–2), Boston, MA, 02109–3912, telephone number (617) 918–1046, fax number (617) 918–0046, email
In rule FR Doc. 2013–21618 published on September 9, 2013 (78 FR 54960), make the following correction. On page 54962, the sixth column of Table 52.1167 incorrectly contained the placeholder language “Insert next available paragraph number in sequence” in two locations. Rather than this language, table 52.1167 should have indicated the number “138” instead.
Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.
Part 52 of chapter I, title 40 of the Code of Federal Regulations, is amended as follows:
42 U.S.C. 7401
The Environmental Protection Agency (EPA).
Withdrawal of direct final rule.
Due to the receipt of adverse comments, the Environmental Protection Agency (EPA) is withdrawing the March 31, 2014, direct final rule to approve requests from Florida and North Carolina for the EPA to relax the Reid Vapor Pressure (RVP) Standard applicable to gasoline introduced into commerce from June 1 to September 15 of each year in six counties in Florida, and in counties in the Raleigh-Durham-Chapel Hill Area (also referred to as the “Triangle Area”) and the Greensboro/Winston-Salem/High Point Area (also referred to as the “Triad Area”) in North Carolina. The EPA is considering these comments and will address the comments in a subsequent action that is to be published soon. The EPA will not institute a second comment period on this action.
The direct final rule published at 79 FR 17889 on March 31, 2014, is withdrawn as of May 22, 2014.
Rudolph Kapichak, Office of Transportation and Air Quality, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: 734–214–4574; fax number 734–214–4052; email address:
On March 31, 2014 (79 FR 17889), the EPA published a direct final rule approving a request from Florida to change the summertime RVP standard for Broward, Dade, Duval, Hillsborough, Palm Beach and Pinellas counties in Florida from 7.8 psi to 9.0 psi by amending the EPA's regulations at 40 CFR 80.27(a)(2). Additionally, in that direct final rule the EPA approved a request from North Carolina to change the summertime RVP standard for the Triangle and Triad Areas from 7.8 psi to 9.0 psi by amending the EPA's regulations at 40 CFR 80.27(a)(2). The Triangle Area is comprised of Durham and Wake Counties, and the Dutchville Township portion of Granville County. The Triad Area is comprised of the counties of Davidson, Forsyth and Guilford in their entirety, and the portion of Davie County bounded by the Yadkin River, Dutchmans Creek, North Carolina Highway 801, Fulton Creek and back to Yadkin River. In previous rulemakings, the EPA approved state implementation plan revisions from Florida and North Carolina which provided technical analyses that demonstrated that removal of the Federal RVP requirements of 7.8 psi for gasoline sold between June 1 and September 15 of each year in the six counties in Florida, and the North Carolina Triangle and Triad Areas would not interfere with maintenance of the national ambient air quality standards in these areas. In the direct final rule, the EPA stated that if adverse comments were received by April 30, 2014, the rule would be withdrawn and not take effect. On March 29, 2014, the EPA received a comment letter. The EPA interprets the comments in that letter as adverse and, therefore, the EPA is withdrawing the direct final rule. The EPA will address these comments in a separate final action based upon the proposed rulemaking action at 79 FR 17966 (March 31, 2014). The EPA will not institute a second comment period on this action.
Accordingly, the amendment to 40 CFR 80.27 which published in the
The Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is taking final action to approve requests from Florida and North Carolina for the EPA to relax the Reid Vapor Pressure (RVP) Standard applicable to gasoline introduced into commerce from June 1 to September 15 of each year in six counties in Florida, and in counties in the Raleigh-Durham-Chapel Hill Area (also referred to as the “Triangle Area”) and the Greensboro/Winston-Salem/High Point Area (also referred to as the “Triad Area”) in North Carolina. Specifically, the EPA is approving amendments to the regulations to change the RVP standard for six counties in Florida, and for the counties in the Triangle and Triad Areas from 7.8 pounds per square inch (psi) to 9.0 psi for gasoline. Additionally, the EPA is responding to adverse comments received for this action. The EPA has determined that these changes to the Federal RVP regulation are consistent with the applicable provisions of the Clean Air Act (CAA or Act).
This final rule will become effective on May 30, 2014.
The EPA has established a docket for this action under Docket Identification No. EPA–HQ–OAR–2013–0787. All documents in the docket are listed on the
Rudolph Kapichak, Office of Transportation and Air Quality, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: (734) 214–4574; fax number (734) 214–4052; email address:
Throughout this document, “the Agency” is used to mean the EPA.
Entities potentially affected by this rule are fuel producers and distributors who do business in Florida and in North Carolina. Regulated entities include:
This table provides only a guide for readers regarding entities likely to be regulated by this action. You should carefully examine the regulations in 40 CFR 80.27 to determine whether your facility is impacted. If you have further questions, call the person listed in the
This final rule approves a request from Florida to change the summertime RVP standard for Broward, Dade, Duval, Hillsborough, Palm Beach and Pinellas counties in Florida from 7.8 psi to 9.0 psi by amending the EPA's regulations at 40 CFR 80.27(a)(2). Additionally, this final rule approves a request from North Carolina to change the summertime RVP standard for the Triangle and Triad Areas from 7.8 psi to 9.0 psi by amending the EPA's regulations at 40 CFR 80.27(a)(2). The Triangle Area is comprised of Durham and Wake Counties, and the Dutchville Township portion of Granville County. The Triad Area is comprised of the counties of Davidson, Forsyth and Guilford in their entirety, and the portion of Davie County bounded by the Yadkin River, Dutchmans Creek, North Carolina Highway 801, Fulton Creek and back to Yadkin River.
In previous rulemakings, the EPA approved state implementation plan (SIP) revisions from Florida and North Carolina which provided technical analyses that demonstrated that removal of the Federal RVP requirements of 7.8 psi for gasoline sold between June 1 and September 15 of each year in the six counties in Florida, and the North Carolina Triangle and Triad Areas would not interfere with maintenance of the national ambient air quality standards (NAAQS) in these areas. For more information on Florida's SIP revision for the six Florida counties and the EPA's analysis of Florida's SIP revision refer to the January 6, 2014, final rule at 79 FR 573; on North Carolina's SIP revision for the Triangle Area refer to the January 2, 2014 final rule at 79 FR 47; and on North Carolina's SIP revision for the Triad Area refer to the January 24, 2014 final rule at 79 FR 4082.
As mentioned above, this final rule approves requests from Florida and North Carolina to change the summertime RVP standard for six Florida counties, and for the Triangle and Triad Areas from 7.8 psi to 9.0 psi by amending the EPA's regulations at 40 CFR 80.27(a)(2). The preamble for this rulemaking is organized as follows. Section III provides the history of federal gasoline volatility regulation. Section IV describes the policy regarding relaxation of volatility standards in ozone nonattainment areas that are redesignated as attainment areas. Section V provides information specific to Florida's request for the six counties currently subject to the 7.8 psi summertime RVP requirements. Section VI provides information specific to North Carolina's requests for the counties in the Triangle and Triad Areas that are currently subject to the 7.8 psi summertime RVP requirements. Section VII provides EPA's response to the adverse comment received. Finally, Section VIII presents the final action in response to the requests from Florida and North Carolina.
On August 19, 1987 (52 FR 31274), the EPA determined that gasoline nationwide was becoming increasingly volatile, causing an increase in evaporative emissions from gasoline-powered vehicles and equipment. Evaporative emissions from gasoline, referred to as volatile organic compounds (VOC), are precursors to the formation of tropospheric ozone and contribute to the nation's ground-level ozone problem. Exposure to ground-level ozone can reduce lung function (thereby aggravating asthma or other respiratory conditions), increase susceptibility to respiratory infection, and may contribute to premature death in people with heart and lung disease.
The most common measure of fuel volatility that is useful in evaluating gasoline evaporative emissions is RVP. Under section 211(c) of the CAA, the EPA promulgated regulations on March 22, 1989 (54 FR 11868) that set maximum limits for the RVP of gasoline sold during the regulatory control periods that were established on a state-by-state basis in the final rule. The regulatory control periods addressed the portion of the year when peak ozone concentrations were expected. These regulations constituted Phase I of a two-phase nationwide program, which was designed to reduce the volatility of commercial gasoline during the high ozone season. On June 11, 1990 (55 FR 23658), the EPA promulgated more stringent volatility controls as Phase II of the volatility control program. These requirements established maximum
The 1990 CAA Amendments established a new section, 211(h), to address fuel volatility. Section 211(h) requires the EPA to promulgate regulations making it unlawful to sell, offer for sale, dispense, supply, offer for supply, transport, or introduce into commerce gasoline with an RVP level in excess of 9.0 psi during the high ozone season. Section 211(h) prohibits the EPA from establishing a volatility standard more stringent than 9.0 psi in an attainment area, except that the Agency may impose a lower (more stringent) standard in any former ozone nonattainment area redesignated to attainment.
On December 12, 1991 (56 FR 64704), the EPA modified the Phase II volatility regulations to be consistent with section 211(h) of the CAA. The modified regulations prohibited the sale of gasoline with an RVP above 9.0 psi in all areas designated attainment for ozone, beginning in 1992. For areas designated as nonattainment, the regulations retained the original Phase II standards published on June 11, 1990 (55 FR 23658), which included the 7.8 psi ozone season limitation for certain areas. As stated in the preamble to the Phase II volatility controls and reiterated in the proposed change to the volatility standards published in 1991, the EPA will rely on states to initiate changes to the volatility program. The EPA's policy for approving such changes is described in Section IV of this preamble.
Florida and North Carolina initiated these changes by requesting that the EPA relax the 7.8 psi RVP standard for counties that are in ozone maintenance areas. Accordingly, the States revised their original modeling and maintenance demonstrations for these areas to reflect continued attainment under the relaxed 9.0 psi RVP standard that the States have requested. See Section V of this action for information specific to Florida's request for the six counties currently subject to the 7.8 psi summertime RVP requirements. See Section VI of this action for information specific to North Carolina's requests for the counties in the Triangle and Triad Areas that are currently subject to the 7.8 psi summertime RVP requirements.
As stated in the preamble for the EPA's amended Phase II volatility standards (56 FR 64706), any change in the volatility standard for a nonattainment area that was subsequently redesignated as an attainment area must be accomplished through a separate rulemaking that revises the applicable standard for that area. Thus, for former 1-hour ozone nonattainment areas where the EPA mandated a Phase II volatility standard of 7.8 psi RVP in the December 12, 1991 rulemaking, the 7.8 psi RVP will remain in effect, even after such an area is redesignated to attainment, until a separate rulemaking is completed that revises the RVP standard in that area from 7.8 psi to 9.0 psi.
As explained in the December 12, 1991, rulemaking, the EPA believes that relaxation of an applicable RVP standard is best accomplished in conjunction with the redesignation process. In order for an ozone nonattainment area to be redesignated as an attainment area, section 107(d)(3) of the Act requires the state to make a showing, pursuant to section 175A of the Act, that the area is capable of maintaining attainment for the ozone NAAQS for ten years. Depending on the area's circumstances, this maintenance plan will either demonstrate that the area is capable of maintaining attainment for ten years without the more stringent volatility standard or that the more stringent volatility standard may be necessary for the area to maintain its attainment with the ozone NAAQS. Therefore, in the context of a request for redesignation, the EPA will not relax the volatility standard unless the state requests a relaxation and the maintenance plan demonstrates, to the satisfaction of the EPA, that the area will maintain attainment for ten years without the need for the more stringent volatility standard.
On November 6, 1991, the EPA designated and classified the Southeast Florida area (i.e., Broward, Dade and Palm Beach counties) as Moderate; the Jacksonville area (i.e., Duval County) as Transitional; and the Tampa area (i.e., Hillsborough and Pinellas counties) as Marginal nonattainment areas for the 1-hour ozone NAAQS. See 56 FR 56694 (November 6, 1991). Among the requirements applicable to nonattainment areas for the 1-hour ozone NAAQS was the requirement to meet certain RVP standards for gasoline sold commercially during the high ozone season. See 55 FR 23658 (June 11, 1990). Thus, the RVP requirements for gasoline sold in these three 1-hour ozone nonattainment areas was 7.8 psi from June 1 through September 15 of each year. Subsequently, each area was redesignated to attainment for the 1-hour ozone NAAQS.
On August 15, 2013, the State of Florida, through the Florida Department of Environmental Protection (FDEP), submitted a request for the EPA to relax the Federal RVP requirement of 7.8 psi in Broward, Dade, Duval, Hillsborough, Palm Beach and Pinellas Counties in Florida. The State also submitted a technical analysis which demonstrated that the less-stringent RVP in these counties would not interfere with continued maintenance of the 1997 8-hour ozone NAAQS or any other applicable standard.
As mentioned above, on August 15, 2013, FDEP submitted changes to the three CAA section 110(a)(1) maintenance plans that collectively cover Broward, Dade, Duval, Hillsborough, Palm Beach and Pinellas Counties in Florida. Florida's August 15, 2013, SIP revision modifies the existing section 110(a)(1) maintenance plans to account for a less stringent applicable RVP gasoline requirement of 9.0 psi for these areas. Specifically, Florida's August 15, 2013, SIP revision included an evaluation of the impact that the removal of the 7.8 psi RVP requirement would have on maintenance of the 1997 and 2008 ozone standards, and on other applicable NAAQS. The EPA evaluated Florida's August 15, 2013, SIP revision in a previous rulemaking that was subject to public notice-and-comment and no comments were received. The EPA approved Florida's August 15, 2013, SIP revision on January 6, 2014. See 79 FR 573. In this final action, based on the previous approval of Florida's August 15, 2013, SIP revision, and the fact that the areas are currently attaining all ozone NAAQS, the EPA is approving Florida's request to relax the high ozone season RVP standard for Broward, Dade, Duval, Hillsborough, Palm Beach and Pinellas counties from 7.8 psi to 9.0 psi.
The following two sections provide the EPA's analysis of North Carolina's requests to relax the Federal RVP requirements in the Triangle and Triad Areas.
On November 6, 1991, the EPA designated and classified Durham and Wake Counties, and the Dutchville Township portion of Granville County (also known as the Triangle Area at the time) as a Moderate nonattainment area for the 1-hour ozone NAAQS. See 56 FR 56694 (November 6, 1991). Among the requirements applicable to nonattainment areas for the 1-hour ozone NAAQS was the requirement to meet certain RVP standards for gasoline sold commercially during the high ozone season. See 55 FR 23658 (June 11, 1990). Thus, the RVP requirement for gasoline sold in the Triangle Area was 7.8 psi from June 1 through September 15 of each year. On April 18, 1994, the Triangle Area was redesignated to attainment for the 1-hour ozone standard. See 59 FR 18300. North Carolina's redesignation request for the Triangle Area did not include a request for relaxation of the gasoline volatility standard.
On March 27, 2013, the State of North Carolina, through the North Carolina Department of Environment and Natural Resources (NC DENR), submitted a request for the EPA to relax the Federal RVP requirement of 7.8 psi in Wake and Durham Counties, and the Dutchville Township portion of Granville County that was originally included in the 1-hour ozone nonattainment area. The State also submitted a technical analysis that demonstrated that the less-stringent RVP in these counties would not interfere with continued maintenance of the 1997 8-hour ozone NAAQS or any other applicable standard. Specifically, the State updated the 10-year maintenance plan that was submitted for the Triangle 1997 8-hour ozone maintenance area under section 175A of the CAA. As required, this section 175A maintenance plan provided for continued attainment and maintenance of the 1997 8-hour ozone NAAQS for at least 10 years from the EPA's redesignation of the area from nonattainment to attainment for the 1997 8-hour ozone NAAQS. This plan also included components demonstrating how the area will continue to attain the 1997 8-hour ozone NAAQS, and provided contingency measures should the area violate the NAAQS. North Carolina's previous ozone redesignation requests and maintenance plans for this area did not remove the 7.8 psi RVP standard. See 72 FR 72948 (December 26, 2007).
As mentioned above, on March 27, 2013, NC DENR submitted changes to the section 175A maintenance plan for the Triangle Area. North Carolina's March 27, 2013, SIP revision modifies the existing section 175A maintenance plan to account for a less stringent applicable RVP gasoline requirement of 9.0 psi for the Triangle Area. Specifically, North Carolina's March 27, 2013, SIP revision included an evaluation of the impact that the removal of the 7.8 psi RVP requirement would have on maintenance of the 1997 and 2008 ozone standards, and on other applicable NAAQS. The EPA evaluated North Carolina's March 27, 2013, SIP revision in a previous rulemaking that was subject to public notice-and-comment. No adverse comments and one supportive comment were received on that proposed action. The EPA approved North Carolina's March 27, 2013, SIP revision on January 2, 2014. See 79 FR 47. In this action, based on the EPA's previous approval of North Carolina's March 27, 2013, SIP revision, and the fact that the Triangle Area is currently attaining all ozone NAAQS, the EPA is approving North Carolina's request to relax the RVP standard for Wake and Durham Counties, and a portion of Granville County in North Carolina from 7.8 psi to 9.0 psi from June 1 through September 15 of each year.
On November 6, 1991, the EPA designated Davidson, Forsyth and Guilford counties in their entirety and the portion of Davie County bounded by the Yadkin River, Dutchmans Creek, North Carolina Highway 801, Fulton Creek and back to Yadkin River in the Triad Area as a Moderate nonattainment area for the 1-hour ozone NAAQS. See 56 FR 56694 (November 6, 1991). Among the requirements applicable to nonattainment areas for the 1-hour ozone NAAQS was the requirement to meet certain RVP standards for gasoline sold commercially during the ozone season. See 55 FR 23658 (June 11, 1990). Thus, the RVP requirement for gasoline sold in the Triad Area was 7.8 psi from June 1 through September 15 of each year. On April 18, 1994, the Triad Area was redesignated to attainment for the 1-hour ozone standard. See 59 FR 18300. North Carolina's redesignation request for the Triad Area did not include a request for the relaxation of the gasoline volatility standard.
On April 12, 2013, the State of North Carolina, through NC DENR, submitted a request for the EPA to relax the Federal RVP requirement of 7.8 psi in Davidson, Forsyth and Guilford Counties and the relevant portion of Davie County. The State also submitted a technical analysis which demonstrated that the less-stringent RVP in the aforementioned counties would not interfere with continued maintenance of the 1997 8-hour ozone NAAQS or any other applicable standard. Specifically, the State updated the 10-year maintenance plan that was submitted for the Triad 1-hour ozone maintenance area under section 110(a)(1) of the CAA for the 1997 ozone NAAQS.
As mentioned above, on April 12, 2013, NC DENR submitted changes to the section 110(a)(1) maintenance plan for the Triad Area. North Carolina's April 12, 2013, SIP revision modifies the existing section 110(a)(1) maintenance plan to account for a less stringent applicable RVP gasoline requirement of 9.0 psi for the area. Specifically, North Carolina's April 12, 2013, SIP revision included an evaluation of the impact that the removal of the 7.8 psi RVP requirement would have on maintenance of the 1997 and 2008 ozone standards, and on other applicable NAAQS. The EPA evaluated North Carolina's April 12, 2013, SIP revision in a previous rulemaking that was subject to public notice-and-comment. No adverse comments and one supportive comment were received on that proposed action. The EPA approved North Carolina's April 12, 2013, SIP revision on January 24, 2014. See 79 FR 4082. In this action, based on the previous approval of North Carolina's April 12, 2013, SIP revision, and the fact that the Triad Area is currently attaining all ozone NAAQS, the EPA is approving North Carolina's request to relax the high ozone season RVP standard for Davidson, Forsyth and Guilford Counties and a portion of Davie County from 7.8 psi to 9.0 psi.
On March 31, 2014 (79 FR 17889), the EPA published a direct final rule to approve requests from Florida and North Carolina for the EPA to relax the RVP standard in six counties in Florida and in the Triangle Area and Triad Area in North Carolina. The EPA published a parallel proposal in the event that adverse comments were received such that the direct final rule would need to be withdrawn. Specifically, in the direct final rule, the EPA stated that if adverse comments were received by April 30, 2014, the direct final rule would be withdrawn and not take effect. The EPA further stated that the corresponding proposed rule would remain in effect and that any adverse comments received would be responded to in a subsequent final rule provided the EPA was able to address such comments.
With regard to the commenter's assertion that “. . . ozone monitors in Forsyth and Guildford Counties have 2010–2012 design values above the 2008 ozone NAAQS,” we note (as included in the EPA's rulemaking for the Triad area (79 FR 4082)) that based on the 2011–2013 design values, the ozone monitors in Forsyth and Guilford Counties were not above the 2008 8-hour ozone NAAQS.
The commenter also mentions that “EPA would need to reconsider its analysis for Florida and North Carolina's CAA 110(a)(2)(D)(i) for the
.
The EPA is taking final action to approve requests from Florida and North Carolina for the EPA to relax the RVP applicable to gasoline introduced into commerce from June 1 to September 15 of each year in six counties in Florida, and in the counties of the Triangle and Triad Areas in North Carolina. Specifically, this action amends the applicable RVP standard from 7.8 psi to 9.0 psi provided at 40 CFR 80.27(a)(2) for Broward, Dade, Duval, Hillsborough, Palm Beach and Pinellas counties in Florida; Wake and Durham Counties, and a portion of Dutchville Township in Granville County in the Triangle Area in North Carolina; and Davidson, Forsyth and Guilford Counties and a portion of Davie County in the Triad Area.
As of January 24, 2014, the Office of Management and Budget (OMB), determined that this action is not a “significant regulatory action” under the terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is therefore not subject to review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011).
This action does not impose an information collection burden under the provisions of the
The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the Agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.
For purposes of assessing the impacts of today's rule on small entities, small entity is defined as: (1) A small business as defined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.
After considering the economic impacts of today's final rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. The small entities directly regulated by this final rule are refiners, importers or blenders of gasoline that choose to produce or import low RVP gasoline for sale in the Florida and North Carolina areas and gasoline distributors and retail stations in those areas.
This action will relax the Federal RVP standard for gasoline sold in portions of Florida and North Carolina, during the ozone control season (June 1 to September 15), from 7.8 psi to 9.0 psi, and is therefore expected not to have a significant economic impact on a substantial number of small entities. The rule does not impose any requirements or create impacts on small entities beyond those, if any, already required by or resulting from the CAA Section 211(h) Volatility Control program.
This rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and tribal governments, in the aggregate, or the private sector in any one year. Today's final rule affects portions of Florida and North Carolina of which the EPA estimates lower fuel costs as a result of this action, therefore reducing cost on businesses and consumers. Thus, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.
This rule is also not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. As discussed above, the rule relaxes an existing standard and affects only the gasoline industry.
This action does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. Thus, Executive Order 13132 does not apply to this rule.
Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires the EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” This action does not have tribal implications, as specified in Executive Order 13175.
This action is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it is not economically significant as defined in Executive Order 12866, and because the Agency does not believe the environmental health or safety risks addressed by this
This action is not subject to Executive Order 13211 (66 FR 28355 (May 22, 2001)), because it is not a significant regulatory action under Executive Order 12866.
Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law 104–113, 12(d) (15 U.S.C. 272 note) directs the EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs the EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.
This action does not involve technical standards. Therefore, the EPA did not consider the use of any voluntary consensus standards.
Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.
The EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not affect the level of protection provided to human health or the environment. This rule will relax the applicable volatility standard of gasoline during the summer possibly resulting in slightly higher mobile source emissions. However, Florida and North Carolina have demonstrated in maintenance plans that this action will not interfere with attainment of the 8-hour ozone NAAQS and therefore disproportionately high and adverse human health or environmental effects on minority or low-income populations are not an anticipated result.
The Congressional Review Act, 5 U.S.C. section 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the Agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. The EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the
Section 307(b)(1) of the CAA indicates which Federal Courts of Appeal have venue for petitions of review of final actions by the EPA. This section provides, in part, that petitions for review must be filed in the Court of Appeals for the District of Columbia Circuit: (i) when the agency action consists of “nationally applicable regulations promulgated, or final actions taken, by the Administrator,” or (ii) when such action is locally or regionally applicable, if “such action is based on a determination of nationwide scope or effect and if in taking such action the Administrator finds and publishes that such action is based on such a determination.”
This rule is “nationally applicable” within the meaning of section 307(b)(1). This rule establishes RVP requirements for multiple counties in different States. At the core of this rulemaking is the EPA's interpretation of the requirements of section 211(h) of the CAA, and its application of that interpretation to different areas of the country.
For the same reasons, the Administrator also is determining that this action is of nationwide scope and effect for the purposes of section 307(b)(1). This is particularly appropriate because, in the report on the 1977 Amendments that revised section 307(b)(1) of the CAA, Congress noted that the Administrator's determination that an action is of “nationwide scope or effect” would be appropriate for any action that has a scope or effect beyond a single judicial circuit. H.R. Rep. No. 95–294 at 323, 324, reprinted in 1977 U.S.C.C.A.N. 1402–03. Here, the scope and effect of this rulemaking extends to two different judicial circuits. In these circumstances, section 307(b)(1) and its legislative history calls for the Administrator to find the rule to be of “nationwide scope or effect” and for venue to be in the D.C. Circuit.
Thus, any petitions for review of final designations must be filed in the Court of Appeals for the District of Columbia Circuit within 60 days from the date final action is published in the
Authority for this final action is in sections 211(h) and 301(a) of the CAA, 42 U.S.C. 7545(h) and 7601(a).
Environmental protection, Administrative practice and procedures, Air pollution control, Fuel additives, Gasoline, Motor vehicle and motor vehicle engines, Motor vehicle pollution, Penalties, Reporting and recordkeeping requirements.
Title 40, chapter I, part 80 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7414, 7545 and 7601(a).
The revisions and additions read as follows:
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Office of Procurement and Property Management, Department of Agriculture.
Interim rule.
The Office of Procurement and Property Management (OPPM) of the Department of Agriculture (USDA) amends the Agriculture Acquisition Regulation (the “AGAR”) by adding a new clause entitled “Fire Suppression and Liability.”
Section 8205 of the Agricultural Act of 2014 (2014 Act) provided the USDA Forest Service with permanent authority for stewardship end results contracting by adding a new section 604 to the Healthy Forests Restoration Act of 2003. Section 8205 contains a requirement that the agency use a fire liability provision in all stewardship contracts and agreements that is in substantially the same form as the fire liability provisions contained in the integrated resource timber contract in Forest Service contract numbered 2400–13, part H, section H.4. This interim rule establishes a new clause in the AGAR, the USDA supplement to the Federal Acquisition Regulation (FAR), for use in Integrated Resource Service Contracts (IRSC) subject to the FAR. This new AGAR clause addresses fire liability on stewardship contracts as requred in the 2014 Agricultural Act.
This interim rule is effective May 22, 2014. Interested parties should submit written comments on this interim rule, to the Department of Agriculture before June 23, 2014 to be considered in the formulation of a final rule.
Submit comments identified in the subject line as “48 CFR 436 Interim Rule” by any of the following methods:
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Please contact Curt Brown, Office of Procurement and Property Management, by telephone at (202) 720–0840, by email at
Individuals who use telecommunication devices for the deaf may call the Federal Information Relay Service at 800–877–8339 between 8:00 a.m. and 8:00 p.m., Eastern Daylight Time, Monday through Friday.
Beginning in 1998 with the enactment of section 347 of the Department of the Interior and Related Agencies Appropriation Act, 1999, the Forest Service has been authorized to carry out Stewardship End Results Contracting Projects; first on a pilot basis and then, through a succession of subsequent
This interim rule establishes a new AGAR clause for use in stewardship contracts subject to the FAR. This clause addresses fire liability on stewardship end results contracts as required in the 2014 Agricultural Act. The text of the clause is closely specified in the law. Therefore, it has been determined that this rule should become effective upon publication. However, comments are requested with regard to the interim rule.
USDA certifies that this proposed rule will not have a significant impact on a substantial number of small entities as defined in the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. There is no additional submission required as a result of this action. The rule will not have a significant impact on the small business community or on a substantial number of small businesses. The Department invites comment on its estimates for the potential impact of this rulemaking on small businesses.
The Paperwork Reduction Act does not apply because the proposed rule does not impose any record keeping or information collection requirements that require approval by the Office of Management and Budget.
The USDA has determined that this interim rule falls within this category of actions and that no extraordinary circumstances exist which would require preparation of an environmental assessment or environmental impact statement.
This interim rule has been reviewed under USDA procedures and Executive Order 12866 on Regulatory Planning and Review. It has been determined that this is not a significant rule. This rule would not have an annual effect of $100 million or more on the economy, nor would it adversely affect productivity, competition, jobs, the environment, public health and safety, or State or local governments. This interim rule would not interfere with an action taken or planned by another agency, nor raise new legal or policy issues. Finally, this interim rule would not alter the budgetary impact of entitlement, grant, user fee, or loan programs or the rights and obligations of beneficiaries of such programs. Accordingly, this interim rule is not subject to Office of Management and Budget (OMB) review under Executive Order (E.O.) 12866.
The USDA has analyzed this interim rule in accordance with the principles and criteria contained in E.O. 12630 and determined that the rule would not pose the risk of a taking of private property.
The USDA has reviewed this interim rule under E.O. 12778, Civil Justice Reform. Under this rule, (1) all State and local laws and regulations that conflict with this rule or that impede its full implementation would be preempted; (2) no retroactive effect would be given to this interim rule; and (3) it would require administrative proceedings before parties may file suit in court challenging its provisions.
The USDA has considered this interim rule under the requirements of E.O. 13132 on federalism and has determined that this rule conforms to the federalism principles in the E.O. The rule would not impose any compliance costs on the States; and would not have any substantial direct effects on the States, the relationship between the Federal Government and the States, or the distribution of power and responsibilities among the various levels of government. Moreover, this interim rule does not have tribal implications as defined by E.O. 13175, Consultation and Coordination with Indian Tribal Governments, and therefore advance consultation with tribes is not required.
The USDA has reviewed this interim rule under E.O. 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or use and has determined that this rule would not constitute a significant energy action as defined in the E.O.
Pursuant to Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531–1538), the USDA assessed the effects of this interim rule on State, local, and tribal governments and the private sector. This rule would not compel the expenditure of $100 million, or more by any State, local, or tribal government, or anyone in the private sector. Therefore, a statement under section 202 of the Act is not required.
Government procurement.
For the reasons set forth in the preamble, the Department of Agriculture amends 48 CFR Chapter 4, in the following manner:
5 U.S.C. 301 and 40 U.S.C. 486(c).
Insert the clause at
5 U.S.C. 301 and 40 U.S.C. 486(c).
As prescribed in § 436.578, the following clause may be inserted in contracts awarded fir Intergrated Resource Service Contracts (IRSC) awarded for the Forest Service.
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National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule.
NMFS issues final specifications for the 2014 summer flounder fishery, and the 2015 summer flounder, scup, and black sea bass fisheries. This final rule specifies allowed harvest limits for both commercial and recreational fisheries. This action prohibits federally permitted commercial fishing vessels from landing summer flounder in Delaware in 2014 due to continued quota repayment from previous years' overages. These actions are necessary to comply with regulations implementing the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan, and to ensure compliance with the Magnuson-Stevens Fishery Conservation and Management Act. The intent of this action is to establish harvest levels and other management measures to ensure that these species are not overfished or subject to overfishing in 2014 and 2015.
Effective May 22, 2014, through December 31, 2015.
Copies of the specifications document, consisting of an Environmental Assessment (EA), Initial Regulatory Flexibility Analysis (IRFA), and other supporting documents used by the Summer Flounder, Scup, and Black Sea Bass Monitoring Committees and Scientific and Statistical Committee (SSC), are available from Dr. Christopher Moore, Executive Director, Mid-Atlantic Fishery Management Council, Suite 201, 800 North State Street, Dover, DE 19901. The specifications document is also accessible via the Internet at
Moira Kelly, Fishery Policy Analyst, (978) 281–9218.
The Mid-Atlantic Fishery Management Council (Council) and the Atlantic States Marine Fisheries Commission (Commission) cooperatively manage the summer flounder, scup, and black sea bass fisheries under the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan (FMP). Fishery specifications in these fisheries include various catch and landing subdivisions, such as the commercial and recreational sector annual catch limits (ACLs), annual catch targets (ACTs), sector-specific landing limits (i.e., the commercial fishery quota and recreational harvest limit (RHL)), and research set-aside (RSA) established for the upcoming fishing year. Details of each subdivision appear later in this rule.
The FMP and its implementing regulations establish the Council's process for establishing specifications. All requirements of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), including the 10 national standards, also apply to specifications.
The management units specified in the FMP include summer flounder (
NMFS will establish the 2014 recreational management measures (i.e., minimum fish size, possession limits, and fishing seasons) for summer flounder, scup, and black sea bass by publishing proposed and final rules in the
This action specifies the allowed harvest limits for the commercial and recreational fisheries for the 2014 summer flounder fishery, and the 2015 summer flounder, scup, and black sea bass fisheries. Specifications for all three species for fishing year 2014 were implemented in 2012 (December 31, 2012; 77 FR 76942). This rule modifies the 2014 summer flounder specifications based an updated stock assessment conducted by the NMFS Northeast Fisheries Science Center (NEFSC) in July 2013, and establishes the 2015 summer flounder specifications. This rule also establishes the 2015 scup and black sea bass specifications. This rule makes no changes to the 2014 scup specifications, previously established in 2012, and the 2014 black sea bass specifications, last revised in 2013 (June 21, 2013; 78 FR 37475). This action will establish the following specifications:
The summer flounder stock was declared rebuilt in 2011. The new (2013) stock assessment utilized to derive specification recommendations indicates that summer flounder were not overfished and that overfishing did not occur in 2012, the most recent year of available data.
The overfishing limit (OFL) for 2014 was estimated to be 26.76 million lb (12,138 mt). Based on this information, the 2014 ABC for summer flounder is 23.94 million lb (9,950 mt). The OFL for 2015 is projected to be 27.06 million lb (12,275 mt), and the 2015 ABC for summer flounder is 22.77 million lb (10,329 mt). Consistent with the summer flounder regulations, the sum of the recreational and commercial sector ACLs is equal to the ABC. ACL is an expression of total catch (i.e., landings and dead discarded fish). To derive the ACLs, the sum of the sector-specific estimated discards is removed from the ABC to derive the landing allowance. The resulting landing allowance is apportioned to the commercial and recreational sectors by applying the FMP allocation criteria: 60 percent to the commercial fishery and 40 percent to the recreational fishery. Using this method ensures that each sector is accountable for its respective discards, rather than simply apportioning the ABC by the allocation percentages to derive the sector ACLs. Although the derived ACLs are not split exactly 60/40, the landing portions of the ACLs preserve the 60/40 allocation split, consistent with the FMP. This process results in a commercial ACL of 12.89 million lb (5,837 mt) for 2014, and 13.34 million lb (6,049 mt) for 2015. The recreational ACLs are 9.07 million lb (4,113 mt) for 2014 and 9.44 million lb (4,280 mt) for 2015. The ACTs (both commercial and recreational) are equal to their respective ACL for both 2014 and 2015. Removing the estimated discards and 3 percent of the TAL for RSA, the commercial summer flounder quotas are 10.51 million lb (4,767 mt) for 2014 and 10.74 million lb (4,870 mt) for 2015. The RHLs are 7.01 million lb (3,179 mt) for 2014 and 7.16 million lb (3,247 mt) for 2015.
Table 3 presents the final allocations for 2014, by state, with the commercial portion of the RSA deduction. In December 2013, NMFS published a document (78 FR 78786) indicating what, if any, adjustments would be required to the state commercial summer flounder quotas as a result of commercial sector overages. Those overages have been applied to the new specifications for fishing year 2014 as well, and are presented in Table 3. Any commercial quota adjustments to account for overages will be published prior to the start of the 2015 fishing year. As described in the document, consistent with the quota-setting procedures for the FMP, summer flounder overages are determined based upon landings for the period January-October 2013, plus any previously unaccounted for overages. Table 3 summarizes, for each state, the commercial summer flounder percent shares as outlined in § 648.102 (c)(1)(i), the resultant 2014 commercial quotas (both initial and after deducting the RSA), the quota overages as described above, and the final adjusted 2014 commercial quotas, after deducting the RSA.
Table 4 presents the initial allocations of summer flounder for 2015, by state, with and without the commercial portion of the RSA deduction. These state quota allocations for 2015 are preliminary and are subject to change if there are overages of states' quotas carried over from a previous fishing year, as well as any adjustments needed after the 2015 RSA projects are awarded. The final commercial quota allocations will be announced in a
Table 3 shows that, for Delaware, the amount of overharvest from previous years is greater than the amount of commercial quota allocated to Delaware for 2014. As a result, there is no quota available for 2014 in Delaware. The regulations at § 648.4(b) provide that Federal permit holders, as a condition of their permit, must not land summer flounder in any state that the Administrator, Greater Atlantic Region, NMFS, has determined no longer has commercial quota available for harvest. Therefore, landings of summer flounder in Delaware by vessels holding commercial Federal summer flounder permits are prohibited for the 2014 calendar year, unless additional quota becomes available through a quota transfer and is announced in the
Using the appropriate control rule and applying the Council's risk policy, the ABC for scup is 33.77 million lb (15,320 mt) for fishing year 2015. The stock assessment review upon which the specifications are based indicates that scup biomass is currently lower than in recent years. Therefore, the catch limits are lower than those for fishing year 2014, but are still relatively high compared to recent landings.
The scup management measures specify that the ABC is equal to the sum of the commercial and recreational sector ACLs. It was recommended that the ACTs (both commercial and recreational) should be set equal to the respective ACLs for fishing year 2015. Therefore, the 2015 commercial sector ACL/ACT is 26.35 million lb (11,950 mt) and the 2015 recreational sector ACL/ACT is 7.43 million lb (3,370 mt). After 840,990 lb (381 mt) of RSA and discards (commercial: 5.11 million lb (2,321 mt); recreational: 630,000 lb (285 mt)) are removed, the 2015 commercial quota is 20.60 million lb (9,343 mt) and the 2015 recreational harvest limit is 6.60 million lb (2,991 mt).
The scup commercial quota is divided into three commercial fishery quota periods. If there is a commercial overage applicable to the 2015 scup commercial quota, a document will be published prior to the start of the 2015 fishing year. The period quotas, after deducting for RSA, are detailed in Table 6. Unused Winter I quota may be carried over for use in the Winter II period. The Winter I possession limit will drop to 1,000 lb (454 kg) upon attainment of 80 percent of that period's allocation.
An increase in the Winter II commercial scup possession limit from 2,000 lb (907 kg) to 12,000 lb (5,443 kg) is also being implemented in this action. Because the commercial fishery has under-harvested the scup quota in recent years, this increase in the possession limit is expected to increase efficiency in the scup fishery. The quota period possession limits are shown in Table 7. The increase in the Winter II possession limit does not impact the potential additional increase as a result of a quota transfer from Winter I. If the Winter I quota is not fully harvested, the remaining quota is transferred to Winter II. The Winter II possession limit may be adjusted (in association with a transfer of unused Winter I quota to the Winter II period) via notification in the
The 2015 black sea bass ABC is 5.50 million lb (2,494 mt), equal to the 2013 and 2014 fishing years' ABC. The fishing year 2015 commercial ACL and ACT are 2.60 million lb (1,180 mt), the recreational ACL and ACT are 2.90 million lb (1,314 mt), the commercial quota is 2.17 million lb (986 mt), and the RHL is 2.26 million lb (1,026 mt). The quotas include reductions for RSA (3 percent) and discards.
On March 31, 2014, NMFS published proposed specifications for public notice and comment. NMFS received one letter containing comments on three issues. The one commenter suggested that the quotas should be reduced by 50 percent, that exempted fishing permits (discussed under the RSA sections) were unnecessary, and that the scup possession limit should not be increased.
NMFS disagrees with each of those statements. The quotas established through this final rule were based on the best available science, as recommended by the Council's SSC. Thus, NMFS did not take the suggestion to reduce the quotas by 50%. The RSA program continues to provide a mechanism to fund research and compensate vessel owners through the sale of fish harvested under the research quota. This program provides valuable scientific information and fosters cooperative research throughout the region. Further, the scup quota has not been fully harvested in several years and the Council has concluded that a Winter II possession limit closer to the Winter I possession limit of 20,000 lb would allow the industry to fish more efficiently. Thus, for this reason, NMFS did not implement the suggestion that the scup possession limit should not be increased.
The Administrator, Greater Atlantic Region, NMFS, determined that this final rule is necessary for the conservation and management of the summer flounder, scup, and black sea bass fisheries and that it is consistent with the Magnuson-Stevens Act and other applicable laws.
These specifications are exempt from the procedures of Executive Order 12866.
This final rule does not duplicate, conflict, or overlap with any existing Federal rules.
A FRFA was prepared pursuant to 5 U.S.C. 604(a), and incorporates the IRFA, a summary of the significant issues raised by the public comments in response to the IRFA, NMFS's responses to those comments, and a summary of the analyses completed to support the action. A copy of the EA//IRFA is available from the Council (see
The preamble to the proposed rule included a detailed summary of the analyses contained in the IRFA, and that discussion is not repeated here.
A description of the reasons why this action is being taken, and the objectives of and legal basis for this final rule, is contained in the preambles to the proposed rule and this final rule and is not repeated here.
No changes to the proposed rule were required to be made as a result of public comments. None of the comments received raised specific issues regarding the economic analyses summarized in the IRFA or the economic impacts of the rule more generally. For a summary of the comments received, and the responses thereto, refer to the “Comments and Responses” section of this preamble.
The Small Business Administration defines a small business in the commercial harvesting sector as a firm with receipts (gross revenues) of up to $5.0 and $19.0 million for shellfish and for finfish business, respectively. A small business in the recreational fishery is a firm with receipts of up to $7.0 million. The categories of small entities likely to be affected by this action include commercial and charter/party vessel owners holding an active Federal permit for summer flounder, scup, or black sea bass, as well as owners of vessels that fish for any of these species in state waters. The Council estimates that the 2014–2015 specifications could affect 986 entities that are small and 6 that are large, assuming average revenues for the 2010–2013 period. The majority of the permitted vessels readily fall within the definition of small business. Estimates of costs associated with this rule are discussed further below.
No additional reporting, recordkeeping, or other compliance requirements are included in this final rule.
Specification of commercial quotas and possession limits is constrained by the conservation objectives set forth in the FMP and implemented at 50 CFR part 648 under the authority of the Magnuson-Stevens Act. Economic impacts of changes in year-to-year quota specifications may be offset by adjustments to such measures as commercial fish sizes, changes to mesh sizes, gear restrictions, or possession and trip limits that may increase efficiency or value of the fishery. For 2014 and 2015, this final rule implements one such measure: Increasing the scup Winter II possession limit. Therefore, the economic impact analysis of the action is evaluated on the different levels of quota specified in the alternatives and the increase in the possession limit. While the overall scup catch limits have been decreasing slightly, the scup quota has been significantly under-harvested in recent years. As a result, the increase in the scup possession limit is intended to offset the quota decrease by allowing the fleet to fish more efficiently. The ability of NMFS to minimize economic impacts for this action is constrained to approving quota levels that provide the maximum availability of fish while still ensuring that the required objectives and directives of the FMP, its implementing regulations, and the Magnuson-Stevens Act are met. In particular, the Council's SSC has made recommendations for the 2014–2015 ABC level for all three stocks. NMFS considers these recommendations to be consistent with National Standard 2. Establishing catch levels higher than the SSC ABC recommendations is not permitted under the Magnuson-Stevens Act.
The economic analysis for the 2014–2015 specifications assessed the impacts for quota alternatives that achieve the aforementioned objectives. The Council analyzed three sets of combined catch limit alternatives for the 2014–2015 summer flounder, scup, and black sea bass fisheries, even though the 2014 scup and black sea bass catch limits are not being considered for modification. Of these, one alternative, labeled Alternative 3 for each species, contained the most restrictive options (i.e., lowest total landing levels) for each fishery: Commercial quotas of 9.18 million lb (4,164 mt) for summer flounder, 10.68 million lb (4,844 mt) for scup, and 1.09 million lb (494 mt) for black sea bass; and recreational harvest limits of 6.12 million lb (2,776 mt) for summer flounder, 3.01 million lb (1,365 mt) for scup, and 1.14 million lb (517 mt) for black sea bass. The catch limits associated with Alternative 3 pre-date the ABC framework, thus the information for this alternative is presented in terms of landing levels. Please see the EA for a detailed discussion on this alternative. While the Alternative 3 measures would achieve the objectives of the proposed action for each of three species, they have the highest potential adverse economic impacts on small entities in the form of potential foregone fishing opportunities. Alternative 3 was not preferred by the Council because the other alternatives considered are expected have lower adverse impacts on small entities while achieving the stated objectives of sustaining the summer flounder, scup, and black sea bass stocks, consistent with the FMP and Magnuson-Stevens Act.
Another alternative, Alternative 2 (status quo), would maintain the current 2014 ABC for summer flounder of 22.24 million lb (10,088 mt). Alternative 2 (status quo) would implement the following ABCs in 2015: Summer flounder, 22.24 million lb (10,088 mt); scup, 35.99 million lb (16,325 mt); and black sea bass, 5.5 million lb (2,494 mt). This alternative is not consistent with the goals and objectives of the FMP and the Magnuson-Stevens Act. The status quo alternative would result in fishing limits for the 2014 summer flounder fishery and for the 2015 summer flounder and scup fisheries which are higher than the recommended levels. This could result in overfishing of the resources and substantially compromise the mortality and/or stock rebuilding objectives for each species, contrary to laws and regulations.
Likewise, a “true” no action alternative, wherein no quotas are adjusted for 2014 or established for 2015, was excluded from analysis because it is not consistent with the goals and objectives of the FMP and the Magnuson-Stevens Act. Implementation of the no action alternative in 2014 or 2015 would substantially complicate the approved management programs for these three species. NMFS is required under the FMP's implementing regulations to implement specifications for these fisheries on an annual basis, and for up to 3 years. The no action alternative would result in no fishing limits for 2015 and would maintain a fishing limit for the 2014 summer flounder fishery which is higher than the recommended level. This could result in overfishing of the resources and substantially compromise the mortality and/or stock rebuilding objectives for each species, contrary to laws and regulations.
Through this final rule, NMFS implements Alternative 1 (the Council's preferred alternative). Under this alternative, NMFS would implement the ABCs in 2014 for summer flounder (21.94 million lb (9,950 mt)). This final
The revenue decreases associated with allocating a portion of available catch to the RSA program are expected to be minimal (approximately between $300 and $1,000 per vessel), and are expected to yield important benefits associated with improved fisheries data. It should also be noted that fish harvested under the RSA program can be sold, and the profits used to offset the costs of research. As such, total gross revenues to the industry are not expected to decrease substantially, if at all, as a result of this final rule authorizing RSA for 2014 and 2015.
Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, a small entity compliance guide will be sent to all holders of Federal permits issued for the summer flounder, scup, and black sea bass fisheries. In addition, copies of this final rule and guide (i.e., permit holder letter) are available from NMFS (see
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule.
Pursuant to its emergency authority, NMFS renews an emergency action that implemented, among other measures, mandatory monitoring (VMS) and observer requirements (pre-trip notification and a 100% deep water closure zone unless a NMFS-certified observer was on board) in the California thresher shark/swordfish drift gillnet (mesh size ≥14 inches) (DGN) fishery during the August 15, 2013 to January 31, 2014 fishing season, and would have immediately shut down the fishery for the calendar year in the event of a sperm whale interaction in the DGN fishery. This renewing action is necessary to ensure that the conservation measures continue to provide protection for sperm whales until permanent measures are in place. Specifically, per recommendations of the Pacific Offshore Cetacean Take Reduction Team, NMFS is currently developing a rule under authority of the Marine Mammal Protection Act (MMPA) in order to adequately monitor the DGN fishery and reduce the risk of sperm whale interactions.
This rule is effective from May 22, 2014, through August 5, 2014. Comments must be received on or before June 23, 2014.
Requests for copies of documents supporting the temporary rule may be obtained from the West Coast Regional Office, NMFS, 501 W. Ocean Blvd., Ste. 4200, Long Beach, CA 90802.
You may submit comments on the temporary rule, identified by NOAA–NMFS–2013–0131, by any of the following methods:
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Requests for copies of documents supporting this rule may be obtained from the West Coast Regional Office, NMFS, 501 W. Ocean Blvd., Ste. 4200, Long Beach, CA 90802
Craig Heberer, telephone: 706–431–9440 (#303), fax: 562–980–4047, email:
The DGN fishery is managed under the Federal Fishery Management Plan for U.S. West Coast Fisheries for Highly Migratory Species (HMS FMP). The HMS FMP was prepared by the Pacific Fishery Management Council (Council) and is implemented under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (MSA) by regulations at 50 CFR part 660.
On September 4, 2013, NMFS published in the
The temporary rule expired on January 31, 2014, which corresponded with the traditional end of the DGN fishing season. From February 1 through April 30, the DGN fishery is prohibited from operating inside the West Coast Exclusive Economic Zone (EEZ). See 50 CFR 660.713(d). No fishing effort has occurred during this period due to the distance involved in transiting to fishing areas beyond the EEZ, coupled with a lack of swordfish availability. The DGN fishery is allowed access inside the EEZ off the coasts of California and Oregon from May 1 through August 14, but is prohibited from operating within 75 miles of the coast. Very little DGN fishing effort typically takes place during this time due mainly to the lack of swordfish availability. The core of the DGN fishery, and virtually all of the contemporary fishing effort, takes place from August 15 through January 31. NMFS took public comment on the original temporary rule commencing September 4, 2013, and ending on October 4, 2013.
This action is necessary to retain in force the earlier temporary regulations, while NMFS develops a permanent rule to adequately monitor the DGN fishery and minimize sperm whale interactions by the fishery. Without the temporary regulations remaining in place, the DGN fishery may not be properly monitored, and therefore might risk additional negative sperm whale interactions, contrary to the MMPA and ESA.
The Assistant Administrator for Fisheries, NOAA (AA) finds that providing the public with notice and an opportunity comment on this action would be contrary to the public interest, and therefore waives this requirement of the Administrative Procedure Act (APA).
An owner/operator of a federally-permitted DGN fishing vessel has informed NMFS that he may fish for thresher shark/swordfish on or after May 1, 2014, when the DGN fishery can legally operate within the EEZ, but outside 75 miles from the coast of California. Prohibiting unobserved DGN vessels from fishing in the EEZ off California in waters seaward of the 1,100 fm (2,012 m) depth contour, and setting a limit of one serious injury/mortality to sperm whales interacting with DGN gear, will protect sperm whales from potential interactions with the DGN fishery, such as occurred in 2010, where two sperm whales became entangled in DGN fishing gear. NMFS' long term research vessel sightings of sperm whales in the California Current indicate that 90 percent of sightings occurred in waters deeper than 1,100 fm (2,012 m). Further, NMFS' analyses of DGN observer data indicate that an average of approximately 13 percent of total annual DGN fishing occurred in the deeper water zone in years 2009 through 2011. NMFS' Southwest Fisheries Science Center scientists have suggested that reducing spatial overlap of fishing effort and sperm whale habitat may be an effective means to reduce the risk of sperm whale bycatch. There is no action that NMFS can take through the normal rulemaking process that would enable NMFS to implement the requirement for observer monitoring of DGN vessels in the deeper water area and the cap of one sperm whale serious injury/mortality for the DGN fishery to reduce the bycatch risk of this species before the DGN fishery begins actively fishing in waters inhabited by sperm whales. This emergency action enables NMFS to keep the fishery operating while a permanent rule is under development, thus avoiding unnecessary adverse biological and economic impacts.
Without this rule, sperm whales will be at risk of unauthorized takings, possibly leading to injury or death, which is contrary to the public interest in protecting these marine mammals. Due to the urgent need to protect sperm whales before NMFS issues any final rule, NMFS is waiving the public notice and opportunity for comment under the APA. However although this action is being implemented without notice and request for advance public comment, NMFS is seeking public comment on this rule for purposes of identifying possible measures for long-term management.
For these same reasons stated above, pursuant to 5 U.S.C. 553(d)(3), the AA finds good cause to waive the full 30-day delay in effectiveness for this rule. It would be contrary to the public interest if this rule does not become effective immediately, because the DGN fishery can fish within 75 nautical miles of shore starting May 1 through August 14. Without this emergency rule, NMFS would not provide 100 percent observer coverage in the deeper water area with higher concentrations of sperm whales, or be able to close the fishery in the event that there is one serious injury or mortality to a sperm whale in the DGN fishery. These measures are needed to provide adequate protections for sperm whales during the 2014–2015 DGN fishing season while a permanent rule is under development. For these reasons, there is good cause to waive the requirement for delayed effectiveness. The need to implement these measures in a timely manner constitutes good cause under authority contained in 5 U.S.C. 553(d)(3), to make the rule effective immediately upon publication in the
Because notice and opportunity for comment are not required pursuant to 5 U.S.C. 553 or any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are inapplicable. Therefore, a regulatory flexibility analysis is not required and has not been prepared.
This rule has been determined to be not significant for purposes of Executive Order 12866. A Regulatory Impact Review was completed and is available upon request from the NMFS, Southwest Region.
Fisheries, Fishing, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, 50 CFR part 660 is amended as follows:
16 U.S.C. 1801
(f)
(2) As soon as practicable following determination by the Regional Administrator that one serious injury to, or mortality of, a sperm whale has resulted from drift gillnet fishing during the period of this emergency rule, the Regional Administrator will contact the fleet via VMS communication and provide the effective date and time that all fishing by vessels registered for use under a drift gillnet permit are prohibited from swordfish fishing until August 5, 2014. Coincidental with the VMS communication, the Regional Administrator will also file a closure notice with the Office of the Federal Register for publication; notify all permit holders by postal mail, and a post a notice on the NMFS regional Web site.
(3) Drift gillnet vessel owners/operators are required to notify the NMFS-designated observer provider at least 48 hours prior to departing on all fishing trips. Vessel owners/operators must provide to the observer provider their name, contact information, vessel name, port of departure, and estimated date and time of departure, and a telephone number at which the owner or operator may be contacted during the business day (8 a.m. to 5 p.m.) to indicate whether an observer will be required on the subject fishing trip.
(4) Drift gillnet vessel owners/operators must provide NOAA OLE with a declaration report before the vessel leaves port on a trip in which the vessel will be used to fish swordfish with drift gillnet gear in U.S. ocean waters between 0 and 200 nm offshore of California.
(5) Drift gillnet vessel owners are required to install a NMFS OLE type-approved mobile transceiver unit and to arrange for a NMFS OLE type-approved communications service provider to receive and relay transmissions to NMFS OLE prior to swordfish fishing during the period of this emergency rule. Vessel owners/operators shall perform the same requirements consistent with 50 CFR 660.14.
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Notice of public meeting and availability of preliminary technical support document.
The U.S. Department of Energy (DOE) will hold a public meeting to discuss and receive comments on the preliminary analysis it has conducted for purposes of establishing energy conservation standards for residential dehumidifiers. The meeting will cover the analytical framework, models, and tools that DOE is using to evaluate potential standards for this product; the results of preliminary analyses performed by DOE for this product; the potential energy conservation standard levels derived from these analyses that DOE could consider for this product; and any other issues relevant to the development of energy conservation standards for this product. In addition, DOE encourages written comments on these subjects. To inform interested parties and to facilitate this process, DOE has prepared an agenda, a preliminary technical support document (TSD), and briefing materials, which are available on the DOE Web site at:
DOE will hold a public meeting on Friday, June 13, 2014 from 1 p.m. to 4 p.m., in Washington, DC. Additionally, DOE plans to allow for participation in the public meeting via webinar. DOE will accept comments, data, and other information regarding this rulemaking before or after the public meeting, but no later than July 21, 2014. See section IV, “Public Participation,” of this notice of public meeting (NOPM) for details.
The public meeting will be held at the U.S. Department of Energy, Forrestal Building, Room 8E–089, 1000 Independence Avenue SW., Washington, DC 20585–0121.
Interested persons may submit comments, identified by docket number EERE–2012–BT–STD–0027 and/or Regulation Identification Number (RIN) 1904–AC81, by any of the following methods:
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The rulemaking Web page can be found at:
For detailed instructions on submitting comments and additional information on the rulemaking process, see section IV, “Public Participation,” of this document. For further information on how to submit a comment, review other public comments and the docket, or participate in the public meeting, contact Ms. Brenda Edwards at (202) 586–2945 or by email:
Ms. Ashley Armstrong, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies, EE–5B, 1000 Independence Avenue SW., Washington, DC 20585–0121. Email:
In the Office of the General Counsel, contact Ms. Elizabeth Kohl, U.S. Department of Energy, Office of the General Counsel, GC–71, 1000 Independence Avenue SW., Washington, DC 20585–0121. Telephone: (202) 586–7796. Email:
Title III, Part B
EPCA established energy conservation standards for dehumidifiers
EPCA also requires that, not later than 6 years after the issuance of a final rule establishing or amending a standard, DOE publish a notice of proposed rulemaking (NOPR) proposing new standards or a notice of determination that the existing standards do not need to be amended. (42 U.S.C. 6295(m)(1))
DOE is required to consider standards that: (1) Achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified; and (2) result in significant conservation of energy. (42 U.S.C. 6295(o)(2)(A) and (o)(3)(B)) To determine whether a proposed standard is economically justified, DOE will, after receiving comments on the proposed standard, determine whether the benefits of the standard exceed its burdens, considering, to the greatest extent practicable, the following seven factors:
1. The economic impact of the standard on manufacturers and consumers of products subject to the standard;
2. The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products which are likely to result from the standard;
3. The total projected amount of energy savings likely to result directly from the standard;
4. Any lessening of the utility or the performance of the covered products likely to result from the standard;
5. The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;
6. The need for national energy conservation; and
7. Other factors the Secretary of Energy considers relevant.
Before proposing a standard, DOE typically seeks public input on the analytical framework, models, and tools that DOE will use to evaluate standards for the product at issue and the results of preliminary analyses DOE performed for the product. Today's notice announces the availability of the preliminary TSD, which details the preliminary analyses, discusses the comments DOE received from interested parties on the Framework Document, and summarizes the preliminary results of DOE's analyses. In addition, DOE is announcing a public meeting to solicit feedback from interested parties on its analytical framework, models, and preliminary results.
In initiating this rulemaking, DOE prepared a Framework Document, “Energy Conservation Standards Rulemaking Framework Document for Residential Dehumidifiers,” which describes the procedural and analytical approaches DOE anticipates using to evaluate energy conservation standards for residential dehumidifiers. This document is available at:
DOE held a public meeting on September 24, 2012, at which it described the various analyses DOE would conduct as part of the rulemaking, such as the engineering analysis, the life-cycle cost (LCC) and payback period (PBP) analyses, and the national impact analysis (NIA). Representatives for manufacturers, trade associations, environmental and energy efficiency advocates, and other interested parties attended the meeting.
Comments received since publication of the Framework Document have helped DOE identify and resolve issues related to the preliminary analyses. Chapter 2 of the preliminary TSD summarizes and addresses the comments received.
For the products covered in this rulemaking, DOE conducted in-depth technical analyses in the following areas: (1) Engineering; (2) markups to determine product price; (3) energy use; (4) life-cycle cost and payback period; and (5) national impacts. The preliminary TSD that presents the methodology and results of each of these analyses is available at
DOE also conducted, and has included in the preliminary TSD, several other analyses that support the major analyses or are preliminary analyses that will be expanded upon for a notice of proposed rulemaking (NOPR) if DOE proposes that amended energy conservation standards are technologically feasible, economically justified, and would save a significant amount of energy. These analyses include: (1) The market and technology assessment; (2) the screening analysis, which contributes to the engineering analysis; and (3) the shipments analysis, which contributes to the LCC and PBP analysis and NIA. In addition to these analyses, DOE has begun preliminary work on the manufacturer impact analysis and has identified the methods to be used for the consumer subgroup analysis, the emissions analysis, the employment impact analysis, the regulatory impact analysis, and the utility impact analysis. DOE will expand on these analyses in any notice of proposed rulemaking (NOPR).
The engineering analysis establishes the relationship between the cost and efficiency levels of the product that DOE is evaluating as potential energy conservation standards. This relationship serves as the basis for cost-benefit calculations for individual consumers, manufacturers, and the nation. The engineering analysis identifies representative baseline
DOE derives customer prices based on manufacturer markups, retailer markups, distributor markups, contractor markups (where appropriate), and sales taxes. In deriving these markups, DOE determines the major distribution channels for product sales, the markup associated with each party in each distribution channel, and the existence and magnitude of differences between markups for baseline products (baseline markups) and higher-efficiency products (incremental markups). DOE calculates both overall baseline and overall incremental markups based on the markups at each step in each distribution channel. Chapter 6 of the preliminary TSD addresses the markups analysis.
The energy use analysis provides estimates of the annual energy consumption of residential dehumidifiers. The energy use analysis seeks to estimate the range of energy consumption of the products that meet each of the efficiency levels considered in a given rulemaking as they are used in the field. DOE uses these values in the LCC and PBP analyses and in the NIA. Chapter 7 of the preliminary TSD addresses the energy use analysis.
The LCC and PBP analyses determine the economic impact of potential standards on individual consumers. The LCC is the total cost of purchasing, installing and operating a considered product over the course of its lifetime. The LCC analysis compares the LCCs of products designed to meet possible energy conservation standards with the LCC of the product likely to be installed in the absence of standards. DOE determines LCCs by considering: (1) Total installed cost to the purchaser (which consists of manufacturer selling price, distribution chain markups, sales taxes, and installation cost); (2) the operating cost of the product (energy cost, water and wastewater cost in some cases, and maintenance and repair cost); (3) product lifetime; and (4) a discount rate that reflects the real consumer cost of capital and puts the LCC in present-value terms. The PBP represents the number of years needed to recover the increase in purchase price (including installation cost) of higher-efficiency products through savings in the operating cost of the product. PBP is calculated by dividing the incremental increase in installed cost of the higher efficiency product, compared to the baseline product, by the annual savings in operating costs. Chapter 8 of the preliminary TSD addresses the LCC and PBP analyses.
The NIA estimates the national energy savings (NES) and the net present value (NPV) of total consumer costs and savings expected to result from amended standards at specific efficiency levels (referred to as candidate standard levels). DOE calculated NES and NPV for each candidate standard level for residential dehumidifiers as the difference between a base-case forecast (without amended standards) and the standards-case forecast (with standards). Cumulative energy savings are the sum of the annual NES determined for the lifetime of the products shipped from 2019 to 2048. The NPV is the sum over time of the discounted net savings each year, which consists of the difference between total operating cost savings and increases in total installed costs. Critical inputs to this analysis include shipments projections, estimated product lifetimes, product installed costs and operating costs, product annual energy consumption, the base case efficiency projection, and discount rates. Chapter 10 of the preliminary TSD addresses the NIA.
DOE invites input from the public on all the topics described above. The preliminary analytical results are subject to revision following further review and input from the public. A complete and revised TSD will be made available upon issuance of a NOPR. The final rule establishing any amended energy conservation standards will contain the final analytical results and will be accompanied by a final rule TSD.
DOE encourages those who wish to participate in the public meeting to obtain the preliminary TSD from DOE's Web site and to be prepared to discuss its contents. The preliminary TSD is available at:
Furthermore, DOE welcomes all interested parties, regardless of whether they participate in the public meeting, to submit in writing by July 21, 2014 comments, data, and information on matters addressed in the preliminary TSD and on other matters relevant to consideration of energy conservation standards for residential dehumidifiers.
The public meeting will be conducted in an informal conference style. A court reporter will be present to record the minutes of the meeting. There shall be no discussion of proprietary information, costs or prices, market shares, or other commercial matters regulated by United States antitrust laws.
After the public meeting and the closing of the comment period, DOE will consider all timely-submitted comments and additional information obtained from interested parties, as well as information obtained through further analyses. Afterwards, the Department will publish either a determination that the standards for residential dehumidifiers need not be amended or a NOPR proposing to amend those standards. The NOPR will include proposed energy conservation standards for the products covered by the rulemaking, and members of the public will be given an opportunity to submit written and oral comments on the proposed standards.
The time and date of the public meeting are listed in the
Please note that foreign nationals participating in the public meeting are subject to advance security screening procedures which require advance notice prior to attendance at the public meeting. If a foreign national wishes to participate in the public meeting, please
DOE requires visitors to have laptops and other devices, such as tablets, checked upon entry into the building. Please report to the visitor's desk to have devices checked before proceeding through security.
The purpose of the meeting is to receive comments and to help DOE understand potential issues associated with this rulemaking. DOE must receive requests to speak at the meeting before May 30, 2014 at 4:00 p.m. DOE must receive a signed original and an electronic copy of statements to be given at the public meeting before May 30, 2014 at 4:00 p.m.
You can attend the public meeting via webinar, and registration information, participant instructions, and information about the capabilities available to webinar participants will be published on the following Web site:
Any person who has an interest in today's notice or who is a representative of a group or class of persons that has an interest in these issues may request an opportunity to make an oral presentation. Such persons may hand-deliver requests to speak, along with a computer diskette or CD in WordPerfect, Microsoft Word, PDF, or text (ASCII) file format to Ms. Brenda Edwards at the address shown in the
Persons requesting to speak should briefly describe the nature of their interest in this rulemaking and provide a telephone number for contact. DOE requests persons selected to be heard to submit an advance copy of their statements at least two weeks before the public meeting. At its discretion, DOE may permit any person who cannot supply an advance copy of their statement to participate, if that person has made advance alternative arrangements with the Building Technologies Program. The request to give an oral presentation should ask for such alternative arrangements.
DOE will designate a DOE official to preside at the public meeting and may also employ a professional facilitator to aid discussion. The meeting will not be a judicial or evidentiary-type public hearing, but DOE will conduct it in accordance with section 336 of EPCA. (42 U.S.C. 6306) A court reporter will record the proceedings and prepare a transcript. DOE reserves the right to schedule the order of presentations and to establish the procedures governing the conduct of the public meeting. After the public meeting, interested parties may submit further comments on the proceedings as well as on any aspect of the rulemaking until the end of the comment period.
The public meeting will be conducted in an informal conference style. DOE will present summaries of comments received before the public meeting, allow time for presentations by participants, and encourage all interested parties to share their views on issues affecting this rulemaking. Each participant will be allowed to make a prepared general statement (within DOE-determined time limits) prior to the discussion of specific topics. DOE will permit other participants to comment briefly on any general statements.
At the end of all prepared statements on a topic, DOE will permit participants to clarify their statements briefly and comment on statements made by others. Participants should be prepared to answer questions from DOE and other participants concerning these issues. DOE representatives may also ask questions of participants concerning other matters relevant to this rulemaking. The official conducting the public meeting will accept additional comments or questions from those attending, as time permits. The presiding official will announce any further procedural rules or modification of the above procedures that may be needed for the proper conduct of the public meeting.
A transcript of the public meeting will be posted on the DOE Web site and will also be included in the docket, which can be viewed as described in the Docket section at the beginning of this notice. In addition, any person may buy a copy of the transcript from the transcribing reporter.
DOE will accept comments, data, and other information regarding this rulemaking before or after the public meeting, but no later than the date provided at the beginning of this notice. Please submit comments, data, and other information as provided in the
Pursuant to 10 CFR 1004.11, any person submitting information that he or she believes to be confidential and exempt by law from public disclosure should submit two copies: One copy of the document including all the information believed to be confidential and one copy of the document with the information believed to be confidential deleted. DOE will make its own determination as to the confidential status of the information and treat it according to its determination.
Factors of interest to DOE when evaluating requests to treat submitted information as confidential include: (1) A description of the items; (2) whether and why such items are customarily treated as confidential within the industry; (3) whether the information is generally known by or available from other sources; (4) whether the information has previously been made available to others without obligation concerning its confidentiality; (5) an explanation of the competitive injury to the submitting person which would result from public disclosure; (6) a date upon which such information might lose its confidential nature due to the passage of time; and (7) why disclosure of the information would be contrary to the public interest.
The Secretary of Energy has approved publication of this NOPM.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain Rockwell Collins TDR–94 and TDR–94D Mode select (S) transponders that are installed on airplanes. This proposed AD was prompted by instances where the TDR–94 and TDR–94D Mode S transponders did not properly respond to Mode S Only All-Call interrogations when the airplane transitioned from a ground to airborne state. This proposed AD would require inspecting the setting of the airplane type code category strapping and require either modifying the airplane type code category setting or installing the software upgrade to convert the affected transponders to the new part number. We are proposing this AD to correct the unsafe condition on these products.
We must receive comments on this proposed AD by July 7, 2014.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
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For service information identified in this proposed AD, contact Rockwell Collins, Inc., Collins Aviation Services, 350 Collins Road NE., M/S 153–250, Cedar Rapids, IA 52498–0001; telephone: 888–265–5467 (U.S.) or 319–265–5467; fax: 319–295–4941 (outside U.S.); email:
You may examine the AD docket on the Internet at
Ben Tyson, Aerospace Engineer, Wichita Aircraft Certification Office, FAA, 1801 Airport Road, Room 100, Wichita, Kansas 67209; phone: 316–946–4174; fax: 316–946–4107; 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 were notified that Bombardier CL604 airplanes in Eurocontrol airspace were not transmitting the appropriate Mode S replies. In at least one case, the flight crews switched to the other installed transponder, resulting in normal operation. Rockwell Collins, Inc. confirmed that other types of airplane could exhibit this same unsafe condition. As a result of the issue in Eurocontrol airspace, EASA issued Airworthiness Directive 2010–0003R1, effective date January 11, 2010.
The TDR–94 and TDR–94D Mode S transponder internal software does not correctly implement the air/ground override function when the airplane type code strapping is set to any value other than (1) or (0) and the airplane rotation speed is greater than 100 knots. The error in the air/ground override function inhibits the Mode S Only All-Call replies. This condition, if not corrected, could result in increased pilot and air traffic controller workload as well as reduced separation of airplanes.
We reviewed Rockwell Collins, Inc. Service Information Letter 07–2, Revision No. 1, 523–0810069–101000, dated September 2, 2008; Service Bulletin 505, 523–0816034–001000, dated September 2, 2008; Service Bulletin 507, 523–0816423–301000, dated Revision 3, dated December 5, 2011; Service Bulletin 508, 523–0817821–001000, dated September 16, 2009; and Service Bulletin 509, 523–0817822–001000, dated September 16, 2009. The service information describes procedures for verifying the airplane type category strapping is correctly set and installing the software upgrade to convert the affected transponders to the new part number.
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 inspecting the setting of the airplane type code category strapping and require either modifying the airplane type code category setting or installing the software upgrade to convert the affected transponders to the new part number.
We estimate that this proposed AD affects 8,000 products installed on airplanes of U.S. registry.
We estimate the following costs to comply with this proposed AD:
We estimate the following costs to do any necessary corrections that would be required based on the results of the proposed inspection. We have no way of determining the number of airplane that might need these corrections:
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 7, 2014.
None.
(1) This AD applies to the following Rockwell Collins, Inc. part number (P/N) Mode S transponders that are known to be installed on but not limited to the airplanes listed in paragraphs (c)(2)(i) through (c)(2)(xiv) of this AD, except for those airplanes listed in paragraphs (c)(3)(i) through (c)(3)(vi) of this AD, that have been modified in-production or in-service:
(i) TDR–94: CPN 622–9352–008, 622–9352–108, 622–9352–308, 622–9352–408; and
(ii) TDR–94D: CPN 622–9210–008, 622–9210–108, 622–9210–308, 622–9210–408.
(2) The products listed in paragraphs (c)(1)(i) and (c)(1)(ii) of this AD may be installed on but not limited to the following airplanes featuring weight-on wheels input to the transponder, certificated in any category:
(i) ATR42 and ATR72;
(ii) Bombardier (Canadair) CL–600–2B16 (604 Variant);
(iii) Bombardier CL–600–2B19 (RJ100 and RJ200);
(iv) Cessna 525, serial numbers (S/N) 525–0600 through 525–0684 (CJ1);
(v) Cessna 525A, S/N 525A–0300 through 525A–0438 (CJ2);
(vi) Cessna 525B, S/N 525B–0001 through 525B–0293 (CJ3);
(vii) Cessna 560, S/N 560–0751 through 560–0802 (Citation Encore);
(viii) Cessna 560XL, S/N 560–6001 and subsequent;
(ix) Dassault Aviation Mystere-Falcon 50;
(x) Dassault Aviation Mystere-Falcon 900;
(xi) Dassault Aviation Falcon 2000;
(xii) Dassault Aviation Falcon 2000EX;
(xiii) Piaggio Aero Industries P.180 (Avanti and Avanti II); and
(xiv) SAAB 2000.
(3) This AD action does not apply to the excepted airplane models, identified in paragraphs (c)(3)(i) through (c)(3)(vi) of this AD, that have been modified in-production or in-service. They do not have the unsafe condition described in this AD.
(i) Dassault airplanes that have been modified in-service or in-production following the applicable Dassault Aviation service information as listed in table 1 of paragraph (c)(3)(i) of this AD.
(ii) Model ATR 42 airplanes or ATR 72 airplanes that had P/N 622–9210–108 transponders installed in production using ATR modification 05614 or installed in-service using ATR Service Bulletin ATR42–34–0167 or ATR Service Bulletin ATR72–34–1094, as applicable.
(iii) SAAB Model 2000 airplanes that had P/N 622–9210–008 transponders installed in production using SAAB modifications 6231, 6243, and 6249 or installed in-service using SAAB Service Bulletins 2000–34–066, 2000–34–072, and 2000–34–076.
(iv) Bombardier Aerospace (Canadair) airplanes Model CL–600–2B16 (604 Variant) that had P/N 622–9210–008 transponders installed and incorporated the corrective actions recommended in the Bombardier Advisory Wire AW 604–34–0078 using the instructions in Bombardier Aerospace Service Bulletin 604–34–054 (drawing 604–70482 Engineering Order, Revison D–1) or using a service request for product support. Bombardier Aerospace (Canadair) airplanes Model CL–600–2B19 (RJ100 and RJ200) that had P/N 622–9210–008 transponders installed in production using Bombardier Aerospace Modification TC601R16789 or in service using Bombardier Aerospace Service Bulletin 601R–34–142 (Modification TC601R16790).
(v) Cessna Aircraft Company Models 525, 525A, and 525B airplanes that had P/N 622–9352–008 transponders installed in production using Cessna Engineering Change Records (ECRs) 55298, 58654, and 59567; and Model 525B airplanes that had P/N 622–9352–008 transponders installed in service using Cessna Aircraft Company Service Bulletin SB525B–34–03 or SB525B–34–08. Cessna Aircraft Company Models 525, 525A, 525B, 560, and 560XL airplanes that had P/N 622–9210–008 transponders installed in production using Cessna ECRs 55298, 58654, 59567, 56135, and 58032; and Model 525B airplanes that had P/N 622–9210–008 transponders installed in service using Cessna Service Bulletin SB525B–34–03 or SB525B–34–08.
(vi) Piaggio Aero Industries Model P.180 (Avanti) airplanes that had P/N 622–9210–008 transponders installed in production using Piaggio modification 80–0773 or in service using Piaggio Service Bulletin SB–80–0227. Piaggio Aero Industries Model P.180 (Avanti II) airplanes that had P/N 622–9210–008 transponders installed in production using Piaggio modification 80–0588 and 80–0598.
Joint Aircraft System Component (JASC)/Air Transport Association (ATA) of America Code 34, Navigation.
This AD was prompted by instances where the TDR–94 and TDR–94D Mode S transponders did not properly respond to Mode S Only All-Call interrogations when the airplane transitioned from a ground to airborne state. We are issuing this AD to detect and correct Mode S transponders that do not respond correctly to Mode S Only All-Call interrogations, which could result in increased pilot and air traffic controller workload as well as reduced separation of airplanes.
Comply with this AD within the compliance times specified, unless already done.
Within the next 2 years after the effective date of this AD, inspect the airplane type code category strapping setting for a value of zero (0) or one (1) following Rockwell Collins, Inc. Service Information Letter 07–2, 523–0810069–101000, Revision 1, dated September 2, 2008. If the airplane type code category strapping is set to a value of zero (0) or one (1), no further action is required by this AD.
If the airplane type code category strapping is not set to a value of zero (0) or one (1), within two years after the effective date of this AD, do the actions required in either paragraph (h)(1) or (h)(2) of this AD.
(1) Modify the airplane type code category strapping setting to a value of zero (0) or one (1) following Rockwell Collins, Inc. Service Information Letter 07–2, 523–0810069–101000, Revision 1, dated September 2, 2008.
(2) Install a software upgrade to convert the part numbers of the transponders to the new part numbers using the following service information, as applicable:
More than one of the bulletins may apply to your particular P/N transponder, but each bulletin brings different capabilities and associated costs. We recommend reviewing each bulletin to determine the optimal choice for your installation.
(i) Service Bulletin 505, 523–0816034–001000, dated September 2, 2008;
(ii) Service Bulletin 507, 523–0816423–301000, Revision 3, dated December 5, 2011;
(iii) Service Bulletin 508, 523–0817821–001000, dated September 16, 2009; or
(iv) Service Bulletin 509, 523–0817822–001000, dated September 16, 2009.
(1) The Manager, Wichita Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (j)(1) of this AD.
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(1) For more information about this AD, contact Ben Tyson, Aerospace Engineer, Wichita ACO, FAA, 1801 Airport Road,
(2) For service information identified in this AD, contact Rockwell Collins, Inc., Collins Aviation Services, 350 Collins Road NE., M/S 153–250, Cedar Rapids, IA 52498–0001; telephone: 888–265–5467 (U.S.) or 319–265–5467; fax: 319–295–4941 (outside U.S.); email:
Food and Drug Administration, HHS.
Proposed order.
The Food and Drug Administration (FDA) is proposing to reclassify antigen based rapid influenza virus antigen detection test systems intended to detect influenza virus directly from clinical specimens that are currently regulated as influenza virus serological reagents from class I into class II with special controls and into a new device classification regulation.
Submit either electronic or written comments on the proposed order by August 20, 2014. See section XI for the proposed effective date of any final order that may publish based on this proposed order.
You may submit comments, identified by Docket No. FDA–2014–N–0440, by any of the following methods:
Submit electronic comments in the following way:
•
Submit written submissions in the following ways:
• Mail/
Stefanie Akselrod, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 5517, Silver Spring, MD 20993–0002, 301–796–6188.
The Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended by the Medical Device Amendments of 1976 (the 1976 amendments) (Pub. L. 94–295), the Safe Medical Devices Act of 1990 (Pub. L. 101–629), and the Food and Drug Administration Modernization Act of 1997 (FDAMA) (Pub. L. 105–115), the Medical Device User Fee and Modernization Act of 2002 (Pub. L. 107–250), the Medical Devices Technical Corrections Act (Pub. L. 108–214), the Food and Drug Administration Amendments Act of 2007 (Pub. L. 110–85), and the Food and Drug Administration Safety and Innovation Act (FDASIA) (Pub. L. 112–144), among other amendments, established a comprehensive system for the regulation of medical devices intended for human use. Section 513 of the FD&C Act (21 U.S.C. 360c) established three categories (classes) of devices, reflecting the regulatory controls needed to provide reasonable assurance of their safety and effectiveness. The three categories of devices are class I (general controls), class II (special controls), and class III (premarket approval).
Under the FD&C Act, FDA clears or approves the three classes of medical devices for commercial distribution in the United States through three regulatory processes: Premarket approval (PMA), product development protocol, and premarket notification (a premarket notification is generally referred to as a “510(k)” after the section of the FD&C Act where the requirement is found). The purpose of a premarket notification is to demonstrate that the new device is substantially equivalent to a legally marketed predicate device. Under section 513(i) of the FD&C Act, a device is substantially equivalent if it has the same intended use and technological characteristics as a predicate device, or has different technological characteristics but data demonstrate that the new device is as safe and effective as the predicate device and does not raise different issues of safety or effectiveness.
FDA determines whether new devices are substantially equivalent to previously offered devices by means of premarket notification procedures in section 510(k) of the FD&C Act (21 U.S.C. 360(k)) and part 807 of the regulations (21 CFR part 807). Section 510(k) of the FD&C Act and the implementing regulations in part 807, subpart E, require a person who intends to market a medical device to submit a premarket notification submission to FDA before proposing to begin the introduction, or delivery for introduction into interstate commerce, for commercial distribution of a device intended for human use.
In accordance with section 513(f)(1) of the FD&C Act, devices that were not in commercial distribution before May 28, 1976, the date of enactment of the 1976 amendments, generally referred to as postamendment devices, are classified automatically by statute into class III without any FDA rulemaking process. These devices remain in class III and require premarket approval, unless FDA classifies the device into class I or class II by issuing an order finding the device to be substantially equivalent, in accordance with section 513(i) of the FD&C Act, to a predicate device that does not require premarket approval or the device is reclassified into class I or class II. The Agency determines whether new devices are substantially equivalent to predicate devices by means of premarket notification procedures in section 510(k) of the FD&C Act and part 807 of FDA's regulations.
Section 513(f)(2) of the FD&C Act establishes procedures for “de novo” risk-based review and classification of postamendment devices automatically classified into class III by section
On July 9, 2012, FDASIA was enacted. Section 608(a) of FDASIA (126 Stat. 1056) amended section 513(e) of the FD&C Act, changing the process for reclassifying a device from rulemaking to an administrative order. Section 608(b) of FDASIA (126 Stat. 1056) amended section 515(b) of the FD&C Act (21 U.S.C. 360e(b)), changing the process for requiring premarket approval for a preamendments class III device from rulemaking to an administrative order.
FDA is publishing this document to propose the reclassification of antigen based rapid influenza detection test (RIDT) systems intended to detect influenza virus antigen directly from clinical specimens that are currently regulated as influenza virus serological reagents under § 866.3330 (21 CFR 866.3330) from class I into class II with special controls and into a new device classification regulation.
Section 513(e) of the FD&C Act governs reclassification of classified preamendments device types and postamendments devices that have been classified into class I or II under section 513(f)(2) or (f)(3) of the FD&C Act. This section provides that FDA may, by administrative order, reclassify a device based upon “new information.” FDA can initiate a reclassification under section 513(e) of the FD&C Act or an interested person may petition FDA to reclassify an eligible device type. The term “new information,” as used in section 513(e) of the FD&C Act, includes information developed as a result of a reevaluation of the data before the Agency when the device was originally classified, as well as information not presented, not available, or not developed at that time. (See, e.g.,
Reevaluation of the data previously before the Agency is an appropriate basis for subsequent action where the reevaluation is made in light of newly available authority (see
FDA relies upon “valid scientific evidence” in the classification process to determine the level of regulation for devices. To be considered in the reclassification process, the “valid scientific evidence” upon which the Agency relies must be publicly available. Publicly available information excludes trade secret and/or confidential commercial information, e.g., the contents of a pending PMA. (See section 520(c) of the FD&C Act (21 U.S.C. 360j(c)).) Section 520(h)(4) of the FD&C Act, added by FDAMA, provides that FDA may use, for reclassification of a device, certain information in a PMA 6 years after the application has been approved. This can include information from clinical and preclinical tests or studies that demonstrate the safety or effectiveness of the device but does not include descriptions of methods of manufacture or product composition and other trade secrets.
Section 513(e)(1) of the FD&C Act sets forth the process for issuing a final order for reclassifying a device. Specifically, prior to the issuance of a final order reclassifying a device, the following must occur: (1) Publication of a proposed order in the
FDAMA added section 510(m) to the FD&C Act. Section 510(m) of the FD&C Act provides that a class II device may be exempted from the premarket notification requirements under section 510(k) of the FD&C Act, if the Agency determines that premarket notification is not necessary to assure the safety and effectiveness of the device.
In the
There are approximately 12 RIDTs classified under § 866.3330 actively marketed today. Because these devices are easy to use and provide results within 15 to 30 minutes, they are widely used in point-of-care settings where rapid diagnosis of influenza is important for early case identification.
We are proposing that RIDTs classified under § 866.3330 be identified under the new name of influenza virus antigen detection test system. An influenza virus antigen detection test system is a device intended for the qualitative detection of influenza viral antigens directly from clinical specimens in patients with signs and symptoms of respiratory infection. The test aids in the diagnosis of influenza infection and provides epidemiological information on influenza. Due to the propensity of the virus to mutate, new strains emerge over time that may potentially affect the performance of these devices. Because influenza is highly contagious and may lead to an acute respiratory tract infection causing severe illness and even death, the accuracy of these devices has serious public health implications.
On June 13, 2013, FDA convened a meeting of the Microbiology Advisory Panel to discuss the regulation of RIDTs that are currently regulated as class I devices. The primary reasons for convening the panel to discuss this topic were continued reports of poor real world RIDT performance by the RIDTs in the field compounded by the emergence of new influenza strains with a potential to create a public health emergency. The occurrence of the 2009 flu pandemic emphasized that these RIDTs, while widely used by clinicians in point of care settings, performed poorly resulting in misdiagnosed cases and, according to anecdotal reports, sometimes with serious or even fatal consequences.
The panel discussion included a discussion of the labeled performance of the currently available RIDTs and presentations by representatives from the Centers for Disease Control and Prevention (CDC) and the Association of Public Health Laboratories (APHL) citing the evidence of performance of these tests in real life settings. One of the important issues raised was that the performance of an influenza antigen detecting test is subject to the changes in the virus as it mutates over time. The panel members were asked to discuss whether there is sufficient evidence to suggest that general controls under class I regulation are or are not sufficient to provide a reasonable assurance that current and future RIDTs are safe and effective and whether the addition of special controls would provide reasonable assurance of the device's safety and effectiveness if the general controls alone do not. Panel members provided the opinion that sufficient data and information exist to indicate that special controls are needed to mitigate the risks of false positive and false negative results from RIDTs and provide a reasonable assurance of safety and effectiveness of the device and to identify the special controls needed. The panel members indicated that placing RIDTs into class II with special controls was appropriate.
FDA is proposing that all RIDTs currently regulated under § 866.3330 be reclassified into class II with special controls under the new device name “influenza virus antigen detection test system.” FDA believes that special controls that: (1) Identify the minimum acceptable performance criteria; (2) identify the appropriate comparator for establishing performance of new assays; and (3) call for mandatory annual analytical reactivity testing of contemporary influenza strains, including testing of newly emerging strains that pose a danger of public health emergency, would provide reasonable assurance of safety and effectiveness of these devices.
Section 510(m) of the FD&C Act provides that a class II device may be exempt from the premarket notification requirements under section 510(k), if the Agency determines that premarket notification is not necessary to provide reasonable assurance of the safety and effectiveness of the device. For this device, FDA believes that premarket notification is necessary to provide reasonable assurance of safety and effectiveness and, therefore, does not intend to exempt the device from the premarket notification requirements.
Although an RIDT is intended for use as an aid in the diagnosis of influenza infection in conjunction with clinical symptoms and other laboratory findings, failure of the device to perform as indicated (producing erroneous or inaccurate results) could mislead the physician and cause inappropriate or delayed medical treatment of a patient. Failure of the test to produce accurate test results can also lead to inaccurate epidemiological information that may contribute to inappropriate public health responses and to facilitate spread of the infection in a community. After considering the information discussed by the Microbiology Devices Panel during the June 13, 2013, meeting in conjunction with the published literature on the subject and the FDA Medical Device Reporting system reports, FDA believes the following risks are associated with RIDTs:
• A false negative result may lead to failure to provide a correct diagnosis and the appropriate treatment of infection caused by influenza virus and may contribute to unnecessary treatment for another suspected condition.
• A false negative result will also provide incorrect epidemiological information leading to failure to initiate appropriate corrective measures to control and prevent additional infections.
• A false positive result on the other hand may lead to delayed treatment of a respiratory infection caused by another etiologic agent, which could potentially result in a more serious patient outcome.
• A false positive result will also provide incorrect epidemiological information on the presence of influenza in a community, which may result in unnecessary patient isolation or contact limitations and in unnecessary close contact investigations.
• A lack of result due to a device malfunction also may lead to a delayed diagnosis and an inadequate treatment regime and, again, lead to delayed epidemiological information on the presence of influenza in a community, contributing to the spread of the infection.
Due to the mounting evidence and reports from the scientific community about the poor sensitivity of the RIDTs currently on the market and the corresponding risks to health associated with low sensitivity in combination with a rapidly evolving influenza genome with the potential for a public health emergency, FDA convened a meeting of the Microbiology Devices Panel of the Medical Devices Advisory Committee in order to discuss a proposal to reclassify RIDTs in § 866.3330 from class I to class II with special controls. Consistent with the opinions expressed by the experts on the panel, FDA believes that the establishment of special controls, in addition to general controls, is necessary to mitigate the risks to health not mitigated by the general controls and provide a reasonable assurance of safety and effectiveness for these devices. While we believe that general controls continue to adequately address the risk to health caused by a lack of result due to a device malfunction we believe special controls, in addition to general controls, are needed to control
FDA believes that the following special controls are necessary, in addition to general controls, to mitigate the risks to health described in section VI.
1. The device's sensitivity and specificity performance characteristics must meet one of the following two minimum clinical performance criteria in order to be cleared for marketing and to remain on the market:
• If the manufacturer chooses to compare the device to viral culture:
○ The sensitivity estimate for the device when testing for Influenza A must be at least at the 90 percent point estimate with a lower bound of the 95 percent confidence interval that is greater than or equal to 80 percent. The sensitivity estimate for the device when testing for Influenza B must be at least at the 80 percent point estimate with a lower bound of the 95 percent confidence interval that is greater than or equal to 70 percent.
○ The specificity estimate for the device when testing for Influenza A and Influenza B must be at least at the 95 percent point estimate with a lower bound of the 95 percent confidence interval that is greater than or equal to 90 percent.
• If the manufacturer chooses to compare the device to an appropriate molecular comparator method:
○ The positive percent agreement for the device when testing for Influenza A and Influenza B must be at least at the 80 percent point estimate with a lower bound of the 95 percent confidence interval that is greater than or equal to 70 percent.
○ The negative percent agreement for the device when testing for Influenza A and Influenza B must be at least at the 95 percent point estimate with a lower bound of the 95 percent confidence interval that is greater than or equal to 90 percent.
2. When performing testing to demonstrate the device meets the requirements in paragraph 1 of this section, a currently appropriate and FDA accepted comparator method must be used to establish assay performance in clinical studies.
3. Annual analytical reactivity testing of the device must be performed with contemporary influenza strains. This annual analytical reactivity testing must meet the following criteria:
• The appropriate strains to be tested will be identified by FDA in consultation with CDC and sourced from CDC or a CDC-designated source. If the annual strains are not available from CDC, FDA will identify an alternative source for obtaining the requisite strains.
○ The testing must be conducted according to a standardized protocol considered and determined by FDA to be acceptable and appropriate.
○ By July 31 of each calendar year, the results of the last 3 years of annual analytical reactivity testing must be included as part of the device's labeling. If a device has not been on the market long enough for 3 years of annual reactivity testing since the device was given marketing authorization, then the results of every designated annual reactivity testing since the device was given marketing authorization by FDA, including the results of annual analytical reactivity testing performed on the viral strains provided that calendar year, must be included. The results must be presented as part of the device's labeling in a tabular format, which includes the detailed information for each virus tested as described in the certificate of authentication, either by:
○ Placing the results directly in the device's § 809.10(b) (21 CFR 809.10(b)) compliant labeling in a section of the labeling devoted to annual analytical reactivity testing; or
○ Providing a hyperlink in a section of the device's labeling to the manufacturer's public Web site where the annual analytical reactivity testing data can be found. If this option is chosen, the manufacturer's home page must publicly provide a hyperlink, which can easily be found and executed, to the annual analytical reactivity testing results and the Web page containing those annual analytical reactivity testing results must allow unrestricted viewing access. This includes being easy to locate the results from the primary part of the manufacturer's Web site that discusses the device.
4. If an emergency, or a potential emergency, is declared by the Secretary of Health and Human Services (HHS) for an influenza viral strain:
• Within 30 days from the date that FDA notifies manufacturers that characterized viral samples are available for test evaluation, the manufacturer must have testing performed on the device with that viral strain in accordance with a standardized protocol considered and determined by FDA to be acceptable and appropriate. The procedure and location of testing may depend on the nature of the emerging virus.
• Within 60 days from the date that CDC first makes characterized viral samples available to manufacturers and continuing until the emergency, or potential emergency, is declared by the Secretary of HHS to be over, the results of the influenza emergency analytical reactivity testing, including the detailed information for the virus tested as described in the certificate of authentication, must be included as part of the device's labeling in a tabular format, either by:
○ Placing the table directly in the device's § 809.10(b) compliant labeling in the section of the labeling devoted to annual analytical reactivity testing and influenza emergency analytical reactivity testing but separate from the annual analytical reactivity testing tables; or
○ Providing a hyperlink in a section of the device's labeling devoted to annual analytical reactivity testing and influenza emergency analytical reactivity testing to a part of the manufacturer's public Web site where the annual and the emergency analytical reactivity testing data can be found. If this option is chosen, the manufacturer's home page must publicly provide a hyperlink, which can easily be found and executed, to the analytical reactivity and emergency testing results and the Web page containing those annual analytical reactivity testing results must allow unrestricted viewing access.
Table 1 shows the special controls set forth in this order that are needed to address the identified risks for this device not sufficiently addressed by the general controls to provide a reasonable assurance of safety and effectiveness of the device.
If this proposed order is finalized, RIDTs in § 866.3330 will be reclassified into class II with special controls in a new classification regulation at 21 CFR 866.3328. Adherence to the special controls, when finalized, in addition to the general controls, is necessary to provide a reasonable assurance of the safety and effectiveness of the device.
The Agency has determined under 21 CFR 25.34(b) that this action is of type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.
This proposed administrative order establishes special controls that refer to previously approved collections of information found in other FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520). The collections of information in part 807, subpart E, regarding premarket notification submissions have been approved under OMB control number 0910–0120; and the collections of information in 21 CFR part 801 and 21 CFR 809.10 have been approved under OMB control number 0910–0485.
FDA proposes that any final order based on this proposed order become effective 1 year after its date of publication in the
Interested persons may submit either electronic comments regarding this document or the associated Special Controls guideline to
The following reference has been placed on display in the Division of Dockets Management (see
1. Transcript of FDA's Microbiology Devices Panel Meeting, June 13, 2013. (Available at:
Biologics, Laboratories, Medical devices.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, it is proposed that 21 CFR part 866 be amended as follows:
21 U.S.C. 351, 360, 360c, 360e, 360j, 371.
(a)
(b)
(1) The device's sensitivity and specificity performance characteristics must meet one of the following two minimum clinical performance criteria in order to be cleared for marketing and to remain on the market:
(i) If the manufacturer chooses to compare the device to viral culture:
(A) The sensitivity estimate for the device when testing for Influenza A must be at least at the 90 percent point estimate with a lower bound of the 95 percent confidence interval that is greater than or equal to 80 percent. The sensitivity estimate for the device when testing for Influenza B must be at least at the 80 percent point estimate with a lower bound of the 95 percent confidence interval that is greater than or equal to 70 percent.
(B) The specificity estimate for the device when testing for Influenza A and Influenza B must be at least at the 95 percent point estimate with a lower bound of the 95 percent confidence interval that is greater than or equal to 90 percent.
(ii) If the manufacturer chooses to compare the device to an appropriate molecular comparator method:
(A) The positive percent agreement for the device when testing for Influenza A and Influenza B must be at least at the 80 percent point estimate with a lower bound of the 95 percent confidence interval that is greater than or equal to 70 percent.
(B) The negative percent agreement estimate for the device when testing for Influenza A and Influenza B must be at least at the 95 percent point estimate with a lower bound of the 95 percent confidence interval that is greater than or equal to 90 percent.
(2) When performing testing to demonstrate the device meets the requirements in paragraph (b)(1) of this section, a currently appropriate and FDA accepted comparator method must be used to establish assay performance in clinical studies.
(3) Annual analytical reactivity testing of the device must be performed with contemporary influenza strains. This annual analytical reactivity testing must meet the following criteria:
(i) The appropriate strains to be tested will be identified by FDA in consultation with the Centers for Disease Control and Prevention (CDC) and sourced from CDC or a CDC-designated source. If the annual strains are not available from CDC, FDA will identify an alternative source for obtaining the requisite strains.
(ii) The testing must be conducted according to a standardized protocol considered and determined by FDA to be acceptable and appropriate.
(iii) By July 31 of each calendar year, the results of the last 3 years of annual analytical reactivity testing must be included as part of the device's labeling. If a device has not been on the market long enough for 3 years of annual reactivity testing since the device was given marketing authorization, then the results of every designated annual reactivity testing since the device was given marketing authorization by FDA, including the results of annual analytical reactivity testing performed on the viral strains provided that calendar year, must be included. The results must be presented as part of the device's labeling in a tabular format, which includes the detailed information for each virus tested as described in the certificate of authentication, either by:
(A) Placing the results directly in the device's § 809.10(b) of this chapter compliant labeling in a section of the labeling devoted to annual analytical reactivity testing; or
(B) Providing a hyperlink in a section of the device's labeling to the manufacturer's public Web site where the annual analytical reactivity testing data can be found. If this option is chosen, the manufacturer's home page must publicly provide a hyperlink, which can easily be found and executed, to the annual analytical reactivity testing results and the Web page containing those annual analytical reactivity testing results must allow unrestricted viewing access. This includes being easy to locate the results from the primary part of the manufacturer's Web site that discusses the device.
(4) If an emergency, or a potential emergency, is declared by the Secretary of Health and Human Services (HHS) for an influenza viral strain:
(i) Within 30 days from the date that FDA notifies manufacturers that characterized viral samples are available for test evaluation, the manufacturer must have testing performed on the device with that viral strain according to a standardized protocol considered and determined by FDA to be acceptable and appropriate. The procedure and location of testing may depend on the nature of the emerging virus.
(ii) Within 60 days from the date that CDC first makes characterized viral samples available to manufacturers and continuing until the emergency, or potential emergency, is declared by the Secretary of HHS to be over, the results of the influenza emergency analytical reactivity testing, including the detailed information for the virus tested as described in the certificate of authentication, must be included as part of the device's labeling in a tabular format, either by:
(A) Placing the table directly in the device's § 809.10(b) of this chapter compliant labeling in the section of the labeling devoted to annual analytical reactivity testing and influenza emergency analytical reactivity testing but separate from the annual analytical reactivity testing tables; or
(B) Providing a hyperlink in a section of the device's labeling devoted to annual analytical reactivity testing and influenza emergency analytical reactivity testing to a part of the manufacturer's public Web site where the annual and the emergency analytical reactivity testing data can be found. If this option is chosen, the manufacturer's home page must publicly provide a hyperlink, which can easily be found and executed, to the analytical reactivity and emergency testing results and the Web page containing those annual analytical reactivity testing results must allow unrestricted viewing access.
Coast Guard, DHS.
Notice of proposed rulemaking.
The Coast Guard proposes to establish safety zone on the Charleston Harbor in Charleston, South Carolina during the International Outboard Grand Prix (IOGP) 9–11 Patriot Festival, a series of high-speed boat races. The event is scheduled to take place on Friday September 12 through Sunday September 14, 2014. Approximately 25 high-speed race boats are anticipated to participate in the races. This safety zone is necessary to provide for the safety of life and property on navigable waters of the United States during the event. This safety zone would temporarily restrict vessel traffic in a portion of Charleston Harbor. Persons and vessels that are not participating in the races would be prohibited from entering, transiting through, anchoring in, or remaining within the restricted area unless authorized by the Captain of the Port Charleston or a designated representative.
Comments and related material must be received by the Coast Guard on or before June 23, 2014. Requests for public meetings must be received by the Coast Guard on or before June 1, 2014.
You may submit comments identified by docket number using any one of the following methods:
(1)
(2)
(3)
See the “Public Participation and Request for Comments” portion of the
If you have questions on this rule, call or email Chief Warrant Officer Christopher Ruleman, Sector Charleston Office of Waterways Management, Coast Guard; telephone (843) 740–3184, email
We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted without change to
If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online at
To submit your comment online, go to
If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8
To view comments, as well as documents mentioned in this preamble as being available in the docket, go to
Anyone can search the electronic form of 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 a Privacy Act notice regarding our public dockets in the January 17, 2008, issue of the
We do not now plan to hold a public meeting, but you may submit a request for one on or before June 1, 2014 using one of the four methods specified under
The legal basis for the proposed rule is the Coast Guard's authority to establish a safety zone: 33 U.S.C. 1231; 33 U.S.C. 1225; 33 CFR 1.05–1, 33 CFR 6.04–1, 33 CFR 160.5; Department of Homeland Security Delegation No. 0170.1.
The purpose of the proposed rule is to protect the safety of spectator vessels and to ensure safety of life and property on the navigable waters of the United States during the IOGP 9–11 Patriot Festival boat races.
On Friday September 12 through Sunday September 14, 2014 the International Outboard Grand Prix (IOGP) will host “9–11 Patriot Festival” a series of high-speed boat races. The event will be held on a portion of Charleston Harbor in Charleston, South Carolina. Approximately 25 high-speed race boats are anticipated to participate in the races.
The proposed rule would establish a safety zone that encompass certain waters of the Charleston Harbor in Charleston, South Carolina. The safety zone would be enforced daily from 2:30 p.m. through 5:30 p.m. on September 12, 10:30 a.m. through 6:30 p.m. on September 13, and 1:30 p.m. through 5:30 p.m. on September 14, 2014. The safety zone would consist of a regulated area around vessels participating in the event. The regulated area would be as follows: All waters of the Charleston Harbor encompassed within the following points; starting at point 1 in position 32°48′48″ N 079°54′30″ W; thence west to point 2 in position 32°48′48″ N 079°54′54″ W; thence south to point 3 in position 32°48′12″ N 079°55′05″ W; thence south to point 4 in position 32°47′20″ N 079°55′01″ W; thence east to point 5 in position 32°47′21″ N 079°54′31″ W; thence north along the bank back to origin. All coordinates are North American Datum 1983. Persons and vessels, except those participating in the race, would be prohibited from entering, transiting through, anchoring, or remaining within the safety zone unless specifically authorized by the Captain of the Port Charleston or a designated representative. Persons and vessels would be able to request authorization to enter, transit through, anchor in, or remain within the regulated area by contacting the Captain of the Port Charleston by telephone at: (843) 740–7050, or a designated representative via VHF radio on channel 16. If authorization to enter, transit through, anchor in, or remain within the regulated area is granted by the Captain of the Port Charleston or a designated representative, all persons and vessels receiving such authorization would be required to comply with the instructions of the Captain of the Port Charleston or
We developed this proposed rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes or executive orders.
This proposed rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders. The economic impact of this proposed rule is not significant for the following reasons: (1) Although persons and vessels would not be able to enter, transit through, anchor in, or remain within the regulated area without authorization from the Captain of the Port Charleston or a designated representative, they would be able to operate in the surrounding area during the enforcement periods; (2) persons and vessels would still be able to enter, transit through, anchor in, or remain within the regulated area if authorized by the Captain of the Port Charleston or a designated representative; and (3) the Coast Guard would provide advance notification of the regulated area to the local maritime community by Local Notice to Mariners and Broadcast Notice to Mariners.
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601–612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule will not have a significant economic impact on a substantial number of small entities: This proposed rule may affect the following entities, some of which may be small entities: The owners or operators of vessels intending to enter, transit through, anchor in, or remain within that portion of the Charleston harbor encompassed within the safety zone from 2:30 p.m. through 5:30 p.m. on September 12; and from 10:30 a.m. through 6:30 p.m. on September 13; and from 1:30 p.m. through 5:30 p.m. on September 14, 2014. For the reasons discussed in the Regulatory Planning and Review section above, this proposed rule would not have a significant economic impact on a substantial number of small entities.
If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104–121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
This proposed rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and determined that this rule does not have implications for federalism.
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531–1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This proposed rule would not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This proposed rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this proposed rule under Executive Order 13045, Protection of Children From Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children.
This proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
This proposed rule is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.
This proposed rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this proposed rule under Department of Homeland Security Management Directive 023–01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321–4370f), and have made a preliminary determination that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves establishing a safety zone issued in conjunction with a regatta or marine parade, that will be enforced from 2:30 p.m. through 5:30 p.m. on September 12, and from 10:30 a.m. through 6:30 p.m. on September 13; and from 1:30 p.m. through 5:30 p.m. on September 14, 2014. This proposed rule involves establishing a safety zone as described in figure 2–1, paragraph (34)(g), of the Instruction. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 165 as follows:
33 U.S.C. 1231; 33 CFR 1.05–1, 6.04–1, 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
(d)
(2) The Coast Guard will provide notice of the regulated area by Marine Safety Information Bulletins, Local Notice to Mariners, Broadcast Notice to Mariners, and on-scene designated representatives.
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve Illinois's March 28, 2014, State Implementation Plan (SIP) revision to the Chicago area's 1997 8-hour ozone maintenance plan. This maintenance plan revision establishes new transportation conformity Motor Vehicle Emissions Budgets (MVEB) for the year 2025. EPA is approving the allocation of a portion of the safety margin for the volatile organic compounds and oxides of nitrogen to the area's 2025 MVEBs for transportation conformity purposes. This allocation will still maintain the total emissions for the area below the attainment level required by the transportation conformity regulations.
Comments must be received on or before June 23, 2014.
Submit your comments, identified by Docket ID No. EPA–R05–OAR–2014–0274, by one of the following methods:
1.
2.
3.
4.
5.
Michael Leslie, Environmental Engineer, Control Strategies Section, Air Programs Branch (AR–18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 353–6680,
In the Final Rules section of this
Pike and San Isabel National Forests and Cimarron and Comanche National Grasslands, Forest Service, USDA.
Notice of Intent to Prepare an Environmental Impact Statement.
The Pike and San Isabel National Forests Cimarron and Comanche National Grasslands (PSICC) propose to conduct forest restoration activities on 25,000 acres within the 67,000 acre Upper Monument Creek (UMC) analysis area. Treatment activities include mechanical thinning, mastication, hand thinning, and prescribed fire. The treatments will be used singularly or in combination to transition forested plant communities across the landscape towards desired future conditions that are more characteristic of a resilient forest. Resilient forests are better able to respond to large high intensity wildfires, insects and disease outbreaks, and extreme water flows that are known to occur in the project's location along Colorado's Front Range. By protecting against the aforementioned extreme events, resilient forests are better equipped to protect the following identified values at risk; adjoining private property, water quality and quantity, water conveyance facilities, transportation systems, wildlife habitats, heritage sites, municipal watersheds and timber resources, Resilient forests also help attenuate the impacts of increased noxious weeds, sedimentation, and other hydrologic disturbances
In order to successfully complete the amount and types of treatments necessary for the maximum amount of resilience, the PSICC might need to amend the PSICC Land and Resource Management Plan to adjust plan standards and guidelines. Plan standards and guideline amendments might include but are not limited to the following; forest regeneration, big game winter range, wildlife habitat, and allowable levels and types of fire and fuels treatments. Proposed Land and Resource Management Plan amendments will help the PSICC achieve resiliency, and protect the values at risk within in each Land and Resource Management Plan Management Area in the Upper Monument Creek Project Area.
Comments concerning the scope of the analysis must be received by July 7, 2014. The draft environmental impact statement is expected April 2015 and the final environmental impact statement is expected August 2015.
Send written comments to Pikes Peak Ranger District, Attn: UMC Project, 601 South Weber St., Colorado Springs, CO 80903. Comments may also be sent via email to
Allan Hahn, District Ranger, 719–636–1602,
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1–800–877–8339 between 8 a.m. and 8 p.m., Eastern Time, Monday through Friday.
Public meeting notices will be published in the Colorado Springs Gazette, showing locations, dates and times for each public meeting. A Web site is available for current information about the project including maps and descriptions of the planned activities.
The size, severity, and behavior of recent wildfires on the Pike National Forest and along the Front Range have highlighted the risks posed by current forest conditions. The human and environmental costs of wildfire suppression and rehabilitation have seen a significant increase across the region in recent decades. As a result of increasing risks for large fires and extreme water flows, there is a need to make strategic investments in vegetative treatments within the UMC landscape. Strategically placed vegetative treatments reduce the vulnerability of surrounding communities, municipal watersheds, and natural resource values at risk to severe fire and excessive water flows in the future.
In response to the conditions described above, the proposed action is to effectively treat up to 25,000 acres within the 67,000 acre analysis area. Combinations of mechanical thinning with product removal, mastication, hand thinning, and prescribed fire will be used to shift forest conditions across the analysis area towards agreed upon desired conditions. Emphasis will be on retention of older trees in all forest types, opening up densely closed stands of mid to late seral classes, creating a more open forest environment and improving shrub and grass diversity. The forest ecosystems that will be the primary targets for treatments will be the ponderosa pine, dry mixed conifer, aspen, and mesic mixed conifer, with some treatments in lodgepole and oak/ponderosa types. Vegetative treatments will balance the need to protect important values at risk within and adjoing the project area. Values at risk include but are not limited to the following; private property, utility infrastructure, wildlife habitat and fully functioning rivers and streams.
The Proposed Action includes the use of adaptive management principals to enable land managers with public participation to identify management treatments that modify forest structure, pattern, and composition across the landscape to help improve forest resiliency and function in response to the potential for large, high intensity fires and excessive water flows within the Upper Monument Project Area. Adaptive management relies on monitoring change conditions and the result of actions to determine if management changes are needed, and if so, what changes and to what degree.
In this EIS we will use the Iterative Alternative Process, to make changes to that action to keep it viable and responsive to our analysis, and to public comments. We will conclude the analysis with one alternative. The final alternative will reflect the USFS
The Responsible Official for this decision will be the PSICC Forest Supervisor.
This decision will include the type of treatments expected to achieve our objectives, the locations of treatments, the monitoring methods to be used, and the adaptive management strategy that will provide direction for making future adjustments to this decision. This decision will only cover actions within the Upper Monument Creek analysis area.
A primary concern for management of this area is the resiliency of the various forest types, and their resistance to large, high intensity wildfires, and extreme water flows. Maintaining vegetative cover across the landscape will help to minimize the risks to municipal and domestic water sources and other resource values within the project area.
This notice of intent initiates the scoping process, which guides the development of the environmental impact statement. There will be public meetings held in several municipalities during this scoping period. Each of those meetings will be announced in the Colorado Springs Gazette with the location, date, and time included. Comments can also be made through email to the contacts listed above. A Web site is also available for conveying information and submitting comments.
It is important that reviewers provide their comments at such times and in such manner that they are useful to the agency's preparation of the environmental impact statement. Therefore, comments should be provided prior to the close of the comment period and should clearly articulate the reviewer's concerns and contentions.
Comments received in response to this solicitation, including names and addresses of those who comment, will be part of the public record for this proposed action. Comments submitted anonymously will be accepted and considered, however.
National Institute of Food and Agriculture, USDA.
Notice.
Section 7101 of the Agricultural Act of 2014 requires the National Institute of Food and Agriculture (NIFA) to establish a process through which institutions may apply for designation as a NLGCA. Designation as a NLGCA is one way an institution may qualify to receive an exemption from the new matching fund requirement described in Section 7128 of the Agricultural Act of 2014. NLGCA designation also satisfies the eligibility requirement for the Capacity Building Grants for Non-Land Grant Colleges of Agriculture program, which is authorized under 7 U.S.C. 3319i.
This notice outlines the criteria to qualify for NLGCA designation and the steps to obtain such designation. Additionally, McIntire-Stennis and Hispanic-serving Agricultural Colleges and Universities may opt out of their current designation and request NLGCA designation.
Matthew Lockhart (202) 559–5088, (FAX) (202) 401–7752,
In order for an institution to qualify as a NLGCA, it must be a public college or university offering a baccalaureate or higher degree in the study of food and agricultural sciences, as defined in 7 U.S.C. 3103(9).
Section 7101 of the Agricultural Act of 2014 (Pub. L. 113–73), amended 7 U.S.C. 3103 to allow Hispanic-serving Agricultural Colleges and Universities (HSACUs) and State-certified non-land grant institutions eligible to receive funds under the McIntire-Stennis Cooperative Forestry Act of 1962 to opt out of their respective designation to qualify as Non-Land Grant Colleges of Agriculture. For these institutions to be considered for NLGCA designation, an Authorized Representative (AR) of one of these institutions must submit a declaration of the institution's intent not to be considered a HSACU or Cooperating Forestry School, as applicable, to
For example, the email should read “The [insert name of University and City/State] has decided to opt out of being classified as an HSACU/as an institution eligible to receive funds under the McIntire- Stennis Cooperative Forestry Act of 1962, in accordance with Section 7101 of the Agricultural Act of 2014. We plan on applying for designation as a Non-Land-Grant College of Agriculture.”
Requests to opt out of McIntire-Stennis status must be submitted by June 13th for fiscal year 2014, and for fiscal years 2015 through 2018, by December 30th. In accordance with Section 7101, this declaration by such institutions shall remain in effect until September 30, 2018, and will result in the institution not being eligible for funds available to it under its prior status for this period of time.
To request that NIFA provide certification of NLGCA status, an AR must go to
Within 30 days of submission, NIFA will provide the administrative point of contact specified on the request, with a certification of NLGCA designation or a response indicating why the request for certification is being denied. Future Requests for Application issued by NIFA may require NLGCA certification. NIFA will include instructions for attaching the certification to the applications, as appropriate.
This process is in effect immediately upon publication in the
Rural Utilities Service, USDA.
Notice of Funds Availability.
The Rural Utilities Service (RUS), an agency of the United States Department of Agriculture (USDA), announces the availability of $19,300,000 in grant funds and solicits applications for the Distance Learning and Telemedicine (DLT) Grant Program for the Fiscal Year (FY) 2014 competition.
You may submit completed applications for grants on paper or electronically by the following deadline:
•
•
• If the submission deadline falls on Saturday, Sunday, or a Federal holiday, the application is due the next business day.
Copies of the FY 2014 Application Guide and materials for the DLT grant program may be obtained by the following:
(1) The DLT Web site:
(2) Contacting the DLT Program at 202–720–0665.
(1)
(2)
Sam Morgan, Program Management Analyst, Advanced Services Division, Telecommunications Program, Rural Utilities Service, email:
I. Funding Opportunity: Brief introduction to the DLT program.
II. Minimum and Maximum Application Amounts: Projected Available Funding.
III. Eligibility Information: Who is eligible, and what kinds of projects are eligible, what criteria determine basic eligibility.
IV. Application and Submission Information: Where to get application materials, what constitutes a completed application, how and where to submit applications, deadlines, and items that are eligible.
V. Application Review Information: Considerations and preferences, scoring criteria, review standards, and selection information.
VI. Award Administration Information: Award notice information, award recipient and reporting requirements.
VII. Agency Contacts: Web, phone, fax, email, contact name.
DLT grants are specifically designed to provide access to education, training and health care resources for rural Americans.
The DLT Program provides financial assistance to encourage and improve telemedicine services and distance learning services in rural areas through the use of telecommunications, computer networks, and related advanced technologies to be used by students, teachers, medical professionals, and rural residents.
The grants, which are awarded through a competitive process, may be used to fund telecommunications-enabled information, audio and video equipment, and related advanced technologies which extend educational and medical applications into rural areas. Grants are intended to benefit end users in rural areas, who are often not in the same location as the source of the educational or health care service.
As in years past, the FY 2014 DLT Grant Application Guide has been updated based on program experience. All applicants should carefully review and prepare their applications according to instructions in the FY 2014 Application Guide and sample materials when compiling a DLT grant application.
Under 7 CFR 1703.124, the Administrator has determined the maximum amount of a grant to be made available to an applicant in FY 2014 is $500,000, and the minimum amount of a grant is $50,000, subject to availability of funding.
Award documents specify the term of each award. The Agency will make awards and execute documents appropriate to the project prior to any advance of funds to successful applicants. Prior DLT grants cannot be renewed; however, applications from existing DLT awardees for new projects are acceptable (grant applications must be submitted during the application window) and will be evaluated as new applications.
1. Only entities legally organized as one of the following are eligible for DLT financial assistance:
a. An incorporated organization or partnership,
b. An Indian tribe or tribal organization, as defined in 25 U.S.C. 450b,
c. A state or local unit of government,
d. A consortium, as defined in 7 CFR 1703.102,
e. A library, or
f. Other legal entity, including a private corporation organized on a for-profit or not-for-profit basis.
2. Individuals are not eligible for DLT program financial assistance directly.
3. Electric and telecommunications borrowers under the Rural Electrification Act of 1936 (7 U.S.C. 950aaa et seq.) are not eligible for grants.
4. Corporations that have been convicted of a felony (or had an officer or agency acting on behalf of the corporation convicted of a felony)
1. Required matching contributions for grants: See 7 CFR 1703.125(g) and the FY 2014 Application Guide for information on required matching contributions.
a. Grant applicants must demonstrate matching contributions, in cash or in kind (new, non-depreciated items), of at least fifteen (15) percent of the total amount of financial assistance requested. Matching contributions must be used for eligible purposes of DLT grant assistance (see 7 CFR 1703.121, paragraphs IV.H.1.b of this Notice and the FY 2014 Application Guide).
b. Greater amounts of eligible matching contributions may increase an applicant's score (see 7 CFR 1703.126(b)(4) and the FY 2014 Application Guide).
c. Applications that do not provide evidence of the required fifteen percent match will be declared ineligible. See paragraphs IV.H.1.c and V.A.1 of this Notice, and the FY 2014 Application Guide for more information on matching contributions.
d. Matching contributions which are not sufficiently documented, as described in the Application Guide, are subject to disallowance and may result in an ineligible application.
2. The DLT grant program is designed to bring the benefits of distance learning and telemedicine to residents of rural America. Therefore, to be eligible, applicants must deliver distance learning or telemedicine services to entities that operate a rural community facility or to residents of rural areas, at rates calculated to ensure that the benefit of the financial assistance is passed through to such entities or to residents of rural areas.
3. Rurality.
a. All projects proposed for DLT grant assistance must meet a minimum rurality threshold, to ensure that benefits from the projects flow to rural residents. The minimum eligibility score is 20 points.
b. Each application must apply the following criteria to each of its end-user sites, and hubs that are also proposed as end-user sites, to determine a rurality score. The rurality score is the average of all end-user sites' rurality scores.
c. The rurality score is one of the competitive scoring criteria applied to grant applications.
4. Projects located in areas covered by the Coastal Barrier Resources Act (16 U.S.C. 3501 et seq.) are not eligible for financial assistance from the DLT Program. Please see 7 CFR 1703.123(a).
C.
A.
1. The Internet:
2. The DLT Program for paper copies of these materials: 202–720–0665.
1. Applicants are reminded that the DLT Grant Program is intended to meet the educational and health care needs of rural America. Hub sites may be located in rural or non-rural areas, but end-user sites need to be located in rural areas. Non-fixed sites serving a geographical service area may include non-rural areas. However, for determining rurality and NSLP scores every incorporated and non-incorporated city, village or borough must be listed and scored accordingly, including those jurisdictions which are more populated than those defined as rural. The necessary inclusion of non-rural jurisdictions in these types of projects could cause a lower rurality score by virtue of the project's geographic and demographic layout. Because of this, the
2. If a grant application includes a site that is included in any other DLT grant application for FY 2014, or a site that has been included in any DLT grant funded in FY 2013 or FY 2012, the application should contain a detailed explanation of the related applications or grants. The Agency must make a nonduplication finding for each grant approved; however, an apparent but unexplained duplication of funding for a site can prevent such a finding.
1. Detailed information on each item included in the
a. When the table refers to a narrative, it means a written statement, description or other written material prepared by the applicant, for which no form exists. The Agency recognizes that each project is unique and requests narratives to allow applicants to explain their request for financial assistance.
b. When documentation is requested, it means letters, certifications, legal documents, or other third-party documentation that provide evidence that the applicant meets the listed requirement. For example, to confirm rurality scores, applicants can use printouts from the Web site
2. The DLT Application Guide and ancillary materials provide all necessary sample forms and worksheets.
3. While the table in paragraph IV.C.8 of this Notice includes all items of a completed application, the Agency may ask for additional or clarifying information for applications submitted by the deadline which appear to demonstrate that they meet eligibility requirements, but which may require follow up for the Agency.
4. Given the high volume of program interest, to expedite processing applicants are asked to submit the required application items in the order depicted in the FY 2014 Application Guide. The FY 2014 Application Guide specifies the format and order of all required items. Applications that are not assembled and tabbed in the order specified prevent timely determination of eligibility. For applications with inconsistency among submitted copies, the Agency will base its evaluation on the original signed application received by the Agency.
5. DUNS Number. The applicant for a grant must supply a Dun and Bradstreet Data Universal Numbering System (DUNS) number as part of an application. The Standard Form 424 (SF–424) contains a field for the DUNS number. The applicant can obtain the DUNS number free of charge by calling Dun and Bradstreet. Please see
6. Prior to submitting an application, the applicant must register in the System for Award Management (SAM) (formerly Central Contractor Registry, (CCR)).
a. Applicants must register for the SAM at
b. SAM registration must remain active with current information at all times while RUS is considering an application or while a Federal grant award or loan is active. To maintain SAM registration the applicant must review and update the information in the SAM database annually from date of initial registration or from the date of the last update. The applicant must ensure that the information in the database is current, accurate, and complete.
7. Compliance with other federal statutes. The applicant must provide evidence of compliance with other federal statutes and regulations, including, but not limited to the following:
a. 7 CFR part 15, subpart A—Nondiscrimination in Federally Assisted Programs of the Department of Agriculture—Effectuation of Title VI of the Civil Rights Act of 1964.
b. 7 CFR part 3015—Uniform Federal Assistance Regulations.
c. 2 CFR part 417—Governmentwide Debarment and Suspension (Non-procurement).
d. 7 CFR part 3018—New Restrictions on Lobbying.
e. 7 CFR part 3019—Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals, and Non-profit Organizations.
f. 2 CFR part 421—Governmentwide Requirements for Drug-Free Workplace (Financial Assistance).
g. Executive Order 13166, “Improving Access to Services for Persons with Limited English Proficiency. ” For information on limited English proficiency and agency-specific guidance, go to
h. Federal Obligation Certification on Delinquent Debt.
1. Applications submitted on paper.
a. Submit the original application and two (2) copies to RUS; and
b. Submit one (1) additional copy to the state government single point of contact (if one has been designated) at the same time as you submit the application to the Agency for the State where the project is located. If the project is located in more than one State, submit a copy to each state government single point of contact. See
2. Electronically submitted applications. Grant applications may be submitted electronically. Please carefully read the FY 2014 Application Guide for guidance on submitting an electronic application. In particular, we ask that you identify and number each page in the same way you would a paper application so that we can assemble them as you intended.
a. The additional paper copy is not necessary if you submit the application electronically through Grants.gov.
b. Submit one (1) copy to the state government single point of contact (if one has been designated) at the same time as you submit the application to the Agency. If the project is located in more than one State, submit a copy to each state government single point of contact. See
E.
1. Submitting applications on paper.
a. Address paper applications to the Telecommunications Program, RUS, United States Department of Agriculture, 1400 Independence Ave. SW., Room 2845, STOP 1550, Washington, DC 20250–1550. Applications should be marked “Attention: Acting Director, Advanced Services Division.”
b. Paper grant applications must show proof of mailing or shipping by the deadline consisting of one of the following:
(i) A legibly dated U.S. Postal Service (USPS) postmark;
(ii) A legible mail receipt with the date of mailing stamped by the USPS; or
(iii) A dated shipping label, invoice, or receipt from a commercial carrier.
c. Due to screening procedures at the Department of Agriculture, packages arriving via regular mail through the USPS are irradiated, which can damage the contents and delay delivery to the DLT Program. RUS encourages applicants to consider the impact of this procedure in selecting their application delivery method.
2.
a. Applications will not be accepted via fax or electronic mail.
b. Electronic applications for grants must be submitted through the Federal
c. How to use Grants.gov.
(i) Grants.gov contains full instructions on all required passwords, credentialing and software.
(ii) System for Award Management. Submitting an application through Grants.gov requires that your organization list in the System for Award Management (SAM) (formerly Central Contractor Registry, CCR). The Agency strongly recommends that you obtain your organization's DUNS number and SAM listing well in advance of the deadline specified in this notice.
(iii) Credentialing and authorization of applicants. Grants.gov will also require some credentialing and online authentication procedures. These procedures may take several business days to complete, further emphasizing the need for early action by applicants to complete the sign-up, credentialing and authorization procedures at Grants.gov before you submit an application at that Web site.
(iv) Some or all of the SAM and Grants.gov registration, credentialing and authorizations require updates. If you have previously registered at Grants.gov to submit applications electronically, please ensure that your registration, credentialing and authorizations are up to date well in advance of the grant application deadline.
d. RUS encourages applicants who wish to apply through Grants.gov to submit their applications in advance of the deadlines.
e. If a system problem occurs or you have technical difficulties with an electronic application, please use the customer support resources available at the Grants.gov Web site.
1. Paper grant applications must be postmarked and mailed, shipped, or sent overnight no later than July 7, 2014 to be eligible for FY 2014 grant funding. Late applications, applications which do not include proof of mailing or shipping as described in paragraph IV.E.1.b, and incomplete applications are not eligible for FY 2014 grant funding.
2. Electronic grant applications must be received by July 21, 2014 to be eligible for FY 2014 funding. Late or incomplete applications will not be eligible for FY 2014 grant funding.
3. If the submission deadline falls on Saturday, Sunday, or a Federal holiday, the application is due the next business day.
G.
1. Ineligible purposes.
a. Hub sites that are not located in rural areas are not eligible for grant assistance unless they are necessary to provide DLT services to end-users in rural areas. Please see the Application Guide and 7 CFR 1703.101(h).
b. To fulfill the policy goals laid out for the DLT Program in 7 CFR 1703.101, the following table lists purposes for financial assistance and whether each purpose is generally considered to be eligible for the form of financial assistance. Please consult the FY 2014 Application Guide and the regulations (7 CFR 1703.102) for definitions, in combination with the portions of the regulation cited in the table) for detailed requirements for the items in the table. RUS strongly recommends that applicants exclude ineligible items from the grant and match portions of grant application budgets. However, some items ineligible for funding or matching contributions may be vital to the project. RUS encourages applicants to document those costs in the application's budget. Please see the FY 2014 Application Guide for a recommended budget format, and detailed budget compilation instructions.
c. Discounts. The DLT Program regulation provides that manufacturers' and service providers' discounts are not eligible matches. In the past, the Agency did not consider as eligible any proposed match from a vendor, manufacturer, or service provider whose products or services would also be purchased for the DLT project. However, the agency has now determined that if a vendor can demonstrate that the donated product is normally sold at the in-kind matching price, then it will accept such products for in-kind matches, and not a discount. Similarly, if a vendor, manufacturer, or other service provider proposes a cash match (or any in-kind match) when their products or services will be purchased with grant or match funds, such products must be shown to be normally offered at, or higher than, the contract price of the services to be provided on the project.
2. Eligible Equipment & Facilities. Please see the FY 2014 Application Guide for more information regarding eligible and ineligible items. In addition, see 7 CFR 1703.102 for definitions of eligible equipment, eligible facilities, and telecommunications transmission facilities as used in the table above.
3. Apportioning budget items. Many DLT applications propose to use items for a blend of specific DLT eligible project purposes and other purposes. RUS will consider funding such items in the overall context of the project, but such items will affect the competitive value of the project compared with other projects. The proposed project could receive a lower score in the subjective areas of the grant to the extent that its budget requests items that have limited or questionable value to the purposes of distance learning or telemedicine. See the FY 2014 Application Guide for detailed information on how to apportion use and apportioning illustrations.
1. American Samoa, Guam, Virgin Islands, and Northern Mariana Islands applications are exempt from the matching requirement up to a match amount of $200,000 (see 48 U.S.C. 1469a; 91 Stat. 1164).
2. Special Consideration Areas. RUS will offer special consideration to applications that contain at least one end-user site within a trust area or a tribal jurisdictional area. Such applications will be awarded 15 points. The application will need to include a map showing the end-user site(s) located in the trust area or tribal jurisdictional area, as well as the geographical coordinate(s), and physical address(es) of the end-user site(s). The applicant will also need to submit evidence indicating that the area where the end-user site is located is a trust area or a tribal jurisdictional area.
RUS will use one or more of the following resources in determining whether a particular ends-user site is located in trust area or tribal jurisdictional area:
(a) Official maps of Federal Indian Reservations based on information compiled by the U.S. Department of the Interior, Bureau of Indian Affairs and made available to the public;
(b) Title Status Reports issued by the U.S. Department of the Interior, Bureau of Indian Affairs showing that title to such land is held in trust or is subject to restrictions imposed by the United States;
(c) Trust Asset and Accounting Management System data, maintained by the Department of the Interior, Bureau of Indian Affairs;
(d) Official maps of the Department of Hawaiian Homelands of the State of Hawaii identifying land that has been given the status of Hawaiian home lands under the provisions of section 204 of the Hawaiian Homes Commission Act, 1920;
(e) Official records of the U.S. Department of the Interior, the State of Alaska, or such other documentation of ownership as the RUS may determine to be satisfactory, showing that title is owned by a Regional Corporation or a Village Corporation as such terms are defined in the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq);
(f) Evidence that the land is located on Guam, American Samoa or the Commonwealth of the Northern Mariana Islands, and is eligible for use in the Veteran's Administration direct loan program for veterans purchasing or constructing homes on communally owned land; and
(g) Any other evidence submitted by the applicant that is satisfactory to RUS to establish that area where the end-user site is located is a trust area or a tribal jurisdictional area within the meaning of 38 U.S.C. 3765(1).
1. Grant application scoring criteria (total possible points: 235). See 7 CFR 1703.125 for the items that will be reviewed during scoring, 7 CFR 1703.126 and section V.A.2 of this NOFA for scoring criteria.
2. Grant applications are scored competitively subject to the criteria listed below.
a.
b.
c.
d. Need for services proposed in the application and the benefits that will be derived if the application receives a grant (up to 55 points).
(i)
(ii)
e. Innovativeness category—level of innovation demonstrated by the project (up to 15 points).
f. Cost Effectiveness category—system cost-effectiveness (up to 35 points).
g. Special Consideration Areas—Application must contain at least one end-user site within a trust area or a tribal jurisdictional area (15 points).
C.
1. In addition to the scoring criteria that rank applications against each other, the Agency evaluates grant applications for possible awards on the following items, according to 7 CFR 1703.127:
a. Financial feasibility.
b. Technical considerations. If the application contains flaws that would prevent the successful implementation, operation or sustainability of a project, the Agency will not award a grant.
c. Other aspects of proposals that contain inadequacies that would undermine the ability of the project to comply with the policies of the DLT Program.
2. The FY 2014 grant Application Guide specifies the format and order of all required items.
3. Most DLT grant projects contain numerous project sites. The Agency requires that site information be consistent throughout an application. Sites must be referred to by the same designation throughout all parts of an application. The Agency has provided a site worksheet that requests the necessary information, and can be used as a guide by applicants. RUS strongly recommends that applicants complete the site worksheet, listing all requested information for each site. Applications without consistent site information will be returned as ineligible.
4. As stated above, DLT grant applications which have non-fixed end-user sites, such as ambulance and home health care services, are scored according to the applicant's entire service area. See the FY 2014 Application Guide for specific guidance on preparing an application with non-fixed end users.
D.
RUS generally notifies by mail applicants whose projects are selected for awards. The Agency follows the award letter with an agreement that contains all the terms and conditions for the grant. A copy of the standard agreement is posted on the RUS Web site at
The items listed in Section V of this notice, the DLT Program regulation, FY 2014 Application Guide and accompanying materials implement the appropriate administrative and national policy requirements.
1. Performance reporting. All recipients of DLT financial assistance must provide annual performance activity reports to RUS until the project is complete and the funds are expended. A final performance report is also required; the final report may serve as the last annual report. The final report must include an evaluation of the success of the project in meeting DLT Program objectives.
2. Financial reporting. All recipients of DLT financial assistance must provide an annual audit, beginning with the first year in which a portion of the financial assistance is expended. Audits are governed by United States Department of Agriculture audit regulations. Please
3. Recipient and Subrecipient Reporting. The applicant must have the necessary processes and systems in place to comply with the reporting requirements for first-tier sub-awards and executive compensation under the Federal Funding Accountability and Transparency Act of 2006 in the event the applicant receives funding unless such applicant is exempt from such reporting requirements pursuant to 2 CFR part 170, § 170.110(b). The reporting requirements under the Transparency Act pursuant to 2 CFR part 170 are as follows:
a. First Tier Sub-Awards of $25,000 or more in non-Recovery Act funds (unless they are exempt under 2 CFR part 170) must be reported by the Recipient to
b. The Total Compensation of the Recipient's Executives (5 most highly compensated executives) must be reported by the Recipient (if the Recipient meets the criteria under 2 CFR part 170) to
c. The Total Compensation of the Subrecipient's Executives (5 most highly compensated executives) must be reported by the Subrecipient (if the Subrecipient meets the criteria under 2 CFR part 170) to the Recipient by the end of the month following the month in which the subaward was made.
4. Record Keeping and Accounting.
The grant contract will contain provisions relating to record keeping and accounting requirements.
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Rural Utilities Service, USDA.
Notice of Funds Availability (NOFA).
The United States Department of Agriculture's (USDA) Rural Utilities Service (RUS) announces its Fiscal Year (FY) 2014 Community Connect Grant Program application window and notice of funds availability. The NOFA announces $13 million for grants from FY 2014 and prior year appropriations. In addition, RUS announces the minimum and maximum amounts for Community Connect grants applicable for the fiscal year. The Community Connect Grant Program regulations can be found at 7 CFR part 1739, subpart A.
You may submit completed applications for grants on paper or electronically according to the following deadlines:
• Paper copies must carry proof of shipping
• Electronic copies must be received by July 7, 2014 to be eligible for FY 2014 grant funding. Late applications are not eligible for FY 2014 grant funding.
You may obtain application guides and materials for the Community Connect Grant Program via the Internet at the following Web site:
Submit completed paper applications for grants to the Rural Utilities Service,
U.S. Department of Agriculture, 1400 Independence Ave. SW., Room 2868,
Submit electronic grant applications at
Kenneth Kuchno, Director, Broadband Division, Rural Utilities Service, U.S. Department of Agriculture, telephone: (202) 690–4673, fax: (202) 690–4389.
• Paper copies must carry proof of shipping no later than July 7, 2014, to be eligible for FY 2014 grant funding. Late applications are not eligible for FY 2014 grant funding.
• Electronic copies must be received by July 7, 2014, to be eligible for FY 2014 grant funding. Late applications are not eligible for FY 2014 grant funding.
The provision of broadband service is vital to the economic development, education, health, and safety of rural Americans. The purpose of the Community Connect Grant Program is to provide financial assistance in the form of grants to eligible applicants that will provide currently unserved areas, on a “community-oriented connectivity” basis, with broadband service that fosters economic growth and delivers enhanced educational, health care, and public safety services. Rural Utilities Service will give priority to rural areas that have the greatest need for broadband services, based on the criteria contained herein.
Grant authority will be used for the deployment of broadband service to extremely rural, lower-income communities on a “community-oriented connectivity” basis. The “community-oriented connectivity” concept will stimulate practical, everyday uses and applications of broadband facilities by cultivating the deployment of new broadband services that improve economic development and provide enhanced educational and health care opportunities in rural areas. Such an approach will also give rural communities the opportunity to benefit from the advanced technologies that are necessary to achieve these goals. Please see 7 CFR part 1739, subpart A for specifics.
This notice has been formatted to conform to a policy directive issued by the Office of Federal Financial Management (OFFM) of the Office of Management and Budget (OMB), published in the
The definitions applicable to this Notice are published at 7 CFR 1739.3.
The Agency will review, evaluate, and score applications received in response to this Notice based on the provisions found in 7 CFR part 1739, subpart A, and as indicated in this notice.
1. General. The Administrator has determined that the following amounts are available for grants in FY 2014 under 7 CFR 1739.2(a)
2. Grants
a. $13 million is available for grants from FY 2014 and prior year appropriations. Under 7 CFR 1739.2, the Administrator has established a minimum grant amount of $100,000 and a maximum grant amount of $3,000,000 for FY 2014.
b. Assistance instrument: RUS will execute grant documents appropriate to the project prior to any advance of funds with successful applicants.
B.
1. Only entities legally organized as one of the following are eligible for Community Connect Grant Program financial assistance:
a. An incorporated organization,
b. An Indian tribe or tribal organization, as defined in
c. A state or local unit of government,
d. A cooperative, private corporation or limited liability company organized on a for-profit or not-for-profit basis.
2. Individuals are not eligible for Community Connect Grant Program financial assistance directly.
3. Applicants must have the legal capacity and authority to own and operate the broadband facilities as proposed in its application, to enter into contracts and to otherwise comply with applicable federal statutes and regulations.
4. Applicants must have an active registration with current information in the System for Award Management (SAM) (previously the Central Contractor Registry (CCR)) at
1. General. The regulation for the Community Connect Grant Program requires that certain definitions affecting eligibility be revised and published from time-to-time by the Agency in the
2. Required matching contributions. Please see 7 CFR 1739.14 for the requirement. Grant applicants must demonstrate a matching contribution, in cash, of at least fifteen (15) percent of the total amount of financial assistance requested. Matching contributions must be used to support the broadband operations funded under the Community Connect Grant Program.
3. To be eligible for a grant, the Project must (see 7 CFR 1739.11):
a. Serve a Proposed Funded Service Area where Broadband Service does not currently exist, to be verified by RUS prior to the award of the grant;
b. Offer service at the Broadband Grant Speed, free of all charges for at least 2 years, to all Critical Community Facilities located within the proposed Service Area;
c. Offer service at the Broadband Grant Speed to all residential and business customers within the Proposed Funded Service Area; and
d. Provide a Community Center with at least two (2) Computer Access Points and wireless access at the Broadband Grant Speed available, free of charge, to all users for at least 2 years.
e. Not overlap with the Service area of current RUS borrowers and grantees.
4. Other requirements:
a. DUNS numbers and SAM registration: Applicants must have a Dun and Bradstreet DUNS number and be registered in System Awards Management (SAM) at
b. DUNS Number: As required by the OMB, all applicants for grants must supply a Dun and Bradstreet DUNS number when applying. The Standard Form 424 (SF–424) contains a field for you to use when supplying your DUNS number. Obtaining a DUNS number costs nothing and requires a short telephone call to Dun and Bradstreet. Please see
c. System for Award Management (SAM): In accordance with 2 CFR part 25, applicants, whether applying electronically or by paper must be registered in SAM prior to submitting an application. Applicants may register for the SAM at
See paragraph IV. B of this notice for a discussion of the items that make up a completed application. You may also refer to 7 CFR 1739.15 for completed grant application items.
The application guide, copies of necessary forms and samples, and the Community Connect Grant Program regulation are available from these sources:
1. The Internet:
2. The Rural Utilities Service Broadband Division, for paper copies of these materials: (202) 690–4673.
1. Detailed information on each item required can be found in the Community Connect Grant Program regulation and the Community Connect Grant Program application guide. Applicants are strongly encouraged to read and apply both the regulation and the application guide. This Notice does not change the requirements for a completed application for any form of Community Connect Grant Program financial assistance specified in the Community Connect Grant Program regulation. The Community Connect Grant Program regulation and the application guide provide specific guidance on each of the items listed and the Community Connect Grant Program application guide provides all necessary forms and sample worksheets.
2. Applications should be prepared in conformance with the provisions in 7 CFR 1739, subpart A, and applicable USDA regulations including 7 CFR parts 3015, 3016, and 3019. Applicants must use the RUS Application Guide for this program containing instructions and all necessary forms, as well as other important information, in preparing their application. Completed applications must include the following:
a.
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d.
e.
f.
g.
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(i) 7 CFR part 15, subpart A—Nondiscrimination in Federally Assisted Programs of the Department of Agriculture—Effectuation of Title VI of the Civil Rights Act of 1964.
(ii) 7 CFR part 3015—Uniform Federal Assistance Regulations.
(iii) 2 CFR part 417—Government-wide Debarment and Suspension (Non-procurement).
(iv) 7 CFR part 3018—New Restrictions on Lobbying.
(v) 2 CFR part 421—Government-wide Requirements for Drug-Free Workplace (Financial Assistance).
(vi) Certification regarding Architectural Barriers.
(vii) Certification regarding Flood Hazard Precautions.
(viii) An environmental report/questionnaire, in accordance with 7 CFR 1794.
(ix) A certification that grant funds will not be used to duplicate lines, facilities, or systems providing Broadband Service.
(x) Federal Obligation Certification on Delinquent Debt.
(xi) Assurance Regarding Felony Conviction or Tax Delinquent Status for Corporate Applicants.
1. Applications submitted on paper: Submit the original paper application and a copy in electronic format to RUS.
2. Applications submitted through Grants.gov: The additional paper copies are not necessary if you submit the application electronically through Grants.gov.
Grant applications may be submitted on paper or through Grants.gov.
1. Submitting applications on paper.
a. Address paper applications for grants to the Rural Utilities Service, U.S. Department of Agriculture, 1400 Independence Ave. SW., Room 2868, STOP 1599, Washington, DC 20250–1599. Applications should be marked “Attention: Director, Broadband Division, Rural Utilities Service.”
b. Paper applications must show proof of mailing or shipping consisting of one of the following:
(i) A legibly dated U.S. Postal Service (USPS) postmark;
(ii) A legible mail receipt with the date of mailing stamped by the USPS; or
(iii) A dated shipping label, invoice, or receipt from a commercial carrier.
c. Due to screening procedures at the Department of Agriculture, packages arriving via the USPS are irradiated, which can damage the contents. RUS encourages applicants to consider the impact of this procedure in selecting their application delivery method.
2. Applications submitted through Grants.gov.
(a) Applicant may file an electronic application at
(b) First time Grants.gov users should go to the “Get Started” tab on the Grants.gov site and carefully read and follow the steps listed. These steps need to be initiated early in the application process to avoid delays in submitting your application online.
1. Paper applications must be postmarked and mailed, shipped, or sent overnight no later than July 7, 2014 to be eligible for FY 2014 grant funding. Late applications are not eligible for FY 2014 grant funding.
2. Grant applications submitted through Grants.gov must be received by July 7, 2014 to be eligible for FY 2014 funding. Late applications are not eligible for FY 2014 grant funding.
1. Eligible grant purposes. Grant funds may be used to finance:
a. The construction, acquisition, or leasing of facilities, including spectrum, land or buildings to deploy service at the Broadband Grant Speed to all participating Critical Community Facilities and all required facilities needed to offer such service to all residential and business customers located within the Proposed Funded Service Area;
b. The improvement, expansion, construction, or acquisition of a Community Center that furnishes free internet access at the Broadband Grant Speed and provision of Computer Access Points. Grant funds provided for such costs shall not exceed the lesser of ten percent (10%) of the grant amount requested or $150,000; and
c. The cost of bandwidth to provide service free of charge at the Broadband Grant Speed to Critical Community Facilities for the first 2 years of operation.
2. Ineligible grant purposes.
a. Grant funds may not be used to finance the duplication of any existing Broadband Service provided by another entity.
b. Operating expenses other than the cost of bandwidth for 2 years to provide service at the Broadband Grant Speed to Critical Community Facilities.
3. Please see 7 CFR 1739.3 for definitions, 7 CFR 1739.12 for eligible grant purposes, and 7 CFR 1739.13 for ineligible grant purposes.
1. Grant applications are scored competitively and subject to the criteria listed below.
2. Grant application scoring criteria (total possible points: 100). See 7 CFR 1739.17 for the items that will be reviewed during scoring and for scoring criteria.
a. An analysis of the challenges of the following criteria, laid out on a community-wide basis, and how the project proposes to address these issues (up to 50 points): 1. The economic characteristics; 2. Educational Challenges; 3. Health care needs; 4. Public safety issues; and 5. Small Area Income and Poverty Estimates (applications that according to the 2010 census show that at least 20 percent of the population of the counties included in core coverage areas is living in poverty) will receive the maximum score in this category. This emphasis will support Rural Development's goal of providing 20 percent of its funding by 2016 to these areas of need.
b. The extent of the Project's planning, development, and support by local residents, institutions, and Critical Community Facilities (up to 40 points);
c. The level of experience and past success of operating broadband systems for the management team (up to 10 points); and
d. In making a final selection among and between applications with comparable rankings and geographic distribution, the Administrator may take into consideration the characteristics of the Proposed Funded Service Area (PFSA)
RUS will offer special consideration to applications that propose to provide broadband service within a trust area or a tribal jurisdictional area. Such applications will be awarded 15 points. The applicant will need to submit evidence indicating that the proposed service area is located in a trust area or a tribal jurisdictional area.
RUS will use one or more of the following resources in determining whether a proposed service area is located in a trust area or tribal jurisdictional area:
(a) Official maps of Federal Indian Reservations based on information compiled by the U.S. Department of the Interior, Bureau of Indian Affairs and made available to the public;
(b) Title Status Reports issued by the U.S. Department of the Interior, Bureau of Indian Affairs showing that title to such land is held in trust or is subject
(c) Trust Asset and Accounting Management System data, maintained by the Department of the Interior, Bureau of Indian Affairs;
(d) Official maps of the Department of Hawaiian Homelands of the State of Hawaii identifying land that has been given the status of Hawaiian home lands under the provisions of section 204 of the Hawaiian Homes Commission Act, 1920;
(e) Official records of the U.S. Department of the Interior, the State of Alaska, or such other documentation of ownership as the RUS may determine to be satisfactory, showing that title is owned by a Regional Corporation or a Village Corporation as such terms are defined in the Alaska Native Claims Settlement Act (43 U.S.C. 1451 et seq.); and
(f) Any other evidence submitted by the applicant that is satisfactory to RUS to establish that area where the end-user site is located is a trust area or a tribal jurisdictional area within the meaning of 38 U.S.C. 3765(1).
1. All applications for grants must be delivered to Rural Utilities Service at the address and by the date specified in this notice or electronically submitted by the deadline (see also 7 CFR 1739.2) to be eligible for funding. Rural Utilities Service will review each application for conformance with the provisions of this part. Rural Utilities Service may contact the applicant for additional information or clarification.
2. Incomplete applications as of the deadline for submission will not be considered. If an application is determined to be incomplete, the applicant will be notified in writing and the application will be returned with no further action.
3. Applications conforming with this part will then be evaluated competitively by a panel of Rural Utilities Service employees selected by the Administrator of Rural Utilities Service, and will be awarded points as described in the scoring criteria in 7 CFR 1739.17. Applications will be ranked and grants awarded in rank order until all grant funds are expended.
Grant applications are ranked by final score. Rural Utilities Service selects applications based on those rankings, subject to the availability of funds and consistent with 7 CFR 1739.17.
Rural Utilities Service recognizes that each funded project is unique, and therefore may attach conditions to different projects' award documents. Rural Utilities Service generally notifies applicants whose projects are selected for awards by emailing a scanned copy of an award letter. Rural Utilities Service follows the award letter with a grant agreement that contains all the terms and conditions for the grant. An applicant must execute and return the grant agreement, accompanied by any additional items required by the grant agreement.
The items listed in paragraph IV.B.2.l. of this notice, and the Community Connect Grant Program regulation, application guide and accompanying materials implement the appropriate administrative and national policy requirements.
1. Performance reporting. All recipients of Community Connect Grant Program financial assistance must provide annual performance activity reports to RUS until the project is complete and the funds are expended. A final performance report is also required; the final report may serve as the last annual report. The final report must include an evaluation of the success of the project. See 7 CFR 1739.19.
2. Financial reporting. All recipients of Community Connect Grant Program financial assistance must provide an annual audit, beginning with the first year a portion of the financial assistance is expended. Audits are governed by United States Department of Agriculture audit regulations. See 7 CFR 1739.20.
3. Recipient and Subrecipient Reporting. The applicant must have the necessary processes and systems in place to comply with the reporting requirements for first-tier sub-awards and executive compensation under the Federal Funding Accountability and Transparency Act of 2006 in the event the applicant receives funding unless such applicant is exempt from such reporting requirements pursuant to 2 CFR part 170, § 170.110(b). The reporting requirements under the Transparency Act pursuant to 2 CFR part 170 are as follows:
a. First Tier Sub-Awards of $25,000 or more (unless they are exempt under 2 CFR Part 170) must be reported by the Recipient to
b. The Total Compensation of the Recipient's Executives (5 most highly compensated executives) must be reported by the Recipient (if the Recipient meets the criteria under 2 CFR Part 170) to
c. The Total Compensation of the Subrecipient's Executives (5 most highly compensated executives) must be reported by the Subrecipient (if the Subrecipient meets the criteria under 2 CFR Part 170) to the Recipient by the end of the month following the month in which the subaward was made.
A. Web site:
B. Phone: (202) 690–4673.
C. Fax: (202) 690–4389.
D. Main point of contact: Kenneth Kuchno, Director, Broadband Division, Rural Utilities Service, U.S. Department of Agriculture.
Rural Utilities Service, USDA.
Notice of Funds Availability.
The Rural Utilities Service (RUS), an agency of the United States Department of Agriculture (USDA), announces its Public Television Station Digital Transition Grant Program application window for fiscal year (FY) 2014. The FY 2014 funding for the Public Television Station Digital Transition Grant Program is $2,000,000.
You may submit completed applications for grants on paper or electronically according to the following deadlines:
• Paper copies must carry proof of shipping no later than July 7, 2014 to be eligible for FY 2014 grant funding. Late applications are not eligible for FY 2014 grant funding.
• Electronic copies must be received by July 7, 2014 to be eligible for FY 2014
You may obtain the application guide and materials for the Public Television Station Digital Transition Grant Program at the following sources:
• The Internet at
• You may also request the application guide and materials from RUS by contacting the appropriate individual listed in Section VII of the
Completed applications may be submitted the following ways:
•
•
Petra Schultze, Financial Analyst, Advanced Services Division, Telecommunications Program, Rural Utilities Service, email:
I.
II.
III.
IV.
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VII.
As part of the nation's transition to digital television, the Federal Communications Commission (FCC) required all television broadcasters to have converted their transmitters to broadcast digital signals by June 12, 2009. While stations must broadcast their main transmitter signal in digital, many rural stations have yet to complete a full digital transition of their stations across all equipment. Rural stations often have translators serving small or isolated areas and some of these have not completed the transition to digital.
The 2009 FCC deadline did not apply to translators, and in 2011 the FCC adopted a final deadline for analog-to-digital conversion of all translators by September 1, 2015. Because of this, translators have been allowed to continue broadcasting in analog, and stations are still in the process of converting some of their translators to digital. Some rural stations also have not fully converted their production and studio equipment to digital, which has impaired their ability to provide the same quality local programming that they provided in analog. The digital transition has also created some service gaps where households that received an analog signal are now unable to receive a digital signal. For rural households the digital transition has meant in some cases diminished over-the-air public television service. These rural households are the focus of the Agency's Public Television Station Digital Transition Grant Program.
Most applications to the Public Television Station Digital Transition Grant Program have sought assistance towards the goal of replicating analog coverage areas through transmitter and translator transitions. The first priority has been to initiate digital broadcasting from their main transmitters. As many stations have completed the digital transition of their transmitters, the focus has shifted to power upgrades and translators, as well as digital program production equipment and multicasting/data casting equipment. There are some rural stations that may need to install translators to provide fill-in service to areas that previously received analog but are now unable to receive digital. In FY 2013, 7 awards were made, including the following project purposes: Transmitter equipment, translators, studio and production equipment, master control equipment, and microwave equipment. When compared with the first few years of the program, as the digital transition progresses, more applications were received for translators and master control and production equipment, than for transmitters. However, some stations may remain that have not achieved full analog parity in program management and creation. Continuation of reliable public television service to all current patrons understandably is still the focus for many broadcasters.
It is important for public television stations to be able to tailor their programs and services (e.g., education services, public health, homeland security, and local culture) to the needs of their rural constituents. If public television programming is lost, many school systems may be left without educational programming they count on for curriculum compliance.
This notice has been formatted to conform to a policy directive issued by the Office of Federal Financial Management (OFFM) of the Office of Management and Budget (OMB), published in the
1. The amount available for grants for FY 2014 is $2,000,000. The maximum amount for grants under this program is $750,000 per public television station per year.
2. Assistance instrument: Grant documents appropriate to the project will be executed with successful applicants prior to any advance of funds.
Prior grants cannot be renewed nor extended; however, past grantees may submit new applications for projects not covered under the prior grant. Award documents specify the term length of each award.
1. Public television stations which serve rural areas as defined in 7 CFR 1740.2 are eligible for Public Television Station Digital Transition Grants. A public television station is a noncommercial educational television broadcast station that is qualified for Community Service Grants by the Corporation for Public Broadcasting under section 396(k) of the Communications Act of 1934.
2. Individuals are not eligible for Public Television Station Digital Transition Grant Program financial assistance directly.
3. Corporations that have been convicted of a felony (or had an officer or agency acting on behalf of the corporation convicted of a felony) within the past 24 months are not eligible. Any corporation that has any unpaid federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability, is not eligible.
1. Grants shall be made to perform digital transition of television broadcasting stations serving rural areas. Grant funds may be used to acquire, lease, and/or install facilities and software necessary to the digital transition. Specific purposes include:
a. Digital transmitters, translators, and repeaters, including all facilities required to initiate digital television (DTV) broadcasting. All broadcast facilities acquired with grant funds shall be capable of delivering DTV programming and high definition television (HDTV) programming, at both the interim and final channel and power authorizations. There is no limit to the number of transmitters or translators that may be included in an application;
b. Power upgrades of existing DTV transmitter equipment, including replacement of existing low-power digital transmitters with digital transmitters capable of delivering the final authorized power level;
c. Studio-to-transmitter links;
d. Equipment to allow local control over digital content and programming, including master control equipment;
e. Digital program production equipment, including cameras, editing, mixing and storage equipment;
f. Multicasting and data casting equipment;
g. Cost of the lease of facilities, if any, for up to three years; and,
h. Associated engineering and environmental studies necessary to implementation.
2. Matching contributions: There is no requirement for matching funds in this program (see 7 CFR 1740.5).
3. The following are not eligible for grant funding (see 7 CFR 1740.7):
a. Funding for ongoing operations or for facilities that will not be owned by the applicant, except for leased facilities as provided above;
b. Costs of salaries, wages, and employee benefits of public television station personnel unless they are for construction or installation of eligible facilities;
c. Facilities for which other grant funding from any other source has been approved; and,
d. Expenditures made prior to the application deadline specified in this Notice of Funds Availability.
See paragraph IV.B of this notice for a summary discussion of the items that make up a completed application. You will find more complete information in the FY 2014 Public Television Station Digital Transition Grant Program Application Guide. You may also refer to 7 CFR 1740.9 for completed grant application requirements.
The application guide, copies of necessary forms and samples, and the Public Television Station Digital Transition Grant Program regulation are available from these sources:
1. The Internet:
2. The RUS Advanced Services Division, for paper copies of these materials call (202) 690–4493.
1. Detailed information on each item required can be found in the Public Television Station Digital Transition Grant Program regulation and application guide. Applicants are strongly encouraged to read and apply both the regulation and the application guide. This Notice does not change the requirements for a completed application specified in the program regulation. The program regulation and application guide provide specific guidance on each of the items listed and the application guide provides all necessary forms and sample worksheets.
2. A completed application must include the following documentation, studies, reports and information, in a form satisfactory to RUS. Applications should be prepared in conformance with the provisions in 2 CFR part 180, and 2 CFR part 182, 7 CFR part 1740, subpart A, and applicable USDA regulations including 7 CFR parts 3015, 3016, and 3019. Applicants must use the application guide for this program, which contains instructions and all necessary forms, as well as other important information, in preparing their application. Completed applications must include the following:
a. An application for Federal assistance, Standard Form 424.
b. An executive summary, not to exceed two pages, describing the public television station, its service area and offerings, its current digital transition status, and the proposed project.
c. Evidence of the applicant's eligibility to apply under this Notice, demonstrating that the applicant is a Public Television Station as defined in this Notice, and that it is required by the FCC to perform the digital transition.
d. A spreadsheet showing the total project cost, with a breakdown of items sufficient to enable RUS to determine individual item eligibility.
e. A coverage contour map showing the digital television coverage area of the application project. This map must show the counties (or county) comprising the Core Coverage Area by shading and by name. Partial counties included in the applicant's Core Coverage Area must be identified as partial and must contain an attachment with the applicant's estimate of the percentage that its coverage contour comprises of the total area of the county. If the application is for a translator, the coverage area may be estimated by the applicant through computer modeling or some other reasonable method, and this estimate is subject to acceptance by RUS. (In the Application Guide, see Section C.3, Project Core Coverage Area Map(s).)
f. The applicant's own calculation of its Rurality score, supported by a worksheet showing the population of its Core Coverage Area, and the urban and rural populations within the Core Coverage Area. The data source for the urban and rural components of that population must be identified. If the application includes computations made by a consultant or other organization outside the public
g. The applicant's own calculation of its Economic Need score, supported by a worksheet showing the National School Lunch Program (NSLP) eligibility levels for all school districts within the Core Coverage Area and averaging these eligibility percentages. The application must include a statement from the state or local organization that administers the NSLP program certifying that the school district scores used in the computations are accurate. Applicants are to use the most recent data available. Some official NSLP data is posted on state and/or local government Web sites, in which case a printout of the data may be provided as long as it documents the Web site source. (In the Application Guide, see Section D. Scoring Documentation.)
h. If applicable, a presentation not to exceed five pages demonstrating the Critical Need for the project.
i. Evidence that the FCC has authorized the initiation of digital broadcasting at the project sites. In the event that an FCC construction permit has not been issued for one or more sites, RUS may include those sites in the grant, and make advance of funds for that site conditional upon the submission of a construction permit.
j. Compliance with other Federal statutes. The applicant must provide evidence or certification that it is in compliance with all applicable Federal statutes and regulations, including, but not limited to the following (sample certifications are provided in the application guide):
(i) Equal Opportunity and Nondiscrimination;
(ii) Architectural barriers;
(iii) Flood hazard area precautions;
(iv) Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970;
(v) Drug-Free Workplace Act of 1998 (41 U.S.C. 701);
(vi) Debarment, Suspension; and Other Responsibility Matters—Primary Covered Transactions;
(vii) Lobbying for Contracts, Grants, Loans, and Cooperative Agreements Byrd Anti-Lobbying Amendment (31 U.S.C. 1352).
(viii) Representations Regarding Felony Conviction and Tax Delinquent Status for Corporate Applicants.
k. Environmental impact and historic preservation. The applicant must provide details of the digital transition's impact on the environment and historic preservation, and comply with 7 CFR part 1794, which contains the Agency's policies and procedures for implementing a variety of federal statutes, regulations, and executive orders generally pertaining to the protection of the quality of the human environment. This must be contained in a separate section entitled “Environmental Impact of the Digital Transition,” and must include the Environmental Questionnaire/Certification, available from RUS, describing the impact of its digital transition. Submission of the Environmental Questionnaire/Certification alone does not constitute compliance with 7 CFR part 1794.
3. DUNS Number. As required by the OMB, all applicants for grants must supply a Dun and Bradstreet Data Universal Numbering System (DUNS) number when applying. The Standard Form 424 (SF–424) contains a field for you to use when supplying your DUNS number. The applicant can obtain the DUNS number free of charge by calling Dun and Bradstreet. Please see
4. In accordance with 2 CFR part 25, all applicants, whether applying electronically or by paper, must be registered in the System for Award Management (SAM) (formerly Central Contractor Registry, (CCR)), prior to submitting an application.
a. Applicants may register for the SAM at
b. The SAM registration must remain active with current information at all times while RUS is considering an application or while a Federal Grant Award or loan is active. To maintain the registration in the SAM database the applicant must review and update the information in the SAM database annually from date of initial registration or from the date of the last update. The applicant must ensure that the information in the database is current, accurate, and complete.
1. Applications submitted on paper: Submit the original application and two (2) copies to RUS.
2. Electronically submitted applications: The additional paper copies for RUS are not necessary if you submit the application electronically through
Grant applications may be submitted on paper or electronically.
1. Submitting applications on paper.
a. Address paper applications for grants to the Telecommunications Program, RUS, 1400 Independence Ave. SW., Room 2844, STOP 1550, Washington, DC 20250–1550. Applications should be marked “Attention: Director, Advanced Services Division.”
b. Paper applications must show proof of mailing or shipping consisting of one of the following:
(i) A legibly dated postmark applied by the U.S. Postal Service;
(ii) A legible mail receipt with the date of mailing stamped by the USPS; or
(iii) A dated shipping label, invoice, or receipt from a commercial carrier.
c. Non-USPS-applied postage dating, i.e. dated postage meter stamps, do not constitute proof of the date of mailing.
d. Due to screening procedures at the Department of Agriculture, packages arriving via the USPS are irradiated, which can damage the contents. RUS encourages applicants to consider the impact of this procedure in selecting their application delivery method.
2. Electronically Submitted Applications.
a. Applications will not be accepted via facsimile machine transmission or electronic mail.
b. Electronic applications for grants will be accepted if submitted through the Federal government's Grants.gov initiative at
c. How to use Grants.gov:
(i) Navigate your Web browser to
(ii) Follow the instructions on that Web site to find grant information.
(iii) Download a copy of the application package.
(iv) Complete the package off-line.
(v) Upload and submit the application via the Grants.gov Web site.
d. Grants.gov contains full instructions on all required passwords, credentialing and software.
e. RUS encourages applicants who wish to apply through Grants.gov to submit their applications in advance of the deadline. Difficulties encountered by applicants filing through Grants.gov will not justify filing deadline extensions.
f. If a system problem occurs or you have technical difficulties with an electronic application, please use the customer support resources available at the Grants.gov Web site.
1. Paper applications must be postmarked and mailed, shipped, or sent overnight no later than July 7, 2014 to be eligible for FY 2014 grant funding. Late applications are not eligible for FY 2014 grant funding.
2. Electronic grant applications must be received by July 7, 2014 to be eligible for FY 2014 funding. Late applications are not eligible for FY 2014 grant funding.
1. Grant applications are scored competitively and subject to the criteria listed below.
2. Grant application scoring criteria are detailed in 7 CFR 1740.8. There are 100 points available, broken down as follows:
a. The Rurality of the Project (up to 50 points);
b. The Economic Need of the Project's Service Area (up to 25 points), and;
c. The Critical Need for the project, and of the applicant, including the benefits derived from the proposed service (up to 25 points).
1. All applications for grants must be delivered to RUS at the address and by the date specified in this notice to be eligible for funding. RUS will review each application for conformance with the provisions of this part. RUS may contact the applicant for additional information or clarification.
2. Incomplete applications as of the deadline for submission will not be considered. If an application is determined to be incomplete, the applicant will be notified in writing and the application will be returned and will not be considered for FY 2014 funding.
3. Applications conforming with this part will be evaluated competitively by a panel of RUS employees selected by the Administrator of RUS, and will be awarded points as described in the scoring criteria in 7 CFR 1740.8. Applications will be ranked and grants awarded in rank order until all grant funds are expended.
4. Regardless of the score an application receives, if the RUS determines that the Project is technically or financially infeasible, the Agency will notify the applicant, in writing, and the application will be returned and will not be considered for FY 2014 funding.
1. The applicant's calculated scores in Rurality and Economic Need will be checked and, if necessary, corrected by RUS.
2. The Critical Need score will be determined by RUS based on information presented in the application. The Critical Need score is based on the reviewer's assessment of the supporting arguments made in the application. The score aims to assess how the specific digital transition purpose fits with the unique need of the television station as it moves all of its equipment through the digital transition. This score is intended to capture, from the rural public's standpoint, the necessity and usefulness of the proposed project. This scoring category will also recognize that at a specific time, some transition purposes are perceived to be more essential than others and that, over time, this perception changes. For example, during the transition from analog to digital transmitters, which concluded on June 12, 2009, a first time transition of a primary transmitter was the most essential project that could be undertaken for most stations and would have been scored accordingly. Now that all transmitters have completed the transition to digital, the focus may shift to some of the other eligible purposes such as translators, studio and production equipment, and master control equipment. But what equipment specifically is most essential may vary from station to station. For example, local production equipment can be a high priority especially if it produces an area's only local news or if the station has been historically active in producing local programming. Repositioning a digital transmitter on a tower can also be a high priority in cases where the original analog coverage area was not adequately replicated after the transition. The Critical Need score is also relative since each application is scored in comparison to other applications in the competition. These various factors explain why a similar application may receive a different Critical Need score in different years of this program.
The Agency generally notifies applicants whose projects are selected for awards by faxing an award letter or emailing a PDF facsimile of the award letter. The Agency follows the award letter with a grant agreement that contains the terms and conditions for the grant. A copy of the standard agreement is posted on the RUS Web site at
An applicant must execute and return the grant agreement, accompanied by any additional items required by the grant agreement.
1. All recipients of Public Television Station Digital Transition Grant Program financial assistance must provide semiannual performance activity reports to RUS until the project is complete and the funds are expended. A final performance report is also required; the final report may serve as the last semiannual report. The final report must include an evaluation of the success of the project.
2. Recipient and Subrecipient Reporting.
The applicant must have the necessary processes and systems in place to comply with the reporting requirements for first-tier sub-awards and executive compensation under the Federal Funding Accountability and Transparency Act of 2006 in the event the applicant receives funding unless such applicant is exempt from such reporting requirements pursuant to 2 CFR part 170, § 170.110(b). The reporting requirements under the Transparency Act pursuant to 2 CFR part 170 are as follows:
a. First Tier Sub-Awards of $25,000 or more in non-Recovery Act funds (unless they are exempt under 2 CFR part 170) must be reported by the Recipient to
b. The Total Compensation of the Recipient's Executives (5 most highly compensated executives) must be reported by the Recipient (if the Recipient meets the criteria under 2 CFR part 170) to
c. The Total Compensation of the Subrecipient's Executives (5 most highly compensated executives) must be reported by the Subrecipient (if the Subrecipient meets the criteria under 2 CFR part 170) to the Recipient by the end of the month following the month in which the sub-award was made.
3. Systems Necessary to Meet Reporting Requirements.
The applicant must have the necessary processes and systems in
A. Web site:
B. Phone: (202) 690–4493.
C. Fax: (202) 720–1051.
D. Main points of contact: Petra Schultze, Financial Analyst, Advanced Services Division, Telecommunications Program, RUS, telephone: (202) 690–4493, fax: (202) 720–1051, or email:
An application has been submitted to the Foreign-Trade Zones (FTZ) Board (the Board) by the Capital Region Airport Commission, grantee of FTZ 207, requesting authority to reorganize the zone under the alternative site framework (ASF) adopted by the Board (15 CFR Sec. 400.2(c)). The ASF is an option for grantees for the establishment or reorganization of general-purpose zones and can permit significantly greater flexibility in the designation of new “subzones” or “usage-driven” FTZ sites for operators/users located within a grantee's “service area” in the context of the Board's standard 2,000-acre activation limit for a general-purpose zone project. The application was submitted pursuant to 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, 2014.
FTZ 207 was approved by the Board on March 31, 1995 (Board Order 733, 60 FR 18394–18395, 4/11/95) and expanded on September 9, 2005 (Board Order 1413, 70 FR 55107, 9/20/05). The current zone includes the following sites:
The grantee's proposed service area under the ASF would be the Counties of Amelia, Appomattox, Brunswick, Buckingham, Caroline, Charles City, Charlotte, Chesterfield, Cumberland, Dinwiddie, Essex, Greensville, Goochland, Hanover, Henrico, King and Queen, King George, King William, Lancaster, Lunenburg, Mecklenburg, Middlesex, New Kent, Northumberland, Nottoway, Powhatan, Prince Edward, Prince George, Richmond and Westmoreland and the Cities of Colonial Heights, Emporia, Hopewell, Petersburg and Richmond, as described in the application. If approved, the grantee would be able to serve sites throughout the service area based on companies' needs for FTZ designation. The proposed service area is within and adjacent to the Richmond Customs and Border Protection port of entry.
The applicant is requesting authority to reorganize its existing zone project to include all of the existing sites as “magnet” sites. The ASF allows for the possible exemption of one magnet site from the “sunset” time limits that generally apply to sites under the ASF, and the applicant proposes that Site 1 be so exempted. No subzones/usage-driven sites are being requested at this time. The application would have no impact on FTZ 207's previously authorized subzones.
In accordance with the Board's regulations, Kathleen Boyce of the FTZ Staff is designated examiner to evaluate and analyze the facts and information presented in the application and case record and to report findings and recommendations to the Board.
Public comment is invited from interested parties. Submissions (original and 3 copies) shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is July 21, 2014. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to August 5, 2014.
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
Pursuant to its authority under the Foreign-Trade Zones Act of June 18, 1934, as amended (19 U.S.C. 81a–81u), the Foreign-Trade Zones Board (the Board) adopts the following Order:
The application to reorganize and expand FTZ 235 under the ASF is approved, subject to the FTZ Act and the Board's regulations, including Section 400.13, to the Board's standard 2,000-acre activation limit for the zone, to a five-year ASF sunset provision for magnet sites that would terminate authority for Site 2 if not activated by May 31, 2019, and to a three-year ASF sunset provision for usage-driven sites that would terminate authority for Sites 7 and 8 if no foreign-status merchandise is admitted for a
Attest:__________
Bureau of Industry and Security, Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before July 21, 2014.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Lawrence Hall, BIS Office of Administration, 14th and Pennsylvania Ave. NW., HCHB 6622, Washington, DC 20230; 703–675–9944;
This collection involves the exchange of rated order information between customers and suppliers. Recordkeeping is necessary for administration and enforcement of delegated authority under the Defense Production Act of 1950, as amended (50 U.S.C. App. 2061, et seq.) and the Selective Service Act of 1948 (50 U.S.C. App. 468). Any person (supplier) who receives a priority rated order under DPAS regulation (15 CFR 700) must notify the customer of acceptance or rejection of that order within a specified period of time. Also, if shipment against a priority rated order will be delayed, the supplier must immediately notify the customer.
Rated order information may be transmitted or stored electronically or on paper.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
Bureau of Industry and Security, Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before July 21, 2014.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Lawrence Hall, BIS Office of Administration, 14th and Pennsylvania Ave. NW., HCHB 6622, Washington, DC 20230, 703–675–9944,
The Defense Production Act of 1950, as amended, and Executive Order 12919, authorizes the Secretary of Commerce to assess the capabilities of the defense industrial base to support the national defense. They also develop policy alternatives to improve the international competitiveness of specific domestic industries and their abilities to meet defense program needs. The information collected from voluntary surveys will be used to assist small- and medium-sized firms in defense transition and in gaining access to advanced technologies and manufacturing processes available from Federal Laboratories. The goal is to improve regions of the country
Collected electronically or on paper.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On February 25, 2014, the Department of Commerce (“the Department”) published in the
Laurel LaCivita or Brendan Quinn, AD/CVD Operations, Office III, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–4243 or (202) 482–5848, respectively.
On February 25, 2014, the Department published the
The Department conducted this review in accordance with section 751(a)(1)(B) of the Tariff Act of 1930, as amended (“the Act”).
Merchandise covered by the order is pure magnesium regardless of chemistry, form or size, unless expressly excluded from the scope of the order. Pure magnesium is a metal or alloy containing by weight primarily the element magnesium and produced by decomposing raw materials into magnesium metal. Pure primary magnesium is used primarily as a chemical in the aluminum alloying, desulfurization, and chemical reduction industries. In addition, pure magnesium is used as an input in producing magnesium alloy. Pure magnesium encompasses products (including, but not limited to, butt ends, stubs, crowns and crystals) with the following primary magnesium contents:
(1) Products that contain at least 99.95% primary magnesium, by weight (generally referred to as “ultra pure” magnesium);
(2) Products that contain less than 99.95% but not less than 99.8% primary magnesium, by weight (generally referred to as “pure” magnesium); and
(3) Products that contain 50% or greater, but less than 99.8% primary magnesium, by weight, and that do not conform to ASTM specifications for alloy magnesium (generally referred to as “off–specification pure” magnesium).
“Off–specification pure” magnesium is pure primary magnesium containing magnesium scrap, secondary magnesium, oxidized magnesium or impurities (whether or not intentionally added) that cause the primary magnesium content to fall below 99.8% by weight. It generally does not contain, individually or in combination, 1.5% or more, by weight, of the following alloying elements: aluminum,
Excluded from the scope of the order are alloy primary magnesium (that meets specifications for alloy magnesium), primary magnesium anodes, granular primary magnesium (including turnings, chips and powder) having a maximum physical dimension (
Pure magnesium products covered by the order are currently classifiable under Harmonized Tariff Schedule of the United States (“HTSUS”) subheadings 8104.11.00, 8104.19.00, 8104.20.00, 8104.30.00, 8104.90.00, 3824.90.11, 3824.90.19 and 9817.00.90. Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope is dispositive.
As explained above, in the
After issuing the
The Department determined, and CBP shall assess, antidumping duties on all appropriate entries of subject merchandise in accordance with the final results of this review.
Additionally, consistent with the Department's refinement to its assessment practice in NME cases, because the Department determined that TMI/TMM had no shipments of subject merchandise during the POR, any suspended entries that entered under TMI/TMM's antidumping duty case numbers (
The following cash deposit requirements will be effective for all shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of this notice of final results of the administrative review, as provided by section 751(a)(2)(C) of the Act: (1) For TMI/TMM, which claimed no shipments, the cash deposit rate will remain unchanged from the rate assigned to TMI/TMM in the most recently completed review of the company; (2) for previously investigated or reviewed PRC and non-PRC exporters who are not under review in this segment of the proceeding but who have separate rates, the cash deposit rate will continue to be the exporter-specific rate published for the most recent period; (3) for all PRC exporters of subject merchandise that have not been found to be entitled to a separate rate, the cash deposit rate will be the PRC-wide rate of 111.73 percent;
This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this POR. Failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and terms of an APO is a sanctionable violation.
We are issuing and publishing these final results and this notice in accordance with sections 751(a)(1) and 777(i) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on solid fertilizer grade ammonium nitrate (ammonium nitrate) from the Russian Federation. The review covers two groups of producers/exporters of the subject merchandise, JSC Acron and its affiliate JSC Dorogobuzh (collectively, Acron) and MCC EuroChem and its affiliates OJSC NAK Azot and OJSC Nevinnomyssky Azot (collectively, EuroChem). The period of review (POR) is April 1, 2012, through March 31, 2013. We preliminarily determine that sales of subject merchandise to the United States have not been made at prices below normal value (NV). We invite all interested parties to comment on these preliminary results.
Elizabeth Eastwood or David Crespo, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration,
The merchandise subject to this order is solid, fertilizer grade ammonium nitrate products. The merchandise subject to this order is classified in the Harmonized Tariff Schedule of the United States (HTSUS) at subheadings 3102.30.00.00 and 3102.290000. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise within the scope is dispositive.
The Department conducted this review in accordance with section 751(a)(2) of the Tariff Act of 1930, as amended (the Act). Constructed export price is calculated in accordance with section 772 of the Act. NV is calculated in accordance with section 773 of the Act.
For a full description of the methodology underlying our conclusions, see the Preliminary Decision Memorandum. A list of the topics included in the Preliminary Decision Memorandum is attached as an Appendix to this notice. The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (IA ACCESS). IA ACCESS is available to registered users at
The Department preliminarily determines that the following weighted-average dumping margins exist:
The Department intends to disclose to interested parties the calculations performed in connection with these preliminary results within five days of the date of publication of this notice.
In accordance with section 774 of the Act, the Department will hold a hearing, if timely requested, to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs, provided that such a hearing is requested by an interested party.
The Department intends to issue the final results of this administrative review, including the results of its analysis of the issues raised in any written briefs, not later than 120 days after the date of publication of this notice, pursuant to section 751(a)(3)(A) of the Act and 19 CFR 351.213(h), unless this deadline is extended.
Upon issuance of the final results, the Department shall determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries covered by this review.
The Department clarified its “automatic assessment” regulation on May 6, 2003.
We intend to issue instructions to CBP 15 days after publication of the final results of this review.
The following deposit requirements will be effective upon publication of the notice of final results of administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication as provided by section 751(a)(2)(C) of the Act: (1) The cash deposit rates for Acron and EuroChem will be equal to the weighted-average dumping margins established in the final results of this administrative review, except if the rate is less than 0.50 percent and, therefore,
This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
In response to requests from interested parties, the Department of Commerce (“Department”) is conducting the administrative review of the antidumping duty order on certain activated carbon from the People's Republic of China (“PRC”) for the period of review (“POR”) April 1, 2012, through March 31, 2013. The Department preliminarily determines that sales have been made below normal value (“NV”). Interested parties are invited to comment on these preliminary results.
Bob Palmer or Frances Veith, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–9068, or (202) 482–4295, respectively.
The merchandise subject to the order is certain activated carbon. The products are currently classifiable under the Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 3802.10.00.
The Department conducted this review in accordance with section 751(a)(1)(B) of the Tariff Act of 1930, as amended (“the Act”). Constructed export prices and export prices have been calculated in accordance with section 772 of the Act. Because the PRC is a non-market economy (“NME”) within the meaning of section 771(18) of the Act, NV has been calculated in accordance with section 773(c) of the Act.
For a full description of the methodology underlying our conclusions,
The Department
The Department intends to disclose calculations performed for these preliminary results to the parties within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b).
Interested parties may submit written comments in the form of case briefs within 30 days of publication of the preliminary results and rebuttal comments in the form of rebuttal briefs within five days after the time limit for filing case briefs.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Enforcement and Compliance within 30 days of the date of publication of this notice. Requests should contain: (1) The party's name, address and telephone number; (2) The number of participants; and (3) A list of issues to be discussed. Issues raised in the hearing will be limited to those raised in the respective case and rebuttal briefs.
Upon issuance of the final results, the Department will determine, and U.S. Customs and Border Protection (“CBP”) shall assess, antidumping duties on all appropriate entries covered by this review.
The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the final results of this review and for future deposits of estimated duties, where applicable.
The following cash deposit requirements will be effective upon publication of the final results of this administrative review for shipments of the subject merchandise from the PRC entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(2)(C) of the Act: (1) For each specific company listed above, the cash deposit rate will be that established in the final results of this review (except, if the rate is zero or
This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This administrative review and notice are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.221(b)(4).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) preliminarily determines that non-oriented electrical steel (NOES) from the People's Republic of China (the PRC) is being, or is likely to be, sold to the United States at less than fair value (LTFV), as provided in section 733(b) of the Tariff Act of 1930, as amended (the Act). The period of investigation (POI) is January 1, 2013, through June 30, 2013. The dumping margin is shown in the “Preliminary Determination and Suspension of Liquidation” section of this notice. Interested parties are invited to comment on this preliminary determination.
Effective May 22, 2014.
Sandra Dreisonstok or Yang Jin Chun, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–0768 and (202) 482–5760, respectively.
The merchandise subject to this investigation consists of non-oriented electrical steel (NOES), which includes cold-rolled, flat-rolled, alloy steel products, whether or not in coils, regardless of width, having an actual thickness of 0.20 mm or more, in which the core loss is substantially equal in any direction of magnetization in the plane of the material. The term “substantially equal” means that the cross grain direction of core loss is no more than 1.5 times the straight grain direction (
NOES is subject to this investigation whether it is fully processed (
NOES is sometimes referred to as cold-rolled non-oriented (CRNO), non-grain oriented (NGO), non-oriented (NO), or cold-rolled non-grain oriented (CRNGO) electrical steel. These terms are interchangeable.
Excluded from the scope of this investigation are flat-rolled products not in coils that, prior to importation into the United States, have been cut to a shape and undergone all punching, coating, or other operations necessary for classification in Chapter 85 of the Harmonized Tariff Schedule of the United States (HTSUS) as a part (
The subject merchandise is provided for in subheadings 7225.19.0000, 7226.19.1000, and 7226.19.9000 of the HTSUS. Subject merchandise may also be entered under subheadings 7225.50.8085, 7225.99.0090, 7226.92.5000, 7226.92.7050, 7226.92.8050, 7226.99.0180 of the HTSUS. Although HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope is dispositive.
For a complete discussion of scope comments received from interested parties and changes the Department made to the scope of the investigation,
On February 28, 2014, AK Steel Corporation (the petitioner) made a timely request for a 50-day postponement of the preliminary determinations for this and the other concurrent NOES LTFV investigations, pursuant to section 733(c)(1)(A) of the Act and 19 CFR 351.205(b)(2) and (e).
The Department conducted this LTFV investigation in accordance with section 731 of the Act. Because none of the potential respondents in this investigation submitted separate rate applications, they are considered to be part of the PRC-wide entity. Because the PRC-wide entity did not provide necessary quantity-and-value data the Department requested, the PRC-wide entity failed to cooperate by not acting to the best of its ability. Therefore, the Department is assigning to the PRC-wide entity a rate based on facts available with an adverse inference.
On March 6, 2014, the petitioner alleged that critical circumstances exist with respect to imports of NOES from the PRC. In accordance with 19 CFR 351.206(c)(2)(i), because the critical circumstances allegation was submitted more than 20 days before the scheduled date of the preliminary determination, the Department must issue a preliminary critical circumstances determination not later than the date of the preliminary determination.
In accordance with section 733(e)(1) of the Act, we preliminarily find critical circumstances exist with respect to the PRC-wide entity in this investigation. For a full discussion of our preliminary critical circumstances determination,
The Department preliminarily assigns the PRC-wide entity a rate of 407.52 percent as an adverse facts available rate. As described above, the Department found that critical circumstances exist with respect to the PRC-wide entity. Furthermore, consistent with our practice, where the product under investigation is also subject to a concurrent countervailing duty investigation, we instruct U.S. Customs and Border Protection (CBP) to require a cash deposit equal to the amount by which the normal value exceeds the export price or constructed export price, less the amount of the countervailing duty determined to constitute an export subsidy. In this LTFV investigation, with regard to PRC-wide entity, export subsidies constitute 1.57 percent
Because the Department has reached its conclusions on the basis of adverse facts available, the calculations performed in connection with this preliminary determination are not proprietary in nature, and are described in the Preliminary Decision Memorandum. Case briefs may be submitted to IA ACCESS no later than 30 days after the publication of this preliminary determination in the
Interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request using IA ACCESS within 30 days after the publication of this preliminary determination in the
In accordance with section 733(f) of the Act, we have notified the ITC of our preliminary affirmative determination of sales at LTFV. Because the preliminary determination in this proceeding is affirmative, section 735(b)(2) of the Act requires that the ITC make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of NOES from the PRC before the later of 120 days after the date of this preliminary determination or 45 days after our final determination.
This determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act and 19 CFR 351.205(c).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (the “Department”) preliminarily determines that non-oriented electrical steel (“NOES”) from Germany, Japan, and Sweden is being sold, or is likely to be, sold in the United States at less than fair value (“LTFV”), as provided in section 733(b) of the Tariff Act of 1930, as amended (the “Act”). The period of investigation (“POI”) is July 1, 2012, through June 30, 2013. The estimated weighted-average dumping margins are listed in the “Preliminary Determinations” section of this notice. Interested parties are invited to comment on these preliminary determinations.
Effective May 22, 2014.
Patrick O'Connor at (202) 482–0989 (Germany); Thomas Martin at (202) 482–3936 (Japan); or Drew Jackson at (202) 482–4406 (Sweden); AD/CVD Operations, Enforcement and Compliance, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230.
The Department published the notice of initiation of these investigations on November 18, 2013.
The merchandise subject to these investigations consists of non-oriented electrical steel (NOES), which includes cold-rolled, flat-rolled, alloy steel products, whether or not in coils, regardless of width, having an actual thickness of 0.20 mm or more, in which the core loss is substantially equal in any direction of magnetization in the plane of the material. The term “substantially equal” means that the cross grain direction of core loss is no more than 1.5 times the straight grain direction (
NOES is subject to these investigations whether it is fully processed (
NOES is sometimes referred to as cold-rolled non-oriented (CRNO), non-grain oriented (NGO), non-oriented (NO), or cold-rolled non-grain oriented (CRNGO) electrical steel. These terms are interchangeable.
Excluded from the scope of these investigations are flat-rolled products not in coils that, prior to importation into the United States, have been cut to a shape and undergone all punching, coating, or other operations necessary for classification in Chapter 85 of the Harmonized Tariff Schedule of the United States (HTSUS) as a part
The subject merchandise is provided for in subheadings 7225.19.0000, 7226.19.1000, and 7226.19.9000 of the HTSUS. Subject merchandise may also be entered under subheadings 7225.50.8085, 7225.99.0090, 7226.92.5000, 7226.92.7050, 7226.92.8050, 7226.99.0180 of the HTSUS. Although HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope is dispositive.
The Department conducted these investigations in accordance with section 731 of the Act. As noted above, the mandatory respondents did not respond to the Department's requests for information. Pursuant to section 776(a) of the Act, the Department preliminarily relied upon facts otherwise available to assign estimated weighted-average dumping margins to the mandatory
For a complete discussion of scope comments received from interested parties and changes the Department made to the scope of the investigations,
On February 28, 2014, AK Steel Corporation (the petitioner) made a timely request for a 50-day postponement of the preliminary determinations for this and the other concurrent NOES LTFV investigations, pursuant to section 733(c)(1)(A) of the Act and 19 CFR 351.205(b)(2) and (e).
On March 6, 2014, Petitioner filed timely critical circumstances allegations, pursuant to section 733(e)(1) of the Act and 19 CFR 351.206(c)(1), alleging that critical circumstances exist with respect to imports of the merchandise under consideration from Germany, Japan, and Sweden.
Section 735(c)(5)(A) of the Act provides that the estimated all-others rate shall be an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated excluding any zero or,
The Department preliminarily determines that the following estimated weighted-average dumping margins exist for the producers or exporters during the period July 1, 2012, through June 30, 2013 at the following rates:
We will disclose the calculations performed to parties in this proceeding within five days after the date of publication of this notice in accordance with 19 CFR 351.224(b).
Because none of the mandatory respondents in these investigations provided information requested by the Department and the Department preliminarily determines each of the mandatory respondents to have been uncooperative, verification will not be conducted.
In accordance with section 733(d)(2) of the Act, we will direct Customs and Border Protection (“CBP”) to suspend liquidation of all entries of NOES from Germany from companies receiving the “all others” rate that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the
Pursuant to section 733(d) of the Act and 19 CFR 351.205(d), we will instruct CBP to require a cash deposit as follows: (1) The cash deposit rates for mandatory respondents will be equal to the rates that we have determined in these preliminary determinations for these respondents; (2) if the exporter is not a mandatory respondent identified in one of these investigations but the producer is, the cash deposit rate will be the specific rate established for the producer of the subject merchandise in these preliminary determinations; and (3) the cash deposit rate for all other producers or exporters will be equal to the country-specific “all others” rate determined in these preliminary determinations. These suspension of liquidation instructions will remain in effect until further notice.
In accordance with section 733(f) of the Act, we have notified the International Trade Commission (“ITC”) of our preliminary affirmative determinations. In accordance with section 735(b)(2) of the Act, if the Department's final determinations are affirmative, then the ITC will determine before the later of 120 days after the date of these preliminary determinations or 45 days after our final determinations whether imports of NOES from Germany, Japan, and Sweden are materially injuring, or threatening material injury to, the U.S. industry.
Interested parties are invited to comment on these preliminary determinations. Interested parties may submit case briefs to the Department no later than thirty days after the publication of these preliminary determinations. Rebuttal briefs, the content of which is limited to the issues raised in the case briefs, must be filed within five days of the deadline date for the submission of case briefs.
In accordance with section 774 of the Act, the Department will hold a public hearing, if timely requested, to afford interested parties an opportunity to comment on issues raised in case briefs, provided that such a hearing is requested by an interested party by electronically filing the request via IA ACCESS.
These preliminary determinations are issued and published pursuant to sections 733(f) and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Department) preliminarily determines that non-oriented electrical steel (NOES) from the Republic of Korea (Korea) is being sold, or is likely to be sold in the United States at less than fair value (LTFV), as provided in section 733(b) of the Tariff Act of 1930, as amended (the Act). The period of investigation (POI) is July 1, 2012, through June 30, 2013. The estimated weighted-average dumping margins are listed in the “Preliminary Determination” section of this notice. Interested parties are invited to comment on this preliminary determination.
Effective May 22, 2014.
Dmitry Vladimirov, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–0665.
The merchandise subject to this investigation consists of non-oriented electrical steel (NOES), which includes cold-rolled, flat-rolled, alloy steel products, whether or not in coils, regardless of width, having an actual thickness of 0.20 mm or more, in which the core loss is substantially equal in any direction of magnetization in the plane of the material. The term “substantially equal” means that the cross grain direction of core loss is no more than 1.5 times the straight grain direction (
NOES is subject to this investigation whether it is fully processed (
NOES is sometimes referred to as cold-rolled non-oriented (CRNO), non-grain oriented (NGO), non-oriented (NO), or cold-rolled non-grain oriented (CRNGO) electrical steel. These terms are interchangeable.
Excluded from the scope of this investigation are flat-rolled products not in coils that, prior to importation into the United States, have been cut to a shape and undergone all punching, coating, or other operations necessary for classification in Chapter 85 of the Harmonized Tariff Schedule of the United States (HTSUS) as a part
The subject merchandise is provided for in subheadings 7225.19.0000, 7226.19.1000, and 7226.19.9000 of the HTSUS. Subject merchandise may also be entered under subheadings 7225.50.8085, 7225.99.0090, 7226.92.5000, 7226.92.7050, 7226.92.8050, 7226.99.0180 of the HTSUS. Although HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope is dispositive.
For a complete discussion of scope comments received from interested parties and changes the Department made to the scope of the investigation,
On February 28, 2014, AK Steel Corporation (the petitioner) made a timely request for a 50-day postponement of the preliminary determinations for this and the other concurrent NOES LTFV investigations, pursuant to section 733(c)(1)(A) of the Act and 19 CFR 351.205(b)(2) and (e).
The Department conducted this investigation in accordance with section 731 of the Act. Export price is calculated in accordance with section 772 of the Act. Normal value is calculated in accordance with section 773 of the Act. For a full description of
As explained in the Preliminary Decision Memorandum, we determined that the mandatory respondents selected for individual examination in this investigation, POSCO and Daewoo International Corporation, constitute a single entity.
On March 6, 2014, the petitioner filed a timely critical circumstances allegation, pursuant to section 733(e)(1) of the Act and19 CFR 351.206(c)(1). We preliminarily determine that critical circumstances do not exist for imports of NOES from Korea. For a full description of the methodology and results of our analysis,
The Department preliminarily determines that estimated weighted-average dumping margins exist at the following rates:
Section 735(c)(5)(A) of the Act provides that the estimated “all others” rate shall be an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated, excluding rates that are zero,
We will disclose the calculations performed to parties in this proceeding within five days after the date of publication of this notice in accordance with 19 CFR 351.224(b).
Case briefs or other written comments may be submitted to the Assistant Secretary for Enforcement and Compliance no later than seven days after the date on which the final verification report is issued in this proceeding. Rebuttal briefs, limited to issues raised in case briefs, may be submitted no later than five days after the deadline date for case briefs.
Interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request using IA ACCESS within 30 days after publication of this preliminary determination in the
In accordance with section 733(d)(2) of the Act, we will instruct U.S. Customs and Border Protection (CBP) to suspend liquidation of all entries of NOES from Korea as described in the scope of the investigation section entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the
Pursuant to section 733(d) of the Act and 19 CFR 351.205(d), we will instruct CBP to require a cash deposit equal to the weighted-average amount by which the normal value exceeds export price, as indicated in the chart above, as follows:
Pursuant to a request from POSCO/Daewoo International Corporation and in accordance with section 735(a)(2)(A) of the Act and 19 CFR 351.210(b)(2)(ii) and (e), in this investigation, we are postponing the final determination.
In accordance with section 733(f) of the Act, we notified the International Trade Commission (ITC) of our preliminary affirmative determination of sales at LTFV. Because the preliminary determination in this proceeding is affirmative, section 735(b)(2) of the Act requires that the ITC make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of NOES from Korea before the later of 120 days after the date of this preliminary determination or 45 days after our final determination. Because we are postponing the deadline for our final determination to 135 days from the date of publication of this preliminary determination, as discussed above, the ITC will make its final determination no later than 45 days after our final determination.
This determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act and 19 CFR 351.205(c).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (“Department”) preliminarily determines that non-oriented electrical steel (“NOES”) from Taiwan is being, or is likely to be, sold in the United States at less than fair value (“LTFV”), as provided in section 733(b) of the Tariff Act of 1930, as amended (“the Act”). The period of investigation (“POI”) is July 1, 2012, through June 30, 2013. The estimated weighted-average dumping margins are listed in the “Preliminary Determination” section of this notice. Interested parties are invited to comment on this preliminary determination.
Effective May 22, 2014.
Krisha Hill or Karine Gziryan, AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–4037 or (202) 482–4081, respectively.
The Department published the notice of initiation of this investigation on November 18, 2013.
The merchandise subject to this investigation consists of non-oriented electrical steel (NOES), which includes cold-rolled, flat-rolled, alloy steel products, whether or not in coils, regardless of width, having an actual thickness of 0.20 mm or more, in which the core loss is substantially equal in any direction of magnetization in the plane of the material. The term “substantially equal” means that the cross grain direction of core loss is no more than 1.5 times the straight grain direction (
NOES is subject to this investigation whether it is fully processed (
NOES is sometimes referred to as cold-rolled non-oriented (CRNO), non-grain oriented (NGO), non-oriented (NO), or cold-rolled non-grain oriented (CRNGO) electrical steel. These terms are interchangeable.
Excluded from the scope of this investigation are flat-rolled products not in coils that, prior to importation into the United States, have been cut to a shape and undergone all punching, coating, or other operations necessary for classification in Chapter 85 of the Harmonized Tariff Schedule of the United States (HTSUS) as a part (
The subject merchandise is provided for in subheadings 7225.19.0000, 7226.19.1000, and 7226.19.9000 of the HTSUS. Subject merchandise may also be entered under subheadings 7225.50.8085, 7225.99.0090, 7226.92.5000, 7226.92.7050, 7226.92.8050, 7226.99.0180 of the HTSUS. Although HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope is dispositive.
The Department conducted this investigation in accordance with section 731 of the Act. Because the mandatory respondent Leicong Industrial Company, Ltd. (“Leicong”) failed to respond to the Department's questionnaire, we preliminarily determined to apply facts otherwise available with an adverse inference to this respondent pursuant to sections 776(a) and (b) of the Act. In applying adverse facts available, we are assigning Leicong a rate of 52.23 percent. For CSC, export prices have been calculated in accordance with section 772 of the Act. Normal value (“NV”) has been calculated in accordance with section 773 of the Act.
For a full description of the analysis underlying our preliminary determination,
Section 735(c)(5)(A) of the Act provides that the estimated “all others” rate shall be an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually examined, excluding all zero or de minimis rates, and all rates determined entirely under section 776 of the Act. CSC is the only respondent in this investigation for which the Department calculated a company-specific rate which is not zero, de minimis or based entirely on facts available. Therefore, for purposes of determining the “all others” rate and pursuant to section 735(c)(5)(A) of the Act, we are using the weighted-average dumping margin calculated for CSC, as the estimated weighted-average dumping margin assigned to all other producers and exporters of the merchandise under consideration.
The Department preliminarily determined that the following estimated weighted-average dumping margins exist for the producers or exporters during the period July 1, 2012, through June 30, 2013 at the following rates:
We intend to disclose the calculations performed to parties in this proceeding within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b).
Case briefs or other written comments may be submitted to the Assistant Secretary for Enforcement and Compliance no later than seven days after the date on which the final verification report is issued in this proceeding, and rebuttal briefs, limited to issues raised in case briefs, may be submitted no later than five days after the deadline date for case briefs.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce, filed electronically using IA ACCESS. An electronically filed document must be received successfully in its entirety by the Department's electronic records system, IA ACCESS, by 5:00 p.m. Eastern Standard Time, within 30 days after the date of publication of this notice.
In accordance with section 733(d)(2) of the Act, we are directing U.S. Customs and Border Protection (“CBP”) to suspend liquidation of all entries of NOES from Taiwan as described in the
Pursuant to 19 CFR 351.205(d), we will instruct CBP to require a cash deposit
Pursuant to a request from CSC, we are postponing the final determination and extending the provisional measures from a four-month period to not more than six months. Accordingly, we will make our final determination no later than 135 days after the date of publication of this preliminary determination, pursuant to section 735(a)(2) of the Act.
In accordance with section 733(f) of the Act, we have notified the ITC of our preliminary affirmative determination of sales at LTFV. Because the preliminary determination in this proceeding is affirmative, section 735(b)(2) of the Act requires that the ITC make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of NOES from Taiwan before the later of 120 days after the date of this preliminary determination or 45 days after our final determination. Because we are postponing the deadline for our final determination to 135 days from the date of the publication of this preliminary determination, as discussed above, the ITC will make its final determination no later than 45 days after our final determination.
This determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act and 19 CFR 351.205(c).
National Oceanic and Atmospheric Administration, Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before July 21, 2014.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Seaberry Nachbar, 831–647–4204 or
This request is for extension of a current information collection.
The National Oceanic and Atmospheric Administration (NOAA) Office of National Marine Sanctuaries (ONMS) collects, evaluates and assesses student data and information for the purpose of selecting successful scholarship candidates, generating internal NOAA reports and articles to demonstrate the success of its program. The Dr. Nancy Foster Scholarship Program is available to graduate students pursuing masters and doctoral degrees in the areas of marine biology, oceanography and maritime archaeology. The ONMS requires applicants to the Dr. Nancy Foster Scholarship Program to complete an application and to supply references (e.g., from academic professors and advisors) in support of the scholarship application. Scholarship recipients are required to conduct a pre- and post-evaluation of their studies through the scholarship program to gather information about the level of knowledge, skills and behavioral changes that take place with the students before and after their program participation. The evaluation results support ONMS performance measures. Scholarship recipients are also required to submit an annual progress report, a biographical sketch, and a photograph.
All forms are electronic, and the primary methods of submittal are email and Internet transmission. Approximately 1% of the application and reference forms may be mailed.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meeting.
The New England Fishery Management Council (Council) is scheduling a public meeting of its Groundfish Oversight Committee to consider actions affecting New England fisheries in the exclusive economic zone (EEZ). Recommendations from this group will be brought to the full Council for formal consideration and action, if appropriate.
This meeting will be held on Monday, June 9, 2014 at 9 a.m.
The meeting will be held at the Hampton Inn & Suites, 2100 Post Road, Warwick, RI 02886; telephone: (401) 739–8888; fax: (401) 739–1550.
Thomas A. Nies, Executive Director, New England Fishery Management Council; telephone: (978) 465–0492.
The Council's Groundfish Oversight Committee will meet primarily to discuss alternatives under development in Amendment 18 (A18) and Framework Adjustment 52 (FW 52). Specifically, the Committee will discuss draft alternatives for consideration in A18, review work from the Groundfish Plan Development Team (PDT) related to A18, and develop recommendations to the Council on the A18 alternatives to include in the DEIS for analysis. The Committee will also discuss draft alternatives for consideration in FW 52, review work from the PDT related to FW 52, and possibly make recommendations to the Council on preferred FW 52 alternatives. The Committee will also discuss possible items for inclusion in Framework Adjustment 53, which will be initiated at the June Council meeting. In addition, the Committee may discuss other business as necessary.
Although non-emergency issues not contained in this agenda may come before this group for discussion, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council's intent to take final action to address the emergency.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Thomas A. Nies, Executive Director, at (978) 465–0492, at least 5 days prior to the meeting date.
16 U.S.C. 1801 et seq.
DoD.
Reestablishment of Federal Advisory Committee.
The Department of Defense is publishing this notice to announce that it is reestablishing the charter for the Chief of Engineers Environmental Advisory Board (“the Board”).
Jim Freeman, Advisory Committee Management Officer for the Department of Defense, 703–692–5952.
This committee's charter is being reestablished under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C. Appendix, as amended), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b) (“the Sunshine Act”), and 41 CFR 102–3.50(d).
The Board is a discretionary Federal advisory committee and shall provide the Secretary of Defense, through the Secretary of the Army, the Assistant Secretary of the Army (Civil Works), and the Chief of Engineers (U.S. Army Corps of Engineers), independent advice and recommendations on matters relating to the two distinct component programs of the U.S. Army Corps of Engineers—the Military Program, which supports Army war fighters, and the Civil Works Program, which manages many of the water resources of the Nation.
The Department of Defense (DoD), through the Department of the Army, shall provide support as deemed necessary for the Board's performance, and shall ensure compliance with the requirements of the FACA, the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended) (“the Sunshine Act”), governing Federal statutes and regulations, and governing DoD policies and procedures.
The Board shall be comprised of no more than 10 members, who are eminent authorities in the fields of natural sciences (e.g., biology, ecology), social sciences (e.g., anthropology, community planning), and related sciences. To the extent practical the Board membership will include at least two members whose expertise is focused in the natural sciences, two members whose expertise is focused in the social sciences and two members whose expertise is focused in other related sciences. Board members shall
Board members appointed by the Secretary of Defense or the Deputy Secretary of Defense, who are not full-time or permanent part-time federal employees, shall be appointed as experts and consultants under the authority of 5 U.S.C. 3109 to serve as special government employee (SGE) members. Board members appointed by the Secretary of Defense, who are full-time or permanent part-time Federal employees, shall serve as regular government employee (RGE) members. Board members shall serve a term of one-to-four years on the Board. No member may serve more than two consecutive terms of service without the Secretary or Deputy Secretary of Defense approval. This same term of service limitation also applies to any DoD authorized subcommittees.
With the exception of reimbursement for official Board-related travel and per diem, Board members shall serve without compensation.
DoD, when necessary and consistent with the Board's mission and DoD policies and procedures, may establish subcommittees, task forces, or working groups to support the Board. Establishment of subcommittees will be based upon a written determination, to include terms of reference, by the Secretary of Defense, the Deputy Secretary of Defense, or the Secretary of the Army, as the DoD Sponsor.
Such subcommittees shall not work independently of the Board and shall report all of their recommendations and advice solely to the Board for full and open deliberation and discussion. Subcommittees, task forces, or working groups have no authority to make decisions and recommendations, verbally or in writing, on behalf of the Board. No subcommittee or any of its members can update or report, verbally or in writing, on behalf of the Board, directly to the DoD or any Federal officer or employee.
The Secretary of Defense or the Deputy Secretary of Defense will appoint subcommittee members to a term of service of one-to-four years, even if the member in question is already a member of the Board. Subcommittee members shall not serve more than two consecutive terms of service unless authorized by the Secretary of Defense or the Deputy Secretary of Defense.
Subcommittee members, if not full-time or permanent part-time Federal employees, will be appointed as experts and consultants, under the authority of 5 U.S.C. 3109, to serve as SGE members, whose appointments must be renewed on an annual basis. Subcommittee members appointed by the Secretary of Defense, who are full-time or permanent part-time Federal employees, shall serve as RGE members. With the exception of reimbursement of official travel and per diem related to the Board or its subcommittees, subcommittee members shall serve without compensation.
All subcommittees operate under the provisions of FACA, the Sunshine Act, governing Federal statutes and regulations, and established DoD policies and procedures.
The Board's Designated Federal Officer (DFO) shall be a full-time or permanent part-time DoD employee and shall be appointed in accordance with established DoD policies and procedures.
The Board's Designated Federal Officer (DFO), pursuant to DoD policy, shall be a full-time or permanent part-time DoD employee, and shall be appointed in accordance with established DoD policies and procedures.
The Board's DFO is required to be in attendance at all meetings of the Board and any subcommittees for the entire duration of each and every meeting; however, in the absence of the DFO, a properly approved Alternate DFO shall attend the entire duration of all of the meetings of the Board and its subcommittees.
The DFO, or the Alternate DFO, shall call all meetings of the Board and its subcommittees; prepare and approve all meeting agendas; and adjourn any meeting when the DFO, or the Alternate DFO, determines adjournment to be in the public interest or required by governing regulations or DoD policies and procedures.
Pursuant to 41 CFR 102–3.105(j) and 102–3.140, the public or interested organizations may submit written statements to Chief of Engineers Environmental Advisory Board membership about the Board's mission and functions. Written statements may be submitted at any time or in response to the stated agenda of planned meeting of Chief of Engineers Environmental Advisory Board.
All written statements shall be submitted to the DFO for the Chief of Engineers Environmental Advisory Board, and this individual will ensure that the written statements are provided to the membership for their consideration. Contact information for the Chief of Engineers Environmental Advisory Board DFO can be obtained from the GSA's FACA Database—
The DFO, pursuant to 41 CFR 102–3.150, will announce planned meetings of the Chief of Engineers Environmental Advisory Board. The DFO, at that time, may provide additional guidance on the submission of written statements that are in response to the stated agenda for the planned meeting in question.
Department of Defense.
Notice.
The Department of Defense is publishing this notice to announce that the following Federal Advisory Committee meeting of the Defense Advisory Committee on Women in the Services (DACOWITS) will take place. This meeting is open to the public.
Thursday, June 12, 2014, from 8:30 a.m. to 3:00 p.m.; Friday, June 13, 2014, from 8:30 a.m. to 11:30 a.m.
Sheraton National Hotel-Pentagon City, 900 South Orme St, Arlington, VA 22204.
Mr. Robert Bowling or DACOWITS Staff at 4000 Defense Pentagon, Room 5A734, Washington, DC 20301–4000.
Pursuant to the Federal Advisory Committee Act of 1972 (5 U.S.C. Appendix, as amended), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b), and Section 10(a), Public Law 92–463, as amended, notice is hereby given of a forthcoming meeting of the Defense Advisory Committee on Women in the Services (DACOWITS).
The purpose of the meeting is for the Committee to induct new members, receive briefings and updates relating to their current work. The Committee will induct new members. The Committee will receive a briefing from the Sexual Assault and Prevention Response Office (SAPRO). The Joint Advertising, Market Research and Studies (JAMRS) will provide a briefing on the accession of women. Insight Policy Research will provide a summary briefing of the Committee's installation visits. The
Pursuant to 41 CFR 102–3.105(j) and 102–3.140, and section 10(a)(3) of the Federal Advisory Committee Act of 1972, interested persons may submit a written statement for consideration by the Defense Advisory Committee on Women in the Services. Individuals submitting a written statement must submit their statement to the point of contact listed at the address in
Pursuant to 5 U.S.C. 552b and 41 CFR 102–3.140 through 102–3.165, this meeting is open to the public, subject to the availability of space.
Department of the Army, DoD.
Notice.
In accordance with subsection c, Section 595 of the Ronald W. Reagan National Defense Authorization Act of 2005, the Secretary of the Army has certified that the internal transformation of the Army from a division-oriented force to a brigade-oriented force has been completed. Further, in accordance with subsection c, Section 595 of the Ronald W. Reagan National Defense Authorization Act of 2005, the statutory requirement to submit an annual report is therefore terminated.
Certification and termination of statutory requirement for an annual report effective date is March 31, 2014.
HQDA, G–3/5/7, DAMO–ZT, Mr. John S. Chappell, (703) 614–8283.
None.
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.
The Commission strongly encourages electronic filing. Please file comments, recommendations, terms and conditions, and prescriptions using the Commission's eFiling system at
The Commission's Rules of Practice require all intervenors filing documents with the Commission to serve a copy of
k. This application has been accepted, and is ready for environmental analysis at this time.
l.
Erie proposes a minimum flow of 15 cfs into the bypassed reach at all times and would forego its existing ability to lower the minimum bypass flow to 10 cfs when inflow is less than 85 cfs. In addition, Erie proposes to maintain the impoundment elevation within 0.1 foot of the spillway crest (or flashboards, when installed) when inflow is less than 85 cfs and 0.25 foot when inflow is greater than 85 cfs.
m. A copy of the application is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
All filings must (1) bear in all capital letters the title “COMMENTS,” “REPLY COMMENTS,” “RECOMMENDATIONS,” “TERMS AND CONDITIONS,” or “PRESCRIPTIONS;” (2) set forth in the heading the name of the applicant and the project number of the application to which the filing responds; (3) furnish the name, address, and telephone number of the person protesting or intervening; and (4) otherwise comply with the requirements of 18 CFR 385.2001 through 385.2005. All comments, recommendations, terms and conditions or prescriptions must set forth their evidentiary basis and otherwise comply with the requirements of 18 CFR 4.34(b). Agencies may obtain copies of the application directly from the applicant. A copy of any protest or motion to intervene must be served upon each representative of the applicant specified in the particular application. A copy of all other filings in reference to this application must be accompanied by proof of service on all persons listed in the service list prepared by the Commission in this proceeding, in accordance with 18 CFR 4.34(b) and 385.2010.
You may also register online at
n. A license applicant must file no later than 60 days following the date of issuance of this notice: (1) A copy of the water quality certification; (2) a copy of the request for certification, including proof of the date on which the certifying agency received the request; or (3) evidence of waiver of water quality certification.
o.
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.
k. Pursuant to section 4.32(b)(7) of 18 CFR of the Commission's regulations, if any resource agency, Indian Tribe, or person believes that an additional scientific study should be conducted in order to form an adequate factual basis for a complete analysis of the application on its merit, the resource agency, Indian Tribe, or person must file a request for a study with the Commission not later than 60 days from the date of filing of the application, and serve a copy of the request on the applicant.
l. Deadline for filing additional study requests and requests for cooperating agency status: July 7, 2014
The Commission strongly encourages electronic filing. Please file additional study requests and requests for cooperating agency status using the Commission's eFiling system at
m. The application is not ready for environmental analysis at this time.
n. The proposed project would use the following existing facilities from an abandoned hydroelectric project: (1) a 3.5-foot-high, 120-foot-long concrete diversion weir, (2) a concrete intake structure with trashrack, (3) a 5,350-foot-long earthen power canal, (4) a concrete penstock headworks structure, (5) four 5-foot-diameter, 280-foot-long welded steel penstocks, (6) a 60-foot by 35-foot powerhouse, (7) a 20-foot by 12-foot metal controlhouse, (8) four 300-kilowatt vertical propeller turbine-generators, (9) a substation interconnecting to the transmissions lines operated by Pacific Power and Light Company, (10) a 60-foot-wide, 25-foot-long screened earthen tailrace discharging into the Umatilla River, and (11) appurtenant facilities. The applicant is proposing a new fish bypass at the diversion weir, and refurbishing and replacing the fish screens at the intake structure. The estimated annual project generation is 3,000 megawatt-hours.
o. A copy of the application is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
You may also register online at
p. With this notice, we are initiating consultation with the Oregon State Historic Preservation Officer (SHPO), as required by section 106 of the National Historic Preservation Act and the regulations of the Advisory Council on Historic Preservation, 36 CFR 800.4.
q. Procedural schedule: The application will be processed according to the following preliminary schedule. Revisions to the schedule will be made as appropriate (e.g., if there are no deficiencies and/or scoping is waived, the schedule would be shortened).
The staff of the Federal Energy Regulatory Commission (FERC or Commission) has prepared an environmental assessment (EA) for the Cove Point Liquefaction Project (Project) proposed by Dominion Cove Point LNG, LP (DCP) in the above-referenced docket. DCP requests authorization to construct and operate facilities to process and export domestically sourced liquefied natural gas (LNG) at the existing Cove Point LNG Terminal (LNG Terminal) in Calvert County, Maryland. The Project would enable DCP to export approximately 5.75 million metric tons per annum of LNG via LNG marine carriers that would dock at the existing offshore pier. A draft General Conformity Determination has also been prepared by the FERC to assess the potential air quality impacts associated with construction and operation of the proposed Project and is included as appendix B of the EA.
The EA assesses the potential environmental effects of the construction and operation of the Project in accordance with the requirements of the National Environmental Policy Act (NEPA). The draft General Conformity Determination was prepared to implement the conformity provision of the Clean Air Act. The FERC staff concludes that approval of the proposed Project, with appropriate mitigating measures, would not constitute a major federal action significantly affecting the quality of the human environment.
The U.S. Department of Energy, U.S. Department of Transportation, U.S. Army Corps of Engineers, U.S. Coast Guard, and Maryland Department of Natural Resources participated as cooperating agencies in the preparation of the EA and draft General Conformity Determination. Cooperating agencies have jurisdiction by law or special expertise with respect to resources potentially affected by the proposal and participate in the NEPA analysis. Although the cooperating agencies provided input to the conclusions and recommendations presented in the EA, the agencies will present their own conclusions and recommendations in their respective Records of Decision or determinations for the Project.
The proposed facilities associated with the LNG Terminal include the following:
• One LNG liquefaction train consisting of gas treatment equipment, natural gas-fired turbine-driven refrigerant compressors, waste heat recovery systems, fire and gas detection and safety systems, and control systems;
• additional power generation including waste heat-driven steam turbine generators and other electrical accessories to supplement the existing on-site power generation;
• minor modifications to the existing pier; and
• the use of two off-site areas to support construction.
The Project would also include the addition of up to 62,500 horsepower of electric-driven compression at DCP's existing Pleasant Valley Compressor Station in Fairfax County, Virginia, and modifications to an existing metering and regulating facility at DCP's Loudoun Compressor Station in Loudoun County, Virginia.
The FERC staff mailed copies of the EA and draft General Conformity Determination to federal, state, and local government representatives and agencies; elected officials; environmental and public interest groups; Native American tribes; potentially affected landowners and other interested individuals and groups; libraries in the Project area; and parties to this proceeding. In addition, the EA, including the draft General Conformity Determination, has been placed in the public files of the FERC and is available
Any person wishing to comment on the EA may do so. Your comments should focus on the potential environmental effects, reasonable alternatives, and measures to avoid or lessen environmental impacts. The more specific your comments, the more useful they will be. To ensure that the Commission has the opportunity to consider your comments prior to making its decision on this project, it is important that we receive your comments in Washington, DC on or before June 16, 2014.
For your convenience, there are four methods you can use to submit your comments to the Commission. In all instances please reference the Project docket number (CP13–113–000) with your submission. The Commission encourages electronic filing of comments and has expert staff available to assist you at (202) 502–8258 or
(1) You can file your comments electronically by using the
(2) You can file your comments electronically by using the
(3) You may file a paper copy of your comments at the following address: Kimberly D. Bose, Secretary, Federal Energy Regulatory Commission, 888 First Street NE., Room 1A, Washington, DC 20426.
(4) In lieu of sending written or electronic comments, the Commission invites you to attend a public comment meeting that its staff will conduct in the Project area to receive comments on the EA and draft General Conformity Determination. We encourage interested groups and individuals to attend and present oral comments on the EA and draft General Conformity Determination. A transcript of the meeting will be available for review in eLibrary under the Project docket number. The meeting is scheduled as follows:
Any person seeking to become a party to the proceeding must file a motion to intervene pursuant to Rule 214 of the Commission's Rules of Practice and Procedures (18 CFR 385.214).
Additional information about the project is available from the Commission's Office of External Affairs, at (866) 208–FERC, or on the FERC Web site (
In addition, the Commission offers a free service called eSubscription which allows you to keep track of all formal issuances and submittals in specific dockets. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. Go to
The staff of the Federal Energy Regulatory Commission (FERC or Commission) has prepared a final environmental impact statement (EIS) for the Downeast LNG Project, proposed by Downeast LNG, Inc. and Downeast Pipeline, LLC (collectively Downeast) in the above-referenced dockets. Downeast requests authorization to construct and operate a proposed liquefied natural gas (LNG) import terminal, natural gas sendout pipeline, and associated facilities in Washington County, Maine. The Downeast LNG Project would provide about 500 million cubic feet per day of imported natural gas to the New England region.
The final EIS assesses the potential environmental effects of the construction and operation of the Downeast LNG Project in accordance with the requirements of the National Environmental Policy Act (NEPA). The FERC staff concludes that approval of the proposed project, with the mitigation measures recommended in the EIS, would ensure that most impacts in the project area would be avoided or reduced to less than significant levels. Construction and operation of the project would primarily result in temporary and short-term environmental impacts; however, some long-term and permanent environmental impacts would occur.
The U.S. Coast Guard; U.S. Army Corps of Engineers; National Oceanic and Atmospheric Administration, National Marine Fisheries Service; U.S. Environmental Protection Agency; U.S. Department of Transportation; and the Maine Department of Environmental Protection participated as cooperating agencies in the preparation of the EIS. Cooperating agencies have jurisdiction by law or special expertise with respect to resources potentially affected by the proposal and participate in the NEPA analysis. Although the cooperating
The final EIS addresses the potential environmental effects of the construction and operation of the following project facilities:
• A new marine terminal that would include a 3,862-foot-long pier with a single berth and vessel mooring system, intended to handle LNG vessels ranging from 70,000 to 165,000 cubic meters in capacity, with future expansion capabilities to handle vessels with 220,000 cubic meters of cargo capacity;
• two full-containment LNG storage tanks, each with a nominal usable storage capacity of 160,000 cubic meters;
• LNG vaporization and processing equipment;
• piping, ancillary buildings, safety systems, and other support facilities;
• three vapor fences around the LNG terminal;
• a 29.8-mile-long, 30-inch-diameter underground natural gas pipeline;
• natural gas metering facilities located at the LNG terminal site; and
• various ancillary facilities including pigging
The FERC staff mailed copies of the EIS to Federal, state, and local government representatives and agencies; elected officials; environmental and public interest groups; Native American tribes; potentially affected landowners and other interested individuals and groups; newspapers and libraries in the project area; and parties to this proceeding.
Everyone on our environmental mailing list will receive a CD version of the final EIS. Paper copy versions of the EIS were mailed to those specifically requesting them. Only volume 1 of the final EIS, containing text of the analysis, was printed in hard copy. Volume 2, containing additional appendices, was produced as .pdf files on a CD. Responses to comments received on the draft EIS and Supplemental draft EIS are included in Appendix S and T, respectively. In addition, the EIS is available for public viewing on the FERC's Web site (
Additional information about the project is available from the Commission's Office of External Affairs, at (866) 208–FERC, or on the FERC Web site (
In addition, the Commission offers a free service called eSubscription which allows you to keep track of all formal issuances and submittals in specific dockets. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. Go to
1. By letter filed November 27, 2013, Bolthouse Properties, LLC informed the Commission that the exemption from licensing for the Cottonwood Canyon Ranch Hydroelectric Project, FERC No. 3525, originally issued March 5, 1982,
2. Desert Power Company is now the exemptee of the Cottonwood Canyon Ranch Hydroelectric Project, FERC No. 3525. All correspondence should be forwarded to: Mr. Steve West, Desert Power Company, P.O. Box 609, Rock Springs, WY 82902.
Take notice that on May15, 2014, the North American Electric Reliability Corporation (NERC) filed proposed revisions to certain Violation Risk Factors and Violations Severity Levels assigned to certain Critical Infrastructure Protection Reliability Standards for Federal Energy Regulatory Commission approval, pursuant to Order No. 791.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. On or before the comment date, it is not necessary to serve motions to intervene or protests on persons other than the Applicant.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Take notice that on May 9, 2014, pursuant to Rule 207(a)(2) of the Commission's Rules of Practice and Procedure, 18 CFR 385.207(a)(2)(2013), White Cliffs Pipeline, L.L.C. (White Cliffs) filed a petition requesting a declaratory order approving the overall tariff, rate and priority service structure for a proposed expansion of White Cliffs' existing crude oil pipeline as more fully explained in the petition.
Any person desiring to intervene or to protest in this proceeding must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Anyone filing a motion to intervene or protest must serve a copy of that document on the Petitioner.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 14 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First St. NE., Washington, DC 20426.
The filings in the above proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
Bedford Energy Associates, LLC; Notice of Competing Preliminary Permit Applications Accepted for Filing and Soliciting Comments, Motions To Intervene, and Competing Applications
On February 24, 2014, Pike Island Energy, LLC and on March 26, 2014, Bedford Energy Associates, LLC filed preliminary permit applications, pursuant to section 4(f) of the Federal Power Act, proposing to study the feasibility of the Pike Island Hydroelectric Project (Pike Island Project or project) to be located at the U.S. Army Corps of Engineers' (Corps) Pike Island Lock and Dam on the Ohio River, near Wheeling, West Virginia, and Yorkville, Ohio. The sole purpose of a preliminary permit, if issued, is to grant the permit holder priority to file a license application during the permit term. A preliminary permit does not authorize the permit holder to perform any land-disturbing activities or otherwise enter upon lands or waters owned by others without the owners' express permission.
Pike Island Energy, LLC's proposed project would be located at existing overflow weir and west abutment of the existing Pike Island Lock and Dam and consist of the following: (1) A new 225-foot-wide by 50-foot-long concrete intake containing trash racks, sluice gates, and intake gates; (2) a new160-foot-wide by 140-foot-long concrete powerhouse containing two Kaplan pit turbines rated at 15 megawatts (MW) each and one Kaplan pit turbine rated at 10 MW for a total 40 MW capacity; (3) a 200-foot-wide by 500-foot-long tailrace channel; (4) a new substation to be located near the west abutment; (5) a 7,800-foot-long, 138-kilovolt three phase overhead transmission line connecting the project's substation with an existing substation in Tiltonsville, OH; and (6) appurtenant facilities. The estimated annual generation of Pike Island Energy, LLC's project would be 200 gigawatt-hours.
Bedford Energy Associates, LLC's proposed project would be located at existing overflow weir and west abutment of the existing Pike Island Lock and Dam and consist of the following: (1) A new 265-foot-wide by 50-foot-long concrete intake containing trash racks, sluice gates, and intake gates; (2) a new 265-foot-wide by 128-foot-long concrete powerhouse containing eight Kaplan pit turbines rated at 6 megawatts (MW) each for a total of 48 MW capacity; (3) a 300-foot-long tailrace channel; (4) a new substation to be located at the west abutment; (5) a 7,800-foot-long, 138-kilovolt three phase overhead transmission line connecting the project's substation with an existing substation in Tiltonsville, Ohio; and (6) appurtenant facilities. The estimated annual generation of Bedford Energy Associates, LLC's project would be 250 gigawatt-hours.
Deadline for filing comments, motions to intervene, competing applications (without notices of intent), or notices of intent to file competing applications: 60 days from the issuance of this notice. Competing applications and notices of intent must meet the requirements of 18 CFR 4.36.
The Commission strongly encourages electronic filing. Please file comments, motions to intervene, notices of intent, and competing applications using the Commission's eFiling system at
More information about this project, including a copy of the application, can be viewed or printed on the “eLibrary” link of the Commission's Web site at
On March 13, 2014, the Montana Department of Natural Resources and Conservation, filed an application for a preliminary permit, pursuant to section 4(f) of the Federal Power Act (FPA), proposing to study the feasibility of the Tongue River Power Project (Tongue River Project or project) to be located on the Tongue River near Decker in Big Horn County, Montana. The sole purpose of a preliminary permit, if issued, is to grant the permit holder priority to file a license application during the permit term. A preliminary permit does not authorize the permit holder to perform any land-disturbing activities or otherwise enter upon lands or waters owned by others without the owners' express permission.
The proposed project would consist of the following: (1) An existing 93-feet-high, 1,824-feet-long earth-fill dam with a spillway impounding a reservoir having a total storage capacity of 79,071 acres at a normal operating elevation of 3,428.4 feet mean sea level; (2) a steel-lined, 8-feet-diameter primary outlet conduit; (3) an 8-feet diameter, 700-feet-long penstock; (4) a 30-feet by 45-feet powerhouse containing twin vertical Francis turbines/generator units rated for a total of 2.16 megawatts; (5) outflow channels from the powerhouse returning water to the Tongue River; (6) a substation consisting of a concrete slab and a transformer; (7) a 1-mile-long, 25-kilovolt transmission line; (8) a switchyard facility located at the interconnection point with the grid; (9) a project access road; and (10) appurtenant facilities. The estimated annual generation of the Tongue River project would be 7.34 gigawatt-hours.
Deadline for filing comments, motions to intervene, competing applications (without notices of intent), or notices of intent to file competing applications: 60 days from the issuance of this notice. Competing applications and notices of intent must meet the requirements of 18 CFR 4.36.
The Commission strongly encourages electronic filing. Please file comments, motions to intervene, notices of intent, and competing applications using the Commission's eFiling system at
More information about this project, including a copy of the application, can be viewed or printed on the “eLibrary” link of Commission's Web site at
Take notice that on May 7, 2014, Texas Eastern Transmission, LP (Texas Eastern), 5400 Westheimer Court, Houston, Texas 77056–5310, filed a prior notice application pursuant to section 7(b) of the Natural Gas Act and sections 157.205 and 157.216 of the Federal Energy Regulatory Commission's (Commission) regulations under the Natural Gas Act (NGA), and Texas Eastern's blanket certificate issued in Docket No. CP82–535–000, for authorization to abandon certain inactive supply laterals located in offshore federal waters in the Gulf of Mexico near Louisiana. Specifically, Texas Eastern proposes to abandon in place approximately 6.98 miles of 16-inch diameter pipeline (Line 40–B–3) and approximately 5.2 miles of 12-inch diameter pipeline (Line 40–B–3–B), all as more fully set forth in the application, which is open to the public for inspection. The filing may also be viewed on the web at
Any questions regarding this application should be directed to Lisa A. Connolly, General Manager, Rates & Certificates, Texas Eastern Transmission, LP, P.O. Box 1642, Houston, Texas 77251–1642, or phone (713) 627–4102 or fax (713) 627–5947 or by email
Any person or the Commission's staff may, within 60 days after issuance of the instant notice by the Commission, file pursuant to Rule 214 of the Commission's Procedural Rules (18 CFR 385.214) a motion to intervene or notice of intervention and pursuant to Section 157.205 of the regulations under the NGA (18 CFR 157.205), a protest to the request. If no protest is filed within the time allowed therefore, the proposed
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding, or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (FEIS) or EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS or EA.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. However, the non-party commenter will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the “eFiling” link at
Take notice that on May 9, 2014, Texas Eastern Transmission, LP (Texas Eastern), 5400 Westheimer Court, Houston, Texas 77251–1642, filed in Docket No. CP14–485–000, a prior notice request pursuant to sections 157.205and 157.216 of the Commission's regulations under the Natural Gas Act (NGA), and Texas Eastern's blanket certificate issued in Docket No. CP82–535–000, seeking authorization to abandon, in-place an approximately 1.04 mile segment of Texas Eastern's 30-inch diameter auxiliary pipeline Line 10 between mile post (MP) 278.68 and MP 279.72 at the Percy Priest Reservoir crossing, and to remove related ancillary facilities, as necessary, all as more fully set forth in the application which is on file with the Commission and open for public inspection. The filing may also be viewed on the web at
Any questions concerning this application may be directed to: Lisa A. Connolly, General Manager, Rates & Certificates, Texas Eastern Transmission, LP, P.O. Box 1642, Houston, Texas 77251–1642, Phone: (713) 627–4102, Fax: (713) 627–5947, Email:
Any person may, within 60 days after the issuance of the instant notice by the Commission, file pursuant to Rule 214 of the Commission's Procedural Rules (18 CFR 385.214) a motion to intervene or notice of intervention. Any person filing to intervene or the Commission's staff may, pursuant to section 157.205 of the Commission's Regulations under the NGA (18 CFR 157.205) file a protest to the request. If no protest is filed within the time allowed therefore, the proposed activity shall be deemed to be authorized effective the day after the time allowed for protest. If a protest is filed and not withdrawn within 30 days after the time allowed for filing a protest, the instant request shall be treated as an application for authorization pursuant to section 7 of the NGA.
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (FEIS) or EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS or EA.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with he Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. However, the non-party commenters will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and ill not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests, and interventions via the internet in lieu of paper. See 18 CFR 385.2001(a) (1) (iii) and the instructions on the Commission's Web site (
Take notice that on May 7, 2014, Columbia Gulf Transmission, LLC (Columbia Gulf), having its principal office at 5151 San Felipe, Suite 2500, Houston, TX 77056, filed in Docket No. CP14–478–000, a prior notice request pursuant to sections 157.205, 157.209 and 157.210 of the Commission's Regulations under the Natural Gas Act (NGA). Columbia Gulf seeks authorization to (1) convert a temporary compressor unit located at the site of the Hartsville Compressor Station, located in Macon County, Tennessee, to permanent standby service, (2) remove temporary facilities no longer required for service, and (3) abandon/reduce the certificated horsepower (hp) of the Hartsville Compressor Station by 6,000 hp, to a total of 45,400 hp. Columbia Gulf proposes to perform these activities under its blanket certificate issued in Docket No. CP83–496–000, all as more fully set forth in the application which is on file with the Commission and open to public inspection.
The filing may also be viewed on the web at
Any questions concerning this application may be directed to Fredric J. George, Senior Counsel, Columbia Gas Transmission Corporation, P.O. Box 1273, Charleston, West Virginia 25325–1273 or by calling (304) 357–2359 or fax (304)357–3206.
Any person or the Commission's staff may, within 60 days after issuance of the instant notice by the Commission, file pursuant to Rule 214 of the Commission's Procedural Rules (18 CFR 385.214) a motion to intervene or notice of intervention and pursuant to Section 157.205 of the regulations under the NGA (18 CFR 157.205), a protest to the request. If no protest is filed within the time allowed therefore, the proposed activity shall be deemed to be authorized effective the day after the time allowed for filing a protest. If a protest is filed and not withdrawn within 30 days after the allowed time for filing a protest, the instant request shall be treated as an application for authorization pursuant to Section 7 of the NGA.
Pursuant to section 157.9 of the Commission's rules (18 CFR 157.9), within 90 days of this Notice, the Commission staff will either: complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's EA.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenter's will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenter's will not be required to serve copies of filed documents on all other parties. However, the non-party commentary, will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the “eFiling” link at
Take notice that on May 9, 2014, Tennessee Gas Pipeline Company, L.L.C. (Tennessee), 1001 Louisiana Street, Houston, Texas 77002, filed in Docket No. CP14–483–000, a prior notice request pursuant to sections 157.205 and 157.211of the Commission's regulations under the Natural Gas Act (NGA) as amended, requesting authorization to construct and operate a new delivery point to serve the Hanscom Air Force Base in Middlesex County, Massachusetts. Tennessee proposes to install a three-inch diameter hot tap assembly and appurtenances located on its Line No. 200–1. Tennessee avers that proposed facilities will have the capability of delivering up to 5.76 million cubic feet per day of natural gas. Tennessee estimates the costs of the project to be $561,400, all as more fully set forth in the application which is on file with the Commission and open to public inspection. The filing may also be viewed on the web at
Any questions concerning this application may be directed to Thomas G. Joyce, Manager, Certificates, Tennessee Gas Pipeline Company, L.L.C., 1001 Louisiana Street, Houston, Texas 77002, by telephone at (713) 420–3299, or by email
Any person or the Commission's staff may, within 60 days after issuance of the instant notice by the Commission, file pursuant to Rule 214 of the Commission's Procedural Rules (18 CFR 385.214) a motion to intervene or notice of intervention and pursuant to section 157.205 of the regulations under the NGA (18 CFR 157.205), a protest to the request. If no protest is filed within the
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding, or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (FEIS) or EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS or EA.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenter's will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenter's will not be required to serve copies of filed documents on all other parties. However, the non-party commentary, will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the “eFiling” link at
Environmental Protection Agency (EPA).
Notice.
In compliance with the Paperwork Reduction Act (PRA), this document announces that EPA is planning to submit an Information Collection Request (ICR) to the Office of Management and Budget (OMB). The ICR, entitled: “Partial Update of the TSCA Section 8(b) Inventory Data Base, Production and Site Reports (Chemical Data Reporting)” and identified by EPA ICR No. 1884.08 and OMB Control No. 2070–0162, represents the renewal of an existing ICR that is scheduled to expire on January 31, 2105. Before submitting the ICR to OMB for review and approval, EPA is soliciting comments on specific aspects of the proposed information collection that is summarized in this document. The ICR and accompanying material are available in the docket for public review and comment.
Comments must be received on or before July 21, 2014.
Submit your comments, identified by docket identification (ID) number EPA–HQ–OPPT–2013–0721, by one of the following methods:
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Pursuant to PRA section 3506(c)(2)(A) (44 U.S.C. 3506(c)(2)(A)), EPA specifically solicits comments and information to enable it to:
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 estimates of the burden of the proposed collection of information, including the validity of the methodology and assumptions used.
3. Enhance the quality, utility, and clarity of the information to be collected.
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. In particular, EPA is requesting comments from very small businesses (those that employ less than 25) on examples of specific additional efforts that EPA could make to reduce the paperwork burden for very small businesses affected by this collection.
Responses to the collection of information are mandatory (see 40 CFR part 710). Respondents may claim all or part of a notice confidential. EPA will disclose information that is covered by a claim of confidentiality only to the extent permitted by, and in accordance with, the procedures in TSCA section 14 and 40 CFR part 2.
The ICR, which is available in the docket along with other related materials, provides a detailed explanation of the collection activities and the burden estimate that is only briefly summarized here:
There is an increase of 315,080 hours in the total estimated respondent burden compared with that identified in the ICR currently approved by OMB. This increase reflects a number of factors, which are detailed in the supporting statement. This change involves both program changes and adjustments.
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. EPA will issue another
Environmental protection, Reporting and recordkeeping requirements.
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 twelve days of the date this notice appears in the
By Order of the Federal Maritime Commission.
This notice corrects a notice (FR Doc. 2014–11065) published on page 27611 of the issue for Wednesday, May 14, 2014.
Under the Federal Reserve Bank of Minneapolis heading, the entry for
A. Federal Reserve Bank of Minneapolis (Jacqueline K. Brunmeier, Assistant Vice President) 90 Hennepin Avenue, Minneapolis, Minnesota 55480–0291:
1.
Comments on this application must be received by May 29, 2014.
The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than June 6, 2014.
A. Federal Reserve Bank of Chicago (Colette A. Fried, Assistant Vice President) 230 South LaSalle Street, Chicago, Illinois 60690–1414:
1.
Office of the Secretary, HHS.
Notice.
In compliance with section 3507(a)(1)(D) of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, has submitted an Information Collection Request (ICR), described below, to the Office of Management and Budget (OMB) for review and approval. The ICR is for reinstatement of a previously-approved information collection assigned OMB control number 0990–0313 which expired on October 31, 2013. Comments submitted during the first public review of this ICR will be provided to OMB. OMB will accept further comments from the public on this ICR during the review and approval period.
Comments on the ICR must be received on or before June 23, 2013.
Submit your comments to
Information Collection Clearance staff,
When submitting comments or requesting information, please include the OMB control number 0990–0313 and document identifier HHS–OS–0990–0313–30D for reference.
The survey includes a core of standard questions on blood collection, processing, and utilization practices to allow for comparison with data from previous surveys; additionally, questions to specifically address emerging and developing issues and technologies in blood collection and utilization are included. Biovigilance remains a key theme for the 2013 survey, as continued from the 2007, 2009, and 2011 iterations. To that end, questions on transfusion transmitted infections, transfusion associated circulatory overload, acute hemolysis, delayed hemolysis, and severe allergic reactions are included in the survey.
Office of the Secretary, HHS.
Notice.
In compliance with section 3507(a)(1)(D) of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, has submitted an Information Collection Request (ICR), described below, to the Office of Management and Budget (OMB) for review and approval. The ICR is for a new collection. Comments submitted during the first public review of this ICR will be provided to OMB. OMB will accept further comments from the public on this ICR during the review and approval period.
Comments on the ICR must be received on or before June 23, 2014.
Submit your comments to
Information Collection Clearance staff,
In fiscal year 2013, Congress appropriated approximately $296.8 million for Title X family planning activities. In accordance with the statute and regulations (42 Code of Federal Regulations [CFR] part 59), at least 90% of the appropriation is used for clinical family planning services. In 2012, 98 Title X grantees provided family planning services to five million women and men through a network of 4,400 community-based clinics that include state and local health departments, tribal organizations, and other public and private nonprofit agencies. There is at least one clinic that receives Title X funds and provides services as required under the Title X statute in 73% of U.S. counties.
Sixty percent of the clients seen at Title X funded service sites self-identify as being uninsured. Seventy percent of the total clients are under the age 30. Thus Title X service sites see a large proportion of young and uninsured individuals. Over the past years, OPA has encouraged grantees to develop enrollment programs to ensure that clients who are currently uninsured understand new health insurance options that are available as a result of the ACA. Some sites already assist individuals with enrolling in Medicaid and other public insurance programs. With the availability of the health insurance marketplace, many more service delivery sites are assisting clients enroll in health insurance programs.
OPA does not have any data on how many sites are assisting and enrolling clients into health insurance programs. Thus we seek to collect this data in order to understand the impact of Title X funded service sites on assisting and enrolling clients into insurance programs. We will utilize this information to guide strategic planning around how Title X service sites and prepare for, and assist with, the full implementation of the ACA. Through a separate data collection process called the Family Planning Annual Report (FPAR) (OMB No. 0990–0221, expiration January 31, 2016), OPA collects information on the insurance status of the clients served. With the implementation of the ACA, many of the traditional clients served by Title X service sites will qualify for health insurance.
Agency for Toxic Substances and Disease Registry (ATSDR), Department of Health and Human Services (HHS).
Request for comments on the proposed substances to be evaluated for Set 28 toxicological profiles.
ATSDR is initiating the development of its 28th set of toxicological profiles (CERCLA Set 28). This notice announces the list of proposed substances that will be evaluated for CERCLA Set 28 toxicological profile development. ATSDR's Division of Toxicology and Human Health Sciences is soliciting public nominations from the list of proposed substances to be evaluated for toxicological profile development. ATSDR also will consider the nomination of any additional, non-CERCLA substances that may have public health implications, on the basis of ATSDR's authority to prepare toxicological profiles for substances not found at sites on the National Priorities List. The agency will do so in order to “. . . establish and maintain inventory of literature, research, and studies on the health effects of toxic substances” under CERCLA Section 104(i)(1)(B), to respond to requests for consultation under section 104(i)(4), and to support the site-specific response actions conducted by ATSDR, as otherwise necessary.
Nominations from the Substance Priority List and/or additional substances must be submitted no later than June 20, 2014.
You may submit nominations, identified by Docket No. ATSDR–2014–0002, by any of the following methods:
*
*
For further information, please contact Commander Jessilynn B. Taylor, Division of Toxicology and Human Health Sciences, 1600 Clifton Rd. NE., MS F–57, Atlanta, Ga. 30333, Email:
The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA or Superfund) [42 U.S.C. 9601
Each year, ATSDR develops a list of substances to be considered for toxicological profile development. The Set 28 nomination process includes consideration of all substances on ATSDR's Priority List of Hazardous Substances, also known as the Substance Priority List (SPL), as well as other substances nominated by the public. The 275 substances on the SPL will be considered for Set 28 Toxicological Profile development. This list may be found at the following Web site:
ATSDR will evaluate all data and information associated with nominated substances and will determine the final list of substances to be chosen for toxicological profile development. Substances will be chosen according to ATSDR's specific guidelines for selection. These guidelines can be found in the
Please ensure that your comments are submitted within the specified nomination period. Nominations received after the closing date will be marked as late and may be considered only if time and resources permit.
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
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Information is also available on the Institute's/Center's home page:
Advisory Council on Historic Preservation.
The Advisory Council on Historic Preservation will move to a new location, resulting in a change of physical address and phone numbers.
The Advisory Council on Historic Preservation (ACHP) will be moving from its current location on May 28, 2014. As of Monday, June 2, 2014, the new address and main phone numbers for the ACHP will be: 401 F Street NW., Suite 308, Washington, DC 20001–2637; (202) 517–0200; (202) 517–6381 (fax). All email addresses will remain the same. The ACHP Web site address, at
The ACHP will move from its current location on May 28, 2014. It will arrive at its new location on June 2, 2014.
Starting on June 2, 2104, the ACHP's new address will be 401 F Street NW., Suite 308, Washington, DC 20001–2637. The new main office number will be (202) 517–0200. The new fax number will be (202) 517–6381. The new, individual staff phone numbers will be posted on the ACHP Web site (
Cindy Bienvenue, at
16 U.S.C. 470j.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of an emergency declaration for the State of Washington (FEMA–3370–EM), dated March 24, 2014, and related determinations.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
Notice is hereby given that the incident period for this emergency is closed effective April 28, 2014.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households in Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
In notice document 2014–09450 beginning on page 23005 in the issue of Friday, April 25, 2014 make the following correction:
On page 23007, in the table, under the heading Davidson County, Tennessee, and Incorporated Areas, in the Community Map Repository Address column, the second entry should read “City Hall, 698 Thompson Lane, Berry Hill, TN 37204”.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of Florida (FEMA–4177–DR), dated May 6, 2014, and related determinations.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
The notice of a major disaster declaration for the State of Florida is hereby amended to include the following areas among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of May 6, 2014.
Okaloosa and Walton Counties for Individual Assistance.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households in Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050 Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of Arkansas (FEMA–4174–DR), dated April 29, 2014, and related determinations.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
The notice of a major disaster declaration for the State of Arkansas is hereby amended to include the following areas among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of April 29, 2014.
Faulkner County for Public Assistance [Categories C–G] (already designated for Individual Assistance and assistance for debris removal and emergency protective measures [Categories A and B], including direct federal assistance, under the Public Assistance program).
Clay, Cleburne, Fulton, Independence, Izard, Jackson, Lawrence, and Sharp Counties for Public Assistance (Categories A–G).
Randolph and White Counties for Public Assistance [Categories A–G] (already designated for Individual Assistance).
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households in Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of Washington (FEMA–4168–DR), dated April 2, 2014, and related determinations.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
Notice is hereby given that the incident period for this disaster is closed effective April 28, 2014.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households in Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of Alabama (FEMA–4176–DR), dated May 2, 2014, and related determinations.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
The notice of a major disaster declaration for the State of Alabama is hereby amended to include the following areas among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of May 2, 2014.
Federal Emergency Management Agency, DHS.
Notice.
This is a notice of the Presidential declaration of a major disaster for the State of Montana (FEMA–4172–DR), dated April 17, 2014, and related determinations.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
Notice is hereby given that, in a letter dated April 17, 2014, the President issued a major disaster declaration under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
In order to provide Federal assistance, you are hereby authorized to allocate from funds available for these purposes such amounts as you find necessary for Federal disaster assistance and administrative expenses.
You are authorized to provide Public Assistance in the designated areas and Hazard Mitigation throughout the State. Consistent with the requirement that Federal assistance be supplemental, any Federal funds provided under the Stafford Act for Hazard Mitigation will be limited to 75 percent of the total eligible costs. Federal funds provided under the Stafford Act for Public Assistance also will be limited to 75 percent of the total eligible costs, with the exception of projects that meet the eligibility criteria for a higher Federal cost-sharing percentage under the Public Assistance Alternative Procedures Pilot Program for Debris Removal implemented pursuant to Section 428 of the Stafford Act.
Further, you are authorized to make changes to this declaration for the approved assistance to the extent allowable under the Stafford Act.
The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Administrator, under Executive Order 12148, as amended, Gary R. Stanley, of FEMA is appointed to act as the Federal Coordinating Officer for this major disaster.
The following areas of the State of Montana have been designated as adversely affected by this major disaster:
Broadwater, Dawson, Golden Valley, Jefferson, Lake, Musselshell, Park, Pondera, Prairie, Ravalli, Richland, Rosebud, Sanders, Stillwater, and Wheatland Counties for Public Assistance.
All counties within the State of Montana are eligible to apply for assistance under the Hazard Mitigation Grant Program.
Federal Emergency Management Agency, DHS.
Notice.
This is a notice of the Presidential declaration of a major disaster for the State of Florida (FEMA–4177–DR), dated May 6, 2014, and related determinations.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
Notice is hereby given that, in a letter dated May 6, 2014, the President issued a major disaster declaration under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
I have determined that the damage in certain areas of the State of Florida resulting from severe storms, tornadoes, straight-line winds, and flooding during the period of April 28 to May 6, 2014, is of sufficient severity and magnitude to warrant a major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121 et seq. (the “Stafford Act”). Therefore, I declare that such a major disaster exists in the State of Florida.
In order to provide Federal assistance, you are hereby authorized to allocate from funds available for these purposes such amounts as you find necessary for Federal disaster assistance and administrative expenses.
You are authorized to provide Individual Assistance in the designated areas and Hazard Mitigation throughout the State. Consistent with the requirement that Federal assistance be supplemental, any Federal funds provided under the Stafford Act for Hazard Mitigation and Other Needs Assistance will be limited to 75 percent of the total eligible costs.
Further, you are authorized to make changes to this declaration for the approved assistance to the extent allowable under the Stafford Act.
The time period prescribed for the implementation of section 310(a), Priority to Certain Applications for Public Facility and Public Housing Assistance, 42 U.S.C. 5153, shall be for a period not to exceed six months after the date of this declaration.
The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Administrator, under Executive Order 12148, as amended, Gracia B. Szczech, of FEMA is appointed to act as the Federal Coordinating Officer for this major disaster.
The following areas of the State of Florida have been designated as adversely affected by this major disaster:
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of Florida (FEMA–4177–DR), dated May 6, 2014, and related determinations.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
The notice of a major disaster declaration for the State of Florida is hereby amended to include the Public Assistance program for the following areas among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of May 6, 2014.
Escambia, Okaloosa, Santa Rosa, and Walton Counties for Public Assistance (already designated for Individual Assistance).
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households in Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of Mississippi (FEMA–4175–DR), dated April 30, 2014, and related determinations.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
The notice of a major disaster declaration for the State of Mississippi is hereby amended to include the following areas among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of April 30, 2014.
Itawamba, Lee, Lowndes, Rankin, Wayne, and Winston Counties for Public Assistance [Categories C–G] (already designated for Individual Assistance and assistance for debris removal and emergency protective measures [Categories A and B], including direct federal assistance, under the Public Assistance program).
Jones and Leake Counties for Public Assistance [Categories A–G] (already designated for Individual Assistance).
Newton County for Public Assistance (Categories A–G).
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households in Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
U.S. Customs and Border Protection, Department of Homeland Security.
60-Day Notice and request for comments; extension of an existing collection of information.
U.S. Customs and Border Protection (CBP) of the Department of Homeland Security will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act: Report of Diversion (CBP Form 26). CBP is proposing that this information collection be extended with no change to the burden hours or to the information collected. This document is published to obtain comments from the public and affected agencies.
Written comments should be received on or before July 21, 2014 to be assured of consideration.
Direct all written comments to U.S. Customs and Border Protection, Attn: Tracey Denning, Regulations and Rulings, Office of International Trade, 90 K Street NE., 10th Floor, Washington, DC 20229–1177.
Requests for additional information should be directed to Tracey Denning, U.S. Customs and Border Protection, Regulations and Rulings, Office of International Trade, 90 K Street NE., 10th Floor, Washington, DC 20229–1177, at 202–325–0265.
CBP invites the general public and other Federal agencies to comment on proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (Pub. L. 104–13; 44 U.S.C. 3507). The comments should address: (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimates of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden including the use of automated collection techniques or the use of other forms of information technology; and (e) the annual costs burden to respondents or record keepers from the collection of information (a total capital/startup costs and operations and maintenance costs). The comments that are submitted will be summarized and included in the CBP request for OMB approval. All comments will become a matter of public record. In this document, CBP is soliciting comments concerning the following information collection:
National Park Service, Interior.
Notice of Availability.
Pursuant to Section 102 (2)(C) the National Environmental Policy Act of 1969, 42 U.S.C. 4332(2)(C), the National Park Service (NPS) announces the availability of the Draft Environmental Impact Statement (DEIS) for the Off-Road Vehicle Management Plan (Plan), Cape Lookout National Seashore (Seashore), North Carolina.
The NPS will accept comments on the DEIS/Plan from the public for a period of 60 days following publication by the Environmental Protection Agency (EPA) of the Notice of Availability of the Draft Environmental Impact Statement in the
Copies of the DEIS/Plan will be available for public review at
Superintendent, Cape Lookout National Seashore, 131 Charles St., Harkers Island, North Carolina 28531; phone 252–728–2250 extension 3014.
The DEIS/Plan evaluates whether to allow ORV use at the Seashore. If ORV use is permitted, the DEIS/Plan will address how to manage that use in compliance with the Seashore's enabling legislation, executive orders, NPS management policies, and other laws and regulations to ensure protection of the natural, cultural, and recreational values of the Seashore's dynamic coastal barrier island environment for present and future generations.
The DEIS/Plan evaluates the impacts of four alternatives for designation of off-road vehicle routes and resource management, as well as one alternative that would prohibit off-road vehicle use, and are described as follows:
Executive Order 11644, issued in 1972 and amended by Executive Order 11989 in 1977, states that Federal agencies allowing ORV use must designate the specific areas and trails on public lands on which the use of ORVs may be permitted, and areas in which the use of ORVs may not be permitted. National Park Service policy requires that areas and trails that are designated for ORV use must be established based upon the protection of the resources of the public lands, promotion of the safety of all users of those lands, and minimization of conflicts among the various uses of those lands. 36 CFR 4.10 requires that “Routes and areas designated for off-road motor vehicle use shall be promulgated as special regulations.” In addition, such routes and areas may only be designated in
If you wish to comment electronically, you may submit your comments online at the PEPC Web site by visiting
The responsible official for this DEIS is the Regional Director, NPS Southeast Region, 100 Alabama Street SW., 1924 Building, Atlanta, Georgia 30303.
National Park Service, Interior.
Notice of Meeting.
This notice announces a meeting of the Boston Harbor Islands National Recreation Area Advisory Council. The agenda includes a report from the nominating and bylaws committee, 2016 anniversaries, and park updates.
The Council will meet on Wednesday, June 11, 2014, from 4:00 p.m. to 6:00 p.m. (EASTERN).
Boston Harbor Islands Partnership Office, 15 State Street, 8th floor Conference Room, Boston, MA 02109.
Giles Parker, Superintendent and Designated Federal Officer, Boston Harbor Islands Partnership, 15 State Street, Suite 1100, Boston, MA 02109, by telephone (617) 223–8669, or email
This meeting is open to the public. Those wishing to submit written comments may contact the Designated Federal Officer for the Council, Giles Parker, by mail at National Park Service, Boston Harbor Islands Partnership, 15 State Street, Suite 1100, Boston, MA 02109. Before including your address, telephone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
The Council was appointed by the Director of the National Park Service pursuant to Public Law 104–333. The purpose of the Council is to advise and make recommendations to the Boston Harbor Islands Partnership with respect to the implementation of a management plan and park operations. Efforts have been made locally to ensure that the interested public is aware of the meeting dates.
United States International Trade Commission.
Notice.
The Commission hereby gives notice that it will proceed with a full review pursuant to section 751(c) of the Tariff Act of 1930 (19 U.S.C. 1675(c)) to determine whether revocation of the antidumping duty order on barium carbonate from China would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time. A schedule for the review will be established and announced at a later date. For further information concerning the conduct of this review 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, subparts A, D, E, and F (19 CFR part 207).
Joanna Lo (202–205–1888), Office of Investigations, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202–205–1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202–205–2000. General information concerning the Commission may also be obtained by accessing its Internet server (
On May 9, 2014, the Commission determined that it should proceed to a full review in the subject five-year review pursuant to section 751(c) of the Act. The Commission found that the domestic interested party group response to its notice of institution (79 FR 6219, February 3, 2014) was adequate and that the respondent interested party group response was inadequate, but the Commission found that other circumstances warranted conducting a full review.
This review is being conducted under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to section 207.62 of the Commission's rules.
By order of the Commission.
Notice.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden, conducts a pre-clearance 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 (PRA95) [44 U.S.C. 3506(c)(2)(A)]. 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. The Bureau of Labor Statistics (BLS) is soliciting comments concerning the proposed extension of the Quarterly Census of Employment and Wages Program. A copy of the proposed information collection request (ICR) can be obtained by contacting the individual listed below in the Addresses section of this notice.
Written comments must be submitted to the office listed in the Addresses section of this notice on or before July 21, 2014.
Send comments to Carol Rowan, BLS Clearance Officer, Division of Management Systems, Bureau of Labor Statistics, Room 4080, 2 Massachusetts Avenue NE., Washington, DC 20212. Written comments also may be transmitted by fax to 202–691–5111 (this is not a toll free number).
Carol Rowan, BLS Clearance Officer, 202–691–7628 (this is not a toll free number). (See
The Quarterly Census of Employment and Wages (QCEW) program, a Federal/State cooperative effort, produces monthly employment and quarterly wage information. It is a by-product of quarterly reports submitted to State Workforce Agencies (SWAs) by employers subject to State Unemployment Insurance (UI) laws. The collection of these data is authorized by 29 U.S.C. 1, 2. The QCEW data, which are compiled for each calendar quarter, provide a comprehensive business name and address file with employment and wage information for employers subject to State UI laws. Similar data for Federal Government employers covered by the Unemployment Compensation for Federal Employees program also are included. These data are submitted to the BLS by all 50 States, the District of Columbia, Puerto Rico, and the Virgin Islands. The BLS summarizes these data to produce totals for all counties, Metropolitan Statistical Areas (MSAs), the States, and the nation. The QCEW program provides a virtual census of nonagricultural employees and their wages, with about 55 percent of the workers in agriculture covered as well.
The QCEW program is a comprehensive and accurate source of data on the number of establishments, monthly employment, and quarterly wages, by industry, at the six-digit North American Industry Classification System (NAICS) level, and at the national, State, MSA, and county levels. The QCEW series has broad economic significance in measuring labor trends and major industry developments, in time series analyses and industry comparisons, and in special studies such as analyses of establishments, employment, and wages by size of establishment.
Office of Management and Budget clearance is being sought for the Quarterly Census of Employment and Wages (QCEW) program.
The QCEW program is the only Federal statistical program that provides information on establishments, wages, tax contributions and the number of employees subject to State UI laws and the Unemployment Compensation for the Federal Employees program. The consequences of not collecting QCEW data would be grave to the Federal statistical community. The BLS would not have a sampling frame for its establishment surveys; it would not be able to publish as accurate current estimates of employment for the U.S., States, and metropolitan areas; and it would not be able to publish quarterly census totals of local establishment counts, employment, and wages. The Bureau of Economic Analysis would not be able to publish as accurate personal income data in a timely manner for the U.S., States, and local areas. Finally, the Department of Labor's Employment Training Administration would not have the information it needs to administer the Unemployment Insurance Program.
The Bureau of Labor Statistics is particularly interested in comments that:
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility.
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used.
• Enhance the quality, utility, and clarity of the information to be collected.
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submissions of responses.
Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval of the information collection request; they also will become a matter of public record.
Occupational Safety and Health Administration (OSHA), Labor.
Notice.
This is a notice of an addendum to the interagency Memorandum of Understanding (MOU) between the U.S. Department of Labor and the U.S. Department of Energy (DOE). The MOU establishes specific interagency procedures for the transfer of occupational safety and health coverage for privatized facilities, properties, and operations from DOE to OSHA and state agencies acting under state plans approved by OSHA.
Information regarding this notice is available from the following sources:
DOE and OSHA of the U.S. Department of Labor entered into a MOU on August 10, 1992, delineating regulatory authority over the occupational safety and health of contractor employees at DOE government-owned or leased, contractor-operated (GOCO) facilities. In general, the MOU recognizes that DOE exercises statutory authority under section 161(f) of the Atomic Energy Act of 1954, as amended, (42 U.S.C. 2201(f)), relating to the occupational safety and health of private-sector employees at these facilities.
Section 4(b)(1) of the OSH Act of 1970, 29 U.S.C. 653(b)(1), exempts from OSHA authority working conditions with respect to which other federal agencies have exercised statutory authority to prescribe or enforce standards or regulations affecting occupational safety or health. The 1992 MOU acknowledges DOE's extensive program for the regulation of contractor health and safety, which requires contractor compliance with all OSHA standards as well as additional requirements prescribed by DOE, and concludes with an agreement by the agencies that the provisions of the OSH Act will not apply to GOCO sites for which DOE has exercised its authority to regulate occupational safety and health under the Atomic Energy Act.
In light of DOE's policy emphasis on privatization activities, OSHA and DOE entered into a second MOU on July 25, 2000, that establishes interagency procedures to address regulatory authority for occupational safety and health at specified privatized facilities and operations on sites formerly controlled by DOE. The 2000 MOU covers facilities and operations on lands no longer controlled by DOE, which are not conducting activities for or on behalf of DOE and where there is no likelihood that any employee exposure to radiation from DOE sources would be 25 millirems per year (mrem/yr) or more.
In a letter dated October 18, 2013, DOE requested that OSHA or, as appropriate, the Tennessee Occupational Safety and Health Administration (TOSHA) accept occupational safety and health regulatory authority over employees at the East Tennessee Technology Park in Oak Ridge, Tennessee at two parcels of land pursuant to the MOU on Safety and Health Enforcement at Privatized Facilities and Operations dated July 25, 2000. Other facilities and properties at the East Tennessee Technology Park were transferred to TOSHA jurisdiction under this MOU by
The parcels of land located at the East Tennessee Technology Park within the city of Oak Ridge, Tennessee transferred to the Community Reuse Organization of East Tennessee (CROET) are described as follows:
•
•
OSHA's Regional Office in Atlanta, Georgia, working with the OSHA Nashville Area Office and TOSHA, determined that TOSHA is willing to accept authority over the occupational safety and health of public-sector and private-sector employees at the two parcels of land at the East Tennessee Technology Park in Oak Ridge, Tennessee that were transferred by deed to CROET. In a letter from OSHA to DOE dated March 24, 2014, OSHA stated that TOSHA is satisfied with DOE assurances that (1) there is no likelihood that any employee at facilities in the vicinity of these land parcels will be exposed to radiation levels that will be 25 millirems per year (mrem/yr) or more, and; (2) transfer of authority to TOSHA is free from regulatory gaps and does not diminish the safety and health protection of the employees.
Accordingly, TOSHA accepts and maintains health and safety regulatory authority over employees in the vicinity of Land Parcels ED–9 and ED–10.
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, 200 Constitution Avenue NW., Washington, DC 20210, authorized the preparation of this notice. This
Executive Office of the President, Office of Management and Budget.
Notice of availability of the 2014 OMB Circular A–133 Compliance Supplement.
This notice announces the availability of the 2014 OMB Circular A–133 Compliance Supplement (Supplement). The notice also offers interested parties an opportunity to comment on the 2014 Supplement. The 2014 Supplement adds five new programs, which are added to existing clusters. It deletes 17 programs and has also been updated for program changes and technical corrections.
The five added programs are:
The 17 deleted programs are:
A list of changes to the 2014 Supplement can be found at Appendix V. Appendix VII provides an audit alert concerning deletion of American Recovery and Reinvestment Act programs from clusters (which accounts for many of the deleted programs) and a preview of types of revisions to the FY 2015 Compliance Supplement based on the OMB guidance issued December 26, 2013.
Due to its length, the 2014 Supplement is not included in this Notice. See
The 2014 Supplement supersedes the 2013 Supplement and will apply to audits of fiscal years beginning after June 30, 2013. All comments on the 2014 Supplement must be in writing and received by October 31, 2014. Late comments will be considered to the extent practicable. We received no comments on the 2013 Supplement.
Due to potential delays in OMB's receipt and processing of mail sent through the U.S. Postal Service, we encourage respondents to submit comments electronically to ensure timely receipt. We cannot guarantee that comments mailed will be received before the comment closing date.
Electronic mail comments may be submitted to:
Comments may be mailed to Gilbert Tran, Office of Federal Financial Management, Office of Management and Budget, 725 17th Street NW., Room 6025, New Executive Office Building, Washington, DC 20503.
Comments may also be sent through
The 2014 Supplement is available online on the OMB home page at
Recipients and auditors should contact their cognizant or oversight agency for audit, or Federal awarding agency, as appropriate under the circumstances. The Federal agency contacts are listed in Appendix III of the Supplement. Subrecipients should contact their pass-through entity. Federal agencies should contact Gilbert Tran, Office of Management and Budget, Office of Federal Financial Management, at (202) 395–3052.
In accordance with the Federal Advisory Committee Act (Pub. L. 92–463, as amended), the National Science Foundation announces the following meeting:
To help facilitate your entry into the building, contact the individual listed below. Your request to attend this meeting must be received by email (
Presentations and Discussions:
• Discussion of Key Points from the Meetings with NSF Leadership
• Update of Broadening Participation Activities by the CEOSE Executive Liaison
• Reports of CEOSE Liaisons to NSF Directorate/Office Advisory Committees
• Guest Presenter and NSF Leadership Panel on Broadening Participation in America's STEM Workforce
• Discussion by Federal Agency Liaisons About Interagency Broadening Participation Activities
• Panel Discussion: Science of Broadening Participation
• Panel Discussion: Increasing Hispanic Participation in STEM
• Discussion with NSF Director and Deputy Director
• Discussion of CEOSE Unfinished Business and New Business
Nuclear Regulatory Commission.
Order; issuance.
The U.S. Nuclear Regulatory Commission (NRC) is issuing an order prohibiting Mr. Clavero from involvement in NRC-licensed activities for a period of 3 years. The order also requires Mr. Clavero to notify the NRC of any current involvement in NRC-licensed activities and for a period of 1 year after the 3-year period of prohibition has expired, that he provide a written notice for his acceptance of his first employment offer involving NRC-licensed activities.
Please refer to Docket ID NRC–2014–0111 when contacting the NRC about the availability of information regarding this document. You may access publicly-available information related to this action by the following methods:
• Federal Rulemaking Web site: Go to
• NRC's Agencywide Documents Access and Management System (ADAMS): You may access publicly available documents online in the NRC Library at
• NRC's PDR: You may examine and purchase copies of public documents at the NRC's PDR, Room O1–F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852.
Thomas Marenchin, Office of Enforcement, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001; telephone: 301–415–2979, email:
The text of the Order is attached.
For the Nuclear Regulatory Commission.
Armando N. Clavero (Armando Clavero or Mr. Clavero) is employed as the Chief Technical Officer of University Nuclear and Diagnostics, LLC, (UND) located in Davie, Florida. University Nuclear and Diagnostics, LLC, holds an Agreement State license issued by the State of Florida and was contracted to Bradley D. Bastow (Bastow), who holds U.S. Nuclear Regulatory Commission (NRC) materials license No. 21–32316–01 issued by the NRC pursuant to 10 CFR Part 30 on April 20, 2001, and renewed on December 7, 2011. The Florida license authorizes use of diagnostic nuclear materials in accordance with the conditions specified therein. Armando Clavero is listed on the Florida license in Condition 16.A as President. The NRC license to Bastow authorizes the use of certain diagnostic nuclear materials in accordance with the conditions specified therein.
On February 28, and April 3, 2012, the NRC conducted a special inspection at the Bastow facility in South Haven, Michigan, with continued in-office review through May 24, 2012. The details of the inspection were documented in NRC Inspection Report No. 03035710/2012001(DNMS) issued to Bastow on December 19, 2012. This document is available in the NRC's Agencywide Documents Access and Management System (ADAMS) at accession number
Following the conferences, on July 15, 2013, Armando Clavero provided the NRC with additional information, received via electronic and regular mail. This document is available in ADAMS at accession number
On July 1, 2013, the NRC and Bastow met in an alternative dispute resolution (ADR) mediation session. The parties reached a preliminary settlement agreement which was later finalized in a Confirmatory Order dated September 3, 2013. A copy of the Confirmatory Order to Bastow is available in ADAMS at accession number
The NRC also performed additional investigation into the matter of a second meter as discussed at the June 20, 2013, predecisional enforcement conference, including conducting additional interviews with current and former UND employees. This supplemental investigation was completed on February 4, 2014. A synopsis of the NRC's review into the issue of whether a second meter existed, and other issues left unresolved at the conference, was provided to UND with a Notice of Violation and is available in ADAMS at accession number
Based on the results of the inspection and investigation, the NRC determined that, by his deliberate actions, Armando Clavero caused Bastow to be in violation of NRC requirements by: (1) Deliberately not calibrating a survey meter yet providing falsified survey instrument calibration records dated August 13, 2010, and November 10, 2011, and providing inaccurate information about performing the survey meter calibration both during the NRC investigation and during the predecisional enforcement conference; (2) deliberately not performing a sealed source survey in October or November 2011 and providing falsified records of a sealed source survey on October 24, 2011, when there was no survey meter onsite; and (3) deliberately not performing an annual review on October 24, 2011, and providing a falsified record of an annual review dated November 24, 2011, containing erroneous information, including that surveys were performed when a survey meter was not onsite. Armando Clavero also did not ensure that Bastow's office had a working survey meter during the nearly eight week period from October 5, to November 28, 2011, when a UND NMT had sent the Bastow survey meter to UND for calibration and there was no other survey meter in Bastow's office. Armando Clavero did not ensure that records provided to Bastow's office were complete and accurate in all material respects in that he provided records that were dated one date but were based off surveys performed on a different date. Additionally, Armando Clavero, among others, caused UND to be in violation of 10 CFR 30.10.
Based on the above, Armando Clavero, an employee of UND and contractor to NRC licensee Bastow has engaged in deliberate misconduct, in violation of 10 CFR 30.10, that has caused the NRC licensee to be in violation of 10 CFR 30.9, 35.24, 35.61, and 35.67, and its license conditions. Bastow was required to follow those requirements by the license issued to it pursuant to 10 CFR Part 30 on April 20, 2001, and renewed on December 7, 2011. The NRC must be able to rely on the licensee and its contractors to act with integrity and comply with NRC requirements. Armando Clavero's actions in causing Bastow to violate 10 CFR 30.9, 35.24, 35.61, and 35.67, and its license conditions raised serious doubt as to whether he can be relied upon to comply with NRC requirements.
Consequently, I lack the requisite reasonable assurance that licensed activities can be conducted in compliance with the Commission's requirements and that the health and safety of the public will be protected if Armando Clavero were permitted at this time to be involved in NRC-licensed activities. Therefore, the public health, safety and interest require that Armando Clavero be prohibited from any involvement in NRC-licensed activities for a period of 3 years effective 30 days from the date of issuance of this Order. Additionally, Armando Clavero is required to notify the NRC of his first employment in NRC-licensed activities for a period of 1 year following the prohibition period.
Accordingly, pursuant to sections 81, 161b, and 161i of the Atomic Energy Act of 1954, as amended, and the Commission's regulations in 10 CFR 2.202 and 10 CFR 30.10, IT IS
1. Armando N. Clavero is prohibited for 3 years from engaging in, supervising, directing, or in any other way conducting NRC-licensed activities, including participating in or overseeing contracted activities for NRC licensees. NRC-licensed activities are those activities that are conducted pursuant to a specific or general license issued by the NRC, including, but not limited to, those activities of Agreement State licensees conducted in the NRC's jurisdiction pursuant to the authority granted by 10 CFR 150.20. This also includes ownership of NRC-licensed material located within NRC jurisdiction.
2. If Armando N. Clavero is currently involved with any licensee in NRC-licensed activities, then he must cease those activities, and inform the NRC of the name, address and telephone number of the employer, and provide a copy of this order to the employer.
3. For a period of 1 year after the 3 year period of prohibition has expired, Armando N. Clavero shall, within 20 days of acceptance of his first employment offer involving NRC-licensed activities or his becoming involved in NRC-licensed activities, as defined in Paragraph IV.1 above, provide notice to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001, of the name, address, and telephone number of the employer or the entity where he is, or will be, involved in the NRC-licensed activities. In the notification, Armando N. Clavero shall include a statement of his commitment to compliance with regulatory requirements, including providing complete and accurate information, and the basis why the Commission should have confidence that he will now comply with applicable NRC requirements.
The above provisions are effective 30 days from the date of issuance of this Order.
The Director, Office of Enforcement, or designee, may, in writing, relax or rescind any of the above conditions upon demonstration by Armando N. Clavero of good cause.
In accordance with 10 CFR 2.202, Armando Clavero must submit a written answer to this Order under oath or
All documents filed in NRC adjudicatory proceedings, including a demand or request for hearing, a petition for leave to intervene, any motion or other document filed in the proceeding prior to the submission of a request for hearing or petition to intervene, and documents filed by interested governmental entities participating under 10 CFR 2.315(c), must be filed in accordance with the NRC's E-Filing rule (72 FR 49139; August 28, 2007), as amended by 77 FR 46562; August 3, 2012 (codified in pertinent part at 10 CFR Part 2, Subpart C). The E-Filing process requires participants to submit and serve all adjudicatory documents over the internet, or in some cases to mail copies on electronic storage media. Participants may not submit paper copies of their filings unless they seek an exemption in accordance with the procedures described below.
To comply with the procedural requirements of E-Filing, at least 10 days prior to the filing deadline, the participant should contact the Office of the Secretary by email at
Information about applying for a digital ID certificate is available on NRC's public Web site at
If a participant is electronically submitting a document to the NRC in accordance with the E Filing rule, the participant must file the document using the NRC's online, Web-based submission form. In order to serve documents through Electronic Information Exchange (EIE), users will be required to install a Web browser plug-in from the NRC Web site. Further information on the Web-based submission form, including the installation of the Web browser plug-in, is available on the NRC's public Web site at
Once a participant has obtained a digital ID certificate and a docket has been created, the participant can then submit a request for hearing or petition for leave to intervene through the EIE. Submissions should be in Portable Document Format (PDF) in accordance with NRC guidance available on the NRC's public Web site at
A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC Meta System Help Desk through the “Contact Us” link located on the NRC's Web site at
Participants who believe that they have a good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing requesting authorization to continue to submit documents in paper format. Such filings must be submitted by: (1) First class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001, Attention: Rulemaking and Adjudications Staff; or (2) courier, express mail, or expedited delivery service to the Office of the Secretary, Sixteenth Floor, One White Flint North, 11555 Rockville Pike, Rockville, Maryland, 20852, Attention: Rulemaking and Adjudications Staff. Participants filing a document in this manner are responsible for serving the document on all other participants. Filing is considered complete by first-class mail as of the time of deposit in the mail, or by courier, express mail, or expedited delivery service upon depositing the document with the provider of the service. A presiding officer, having granted an exemption request from using E-Filing, may require a participant or party to use E-Filing if the presiding officer subsequently determines that the reason for granting the exemption from use of E-Filing no longer exists.
Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket, which is available to the public at
If a person other than Armando Clavero requests a hearing, that person shall set forth with particularity the manner in which his interest is adversely affected by this Order and shall address the criteria set forth in 10 CFR 2.309(d) and (f).
If a hearing is demanded by Mr. Clavero or requested by a person whose interest is adversely affected, the Commission will issue an Order designating the time and place of any hearings, as appropriate. If a hearing is held, the issue to be considered at such hearing shall be whether this Order should be sustained. In the absence of any request for hearing, or written approval of an extension of time in which to request a hearing, the provisions specified in Section IV above shall be effective and final 30 days from the date this Order is issued without further order or proceedings. If an extension of time for requesting a hearing has been approved, the provisions specified in Section IV shall be final when the extension expires if a hearing request has not been received.
Pursuant to Section 19(b)(1)
The Exchange proposes to list and trade shares of the following under NYSE Arca Equities Rule 8.600 (“Managed Fund Shares”): PIMCO Foreign Bond Exchange-Traded Fund (U.S. Dollar-Hedged), PIMCO Foreign Bond Exchange-Traded Fund (Unhedged), PIMCO Global Advantage Bond Exchange-Traded Fund, and PIMCO International Advantage Bond Exchange-Traded Fund. The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to list and trade shares (“Shares”) of the following under NYSE Arca Equities Rule 8.600,
The investment manager to the Funds will be Pacific Investment Management Company LLC (“PIMCO” or the “Adviser”). PIMCO Investments LLC will serve as the distributor for the Funds (“Distributor”). State Street Bank & Trust Co. will serve as the custodian and transfer agent for the Funds (“Custodian” or “Transfer Agent”).
Commentary .06 to Rule 8.600 provides that, if the investment adviser to the investment company issuing Managed Fund Shares is affiliated with a broker-dealer, such investment adviser shall erect a “fire wall” between the investment adviser and the broker-dealer with respect to access to information concerning the composition and/or changes to such investment
In the event (a) the Adviser becomes registered as a broker-dealer or newly affiliated with a broker-dealer, or (b) any new adviser or sub-adviser is a registered broker-dealer or becomes affiliated with a broker-dealer, it will implement a fire wall with respect to its relevant personnel or its broker-dealer affiliate regarding access to information concerning the composition and/or changes to the applicable [sic], and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding such portfolio.
According to the Registration Statement, in selecting investments for each Fund, PIMCO will develop an outlook for interest rates, currency exchange rates and the economy, analyze credit and call risks and use other investment selection techniques. The proportion of each Fund's assets committed to investment in securities with particular characteristics (such as quality, sector, interest rate or maturity) will vary based on PIMCO's outlook for the U.S. economy and the economies of other countries in the world, the financial markets and other factors.
With respect to each Fund, in seeking to identify undervalued currencies, PIMCO may consider many factors, including but not limited to, longer-term analysis of relative interest rates, inflation rates, real exchange rates, purchasing power parity, trade account balances and current account balances, as well as other factors that influence exchange rates such as flows, market technical trends and government policies. With respect to fixed income investing, PIMCO will attempt to identify areas of the bond market that are undervalued relative to the rest of the market. PIMCO will identify these areas by grouping fixed income investments into sectors such as money markets, governments, corporates, mortgages, asset-backed and international. Sophisticated proprietary software will then assist in evaluating sectors and pricing specific investments. Once investment opportunities are identified, PIMCO will shift assets among sectors depending upon changes in relative valuations, credit spreads and other factors.
• Among other investments described in more detail herein, each Fund may invest in Fixed Income Instruments, which include:
• Securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);
• corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;
• mortgage-backed and other asset-backed securities;
• inflation-indexed bonds issued both by governments and corporations;
• structured notes, including hybrid or “indexed” securities and event-linked bonds;
• bank capital and trust preferred securities;
• loan participations and assignments;
• delayed funding loans and revolving credit facilities;
• bank certificates of deposit, fixed time deposits and bankers' acceptances;
• repurchase agreements on Fixed Income Instruments and reverse repurchase agreements on Fixed Income Instruments;
• debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises (“Municipal Bonds”);
• obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored enterprises; and obligations of international agencies or supranational entities.
A Fund's investments in derivative instruments will be made in accordance with the 1940 Act and consistent with the Fund's investment objective and policies. With respect to each Fund, derivative instruments primarily will include forwards,
As described further below, each Fund will typically use derivative instruments as a substitute for taking a position in the underlying asset and/or as part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. A Fund may also use derivative instruments to enhance returns. To limit the potential risk associated with such transactions, a Fund will segregate or “earmark” assets determined to be liquid by PIMCO in accordance with procedures established by the Trust's Board of Trustees (“Board”) and in accordance with the 1940 Act (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments. These procedures have been adopted consistent with Section 18 of the 1940 Act and related Commission guidance. In addition, each Fund will include appropriate risk disclosure in its offering documents, including leveraging risk. Leveraging risk is the risk that certain transactions of the Fund, including the Fund's use of derivatives, may give rise to leverage, causing the Fund to be more volatile than if it had not been leveraged.
The Adviser believes that derivatives can be an economically attractive substitute for an underlying physical security that each Fund would otherwise purchase. For example, a Fund could purchase Treasury futures contracts instead of physical Treasuries or could sell credit default protection on a corporate bond instead of buying a physical bond. Economic benefits include potentially lower transaction costs or attractive relative valuation of a derivative versus a physical bond (
The Adviser further believes that derivatives can be used as a more liquid means of adjusting portfolio duration as well as targeting specific areas of yield curve exposure, with potentially lower transaction costs than the underlying securities (e.g., interest rate swaps may have lower transaction costs than physical bonds). Similarly, money market futures can be used to gain exposure to short-term interest rates in order to express views on anticipated changes in central bank policy rates. In addition, derivatives can be used to protect client assets through selectively hedging downside (or “tail risks”) in each Fund.
The Adviser believes that the use of derivatives will allow each Fund to selectively add diversifying sources of return from selling options. Option purchases and sales can also be used to hedge specific exposures in the portfolio, and can provide access to return streams available to long-term investors such as the persistent difference between implied and realized volatility. Option strategies can generate income or improve execution prices (
According to the Registration Statement, the Hedged Foreign Bond Fund will seek maximum total return,
The Hedged Foreign Bond Fund will invest primarily in investment grade debt securities, but may invest up to 10% of its total assets in high yield securities (“junk bonds”) rated B or higher by Moody's Investors Service, Inc. (“Moody's”), or equivalently rated by Standard & Poor's Ratings Services (“S&P”) or Fitch, Inc. (“Fitch”), or, if unrated, determined by PIMCO to be of comparable quality,
The Fund's portfolio will include a minimum of 13 non-affiliated issuers.
The Hedged Foreign Bond Fund may invest in securities and instruments that are economically tied to emerging market countries subject to applicable limitations set forth herein.
In furtherance of the Hedged Foreign Bond Fund 80% policy, or with respect to the Fund's other investments, the Hedged Foreign Bond Fund may invest, without limitation, in derivative instruments, subject to applicable law and any other restrictions described herein.
The Hedged Foreign Bond Fund may invest up to 20% of its assets in mortgage-related and other asset-backed securities, although this 20% limitation does not apply to securities issued or guaranteed by Federal agencies and/or U.S. government sponsored instrumentalities.
According to the Registration Statement, the Hedged Foreign Bond Fund will normally limit its foreign currency exposure (from non-U.S. dollar-denominated securities or currencies) to 20% of its total assets. The Fund may engage in foreign currency transactions on a spot (cash) basis and forward basis
The Hedged Foreign Bond Fund may, without limitation, seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs or dollar rolls).
The Hedged Foreign Bond Fund may invest up to 10% of its total assets in preferred stock, convertible securities and other equity-related securities.
As disclosed in the Registration Statement, the Hedged Foreign Bond Fund may also invest in trade claims,
The Hedged Foreign Bond Fund may purchase or sell securities which it is eligible to purchase or sell on a when-issued basis, may purchase and sell such securities for delayed delivery and may make contracts to purchase or sell such securities for a fixed price at a future date beyond normal settlement time (forward commitments). The Fund may make short sales as part of its overall portfolio management strategies or to offset a potential decline in value of a security.
The Hedged Foreign Bond Fund may enter into repurchase agreements, in which the Fund purchases a security from a bank or broker-dealer, which agrees to repurchase the security at the Fund's cost plus interest within a specified time. Repurchase agreements maturing in more than seven days and which may not be terminated within seven days at approximately the amount at which the Fund has valued the agreements will be considered illiquid securities. The Fund may enter into reverse repurchase agreements and dollar rolls subject to the Fund's limitations on borrowings.
According to the Registration Statement, the Unhedged Foreign Bond Fund will seek maximum total return, consistent with preservation of capital and prudent investment management. The Fund will seek to achieve its investment objective by investing, under normal circumstances, at least 80% of its assets in Fixed Income Instruments and derivatives based on Fixed Income Instruments that are economically tied to foreign (non-U.S.) countries
The Unhedged Foreign Bond Fund will invest primarily in investment grade debt securities, but may invest up to 10% of its total assets in high yield securities (junk bonds) rated B or higher by Moody's, or equivalently rated by S&P or Fitch, or, if unrated, determined by PIMCO to be of comparable quality,
The Fund's portfolio will include a minimum of 13 non-affiliated issuers.
The Unhedged Foreign Bond Fund may invest in fixed income and equity securities and instruments that are economically tied to emerging market countries, subject to applicable limitations set forth herein.
In furtherance of the Unhedged Foreign Bond Fund 80% policy, or with respect to the Fund's other investments, the Unhedged Foreign Bond Fund may invest, without limitation, in derivative instruments, subject to applicable law and any other restrictions described in the Registration Statement.
The Unhedged Foreign Bond Fund may invest up to 20% of its assets in mortgage-related and other asset-backed securities, although this 20% limitation does not apply to securities issued or guaranteed by Federal agencies and/or U.S. government sponsored instrumentalities.
According to the Registration Statement, the Unhedged Foreign Bond Fund may invest in fixed income and equity securities denominated in foreign (non-U.S.) currencies, engage in foreign currency transactions on a spot (cash) basis and forward basis
The Unhedged Foreign Bond Fund may, without limitation, seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs or dollar rolls).
The Unhedged Foreign Bond Fund may invest up to 10% of its total assets in preferred stock, convertible securities and other equity-related securities.
The Unhedged Foreign Bond Fund may invest in trade claims, privately placed and unregistered securities, and exchange-traded and OTC-traded structured products, including credit-linked securities, commodity-linked notes, and structured notes. The Fund may invest in Brady Bonds.
The Unhedged Foreign Bond Fund may purchase or sell securities which it is eligible to purchase or sell on a when-issued basis, may purchase and sell such securities for delayed delivery and may make contracts to purchase or sell such securities for a fixed price at a future date beyond normal settlement time (forward commitments). The Fund may make short sales as part of its overall portfolio management strategies or to offset a potential decline in value of a security.
The Unhedged Foreign Bond Fund may enter into repurchase agreements, in which the Fund purchases a security from a bank or broker-dealer, which
According to the Registration Statement, the Global Advantage Bond Fund will seek total return exceeding that of its benchmarks, consistent with prudent investment management. The Fund will seek to achieve its investment objective by investing, under normal circumstances, at least 80% of its assets in Fixed Income Instruments and derivatives based on Fixed Income Instruments that are economically tied to at least three countries, which may include foreign (non-U.S.) countries and may also include the U.S. (the “Global Advantage Bond Fund 80% policy”). The average portfolio duration of the Fund will vary based on PIMCO's forecast for interest rates and, under normal circumstances, will not be expected to exceed eight years.
The Global Advantage Bond Fund may invest in both investment-grade debt securities and high-yield securities (junk bonds) subject to a maximum of 15% of its total assets in securities rated below B by Moody's, S&P or Fitch, or, if unrated, determined by PIMCO to be of comparable quality.
The Fund's portfolio will include a minimum of 13 non-affiliated issuers.
The Fund may invest, without limitation, in securities and instruments that are economically tied to emerging market countries.
In furtherance of the Global Advantage Bond Fund 80% policy, or with respect to the Fund's other investments, the Global Advantage Bond Fund may invest, without limitation, in derivative instruments, subject to applicable law and any other restrictions described herein.
The Global Advantage Bond Fund may invest up to 20% of its assets in mortgage-related and other asset-backed securities, although this 20% limitation does not apply to securities issued or guaranteed by Federal agencies and/or U.S. government sponsored instrumentalities.
The Global Advantage Bond Fund may invest, without limitation, in securities denominated in foreign currencies and in U.S. dollar-denominated securities of foreign issuers. The Fund may engage in foreign currency transactions on a spot (cash) basis and forward basis and invest in foreign currency futures and options contracts.
The Global Advantage Bond Fund may, without limitation, seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs or dollar rolls).
The Global Advantage Bond Fund may invest up to 10% of its total assets in preferred stock, convertible securities and other equity-related securities.
The Global Advantage Bond Fund may invest in trade claims, privately placed and unregistered securities, and exchange-traded and OTC-traded structured products, including credit-linked securities, commodity-linked notes, and structured notes. The Fund may invest in Brady Bonds.
The Global Advantage Bond Fund may purchase or sell securities which it is eligible to purchase or sell on a when-issued basis, may purchase and sell such securities for delayed delivery and may make contracts to purchase or sell such securities for a fixed price at a future date beyond normal settlement time (forward commitments). The Fund may make short sales as part of its overall portfolio management strategies or to offset a potential decline in value of a security.
The Global Advantage Bond Fund may enter into repurchase agreements, in which the Fund purchases a security from a bank or broker-dealer, which agrees to repurchase the security at the Fund's cost plus interest within a specified time. Repurchase agreements maturing in more than seven days and which may not be terminated within seven days at approximately the amount at which the Fund has valued the agreements will be considered illiquid securities. The Fund may enter into reverse repurchase agreements and dollar rolls subject to the Fund's limitations on borrowings.
According to the Registration Statement, the International Advantage Bond Fund will seek total return exceeding that of its benchmarks, consistent with prudent investment management. The Fund will seek to achieve its investment objective by investing, under normal circumstances, at least 80% of its assets in Fixed Income Instruments and derivatives based on Fixed Income Instruments that are economically tied to foreign (non-U.S.) countries,
The International Advantage Bond Fund may invest in both investment-grade debt securities and high-yield securities (junk bonds) subject to a maximum of 15% of its total assets in securities rated below B by Moody's, S&P or Fitch, or, if unrated, determined by PIMCO to be of comparable quality.
The Fund's portfolio will include a minimum of 13 non-affiliated issuers.
The Fund may invest, without limitation, in securities and instruments that are economically tied to emerging market countries.
In furtherance of the International Advantage Bond Fund 80% policy, or with respect to the Fund's other investments, the International Advantage Bond Fund may invest, without limitation, in derivative instruments, subject to applicable law and any other restrictions described in its prospectus or Statement of Additional Information (“SAI”).
The International Advantage Bond Fund may invest up to 20% of its assets in mortgage-related and other asset-backed securities, although this 20% limitation does not apply to securities issued or guaranteed by Federal agencies and/or U.S. government sponsored instrumentalities.
The International Advantage Bond Fund may invest, without limitation, in securities denominated in foreign currencies and in U.S. dollar-denominated securities of foreign issuers. The Fund may engage in foreign currency transactions on a spot (cash) basis and forward basis and invest in foreign currency futures and options contracts.
The International Advantage Bond Fund may, without limitation, seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs or dollar rolls).
The International Advantage Bond Fund may invest up to 10% of its total assets in preferred stock, convertible securities and other equity-related securities.
The International Advantage Bond Fund may invest in variable and floating rate securities. The Fund may invest in floaters, inverse floaters and may engage in credit spread trades.
The International Advantage Bond Fund may invest in trade claims, privately placed and unregistered securities, and exchange-traded and OTC-traded structured products, including credit-linked securities, commodity-linked notes and structured notes. The Fund may invest in Brady Bonds.
The International Advantage Bond Fund may purchase or sell securities which it is eligible to purchase or sell on a when-issued basis, may purchase and sell such securities for delayed delivery and may make contracts to purchase or sell such secure ties for a fixed price at a future date beyond normal settlement time (forward commitments). The Fund may make short sales as part of its overall portfolio management strategies or to offset a potential decline in value of a security.
The International Advantage Bond Fund may enter into repurchase agreements, in which the Fund purchases a security from a bank or broker-dealer, which agrees to repurchase the security at the Fund's cost plus interest within a specified time. Repurchase agreements maturing in more than seven days and which may not be terminated within seven days at approximately the amount at which the Fund has valued the agreements will be considered illiquid securities. The Fund may enter into reverse repurchase agreements and dollar rolls subject to the Fund's limitations on borrowings.
Each Fund may invest in, to the extent permitted by Section 12(d)(1)(A) of the 1940 Act, other affiliated and unaffiliated funds, such as open-end or closed-end management investment companies, including other exchange-traded funds, provided that each Fund's investment in units or shares of investment companies and other open-end collective investment vehicles will not exceed 10% of that Fund's total assets. Each Fund may invest in securities lending collateral in one or more money market funds to the extent permitted by Rule 12d1–1 under the 1940 Act, including series of PIMCO Funds.
Each Fund's investments, including investments in derivative instruments, will be subject to all of the restrictions under the 1940 Act, including restrictions with respect to illiquid assets; that is, the limitation that a Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), including Rule 144A securities deemed illiquid by the Adviser, consistent with Commission guidance.
The Funds will be non-diversified, which means that each Fund may invest its assets in a smaller number of issuers than a diversified fund.
The Funds intend to qualify annually and elect to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code.
Each Fund may invest without limit, for temporary or defensive purposes, in U.S. debt securities, including taxable securities and short-term money market securities, if PIMCO deems it appropriate to do so. If PIMCO believes that economic or market conditions are unfavorable to investors, PIMCO may temporarily invest up to 100% of each Fund's assets in certain defensive strategies, including holding a substantial portion of the Fund's assets in cash, cash equivalents or other highly rated short-term securities, including securities issued or guaranteed by the U.S. government, its agencies or instrumentalities.
Each Fund's investments, including derivatives, will be consistent with that Fund's investment objective and each Fund's use of derivatives may be used to enhance leverage. However, each Fund's investments will not be used to
The NAV of each Fund's Shares will be determined by dividing the total value of a Fund's portfolio investments and other assets, less any liabilities, by the total number of Shares outstanding.
Each Fund's Shares will be valued as of the close of regular trading of the New York Stock Exchange (“NYSE”) (normally 4:00 p.m. Eastern time (“E.T.”) (the “NYSE Close”) on each day NYSE Arca is open (“Business Day”). Information that becomes known to each of the Funds or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a portfolio asset or the NAV determined earlier that day.
For purposes of calculating NAV, portfolio securities and other assets for which market quotes are readily available will be valued at market value. Market value will generally be determined on the basis of last reported sales prices, or if no sales are reported, based on quotes obtained from a quotation reporting system, established market makers, or pricing services.
Fixed Income Instruments, including those to be purchased under firm commitment agreements/delayed delivery basis, will generally be valued on the basis of quotes obtained from brokers and dealers or independent pricing services. Foreign fixed income securities will generally be valued on the basis of quotes obtained from brokers and dealers or pricing services using data reflecting the earlier closing of the principal markets for those assets. Short-term debt instruments having a remaining maturity of 60 days or less will generally be valued at amortized cost, which approximates market value.
As discussed in more detail below, derivatives will generally be valued on the basis of quotes obtained from brokers and dealers or pricing services using data reflecting the earlier closing of the principal markets for those assets. Local closing prices will be used for all instrument valuation purposes. Foreign currency-denominated derivatives will generally be valued using market inputs as of the respective local region's market close.
With respect to specific derivatives:
• Currency spot and forward rates will generally be determined as of the NYSE Close.
• Exchange traded futures will generally be valued at the settlement price of the exchange.
• A total return swap on an index will be valued at the publicly available index price. The index price, in turn, is determined by the applicable index calculation agent, which generally values the securities underlying the index at the last reported sale price.
• Equity total return swaps will generally be valued using the actual underlying equity at local market closing, while bank loan total return swaps will generally be valued using the evaluated underlying bank loan price minus the strike price of the loan.
• Exchange traded non-equity options, (for example, options on bonds, Eurodollar options and U.S. Treasury options), index options, and options on futures will generally be valued at the official settlement price determined by the relevant exchange, if available.
• OTC and exchange traded equity options will generally be valued on a basis of quotes obtained from a quotation reporting system, established market makers, or pricing services.
• OTC FX options will generally be valued by pricing vendors.
• All other swaps such as interest rate swaps, inflation swaps, swaptions, credit default swaps, CDX/CDS will generally be valued by pricing services.
Exchange-traded equity securities will be valued at the official closing price or the last trading price on the exchange or market on which the security is primarily traded at the time of valuation. If no sales or closing prices are reported during the day, exchange-traded equity securities will generally be valued at the mean of the last available bid and ask quotation on the exchange or market on which the security is primarily traded, or using other market information obtained from quotation reporting systems, established market makers, or pricing services.
If a foreign security's value has materially changed after the close of the security's primary exchange or principal market but before the NYSE Close, the security will be valued at fair value based on procedures established and approved by the Board. Foreign securities that do not trade when the NYSE is open are also valued at fair value.
Securities and other assets for which market quotes are not readily available are valued at fair value as determined in good faith by the Board or persons acting at their direction. The Board has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available, and has delegated to PIMCO the responsibility for applying the valuation methods. In the event that market quotes are not readily available, and the security or asset cannot be valued pursuant to one of the valuation methods, the value of the security or asset will be determined in good faith by the Valuation Committee of the Board generally based upon recommendations provided by PIMCO.
Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (
When a Fund uses fair value pricing to determine its NAV, securities will not be priced on the basis of quotes from the primary market in which they are traded, but rather may be priced by another method that the Board or persons acting at their direction believe reflects fair value. Fair value pricing may require subjective determinations about the value of a security. While the Trust's policy is intended to result in a calculation of the Fund's NAV that fairly reflects security values as of the time of pricing, the Trust cannot ensure that fair values determined by the Board or persons acting at their direction would accurately reflect the price that a Fund could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by a Fund may differ from the value that would be realized if the securities were sold.
For a Fund's 4:00 p.m. E.T. futures holdings, estimated prices from Reuters will be used if any cumulative futures margin impact is greater than $0.005 to the NAV due to futures movement after the fixed income futures market closes (3:00 p.m. E.T.) and up to the NYSE
Investments initially valued in currencies other than the U.S. dollar are converted to the U.S. dollar using exchange rates obtained from pricing services. As a result, the NAV of a Fund's Shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of securities traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed. As a result, to the extent that a Fund holds foreign (non-U.S.) securities, the NAV of a Fund's Shares may change when an investor cannot purchase, redeem or exchange shares.
On each Business Day, before commencement of trading in Fund Shares on NYSE Arca, each Fund will disclose on its Web site the identities and quantities of the portfolio instruments and other assets held by a Fund that will form the basis for a Fund's calculation of NAV at the end of the Business Day.
In order to provide additional information regarding the intra-day value of Shares of a Fund, the NYSE Arca or a market data vendor will disseminate every 15 seconds through the facilities of the Consolidated Tape Association (“CTA”) or other widely disseminated means an updated Portfolio Indicative Value (“PIV”) for each Fund as calculated by an information provider or market data vendor.
A third party market data provider will calculate the PIV for each Fund. For the purposes of determining the PIV, the third party market data provider's valuation of derivatives is expected to be similar to their valuation of all securities. The third party market data provider may use market quotes if available or may fair value securities against proxies (such as swap or yield curves).
With respect to specific derivatives:
• Foreign currency derivatives may be valued intraday using market quotes, or another proxy as determined to be appropriate by the third party market data provider.
• Futures may be valued intraday using the relevant futures exchange data, or another proxy as determined to be appropriate by the third party market data provider.
• Interest rate swaps may be mapped to a swap curve and valued intraday based on the swap curve, or another proxy as determined to be appropriate by the third party market data provider.
• CDX/CDS may be valued using intraday data from market vendors, or based on underlying asset price, or another proxy as determined to be appropriate by the third party market data provider.
• Total return swaps may be valued intraday using the underlying asset price, or another proxy as determined to be appropriate by the third party market data provider.
• Exchange listed options may be valued intraday using the relevant exchange data, or another proxy as determined to be appropriate by the third party market data provider.
• OTC options may be valued intraday through option valuation models (
A third party market data provider's valuation of forwards will be similar to their valuation of the underlying securities, or another proxy as determined to be appropriate by the third party market data provider. The third party market data provider will generally use market quotes if available. Where market quotes are not available, they may fair value securities against proxies (such as swap or yield curves). Each Fund's disclosure of forward positions will include information that market participants can use to value these positions intraday.
Each Fund's disclosure of derivative positions in the applicable Disclosed Portfolio will include information that market participants can use to value these positions intraday. On a daily basis, the Funds will disclose on the Funds' Web site the following information regarding each portfolio holding, as applicable to the type of holding: Ticker symbol, CUSIP number or other identifier, if any; a description of the holding (including the type of holding, such as the type of swap); the identity of the security, commodity, index or other asset or instrument underlying the holding, if any; for options, the option strike price; quantity held (as measured by, for example, par value, notional value or number of shares, contracts or units); maturity date, if any; coupon rate, if any; effective date, if any; market value of the holding; and the percentage weighting of the holding in a Fund's portfolio.
For each Fund, the Adviser believes there will be minimal, if any, impact to the arbitrage mechanism as a result of the use of derivatives. Market makers and participants should be able to value derivatives as long as the positions are disclosed with relevant information. The Adviser believes that the price at which Shares trade will continue to be disciplined by arbitrage opportunities created by the ability to purchase or redeem creation Shares at their NAV, which should ensure that Shares will not trade at a material discount or premium in relation to their NAV.
The Adviser does not believe there will be any significant impacts to the settlement or operational aspects of a Fund's arbitrage mechanism due to the use of derivatives. Because derivatives generally are not eligible for in-kind transfer, they will typically be substituted with a “cash in lieu” amount when each Fund processes purchases or redemptions of “Creation Units” (as described below) in-kind.
According to the Registration Statement, Shares of each of the Funds that trade in the secondary market will be “created” at NAV
Except when aggregated in Creation Units, Shares will not be redeemable by the Funds. The prices at which creations and redemptions occur will be based on the next calculation of NAV after an order is received. Requirements as to the timing and form of orders are described in the Authorized Participant agreement. PIMCO will make available on each business day via the NSCC, prior to the opening of business (subject to amendments) on the Exchange (currently 9:30 a.m., E.T.), the identity and the required amount of each Deposit Security and the amount of the Cash Component (or Cash Deposit) to be included in the current Fund Deposit
Additional information regarding the Trust, the Funds and the Shares, including investment strategies, risks, creation and redemption procedures, fees, portfolio holdings, disclosure policies, distributions and taxes is included in the Registration Statement. All terms relating to the Funds that are referred to but not defined in this proposed rule change are defined in the Registration Statement.
The Trust's Web site (
On a daily basis, for each of the Funds, the Adviser, Funds or Trust will disclose for each portfolio security and other financial instrument of each of the Funds the following information: Ticker symbol (if applicable), name of security or financial instrument, number of shares (if applicable) or dollar value of securities and financial instruments held in the portfolio, and percentage weighting of the security and financial instrument in the portfolio. In addition, price information for the debt securities and other financial instruments held by each of the Funds will be available through major market data vendors.
The Web site information will be publicly available at no charge.
In addition, a basket composition file, which includes the security names and share quantities, if applicable, required to be delivered in exchange for a Funds' Shares, together with estimates and actual cash components, will be publicly disseminated daily prior to the opening of the Exchange via the NSCC. The basket represents one Creation Unit of each of the Funds. The NAV of each of the Funds will normally be determined as of the close of the regular trading session on the Exchange (ordinarily 4:00 p.m. E.T.) on each Business Day. Authorized participants may refer to the basket composition file for information regarding Fixed Income Instruments, and any other instrument that may comprise a Fund's basket on a given day.
Investors can also obtain the Trust's SAI, the Funds' Shareholder Reports, and the Funds' Forms N–CSR and Forms N–SAR, filed twice a year. The Trust's SAI and Shareholder Reports are available free upon request from the Trust, and those documents and the Form N–CSR, Form N–PX and Form N–SAR may be viewed on-screen or downloaded from the Commission's Web site at
With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of any of the Funds.
The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. Shares will trade on the NYSE Arca Marketplace from 4 a.m. to 8 p.m. E.T. in accordance with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late Trading Sessions). The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in NYSE Arca Equities Rule 7.6, Commentary .03, the minimum price variation (“MPV”) for quoting and entry of orders in equity securities traded on the NYSE Arca Marketplace is $0.01, with the exception of securities that are priced less than $1.00 for which the MPV for order entry is $0.0001.
Each Fund's Shares will conform to the initial and continued listing criteria under NYSE Arca Equities Rule 8.600. Consistent with NYSE Arca Equities Rule 8.600(d)(2)(B)(ii), the Funds' Reporting Authority will implement and maintain, or be subject to, procedures designed to prevent the use and dissemination of material non-public information regarding the actual components of each Fund's portfolio. The Exchange represents that, for initial and/or continued listing, each Fund will be in compliance with Rule 10A–3
The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by the Financial Industry Regulatory Authority (“FINRA”) on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
The surveillances referred to above generally focus on detecting securities trading outside their normal patterns. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations.
FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares, exchange-traded options, exchange-traded equities, futures and options on futures with other markets or other entities that are members of the ISG, and FINRA may obtain trading information regarding trading in the Shares, exchange-trade options, exchange-traded equities, futures and options on futures from such markets or entities. In addition, the Exchange may obtain information regarding trading in the Shares, exchange-traded options, exchange-traded equities, futures and options on futures from markets or other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.
Not more than 10% of the net assets of a Fund in the aggregate shall consist of equity securities, including stocks into which a convertible security is converted, whose principal market is not a member of the ISG or is a market with which the Exchange does not have a comprehensive surveillance sharing agreement. Furthermore, not more than 10% of the net assets of a Fund in the aggregate shall consist of futures contracts or exchange-traded options contracts whose principal market is not a member of ISG or is a market with which the Exchange does not have a comprehensive surveillance sharing agreement.
In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees.
Prior to the commencement of trading, the Exchange will inform its Equity Trading Permit (“ETP”) Holders in an Information Bulletin (“Bulletin”) of the special characteristics and risks associated with trading the Shares. Specifically, the Bulletin will discuss the following: (1) The procedures for purchases and redemptions of Shares in Creation Unit aggregations (and that Shares are not individually redeemable); (2) NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading the Shares; (3) the risks involved in trading the Shares during the Opening and Late Trading Sessions when an updated PIV will not be calculated or publicly disseminated; (4) how information regarding the PIV is disseminated; (5) the requirement that ETP Holders deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information.
In addition, the Bulletin will reference that each of the Funds is subject to various fees and expenses described in the Registration Statement. The Bulletin will discuss any exemptive, no-action, and interpretive relief granted by the Commission from any rules under the Act. The Bulletin will also disclose that the NAV for the Shares will be calculated after 4:00 p.m. E.T. each trading day.
The basis under the Act for this proposed rule change is the requirement
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Equities Rule 8.600. The Exchange has in place surveillance procedures that are adequate to properly monitor trading in the Shares in all trading sessions and to deter and detect violations of Exchange rules and federal securities laws applicable to trading on the Exchange. FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares, exchange-traded options, exchange-traded equities, futures and options on futures with other markets or other entities that are members of the ISG, and FINRA may obtain trading information regarding trading in the Shares, exchange-trade options, exchange-traded equities, futures and options on futures from such markets
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that 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. In addition, a large amount of information is publicly available regarding each of the Funds and the Shares, thereby promoting market transparency. Moreover, the PIV will be widely disseminated by one or more major market data vendors at least every 15 seconds during the Exchange's Core Trading Session. On each Business Day, before commencement of trading in Shares in the Core Trading Session on the Exchange, each of the Funds will disclose on the Trust's Web site the Disclosed Portfolio that will form the basis for each Fund's calculation of NAV at the end of the business day. Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services, and quotation and last sale information will be available via the CTA high-speed line. Exchange-traded options quotation and last sale information is available via the Options Price Reporting Authority. The Trust's Web site will include a form of the prospectus for each of the Funds and additional data relating to NAV and other applicable quantitative information. Moreover, prior to the commencement of trading, the Exchange will inform its ETP Holders in an Information Bulletin of the special characteristics and risks associated with trading the Shares. Trading in Shares of the any of the Funds will be halted if the circuit breaker parameters in NYSE Arca Equities Rule 7.12 have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable, and trading in the Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), which sets forth circumstances under which Shares of any of the Funds may be halted. In addition, as noted above, investors will have ready access to information regarding each of the Funds' holdings, the PIV, the Disclosed Portfolio, and quotation and last sale information for the Shares.
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of additional types of actively-managed exchange-traded products that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement. The Adviser is not a broker-dealer but is affiliated with a broker-dealer and has implemented a “fire wall” with respect to such broker-dealer
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 purpose of the Act. The Exchange notes that the proposed rule change will facilitate the listing and trading of additional types of actively-managed exchange-traded products that will enhance competition with respect to such products among market participants, to the benefit of investors and the marketplace.
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 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.
Social Security Administration.
Notice of Social Security Acquiescence Ruling (AR).
We are publishing this Social Security AR in accordance with 20 CFR 402.35(b)(2), 404.985(a), (b), and 416.1485(a), (b).
Marc Epstein, Office of the General Counsel, Office of Program Law, Social Security Administration, 6401 Security Boulevard, Baltimore, MD 21235–6401, (410) 965–8122, or TTY 410–966–5609, for information about this notice. 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
An AR explains how we will apply a holding in a decision of a United States Court of Appeals that we determine conflicts with our interpretation of a provision of the Social Security Act (Act) or regulations when the Government has decided not to seek further review of that decision or is unsuccessful on further review.
We will apply the holding of the Court of Appeals' decision as explained in this AR to claims at all levels of administrative review within the Eighth Circuit. We will apply this AR to all determinations or decisions made on or after May 22, 2014. If we made a determination or decision on an application for benefits between March 28, 2012, the date of the Court of Appeals' decision, and May 22, 2014, the effective date of this AR, the claimant may request that we apply the AR to the prior determination or decision. The claimant must show, pursuant to 20 CFR 404.985(b)(2) or 416.1485(b)(2), that applying the AR could change our prior determination or decision in his or her case.
When we received this precedential Court of Appeals' decision and determined that an AR might be required, we began to identify those claims that were pending before the agency within the circuit that might be
If we later rescind this AR as obsolete, we will publish a notice in the
On appeal, Brock argued that because his impairments were solely nonexertional, the ALJ erred in relying solely on the Grid rules and that the ALJ should have sought VE evidence to determine whether he could adjust to other work. Brock asserted that, because the Grid rules are premised only on exertional limitations, they are not meant to direct a conclusion of “disabled” or “not disabled” for individuals who have solely nonexertional limitations. Therefore, Brock asserted that substantial evidence in the record did not support the ALJ's decision.
At step five of the sequential evaluation process (or the last step in the sequential evaluation process in continuing disability review claims), we consider the vocational factors of age, education, and work experience in conjunction with a claimant's RFC to determine whether the claimant can adjust to other work that exists in significant numbers in the national economy. Section 200.00(e)(1) of 20 CFR Part 404, Subpart P, Appendix 2 provides that “[i]n the evaluation of disability where the individual has solely a nonexertional type of impairment, determination as to whether disability exists shall be based on the principles in the appropriate sections of the regulations, giving consideration to the rules for specific case situations in this appendix 2. The rules do not direct factual conclusions of disabled or not disabled for individuals with solely nonexertional types of impairments.” As explained below, the rules are, however, used as a framework for decision making.
Under SSR 85–15: Titles II and XVI: Capability To Do Other Work—The Medical–Vocational (Grid) Rules as a Framework for Evaluating Solely Nonexertional Impairments, where a person's only impairment is mental, it is not of listing severity but does prevent the person from meeting the mental demands of past relevant work and prevents the transferability of acquired work skills, the final consideration is whether the person can be expected to perform unskilled work. The basic mental demands of competitive, remunerative, unskilled work include the abilities (on a sustained basis) to understand, carry out, and remember simple instructions; to respond appropriately to supervision, coworkers, and usual work situations; and to deal with changes in a routine work setting. Where there is no exertional impairment, unskilled jobs at all levels of exertion constitute the potential occupational base for persons who can meet the mental demands of unskilled work. Under our interpretation of the regulations, an adjudicator is not required to consult a VE or other vocational resource to determine whether a nonexertional limitation significantly erodes a claimant's occupational base when adjudicative guidance on the effect of the limitation is provided in an SSR.
In
The
This Ruling applies only to claims in which the claimant resides in Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota at the time of the determinations or decision at the initial, reconsideration, and ALJ hearing levels.
In making a disability determination or decision at step five of the sequential evaluation process (or the last step in the sequential evaluation process in continuing disability review claims), we will not rely exclusively on the Grid rules as a framework for decision making when an individual has a severe mental impairment(s). Before we deny a claim for disability benefits at step five (or the last step in the sequential evaluation process in continuing disability review claims) when a claimant has a severe mental impairment(s), we will produce VE evidence in claims at the hearing level. For claims decided at the initial and reconsideration levels, we will use evidence from a VS, the Dictionary of Occupational Titles (DOT), or another reliable source of job information, such as the ones listed in 20 CFR 404.1566(d) and 416.966(d).
At the Appeals Council level, the Appeals Council will use this AR to determine whether it was correctly applied at the hearing level. However, when the Appeals Council exercises its authority to issue a corrective unfavorable decision, the Appeals Council may rely on vocational evidence adduced at the hearing.
Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
For further information, including a list of the exhibit objects, contact Julie Simpson, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone: 202–632–6467). The mailing address is U.S. Department of State, SA–5, L/PD, Fifth Floor (Suite 5H03), Washington, DC 20522–0505.
Department of State.
Notice, correction.
On March 4, 2014, notice was published on page 12261 of the
For further information, including a list of the imported objects, contact Paul W. Manning, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone: 202–632–6469). The mailing address is U.S. Department of State, SA–5, L/PD, Fifth Floor (Suite 5H03), Washington, DC 20522–0505.
Office of the Secretary of Transportation, U.S. Department of Transportation.
Reissuance of the announcement of Requirements for the Secretary of Transportation's RAISE (Recognizing Aviation and Aerospace Innovation in Science and Engineering) Awards. This notice is identical to the April 7, 2014 notice announcing the 2014 competition (located at 79 FR 19167) except for a change in the date for submitting expressions of interest. Department of Transportation has decided that interested students could benefit from more time to develop proposals for the 2014 competition. Thus, we are extending the date for submitting early expressions of interest until September 2, 2014. Students are strongly encouraged to submit outlines of their project proposals, as described below, by that date. The deadline for final submissions remains October 31, 2014.
15 U.S.C. 3719 (America COMPETES Act).
Pursuant to a recommendation by the Future of Aviation Advisory Committee, the Secretary of Transportation is announcing the third-annual competition to recognize students with the ability to demonstrate unique, innovative thinking in aerospace science and engineering. In its third year, the Secretary has decided to create two divisions within the award: a high school division and a university division (both undergraduate and graduate). The Secretary of Transportation intends to use the awards to incentivize students at high schools and universities to think creatively in developing innovative solutions to aviation and aerospace issues, and to share those innovations with the broader community.
Effective on April 01, 2014 to October 31, 2014.
Patricia Watts, Ph.D., Federal Aviation Administration, (609) 485–5043,
To be eligible to participate in the Secretary's RAISE Award competition, students must be U.S. citizens or permanent residents. For the high school division, the students must have been enrolled in at least one semester (or quarterly equivalent) at a U.S. high school (or equivalent approved home school program) in 2014. For the University division, the student must have been enrolled in a U.S.-based college or university for at least one semester (or quarterly equivalent) in 2014. Students may participate and be recognized as individuals or in teams. Each member of a team must meet the eligibility criteria. An individual may join more than one team. There is no charge to enter the competition.
The following additional rules apply:
1. Candidates shall submit a project in the competition under the rules promulgated by the Department;
2. Candidates shall agree to execute indemnifications and waivers of claims against the Federal government as provided in this Notice;
3. Candidates may not be a Federal entity or Federal employee acting within the scope of employment;
4. Candidates may not be an employee of the Department, including but not limited to the Federal Aviation Administration, or the Research and Innovative Technology Administration;
5. Candidates shall not be deemed ineligible because an individual used Federal facilities or consulted with Federal employees during a competition, if the facilities and employees are made available to all individuals participating in the competition on an equitable basis;
6. The competition is subject to all applicable Federal laws and regulations. Participation constitutes the Candidates' full and unconditional agreement to these rules and to the Secretary's decisions, which are final and binding in all matters related to this competition;
7. Submissions which in the Secretary's sole discretion are determined to be substantially similar to a prior submitted entry may be disqualified;
8. Submissions must be original, be the work of the Candidates, and must not violate the rights of other parties. All submissions remain the property of the applicants. Each Candidate represents and warrants that he, she, or the team, is the sole author and owner of the submission, that the submission is wholly original, that it does not infringe any copyright or any other rights of any third party of which the Candidate is aware, and, if submitted in electronic form, is free of malware;
9. By submitting an entry in this contest, contestants and entrants agree to assume any and all risks and waive any claims against the Federal Government and its related entities (except in the case of willful misconduct) for any injury, death, damage, or loss of property, revenue or profits, whether direct, indirect, or consequential, arising from their participation in this contest, whether the injury, death, damage, or loss arises through negligence of otherwise. Provided, however, that by registering or submitting an entry, contestants and entrants do not waive claims against the Department arising out of the unauthorized use or disclosure by the agency of the intellectual property, trade secrets, or confidential information of the entrant;
10. The Secretary and the Secretary's designees have the right to request access to supporting materials from the Candidates;
11. The submissions cannot have been submitted in the same or substantially
12. Each Candidate grants to the Department, as well as other Federal agencies with which it partners, the right to use names, likeness, application materials, photographs, voices, opinions, and/or hometown and state for the Department's promotional purposes in any media, in perpetuity, worldwide, without further payment or consideration; and
13. The Secretary collects personal information from Candidates when they enter this competition. The information collected is subject to the ChallengePost privacy policy located at
While not required, students are strongly encouraged to send brief expressions of interest to the Department to be considered for an award. The expressions of interest should be sent by September 2, 2014 to the contact shown below and should include the following elements: (1) Name of Candidate(s); (2) Name of educational institution(s) with which Candidate(s) are affiliated; (2) Telephone and email addresses for Candidate(s); (3) brief high-level overview of the proposed project.
Final submission packages shall consist of the following elements:
1. Nomination letter from at least one teacher, advisor, faculty member, and others as appropriate. The nomination letter(s) must communicate accomplishments in the following areas:
Evidence of technical merit based upon teacher (parent or legal guardian in the case of home schooled applicants), advisor, or faculty nomination and evaluation of the submitted proposal, written paper, and/or reports.
Evidence of professionalism and leadership may be in the form of, but not limited to:
2. An overall summary of the innovation, not to exceed one page, which includes a title of the project and statement of the impact that the innovation will have on the field of aviation or aerospace;
3. A copy of the student's academic transcript or certified grade report (as applicable);
4. A copy of the paper(s) and related materials describing the innovative concept written by the student(s) being nominated (no page limit).
Once submissions have been received, the Department may request additional information, including supporting documentation, more detailed contact information, releases of liability, and statements of authenticity to guarantee the originality of the work. Failure to respond in a timely fashion may result in disqualification.
All materials should be forwarded with a cover letter to the attention of: Patricia Watts, Ph.D., Centers of Excellence Program Director, Federal Aviation Administration, L–28, FAA William J. Hughes Technical Center, Atlantic City International Airport, NJ 08405.
Hardcopy is preferred; however, the package also may be transmitted by email to
The winner will be announced by the end of 2014. A trophy with the winner's name and date of award will be displayed at the Department of Transportation and a display copy of the trophy will be sent to the winner's school/college/university. An additional plaque or trophy will be awarded to the individual or team. At the option of the Secretary, the Department will pay for invitational travel expenses to Washington, DC for up to four representatives of the winning teams to present their project to Department officials and receive the award from the Secretary.
All submissions will be initially reviewed by the FAA Centers for Excellence Program Director upon receipt to determine if the submissions meet the eligibility requirements. Registration packages meeting the eligibility requirements will be judged by advisory panels consisting of academic experts, government officials including FAA, the Department, and representatives of the private sector. The advisory panels will select the most highly qualified submissions and present them to the Secretary of the Department, who will select the winning entrant.
Submissions will be judged against other submissions from the same division on the following criteria:
• Has the submission presented a clear understanding of the associated problems?
• Has the submission developed a logical and workable solution and approach to solving the problem/s?
• What are the most significant aspects of this concept?
• Has the submission clearly described the breadth of impact of the innovation?
• Is this concept new or a variation of an existing idea, and in what way(s)?
• How is this work unique?
• Was the concept developed independently or in cooperation with others?
• To what extent will this project make a significant impact and/or contribution to the future of the aviation and aerospace environment?
• Who directly benefits from this work?
• Can this program or activity be implemented in a practical fashion?
• What are the costs anticipated to be incurred and saved by executing this concept?
• How has this individual/group measured the impact on the aviation environment?
• To what extent does the innovation result in measurable improvements?
• Can this effort be scaled?
• Is this work specific to one region, various regions, or to the entire nation?
All factors are important and will be given consideration, but the advisory panels will give the “technical merit” factor the most weight in the screening process. The Secretary retains sole discretion to select the winning entrant.
Federal grantees may not use Federal funds to develop COMPETES Act challenge applications.
Federal contractors may not use Federal funds from a contract to develop COMPETES Act challenge applications or to fund efforts in support of a COMPETES Act challenge submission.
Federal Aviation Administration (FAA), DOT.
Notice of intent of waiver with respect to land; Freeman Municipal Airport, Seymour, Indiana.
The FAA is considering a proposal to change 3.1 acres of airport land from aeronautical use to non-aeronautical use and to authorize the sale of airport property located at Freeman Municipal Airport, Seymour, Indiana. The aforementioned land is not needed for aeronautical use.
The property is located at 740 East C Avenue, on the corner of 4th Avenue. The property is surplus airport property, following its military air base use during World War II, and is no longer needed for aeronautical purposes. It is currently, and has long been, leased for use as light industrial business. Upon release, the land will be sold for continued use for light industrial purposes.
Comments must be received on or before June 23, 2014.
Documents are available for review by appointment at the FAA Chicago Airports District Office, Michael Ferry, Program Manager, 2300 East Devon Avenue, Des Plaines, IL, 60018, Telephone: (847) 294–8251
Written comments on the Sponsor's request must be delivered or mailed to: Michael Ferry, Program Manager, Federal Aviation Administration, Chicago Airports District Office, 2300 East Devon Avenue, Des Plaines, IL, 60018, Telephone Number: (847) 294–8251/FAX Number: (847) 294–7046.
Michael Ferry, Program Manager, Federal Aviation Administration, Chicago Airports District Office, 2300 East Devon Avenue, Des Plaines, IL, 60018. Telephone Number: (847) 294–8251/
In accordance with section 47107(h) of Title 49, United States Code, this notice is required to be published in the
The property has long been surplus airport property, following its use as a military air base during World War II, and is currently being used for light industrial business. The land was acquired as airport property from the United States government in 1948 through the Surplus Property Act. The airport plans to sell the property at fair market value upon release. The income from the sale will be reinvested in the airport.
The disposition of proceeds from the sale of the airport property will be in accordance with FAA's Policy and Procedures Concerning the Use of Airport Revenue, published in the
This notice announces that the FAA is considering the release of the subject airport property at the Freeman Municipal Airport, Seymour, Indiana, from federal land covenants, subject to a reservation for continuing right of flight as well as restrictions on the released property as required in FAA Order 5190.6B section 22.16. Approval does not constitute a commitment by the FAA to financially assist in the disposal of the subject airport property nor a determination of eligibility for grant-in-aid funding from the FAA.
LOT 41A OF “SEYMOUR MUNICIPAL AIRPORT AUTHORITY—MINOR SUBDIVISION” AS RECORDED IN PLAT CABINET 7, PAGE 1948 IN THE OFFICE OF THE JACKSON COUNTY RECORDER AND DESCRIBED AS FOLLOWS:
BEGINNING AT A 1” STEEL PIPE (FOUND) MARKING THE WEST CORNER OF LOT 41A; THENCE NORTH 44°13′57″ EAST (ASSUMED BEARING) ALONG THE NORTHWEST LINE OF SAID LOT A DISTANCE OF 351.16 FEET TO THE NORTH CORNER OF SAID LOT AND A 1” STEEL PIPE (FOUND); THENCE SOUTH 45°48′15″ EAST ALONG THE NORTHEAST LINE OF SAID LOT A DISTANCE OF 384.04 FEET TO THE EAST CORNER OF SAID LOT AND A 5/8” REBAR AND CAP (FOUND); THENCE SOUTH 44°11′45″ WEST ALONG THE SOUTHEAST LINE OF SAID LOT A DISTANCE OF 351.29 FEET TO THE SOUTH CORNER OF SAID LOT AND A 5/8” REBAR AND CAP (FOUND); THENCE NORTH 45°47′01″ WEST ALONG THE SOUTHWEST LINE OF SAID LOT A DISTANCE OF 384.26 FEET TO THE POINT OF BEGINNING, CONTAINING 3.10 ACRES, MORE OR LESS, AND SUBJECT TO ALL LEGAL RIGHTS OF WAY AND EASEMENTS.
Federal Aviation Administration (FAA), DOT.
Notice of Aviation Rulemaking Advisory Committee (ARAC) meeting.
The FAA is issuing this notice to advise the public of a meeting of the ARAC.
The meeting will be held on June 19, 2014, starting at 2:00 p.m. Eastern Standard Time. Arrange oral presentations by June 12, 2014.
The meeting will take place at the Hyatt Regency Bethesda, One Bethesda Metro Center (7400 Wisconsin Avenue), Bethesda, MD 20814, Diplomat/Ambassador Room.
Renee Pocius, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591, telephone (202) 267–5093; fax (202) 267–5075; email
Pursuant to Section 10(a)(2) of the Federal Advisory Committee Act (5 U.S.C. App. 2), we are giving notice of a meeting of the ARAC taking place on June 19, 2014, at the Hyatt Regency Bethesda, One Bethesda Metro Center (7400 Wisconsin Avenue), Bethesda, MD 20814.
The Agenda includes:
Attendance is open to the interested public but limited to the space available. Please confirm your attendance with the person listed in the
For persons participating by telephone, please contact the person listed in the
The public must arrange by June 12, 2014 to present oral statements at the meeting. The public may present written statements to the Aviation Rulemaking Advisory Committee by providing 25 copies to the Designated Federal Officer, or by bringing the copies to the meeting.
If you are in need of assistance or require a reasonable accommodation for this meeting, please contact the person listed under the heading
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of Title 14, Code of Federal Regulations (14 CFR). The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of the FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number involved and must be received on or before June 11, 2014.
You may send comments identified by docket number FAA–2013–1033 using any of the following methods:
• Government-wide rulemaking Web site: Go to
• Mail: Send comments to the Docket Management Facility; U.S. Department of Transportation, 1200 New Jersey Avenue SE., West Building Ground Floor, Room W12–140, Washington, DC 20590.
• Fax: Fax comments to the Docket Management Facility at 202–493–2251.
• Hand Delivery: Bring comments to the Docket Management Facility in Room W12–140 of the West Building Ground Floor at 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.
Mark Forseth, ANM–113, Federal Aviation Administration, 1601 Lind Avenue SW., Renton, WA 98057–3356, email
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of Title 14, Code of Federal Regulations (14 CFR). The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of the FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number involved and must be received on or before June 11, 2014.
You may send comments identified by docket number FAA–
• Government-wide rulemaking Web site: Go to
• Mail: Send comments to the Docket Management Facility; U.S. Department of Transportation, 1200 New Jersey Avenue SE., West Building Ground Floor, Room W12–140, Washington, DC 20590.
• Fax: Fax comments to the Docket Management Facility at 202–493–2251.
• Hand Delivery: Bring comments to the Docket Management Facility in Room W12–140 of the West Building Ground Floor at 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.
Mark Forseth, ANM–113, (425) 227–2796, Federal Aviation Administration, 1601 Lind Avenue SW., Renton, WA 98057–3356, or Sandra Long, ARM–201, Office of Rulemaking, Federal Aviation Administration, 800 Independence Avenue SW; Washington, DC 20591; email
This notice is published pursuant to 14 CFR 11.85.
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice and request for information.
In accordance with the Paperwork Reduction Act of 1995, FMCSA announces its plan to submit the Information Collection Request (ICR) described below to the Office of Management and Budget (OMB) for its review and approval and invites public comment. The FMCSA requests approval to revise and renew an ICR entitled, “
We must receive your comments on or before July 21, 2014.
You may submit comments identified by Federal Docket Management System (FDMS) Docket Number FMCSA–2014–0195 using any of the following methods:
•
•
•
•
Mr. Robert Redmond, Office of Safety Programs, Commercial Driver's License Division (MC–ESL), Department of Transportation, Federal Motor Carrier Safety Administration, West Building 6th Floor, 1200 New Jersey Avenue SE, Washington, DC, 20590–0001. Telephone: 202–366–5014; email:
The CMVSA addressed these problems. Section 12002 of the Act makes it illegal for a CMV operator to have more than one driver's license. Section 12003 requires the CMV driver conducting operations in commerce to notify both the designated State of licensure official and the driver's employer of any convictions of State or local laws relating to traffic control (except parking tickets). This section also required the promulgation of regulations to ensure each person who applies for employment as a CMV operator to notify prospective employers of all previous employment as a CMV operator for at least the previous ten years.
In section 12005 of the Act, the Secretary of Transportation (Secretary) is required to develop minimum Federal standards for testing and licensing of operators of CMVs.
Section 12007 of the Act also directs the Secretary, in cooperation with the States, to develop a clearinghouse to aid the States in implementing the one driver, one license, and one driving record requirement. This clearinghouse is known as the commercial driver's license information system (CDLIS).
The CMVSA further requires each person who has a CDL suspended, revoked or canceled by a State, or who is disqualified from operating a CMV for any period, to notify his or her employer of such actions. Drivers of CMVs must notify their employers within 1 business day of being notified of the license suspension, revocation, and cancellation, or of the lost right to operate or disqualification. These requirements are reflected in 49 CFR part 383, titled
Specifically, section 383.21 prohibits a person from having more than one license; section 383.31 requires notification of convictions for driver violations; section 383.33 requires notification of driver's license suspensions; section 383.35 requires notification of previous employment; and section 383.37 outlines employer responsibilities. Section 383.111 requires the passing of a knowledge test by the driver and section 383.113 requires the passing of a skills test by the driver; section 383.115 contains the requirement for the double/triple trailer endorsement, section 383.117 contains the requirement for the passenger endorsement, section 383.119 contains the requirement for the tank vehicle endorsement and section 383.121 contains the requirement for the hazardous materials endorsement.
Section 12011 of the CMVSA states that the Secretary shall withhold a portion of the Federal-aid highway funds apportioned to a State if the State does not substantially comply with the requirements in section 12009(a) of the Act. The information gathered during State compliance reviews is used to determine whether States are complying with these requirements.
A final rule was published on July 31, 2002 (67 FR 49742) implementing 15 of the 16 CDL related provisions of the Motor Carrier Safety Improvement Act of 1999 (MCSIA) (Pub. L. 106–159, 113 Stat. 1748 (Dec. 9, 1999)) that were designed to enhance the safety of drivers on our nation's highways by ensuring that only safe drivers operate CMVs. These new requirements are contained in 49 CFR part 383 and include: five new major and serious disqualifying offenses (section 383.51): Non-CMV disqualifying offenses by a CDL holder (section 383.51); disqualification of drivers determined to be an imminent hazard (section 383.52); a new school bus endorsement (section 383.123); a prohibition on issuing a hardship license to operate a CMV while under suspension (section 384.210); a prohibition on masking convictions (section 384.226); and various requirements for transmitting, posting and retaining driver convictions and disqualification records.
A Final Rule was published on December 1, 2008 (73 FR 73096) that implemented the 16th CDL related provision of MCSIA, the merging of the medical certification and CDL issuing processes.
An interim final rule (IFR) was published on May 5, 2003 (68 FR 23844), as a companion rule to the Transportation Security Administration's (TSA's) May 5, 2003 IFR implementing section 1012 of the USA PATRIOT Act (Pub. L. 107–56) on security threat assessments for drivers applying for or renewing a CDL with a hazardous materials endorsement. While TSA set the requirements in their rule; FMCSA has the responsibility as part of the CDL testing and issuance process to ensure that States are in compliance with the TSA requirements.
Section 4019 of the Transportation Equity Act for the 21st Century (TEA–21), Public Law 105–178, 112 Stat. June 8, 1999 (Attachment I), requires the Secretary of Transportation to review the procedures established and implemented by the States under 49 U.S.C. 31305 for CDL knowledge and skills testing to determine whether the current testing system is an accurate measure and reflection of an individual's knowledge and skills to operate a CMV. The results of this review were incorporated into the new “2005 CDL Test System.” A final rule was published on May 9, 2011 (Attachment J) that requires the use of a State Testing System that is comparable to the 2005 CDL Test System.
Section 4122 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users (SAFETEA–LU), Public Law 109–59, August 10, 2005, requires the Department of Transportation (DOT) to prescribe regulations on minimum uniform standards for the issuance of commercial learner's permits (CLPs), as it has already done for CDLs [49 U.S.C. 31308]. More specifically, section 4122 provides that an applicant for a CLP must first pass a knowledge test which complies with minimum standards prescribed by the Secretary and may have only one CLP at a time; that the CLP document must have the same information and security features as the CDL; and that the data on each CLP holder must be added to the driver's record in CDLIS. The Final Rule published on May 9, 2011 also includes each of those requirements.
Section 703 of the Security and Accountability For Every Port Act of 2006 (SAFE Port Act), Public Law 109–347, October 13, 2006, requires the Secretary of Transportation to promulgate regulations implementing the recommendations in a memorandum issued by the DOT's Office of the Inspector General (OIG) on June 4, 2004,
This information collection supports the DOT Strategic Goal of Safety by requiring that drivers of CMVs are properly licensed according to all applicable Federal requirements.
The 10-year employment history information supplied by the CDL holder to the employer upon application for employment (49 CFR 383.35) is used to assist the employer in meeting his/her responsibilities to ensure that the applicant does not have a history of high safety risk behavior.
State officials use the information collected on the license application form (49 CFR 383.71), the medical certificate information that is posted to the driving record (proposed) and the conviction and disqualification data posted to the driving record (49 CFR 383.73) to prevent unqualified and/or disqualified CDL holders from operating CMVs on the nation's highways. State officials are also required to administer knowledge and skills tests to CDL driver applicants (49 CFR 384.202). The driver applicant is required to correctly answer at least 80 percent of the questions on each knowledge test in order to achieve a passing score on that test. To achieve a passing score on the skills test, the driver applicant must demonstrate that he/she can successfully perform all of the skills listed in the regulations. During State CDL compliance reviews, FMCSA officials review this information to ensure that the provisions of the regulations are being carried out. Without the aforementioned requirements, there would be no uniform control over driver licensing practices to prevent unqualified and/or disqualified drivers from being issued a CDL and to prevent unsafe drivers from spreading their convictions among several licenses in several States and remaining behind the wheel of a CMV. Failure to collect this information would render the regulations unenforceable.
Information submitted by the States will be used by the FMCSA to determine if individual States are in “substantial compliance” with section 12009(a) of the CMVSA. The FMCSA reviews information submitted by the States and conducts such reviews, audits, and investigations of each State once every three years or as it deems necessary to make compliance determinations for all States and the District of Columbia. If this information were not available, the FMCSA would have no means of independently verifying State compliance.
This request for renewed approval includes one additional information collection item: “Driver completion of knowledge and skills tests [49 CFR 384.201].”
The information collection is comprised of twelve components:
(1)
FMCSA estimates that there are 657,000 new drivers (5% of the current total of 13.14 million active CDL driver records) who would obtain a CDL every year and that 74% of these new 657,000 CDL holders, or 486,180 new CDL holders would be engaged in interstate commerce.
The number of existing CDL holders who would need to renew and submit a copy of their medical examiner's certificate to the State would be 2.96 million CDL holders engaged in interstate commerce. Since 31% of the 2.96 million interstate CDL holders would need to submit a copy of their medical examiner's certificate to the State every year as a condition of their medical variance or their new employer requires another
FMCSA estimates a total of 81,000 annual burden hours (2.43 million responses × 2/60 hours = 81,000) for the States to obtain and record the medical examiner's certificate information on the CDLIS driver record.
CDLs are renewed on average every 5 years. It takes approximately 5 seconds (.083 minutes) for the SDLA to record the medical certification status information on the CDLIS driver record.
FMCSA estimates the annual SDLA recording of self- certification of CMV operation information would be 3,285,000 million annual responses (13.14 million/5 years + 657,000 million new CDL drivers = 3,285,000).
FMCSA estimates the SDLA recording of self-certification of CMV operation information at a total annual burden of 4,544 hours (3,285,000 million responses × .083/60 hours = 4,544 hours).
(2)
Approximately 2% of active CDLIS driver records are transferred to another State each year.
It takes approximately 5 seconds (.083 minutes) to verify the medical certification status information of a CDL driver who operates a CMV in interstate commerce.
FMCSA estimates that the SDLA's annual verification of medical certification status information would generate 651,200 annual responses [(2,960,000 renewals/5 years) + (.02 × 2,960,000 transfers per year) = 651,200).
FMCSA estimates a total annual burden of 901hours (651,200 × .083/60 hours = 901) for SDLAs to verify the medical certification status information of all interstate CDL drivers.
(4)
(5)
(6)
(7)
(8)
There are approximately 657,000 new drivers a year (13.14 million drivers × .05 = 657,000 new drivers). FMCSA estimates that the average amount of time for each record inquiry performed by a State to add a new driver is 2 minutes. The new driver requirement has an estimated annual burden of 27,900 burden hours (657,000 new drivers × 2/60 = 27,900 hours).
The average renewal period is 5 years. There are approximately 2,628,000 CDLs renewed each year (13.14 million drivers/5 years = 2,628,000). FMCSA estimates that the average amount of time for each record inquiry performed by a State to renew a license is 2 minutes. The renewal record inquiry requirement has an estimated annual burden of 87,600 burden hours (2,628,000 × 2/60 hours = 87,600 hours).
Approximately 2 percent of drivers transfer to a new state each year. There are 262,800 drivers a year who change their State of domicile (13.14 million drivers × .02 = 282,800 drivers). FMCSA estimate that the average amount of time for each record inquiry performed by a State to change a driver's State of domicile is 2 minutes. The driver transfer requirement has an estimated annual burden of 8.760 burden hours (262,800 transferred drivers × 2/60 hours = 8,760 hours).
Each driver averages approximately 1 conviction every three years and approximately 25 percent of the convictions result in a disqualification. There are 5,475,000 driver convictions and disqualifications (13.14 million/3 convictions × 1.25 = 5,475,000). We estimate that the average amount of time for each transaction performed by a State is 2 minutes. The driver conviction/disqualification transaction requirement has an estimated annual burden of 182,500 burden hours (5,475,000 transactions × 2/60 hours = 182,500 hours).
Approximately 33 percent of active CDL drivers have a hazardous materials endorsement. The average renewal period is approximately 5 years. There are 867,240 drivers a year renewing a CDL with a hazardous materials endorsement (13.14 million drivers × .33/5 years = 867,240 drivers). The Agency estimates that the average amount of time for each citizenship/resident alien status inquiry performed by a State is 2 minutes. The citizenship/resident alien status inquiry transaction requirement has an estimated annual burden of 28,908 burden hours (867,240 drivers × 2/60 hours = 28,908 hours).
The total annual burden hours for these combined collection of information activities is 335,668 burden hours (27,900 hours + 87,600 hours + 8.760 hours + 182,500 hours + 28,908 hours = 335,668 hours).
(9)
The average CDL renewal period is approximately 5 years. Therefore, 2,628,000 drivers renew their CDL a year (13.14 million drivers/5 years = 2,628.000 drivers). It takes approximately 1 minute for renewal drivers to complete the CDL part of application form. The renewal driver CDL application form requirement has an estimated annual burden of 43,800 burden hours (2,628,000 × 1/60 hours = 43,800 hours).
Approximately 2 percent of drivers transfer to a new State each year. FMCSA estimates that there are 262,800 transfer drivers (13.14 million × .02 = 262,800). It takes approximately 1 minute for transfer drivers to complete the CDL part of application form. The transfer driver CDL application form requirement has an estimated annual burden of 4,380 hours (262,800 × 1/60 = 4,380).
The total annual burden hours for these combined collection of information activities is 59,130 hours (10,950 hours + 43,800 hours + 4,380 = 59,130 hours).
(10)
Approximately 25 percent of the applicants fail the CDL knowledge and skills tests the first time they take the tests.
FMCSA estimates that a knowledge test on average takes 45 minutes to complete and a skills test on average takes 90 minutes to complete.
The Agency estimates there are 821,250 knowledge tests completed every year (657,000 × 1.25 = 821,250).
The Agency estimates the annual burden for taking the knowledge test is 615,938 burden hours (821,250 × 45/60 hour/test = 615,938).
The Agency estimates there are 821,250 skills tests completed every year (657,000 × 1.25 = 821,250).
The Agency estimates the annual burden for taking the skills tests is 1,231,875 hours (821,250 × 90/60 hour/test = 1,231,875).
The total annual burden hours for these combined collection of information activities is 1,847,813 burden hours (615,938 hours + 1,231,875 hours = 1,847,813 hours).
(11)
The knowledge test recordkeeping requirement has an estimated annual burden of 27,375 burden hours (657,000 applicants × 2/60 hours × 1.25 = 27,375 hours).
The skills test recordkeeping requirement has an estimated annual burden of 68,438 hours (657,000 applicants × 5/60 hours × 1.25 = 68,438).
The total annual burden hours are 95,813 burden hours for these combined activities (27,375 + 68,438 = 95,813).
(12)
Based on a sampling of several State driver licensing agencies (SDLA), approximately 25 percent of the examiners will only administer the knowledge test. Based on Federal employee experience in developing training courses, it is estimated that the initial combined knowledge and skills test examiner training will take 40 hours to complete and that the initial knowledge-test-only examiner training will take 20 hours to complete. States will spread the initial training over the 3 year implementation period.
Based on Federal employee observation of SDLA licensing activities, a criminal background check on an examiner will take approximately 15 minutes to process and evaluate the results and that average amount of time to record results of examiner training, certification and criminal background checks is approximately 2 minutes.
FMCSA estimates the annual burden for examiners to complete the initial combined knowledge and skills test training and certification is 21,440 burden hours ([.75 × 2,144 examiners/3 years] × 40 hours = 21,440) and that the annual burden for examiners to complete the initial knowledge-test-only training and certification is 3,573 burden hours ([.25 × 2,144 examiners/3 years] × 20 hours = 3,573). The total annual burden for initial examiner training is 25,013 burden hours (21,440 + 3,573 = 25,013).
FMCSA estimates the annual burden for States to process and evaluate criminal background checks is 179 burden hours ([2,144 examiners/3 years] × 15/60 hours = 179).
FMCSA estimates the annual burden for States to record results of examiner training, certification and criminal background checks is 24 burden hours ([2,144 examiners/3 years] × 2/60 hours = 24).
The total annual burden hours for these combined collection of information activities is 25,216 burden hours (25,013 hours + 179 hours + 24 hours = 25,216 hours).
(1) Has a gross combination weight rating or gross combination weight of 11,794 kilograms or more (26,001 pounds or more), whichever is greater, inclusive of a towed unit(s) with a gross vehicle weight rating or gross vehicle weight of more than 4,536 kilograms (10,000 pounds), whichever is greater; or
(2) Has a gross vehicle weight rating or gross vehicle weight of 11,794 or more kilograms (26,001 pounds or more), whichever is greater; or
(3) Is designed to transport 16 or more passengers, including the driver; or
(4) Is of any size and is used in the transportation of hazardous materials as defined in this section.
Issued under the authority of 49 CFR 1.87 on: May 14, 2014
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice of applications for exemptions; request for comments.
FMCSA announces receipt of applications from 82 individuals for exemption from the prohibition against persons with insulin-treated diabetes mellitus (ITDM) operating commercial motor vehicles (CMVs) in interstate commerce. If granted, the exemptions would enable these individuals with ITDM to operate CMVs in interstate commerce.
Comments must be received on or before June 23, 2014.
You may submit comments bearing the Federal Docket Management System (FDMS) Docket No. FMCSA–2014–0016 using any of the following methods:
•
on-line instructions for submitting comments.
•
•
Elaine M. Papp, Chief, Medical Programs Division, (202) 366–4001,
Under 49 U.S.C. 31136(e) and 31315, FMCSA may grant an exemption from the Federal Motor Carrier Safety Regulations for a 2-year period if it finds “such exemption would likely achieve a level of safety that is equivalent to or greater than the level that would be achieved absent such exemption.” The statute also allows the Agency to renew exemptions at the end of the 2-year period. The 82 individuals listed in this notice have recently requested such an exemption from the diabetes prohibition in 49 CFR 391.41(b) (3), which applies to drivers of CMVs in interstate commerce. Accordingly, the Agency will evaluate the qualifications of each applicant to determine whether granting the exemption will achieve the required level of safety mandated by statute.
Mr. Andersen, 66, has had ITDM since 2012. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Andersen understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Andersen meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from North Dakota.
Mr. Armbrust, 68, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Armbrust understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Armbrust meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Illinois.
Mr. Baker, 52, has had ITDM since 2012. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Baker understands diabetes management and monitoring, has stable control of his diabetes using ins`ulin, and is able to drive a CMV safely. Mr. Baker meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Indiana.
Mr. Barrett, 66, has had ITDM since 2012. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Barrett understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Barrett meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Michigan.
Mr. Barrineau, 49, has had ITDM since 2011. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Barrineau understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Barrineau meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds an operator's license from Pennsylvania.
Mr. Beals, 51, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Beals understands diabetes management and monitoring,
Mr. Bell, 59, has had ITDM since 2010. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Bell understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Bell meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Wisconsin.
Mr. Billie, 55, has had ITDM since 2008. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Billie understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Billie meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Utah.
Mr. Brandt, 63, has had ITDM since 2010. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Brandt understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Brandt meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Minnesota.
Mr. Bryan, 64, has had ITDM since 1998. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Bryan understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Bryan meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds an operator's license from Texas.
Mr. Calaman, 22, has had ITDM since 2001. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Calaman understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Calaman meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Pennsylvania.
Mr. Case, 59, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Case understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Case meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Iowa.
Mr. Clise, 46, has had ITDM since 2009. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Clise understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Clise meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Maryland.
Mr. Cressey, 62, has had ITDM since 2009. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Cressey understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Cressey meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class B CDL from Maine.
Mr. Cressman, 45, has had ITDM since 1994. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more)
Mr. Crull, 32, has had ITDM since 1991. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Crull understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Crull meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Wisconsin.
Mr. Cunningham, 62, has had ITDM since 2008. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Cunningham understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Cunningham meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds an operator's license from Indiana.
Mr. Dahl, 61, has had ITDM since 1997. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Dahl understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Dahl meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he has stable nonproliferative diabetic retinopathy. He holds a Class A CDL from North Dakota.
Mr. Eastling, 35, has had ITDM since 1994. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Eastling understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Eastling meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he has stable nonproliferative diabetic retinopathy. He holds an operator's license from Minnesota.
Mr. Eck, 33, has had ITDM since 2012. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Eck understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Eck meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Kansas.
Mr. Fernandez, 58, has had ITDM since 2012. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Fernandez understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Fernandez meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Pennsylvania.
Mr. Franje, 28, has had ITDM since 1990. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Franje understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Franje meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Iowa.
Mr. Fuehrer, 43, has had ITDM since 1976. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Fuehrer understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Fuehrer meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from South Dakota.
Mr. Gagnon, 81, has had ITDM since 2010. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Gagnon understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Gagnon meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Washington.
Mr. Goldsberry, 63, has had ITDM since 2010. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Goldsberry understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Goldsberry meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Virginia.
Mr. Greene, 37, has had ITDM since 2014. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Greene understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Greene meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Ohio.
Mr. Haight, 56, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Haight understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Haight meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from North Carolina.
Mr. Harper, 57, has had ITDM since 1963. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Harper understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Harper meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a chauffeur's license from Indiana.
Mr. Haslam, 74, has had ITDM since 2007. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Haslam understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Haslam meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Maine.
Mr. Hessler, 56, has had ITDM since 2009. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Hessler understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Hessler meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from New York.
Mr. Ilenda, 30, has had ITDM since 2013. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Ilenda understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Ilenda meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds an operator's license from North Dakota.
Mr. Jennato, 44, has had ITDM since 1986. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Jennato understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV
Mr. Jobe, 42, has had ITDM since 2014. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Jobe understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Jobe meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he has stable nonproliferative diabetic retinopathy. He holds a Class A CDL from Pennsylvania.
Mr. Jonas, 54, has had ITDM since 2009. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Jonas understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Jonas meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he has stable nonproliferative diabetic retinopathy. He holds a Class A CDL from Pennsylvania.
Mr. Jones, 38, has had ITDM since 2012. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Jones understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Jones meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Maryland.
Mr. Katcher, 47, has had ITDM since 1980. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Katcher understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Katcher meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2013 and certified that he has stable nonproliferative diabetic retinopathy. He holds an operator's license from Colorado.
Mr. Keller, 52, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Keller understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Keller meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds an operator's license from Pennsylvania.
Mr. Keller, 65, has had ITDM since 2014. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Keller understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Keller meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from California.
Mr. King, 50, has had ITDM since 2008. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. King understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. King meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Texas.
Mr. Kirschmann, 36, has had ITDM since 1985. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Kirschmann understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Kirschmann meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from North Dakota.
Mr. LaDuke, 47, has had ITDM since 1977. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function
Mr. Laufenberg, 56, has had ITDM since 2011. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Laufenberg understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Laufenberg meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from North Dakota.
Mr. Longo, 28, has had ITDM since 2001. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Longo understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Longo meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Maryland.
Mr. Mardesen, 37, has had ITDM since 2011. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Mardesen understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Mardesen meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Iowa.
Mr. Maybee, 68, has had ITDM since 2009. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Maybee understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Maybee meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from New York.
Mr. Meadows, 43, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Meadows understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Meadows meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from West Virginia.
Mr. Meek, 58, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Meek understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Meek meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Virginia.
Mr. Mills, 56, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Mills understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Mills meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class B CDL from Massachusetts.
Mr. Moberly, 26, has had ITDM since 1990. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Moberly understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Moberly meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy.
Mr. Monrian, 34, has had ITDM since 1985. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Monrian understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Monrian meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Missouri.
Mr. Nelson, 42, has had ITDM since 2013. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Nelson understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Nelson meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Alabama.
Mr. Olson, 36, has had ITDM since 1988. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Olson understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Olson meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Utah.
Mr. Perry, 40, has had ITDM since 2013. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Perry understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Perry meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Texas.
Mr. Peterson, 54, has had ITDM since 1971. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Peterson understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Peterson meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he has stable nonproliferative diabetic retinopathy. He holds an operator's license from Nebraska.
Mr. Petitt, 52, has had ITDM since 2011. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Petitt understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Petitt meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Texas.
Mr. Restuccio, 67, has had ITDM since 2011. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Restuccio understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Restuccio meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from New Jersey.
Mr. Ridenbaugh, 21, has had ITDM since 2007. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Ridenbaugh understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Ridenbaugh meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Ohio.
Mr. Riley, 57, has had ITDM since 2009. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist
Mr. Rodriguez, 49, has had ITDM since 2008. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Rodriguez understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Rodriguez meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Tennessee.
Mr. Saavedra Garcia, 28, has had ITDM since 2004. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Saavedra Garcia understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Saavedra Garcia meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from California.
Mr. Salinas, 42, has had ITDM since 2011. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Salinas understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Salinas meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Illinois.
Mr. Salmond, 51, has had ITDM since 2003. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Salmond understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Salmond meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Utah.
Mr. Shaw, 60, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Shaw understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Shaw meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he has stable proliferative diabetic retinopathy. He holds a Class A CDL from Pennsylvania.
Mr. Shipley, 55, has had ITDM since 2012. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Shipley understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Shipley meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Kansas.
Mr. Skonberg, 59, has had ITDM since 1994. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Skonberg understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Skonberg meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from South Dakota.
Mr. Smeal, 73, has had ITDM since 2011. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Smeal understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Smeal meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2013 and certified that he has stable nonproliferative diabetic retinopathy. He holds a Class A CDL from Pennsylvania.
Mr. Smith, 34, has had ITDM since 2005. His endocrinologist examined him
Mr. Smith, 66, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Smith understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Smith meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class B CDL from Georgia.
Mr. Spurlock, 63, has had ITDM since 2003. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Spurlock understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Spurlock meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Alabama.
Ms. Stephens, 67, has had ITDM since 2005. Her endocrinologist examined her in 2014 and certified that she has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. Her endocrinologist certifies that Ms. Stephens understands diabetes management and monitoring, has stable control of her diabetes using insulin, and is able to drive a CMV safely. Ms. Stephens meets the requirements of the vision standard at 49 CFR 391.41(b)(10). Her optometrist examined her in 2013 and certified that she does not have diabetic retinopathy. She holds a Class B CDL from Delaware.
Mr. Stewart, 65, has had ITDM since 2012. His endocrinologist examined him in 2013 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Stewart understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Stewart meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Pennsylvania.
Ms. Stinson, 27, has had ITDM since 2005. Her endocrinologist examined her in 2014 and certified that she has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. Her endocrinologist certifies that Ms. Stinson understands diabetes management and monitoring has stable control of her diabetes using insulin, and is able to drive a CMV safely. Ms. Stinson meets the requirements of the vision standard at 49 CFR 391.41(b)(10). Her ophthalmologist examined her in 2014 and certified that she does not have diabetic retinopathy. She holds an operator's license from New York.
Mr. Struthers, 48, has had ITDM since 2014. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Struthers understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Struthers meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Nebraska.
Mr. Svec, 51, has had ITDM since 2014. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Svec understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Svec meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 201 and certified that he does not have diabetic retinopathy. He holds a Class E CDL from Michigan.
Mr. Taff, 63, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Taff understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Taff meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Arkansas.
Mr. Torres, 70, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Torres understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Torres meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2013 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from New Mexico.
Ms. Tyson, 30, has had ITDM since 2006. Her endocrinologist examined her in 2014 and certified that she has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. Her endocrinologist certifies that Ms. Tyson understands diabetes management and monitoring has stable control of her diabetes using insulin, and is able to drive a CMV safely. Ms. Tyson meets the requirements of the vision standard at 49 CFR 391.41(b)(10). Her ophthalmologist examined her in 2013 and certified that she has stable nonproliferative diabetic retinopathy. She holds an operator's license from Pennsylvania.
Mr. Walker, 72, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Walker understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Walker meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class B CDL from Pennsylvania.
Mr. Walter, 64, has had ITDM since 2014. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Walter understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Walter meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from Pennsylvania.
Mr. Watkins, 52, has had ITDM since 2005. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Watkins understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Watkins meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from New York.
Mr. Wilson, 57, has had ITDM since 2013. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Wilson understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Wilson meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His optometrist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds a Class A CDL from South Carolina.
Mr. Young, 55, has had ITDM since 2000. His endocrinologist examined him in 2014 and certified that he has had no severe hypoglycemic reactions resulting in loss of consciousness, requiring the assistance of another person, or resulting in impaired cognitive function that occurred without warning in the past 12 months and no recurrent (2 or more) severe hypoglycemic episodes in the last 5 years. His endocrinologist certifies that Mr. Young understands diabetes management and monitoring, has stable control of his diabetes using insulin, and is able to drive a CMV safely. Mr. Young meets the requirements of the vision standard at 49 CFR 391.41(b)(10). His ophthalmologist examined him in 2014 and certified that he does not have diabetic retinopathy. He holds an operator's license from Georgia.
In accordance with 49 U.S.C. 31136(e) and 31315, FMCSA requests public comment from all interested persons on the exemption petitions described in this notice. We will consider all comments received before the close of business on the closing date indicated in the date section of the notice.
FMCSA notes that section 4129 of the Safe, Accountable, Flexible and Efficient Transportation Equity Act: A Legacy for Users requires the Secretary to revise its diabetes exemption program established on September 3, 2003 (68 FR 52441)
Section 4129 requires: (1) elimination of the requirement for 3 years of experience operating CMVs while being treated with insulin; and (2) establishment of a specified minimum period of insulin use to demonstrate stable control of diabetes before being allowed to operate a CMV.
In response to section 4129, FMCSA made immediate revisions to the diabetes exemption program established
Section 4129(d) also directed FMCSA to ensure that drivers of CMVs with ITDM are not held to a higher standard than other drivers, with the exception of limited operating, monitoring and medical requirements that are deemed medically necessary.
The FMCSA concluded that all of the operating, monitoring and medical
requirements set out in the September 3, 2003 notice, except as modified, were in compliance with section 4129(d). Therefore, all of the requirements set out in the September 3, 2003 notice, except as modified by the notice in the
You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. FMCSA recommends that you include your name and a mailing address, an email address, or a phone number in the body of your document so that FMCSA can contact you if there are questions regarding your submission.
To submit your comment online, go to http://www.regulations.gov and in the search box insert the docket number FMCSA–2014–0016 and click the search button. When the new screen appears, click on the blue “Comment Now!” button on the right hand side of the page. On the new page, enter information required including the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8
We will consider all comments and material received during the comment period and may change this proposed rule based on your comments. FMCSA may issue a final rule at any time after the close of the comment period.
To view comments, as well as any documents mentioned in this preamble, To submit your comment online, go to http://www.regulations.gov and in the search box insert the docket number FMCSA–2014–0016 and click “Search.” Next, click “Open Docket Folder” and you will find all documents and comments related to the proposed rulemaking.
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice of renewal of exemptions; request for comments.
FMCSA announces its decision to renew the exemptions from the vision requirement in the Federal Motor Carrier Safety Regulations for 8 individuals. FMCSA has statutory authority to exempt individuals from the vision requirement if the exemptions granted will not compromise safety. The Agency has concluded that granting these exemption renewals will provide a level of safety that is equivalent to or greater than the level of safety maintained without the exemptions for these commercial motor vehicle (CMV) drivers.
This decision is effective June 27, 2014. Comments must be received on or before June 23, 2014.
You may submit comments bearing the Federal Docket Management System (FDMS) numbers: Docket No. [Docket No. FMCSA–2012–0104], using any of the following methods:
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Elaine M. Papp, Chief, Medical Programs Division, 202–366–4001,
Under 49 U.S.C. 31136(e) and 31315, FMCSA may renew an exemption from the vision requirements in 49 CFR 391.41(b)(10), which applies to drivers of CMVs in interstate commerce, for a two-year period if it finds “such exemption would likely achieve a level of safety that is equivalent to or greater than the level that would be achieved absent such exemption.” The procedures for requesting an exemption (including renewals) are set out in 49 CFR part 381.
This notice addresses 8 individuals who have requested renewal of their exemptions in accordance with FMCSA procedures. FMCSA has evaluated these 8 applications for renewal on their merits and decided to extend each exemption for a renewable two-year period. They are:
The exemptions are extended subject to the following conditions: (1) That each individual has a physical examination every year (a) by an ophthalmologist or optometrist who attests that the vision in the better eye continues to meet the requirements in 49 CFR 391.41(b)(10), and (b) by a medical examiner who attests that the individual is otherwise physically qualified under 49 CFR 391.41; (2) that each individual provides a copy of the ophthalmologist's or optometrist's report to the medical examiner at the time of the annual medical examination; and (3) that each individual provide a copy of the annual medical certification to the employer for retention in the driver's qualification file and retains a copy of the certification on his/her person while driving for presentation to a duly authorized Federal, State, or local enforcement official. Each exemption will be valid for two years unless rescinded earlier by FMCSA. The exemption will be rescinded if: (1) The person fails to comply with the terms and conditions of the exemption; (2) the exemption has resulted in a lower level of safety than was maintained before it was granted; or (3) continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136(e) and 31315.
Under 49 U.S.C. 31315(b)(1), an exemption may be granted for no longer than two years from its approval date and may be renewed upon application for additional two year periods. In accordance with 49 U.S.C. 31136(e) and 31315, each of the 8 applicants has satisfied the entry conditions for obtaining an exemption from the vision requirements (77 FR 27847; 77 FR 38386). Each of these 8 applicants has requested renewal of the exemption and has submitted evidence showing that the vision in the better eye continues to meet the requirement specified at 49 CFR 391.41(b)(10) and that the vision impairment is stable. In addition, a review of each record of safety while driving with the respective vision deficiencies over the past two years indicates each applicant continues to meet the vision exemption requirements.
These factors provide an adequate basis for predicting each driver's ability to continue to drive safely in interstate commerce. Therefore, FMCSA concludes that extending the exemption for each renewal applicant for a period of two years is likely to achieve a level of safety equal to that existing without the exemption.
FMCSA will review comments received at any time concerning a particular driver's safety record and determine if the continuation of the exemption is consistent with the requirements at 49 U.S.C. 31136(e) and 31315. However, FMCSA requests that interested parties with specific data concerning the safety records of these drivers submit comments by June 23, 2014.
FMCSA believes that the requirements for a renewal of an exemption under 49 U.S.C. 31136(e) and 31315 can be satisfied by initially granting the renewal and then requesting and evaluating, if needed, subsequent comments submitted by interested parties. As indicated above, the Agency previously published notices of final disposition announcing its decision to exempt these 8 individuals from the vision requirement in 49 CFR 391.41(b)(10). The final decision to grant an exemption to each of these individuals was made on the merits of each case and made only after careful consideration of the comments received to its notices of applications. The notices of applications stated in detail the qualifications, experience, and medical condition of each applicant for an exemption from the vision requirements. That information is available by consulting the above cited
Interested parties or organizations possessing information that would otherwise show that any, or all, of these drivers are not currently achieving the statutory level of safety should immediately notify FMCSA. The Agency will evaluate any adverse evidence submitted and, if safety is being compromised or if continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136(e) and 31315, FMCSA will take immediate steps to revoke the exemption of a driver.
You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. FMCSA recommends that you include your name and a mailing address, an email address, or a phone number in the body of your document so that FMCSA can contact you if there are questions regarding your submission.
To submit your comment online, go to
We will consider all comments and material received during the comment period and may change this proposed rule based on your comments. FMCSA may issue a final rule at any time after the close of the comment period.
To view comments, as well as any documents mentioned in this preamble, To submit your comment online, go to
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice of applications for exemptions; request for comments.
FMCSA announces that 17 individuals have applied for a medical exemption from the hearing requirement in the Federal Motor Carrier Safety Regulations (FMCSRs). In accordance with the statutory requirements concerning applications for exemptions, FMCSA requests public comments on these requests. The statute and implementing regulations concerning exemptions require that exemptions must provide an equivalent or greater level of safety than if they were not granted. If the Agency determines the exemptions would satisfy the statutory requirements and decides to grant theses requests after reviewing the public comments submitted in response to this notice, the exemptions would enable 17 individuals to operate CMVs in interstate commerce.
Comments must be received on or before June 23, 2014.
You may submit comments bearing the Federal Docket Management System (FDMS) Docket No. FMCSA- 2014–0102 using any of the following methods:
• Federal eRulemaking Portal: Go to
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Elaine M. Papp, Chief Medical Programs, (202) 366–4001,
The Federal Motor Carrier Safety Administration has authority to grant exemptions from many of the Federal Motor Carrier Safety Regulations (FMCSRs) under 49 U.S.C. 31315 and 31136(e), as amended by Section 4007 of the Transportation Equity Act for the 21st Century (TEA–21) (Pub. L. 105–178, June 9, 1998, 112 Stat. 107, 401). FMCSA has published in 49 CFR part 381, subpart C final rules implementing the statutory changes in its exemption procedures made by section 4007, 69 FR 51589 (August 20, 2004).
The Agency reviews the safety analyses and the public comments and determines whether granting the exemption would likely achieve a level of safety equivalent to or greater than the level that would be achieved without the exemption. The decision of the Agency must be published in the
The current provisions of the FMCSRs concerning hearing state that a person is physically qualified to drive a CMV if that person
First perceives a forced whispered voice in the better ear at not less than 5 feet with or without the use of a hearing aid or, if tested by use of an audiometric device, does not have an average hearing loss in the better ear greater than 40 decibels at 500 Hz, 1,000 Hz, and 2,000 Hz with or without a hearing aid when the audiometric device is calibrated to American National Standard (formerly ASA Standard) Z24.5—1951.
FMCSA also issues instructions for completing the medical examination report and includes advisory criteria on the report itself to provide guidance for medical examiners in applying the hearing standard. See 49 CFR 391.43(f). The current advisory criteria for the hearing standard include a reference to a report entitled “Hearing Disorders and Commercial Motor Vehicle Drivers” prepared for the Federal Highway Administration, FMCSA's predecessor, in 1993.
FMCSA requests comments from all interested parties on whether a driver who cannot meet the hearing standard should be permitted to operate a CMV in interstate commerce. Further, the Agency asks for comments on whether a driver who cannot meet the hearing standard should be limited to operating only certain types of vehicles in interstate commerce, for example, vehicles without air brakes. The statute and implementing regulations concerning exemptions require that the Agency request public comments on all applications for exemptions. The Agency is also required to make a
You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. FMCSA recommends that you include your name and a mailing address, an email address, or a phone number in the body of your document so that FMCSA can contact you if there are questions regarding your submission.
To submit your comment online, go to
We will consider all comments and material received during the comment period and may change this proposed rule based on your comments. FMCSA may issue a final rule at any time after the close of the comment period.
To view comments, as well as any documents mentioned in this preamble, To submit your comment online, go to
Mr. Clupper, 43, holds an operator's license in Delaware.
Mr. Deuschle, 44, holds an operator's license in Texas.
Mr. Dignan, 24, holds an operator's license in Illinois.
Mr. Gallagher, 51, holds an operator's license in Pennsylvania.
Mr. Kelly, 27, holds an operator's license in Pennsylvania.
Mr. Laporte, 26, holds an operator's license in Georgia.
Mr. Lorshbaugh, 43, holds an operator's license in Mississippi.
Mr. Mader, 45, holds an operator's license in Illinois.
Mr. Martinez, 51, holds a Class B commercial driver's license (CDL) in Texas.
Mr. Mullens, 33, holds a Class A commercial driver's license (CDL) in New Jersey.
Mr. Oyler, 46, holds a Class B commercial driver's license (CDL) in Utah.
Mr. Ramirez, 43, holds a Class B commercial driver's license (CDL) in Texas.
Ms. Ramirez, 42, holds an operator's license in Texas.
Mr. Robinson, 48, holds an operator's license in California.
Ms. Schmidt, 49, holds a Class A commercial driver's license (CDL) in Texas.
Mr. Soneson, 48, holds an operator's license in Ohio.
Mr. Teesdale, 39, holds a Class A commercial driver's license (CDL) in Alabama.
In accordance with 49 U.S.C. 31136(e) and 31315(b)(4), FMCSA requests public comment from all interested persons on the exemption petitions described in this notice. The Agency will consider all comments received before the close of business June 23, 2014. Comments will be available for examination in the docket at the location listed under the
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice of final disposition.
FMCSA announces its decision to exempt 66 individuals from the vision requirement in the Federal Motor Carrier Safety Regulations (FMCSRs). They are unable to meet the vision requirement in one eye for various reasons. The exemptions will enable these individuals to operate commercial motor vehicles (CMVs) in interstate commerce without meeting the prescribed vision requirement in one eye. The Agency has concluded that granting these exemptions will provide a level of safety that is equivalent to or greater than the level of safety maintained without the exemptions for these CMV drivers.
The exemptions are effective May 22, 2014. The exemptions expire on May 23, 2016.
Elaine M. Papp, Chief, Medical Programs Division, (202)–366–4001,
You may see all the comments online through the Federal Document Management System (FDMS) at
On April 1, 2014, FMCSA published a notice of receipt of exemption applications from certain individuals, and requested comments from the public (79 FR 18392). That notice listed 66 applicants' case histories. The 66 individuals applied for exemptions from the vision requirement in 49 CFR 391.41(b)(10), for drivers who operate CMVs in interstate commerce.
Under 49 U.S.C. 31136(e) and 31315, FMCSA may grant an exemption for a 2-year period if it finds “such exemption would likely achieve a level of safety that is equivalent to or greater than the level that would be achieved absent such exemption.” The statute also allows the Agency to renew exemptions at the end of the 2-year period. Accordingly, FMCSA has evaluated the 66 applications on their merits and made a determination to grant exemptions to each of them.
The vision requirement in the FMCSRs provides:
A person is physically qualified to drive a commercial motor vehicle if that person has distant visual acuity of at least 20/40 (Snellen) in each eye without corrective lenses or visual acuity separately corrected to 20/40 (Snellen) or better with corrective lenses, distant binocular acuity of a least 20/40 (Snellen) in both eyes with or without corrective lenses, field of vision of at least 70° in the horizontal meridian in each eye, and the ability to recognize the colors of traffic signals and devices showing red, green, and amber (49 CFR 391.41(b)(10)).
FMCSA recognizes that some drivers do not meet the vision requirement but have adapted their driving to accommodate their vision limitation and demonstrated their ability to drive safely. The 66 exemption applicants listed in this notice are in this category. They are unable to meet the vision requirement in one eye for various reasons, including amblyopia, central scar, ocular histoplasmosis, prosthetic eye, corneal scar, strabismic amblyopia, corneal ulcer, lens opacity, macular scar, cataract, congenital amblyopia, optic nerve damage, complete loss of vision, macular lesion, corneal laceration, scar tissue, refractive amblyopia, aphakia, total retinal detachment, central corneal scarring, detached retina, keratoconus, enucleation, strabismus, exotropia, macular hole, epiretinal membrane, congenital retinal damage, coloboma, central retinal artery occlusion, congenital cataract, glaucoma, retinoschisis, and anisometropia. In most cases, their eye conditions were not recently developed. Forty-seven of the applicants were either born with their vision impairments or have had them since childhood.
The nineteen individuals that sustained their vision conditions as adults have had it for a period of 5 to 31 years.
Although each applicant has one eye which does not meet the vision requirement in 49 CFR 391.41(b)(10), each has at least 20/40 corrected vision in the other eye, and in a doctor's opinion, has sufficient vision to perform all the tasks necessary to operate a CMV. Doctors' opinions are supported by the applicants' possession of valid commercial driver's licenses (CDLs) or non-CDLs to operate CMVs. Before issuing CDLs, States subject drivers to knowledge and skills tests designed to evaluate their qualifications to operate a CMV.
All of these applicants satisfied the testing requirements for their State of residence. By meeting State licensing requirements, the applicants demonstrated their ability to operate a CMV, with their limited vision, to the satisfaction of the State.
While possessing a valid CDL or non-CDL, these 66 drivers have been authorized to drive a CMV in intrastate commerce, even though their vision disqualified them from driving in interstate commerce. They have driven CMVs with their limited vision in careers ranging from 1 to 55 years. In the past 3 years, two of the drivers were involved in crashes and five were convicted for moving violations in a CMV.
The qualifications, experience, and medical condition of each applicant were stated and discussed in detail in the April 1, 2014 notice (79 FR 18392).
Under 49 U.S.C. 31136(e) and 31315, FMCSA may grant an exemption from the vision requirement in 49 CFR 391.41(b)(10) if the exemption is likely to achieve an equivalent or greater level of safety than would be achieved without the exemption. Without the exemption, applicants will continue to be restricted to intrastate driving. With the exemption, applicants can drive in interstate commerce. Thus, our analysis focuses on whether an equal or greater level of safety is likely to be achieved by permitting each of these drivers to drive in interstate commerce as opposed to restricting him or her to driving in intrastate commerce.
To evaluate the effect of these exemptions on safety, FMCSA considered the medical reports about the applicants' vision as well as their driving records and experience with the vision deficiency.
To qualify for an exemption from the vision requirement, FMCSA requires a person to present verifiable evidence that he/she has driven a commercial vehicle safely with the vision deficiency for the past 3 years. Recent driving performance is especially important in evaluating future safety, according to several research studies designed to correlate past and future driving performance. Results of these studies support the principle that the best predictor of future performance by a driver is his/her past record of crashes and traffic violations. Copies of the studies may be found at Docket Number FMCSA–1998–3637.
FMCSA believes it can properly apply the principle to monocular drivers, because data from the Federal Highway Administration's (FHWA) former waiver study program clearly demonstrate the driving performance of experienced monocular drivers in the program is better than that of all CMV drivers collectively (See 61 FR 13338, 13345, March 26, 1996). The fact that experienced monocular drivers
The first major research correlating past and future performance was done in England by Greenwood and Yule in 1920. Subsequent studies, building on that model, concluded that crash rates for the same individual exposed to certain risks for two different time periods vary only slightly (See Bates and Neyman, University of California Publications in Statistics, April 1952). Other studies demonstrated theories of predicting crash proneness from crash history coupled with other factors. These factors—such as age, sex, geographic location, mileage driven and conviction history—are used every day by insurance companies and motor vehicle bureaus to predict the probability of an individual experiencing future crashes (See Weber, Donald C., “Accident Rate Potential: An Application of Multiple Regression Analysis of a Poisson Process,” Journal of American Statistical Association, June 1971). A 1964 California Driver Record Study prepared by the California Department of Motor Vehicles concluded that the best overall crash predictor for both concurrent and nonconcurrent events is the number of single convictions. This study used 3 consecutive years of data, comparing the experiences of drivers in the first 2 years with their experiences in the final year.
Applying principles from these studies to the past 3-year record of the 66 applicants, two of the drivers were involved in crashes and five were convicted of moving violations in a CMV. All the applicants achieved a record of safety while driving with their vision impairment, demonstrating the likelihood that they have adapted their driving skills to accommodate their condition. As the applicants' ample driving histories with their vision deficiencies are good predictors of future performance, FMCSA concludes their ability to drive safely can be projected into the future.
We believe that the applicants' intrastate driving experience and history provide an adequate basis for predicting their ability to drive safely in interstate commerce. Intrastate driving, like interstate operations, involves substantial driving on highways on the interstate system and on other roads built to interstate standards. Moreover, driving in congested urban areas exposes the driver to more pedestrian and vehicular traffic than exists on interstate highways. Faster reaction to traffic and traffic signals is generally required because distances between them are more compact. These conditions tax visual capacity and driver response just as intensely as interstate driving conditions. The veteran drivers in this proceeding have operated CMVs safely under those conditions for at least 3 years, most for much longer. Their experience and driving records lead us to believe that each applicant is capable of operating in interstate commerce as safely as he/she has been performing in intrastate commerce. Consequently, FMCSA finds that exempting these applicants from the vision requirement in 49 CFR 391.41(b)(10) is likely to achieve a level of safety equal to that existing without the exemption. For this reason, the Agency is granting the exemptions for the 2-year period allowed by 49 U.S.C. 31136(e) and 31315 to the 66 applicants listed in the notice of April 1, 2014 (79 FR 18392).
We recognize that the vision of an applicant may change and affect his/her ability to operate a CMV as safely as in the past. As a condition of the exemption, therefore, FMCSA will impose requirements on the 66 individuals consistent with the
grandfathering provisions applied to drivers who participated in the Agency's vision waiver program.
Those requirements are found at 49 CFR 391.64(b) and include the following: (1) That each individual be physically examined every year (a) by an ophthalmologist or optometrist who attests that the vision in the better eye continues to meet the requirement in 49 CFR 391.41(b)(10) and (b) by a medical examiner who attests that the individual is otherwise physically qualified under 49 CFR 391.41; (2) that each individual provide a copy of the ophthalmologist's or optometrist's report to the medical examiner at the time of the annual medical examination; and (3) that each individual provide a copy of the annual medical certification to the employer for retention in the driver's qualification file, or keep a copy in his/her driver's qualification file if he/she is self-employed. The driver must have a copy of the certification when driving, for presentation to a duly authorized Federal, State, or local enforcement official.
FMCSA received three comments in this proceeding. The comments are discussed below.
Simon Batter and Robert Turley are in favor of granting Blaine R. Dickman an exemption from the vision standard.
Kenneth Stewart is in favor of granting George E. Lewis and exemption from the vision standard.
Based upon its evaluation of the 66 exemption applications, FMCSA exempts Britton J. Anderson (KS), Rodney R. Anderson (PA), Kenneth R. Anselm (KY), James E. Baker (OH), Alphonso A. Barco (SC), Aaron D. Barnett (IA), Daniel W. Bobb (PA), Anatoliy A. Bogdanets (OR), Stanley R. Cap (SD), Louis Castro (MT), David F. Cialdea (MA), Bobby E. Collins (NC), Michael T. Craddock (CA), Eric C. Dettrey (NJ), Dean E. Dexter (SD), Blaine R. Dickman (NV), David C. Dockery (CA), Timothy C. Dotson (MO), Barent H. Eliason (MO), Peter D. J. Ensor (MD), Paul W. Fettig (SD), Roger L. Frazier (NC), Joey W. Freeman (AR), Kevin L. Fritz (IL), Grant G. Gibson (MN), Danny J. Goss (MO), Todd C. Grider (IN), James P. Griffin (WA), Dennis P. Hart (OR), Kyle C. Holschlag (IA), Michael T. Huso (MN), Earl E. Kennedy III (PA), James D. Kessler (SD), Eric W. Kopmann (MO), Robin D. Kurtz (CT), Sherell J. Landry (TX), George E. Lewis (OH), Ronald N. Lindgren (MN), James L. Maddox (GA), Robert P. Malarkey, Sr. (NY), Michael L. Manning (MO), Philip D. Mathys (OH), Rodney J. McMorran (IA), Johnny L. Meese (MO), Corey L. Morman (FL), Jaime P. Narte, Jr. (WA), James M. Nohl (MN), Thomas G. Ohlson (NY), Jason S. Otto (KY), Nathan J. Price (ID), Robert D. Reeder (MI), Ricky L. Rice (PA), Johnnie K. Richard (LA), Jorge L. Y. Rivera (CA), Craig Robinson (FL), Michael E. Schlachter (WY), Kenneth W. Sigl (WI), Robert A. Simpson (MS), Jeffrey L. Singley (MD), Dennis Torrence (WI), Julie J. Walsh (ND), Michael T. Wimber (MT), Elmer F. Winters (NC), Theodore R. Wolden (MN), Eugene T. Wolf (IA), and Duane R. Yoder (IN) from the vision requirement in 49 CFR 391.41(b)(10), subject to the requirements cited above (49 CFR 391.64(b)).
In accordance with 49 U.S.C. 31136(e) and 31315, each exemption will be valid for 2 years unless revoked earlier by FMCSA. The exemption will be revoked if: (1) The person fails to comply with the terms and conditions of the exemption; (2) the exemption has resulted in a lower level of safety than was maintained before it was granted; or (3) continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136 and 31315.
If the exemption is still effective at the end of the 2-year period, the person may
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Receipt of Petition.
General Motors, LLC, “GM” has determined that certain model year (MY) 2014 GMC Sierra Denali vehicles do not fully comply with paragraph S3.1.4.1 of Federal Motor Vehicle Safety Standard (FMVSS) No. 102,
The closing date for comments on the petition is June 23, 2014.
Interested persons are invited to submit written data, views, and arguments on this petition. Comments must refer to the docket and notice number cited at the beginning of this notice and be submitted by any of the following methods:
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Comments must be written in the English language, and be no greater than 15 pages in length, although there is no limit to the length of necessary attachments to the comments. If comments are submitted in hard copy form, please ensure that two copies are provided. If you wish to receive confirmation that your comments were received, please enclose a stamped, self-addressed postcard with the comments. Note that all comments received will be posted without change to
Documents submitted to a docket may be viewed by anyone at the address and times given above. The documents may also be viewed on the Internet at
The petition, supporting materials, and all comments received before the close of business on the closing date indicated below will be filed and will be considered. All comments and supporting materials received after the closing date will also be filed and will be considered to the extent possible. When the petition is granted or denied, notice of the decision will be published in the
Pursuant to 49 U.S.C. 30118(d) and 30120(h) (see implementing rule at 49 CFR part 556), GM submitted a petition for an exemption from the notification and remedy requirements of 49 U.S.C. Chapter 301 on the basis that this noncompliance is inconsequential to motor vehicle safety.
This notice of receipt of GM's petition is published under 49 U.S.C. 30118 and 30120 and does not represent any agency decision or other exercise of judgment concerning the merits of the petition.
Affected are approximately 2,747 MY 2014 GMC Sierra Denali vehicles equipped with RPO code “UHS” instrument cluster displays that were manufactured between July 16, 2013 and January 27, 2014.
GM explains that while the subject vehicles are being driven the gear shift selection indicator (a.k.a., PRNDM) may not be visible for approximately 1.3 seconds during an instrument cluster reset, thus, failing to fully meet the requirements set forth in paragraph S3.1.4.1 of FMVSS No. 102.
Paragraph S3.1.4.1 of FMVSS No. 102 requires:
S3.1.4.1 Except as specified in S3.1.4.3, if the transmission shift position sequence includes a park position, identification of shift positions, including the position in relation to each other and the position selected, shall be displayed in view of the driver whenever any of the following exist:
(a) The ignition is in a position where the transmission can be shifted; or
(b) The transmission is not in park.
GM stated its belief that the subject noncompliance is inconsequential to motor vehicle safety for the following reasons:
1. GM believes that the condition is extremely unlikely to occur. For the condition to occur, the instrument cluster design input rate must be exceeded. This can only happen under extreme load conditions. For example, GM was able to create the condition in the laboratory by simultaneously inputting a series of warnings into the cluster during an active search of a media device connected to the vehicle while a Bluetooth call is received by the vehicle.
2. GM states that any disruption of the PRNDM display as a result of this condition is very brief. In the unlikely event the condition were to occur and the instrument cluster resets, the PRNDM display would be restored within 1.3 seconds. This momentary reset would be a clear indication to the driver that service may be required.
3. GM also believes that the condition has little effect on the normal operation of the vehicle. While the operation of the instrument panel is briefly affected by the underlying condition, none of the other vehicle operations are affected.
4. GM states that the condition is extremely remote and not likely to occur during shifting. Considering the unusual combination of pre-conditions for the condition to occur, it is very unlikely the brief disruption of the PRNDM display would occur when it is needed, i.e., during shifting. Most shifting occurs shortly after the vehicle is started, or just prior to being turned off. In the rare instance of a cluster reset, it would be more likely to occur during driving, not immediately after starting the vehicle or just prior to the driver exiting the vehicle.
5. GM is not aware of any reported instrument cluster resets as a result of the subject noncompliance.
6. GM also expressed its belief that for previous noncompliances that GM believes were similar, NHTSA granted petitions for inconsequential noncompliance.
GM has additionally informed NHTSA that it has corrected the noncompliance so that all future production vehicles will comply with FMVSS No. 102.
In summation, GM believes that the described noncompliance of the subject vehicles is inconsequential to motor vehicle safety, and that its petition, to exempt GM from providing recall notification of noncompliance as required by 49 U.S.C. 30118 and remedying the recall noncompliance as required by 49 U.S.C. 30120 should be granted.
NHTSA notes that the statutory provisions (49 U.S.C. 30118(d) and 30120(h)) that permit manufacturers to file petitions for a determination of inconsequentiality allow NHTSA to exempt manufacturers only from the duties found in sections 30118 and 30120, respectively, to notify owners, purchasers, and dealers of a defect or noncompliance and to remedy the defect or noncompliance. Therefore, any decision on this petition only applies to the subject vehicles that GM no longer controlled at the time it determined that the noncompliance existed. However, any decision on this petition does not relieve GM distributors and dealers of the prohibitions on the sale, offer for sale, or introduction or delivery for introduction into interstate commerce of the noncompliant motor vehicles under their control after GM notified them that the subject noncompliance existed.
(49 U.S.C. 30118, 30120: delegations of authority at 49 CFR 1.95 and 501.8)
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Receipt of Petition.
Cooper Tire & Rubber Company, “Cooper” has determined that certain Cooper light truck tires do not fully comply with paragraph S6.4 of Federal Motor Tire Safety Standard (FMVSS) No. 119,
The closing date for comments on the petition is June 23, 2014.
Interested persons are invited to submit written data, views, and arguments on this petition. Comments must refer to the docket and notice number cited at the beginning of this notice and be submitted by any of the following methods:
• Mail: Send comments by mail addressed to: U.S. Department of Transportation, Docket Operations, M–30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590.
• Hand Deliver: Deliver comments by hand to: U.S. Department of Transportation, Docket Operations, M–30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590. The Docket Section is open on weekdays from 10 a.m. to 5 p.m. except Federal Holidays.
• Electronically: Submit comments electronically by: logging onto the Federal Docket Management System (FDMS) Web site at
Comments must be written in the English language, and be no greater than 15 pages in length, although there is no limit to the length of necessary attachments to the comments. If comments are submitted in hard copy form, please ensure that two copies are provided. If you wish to receive confirmation that your comments were received, please enclose a stamped, self-addressed postcard with the comments. Note that all comments received will be posted without change to
Documents submitted to a docket may be viewed by anyone at the address and times given above. The documents may also be viewed on the Internet at
The petition, supporting materials, and all comments received before the close of business on the closing date indicated below will be filed and will be considered. All comments and supporting materials received after the closing date will also be filed and will be considered to the extent possible. When the petition is granted or denied, notice of the decision will be published in the
Pursuant to 49 U.S.C. 30118(d) and 30120(h) (see implementing rule at 49 CFR part 556), Cooper submitted a petition for an exemption from the notification and remedy requirements of 49 U.S.C. Chapter 301 on the basis that this noncompliance is inconsequential to motor vehicle safety.
This notice of receipt of Cooper's petition is published under 49 U.S.C. 30118 and 30120 and does not represent any agency decision or other exercise of judgment concerning the merits of the petition.
Affected are approximately 83,343 Mickey Thompson Baja MTZ brand LT315/70R17 Load Range D Tubeless tires manufactured from January 28, 2006 through October 31, 2013.
Cooper explains that the noncompliance is that, due to a molding error, the subject tires were manufactured with only five of the six treadwear indicators required by paragraph S6.4 of FMVSS No. 119.
Paragraph S6.4 of FMVSS No. 119 requires in pertinent part:
S6.4
Cooper believes that the subject noncompliance is inconsequential to motor vehicle safety because the absence of a single treadwear indicator has no practical effect on motor vehicle safety. Cooper supported this belief by stating that the presence of five of the six treadwear indicators provides ample coverage over the surface of the tire
Therefore, Cooper believes that five treadwear indicators have an equivalent functionality of six indicators whether the tire is mounted on a vehicle or not.
Copper also points out that NHTSA has previously granted other petitions that Cooper believes were similar to the subject petition.
Cooper has informed NHTSA that it has corrected the noncompliance so that all future production of these tires will comply with FMVSS No. 119.
In summation, Cooper believes that the described noncompliance of the subject tires is inconsequential to motor vehicle safety, and that its petition, to exempt Cooper from providing recall notification of noncompliance as required by 49 U.S.C. 30118 and remedying the recall noncompliance as required by 49 U.S.C. 30120 should be granted.
NHTSA notes that the statutory provisions (49 U.S.C. 30118(d) and 30120(h)) that permit manufacturers to file petitions for a determination of inconsequentiality allow NHTSA to exempt manufacturers only from the duties found in sections 30118 and 30120, respectively, to notify owners, purchasers, and dealers of a defect or noncompliance and to remedy the defect or noncompliance. Therefore, any decision on this petition only applies to the subject tires that Cooper no longer controlled at the time it determined that the noncompliance existed. However, any decision on this petition does not relieve Cooper distributors and dealers of the prohibitions on the sale, offer for sale, or introduction or delivery for introduction into interstate commerce of the noncompliant motor tires under their control after Cooper notified them that the subject noncompliance existed.
49 U.S.C. 30118, 30120: delegations of authority at 49 CFR 1.95 and 501.8.
On May 2, 2014, Iowa Interstate Railroad, Ltd. (IAIS) filed with the Surface Transportation Board (Board) a petition under 49 U.S.C 10502 for exemption from the prior approval requirements of 49 U.S.C 10903 to abandon approximately 10.75 miles of rail line between milepost 145.75 south of Mitchellville to the current end of the track at milepost 135.0 southeast of Prairie City, in Polk and Jasper Counties, Iowa (the Prairie City segment).
In the same petition, IAIS seeks exemption from the prior approval requirements of 49 U.S.C. 10903 to abandon the following two contiguous line segments: (1) Between milepost 135.0 near Prairie City and milepost 123.50 near Otley, a distance of approximately 11.5 miles in Jasper and Marion Counties, Iowa (the Otley segment); and (2) between milepost 123.50 near Otley and milepost 114.80 in Pella, a distance of approximately 8.7 miles in Marion County, Iowa (the Pella segment).
IAIS asserts that no rail shipments have been handled over the Prairie City segment since January of 2008 and that the last rail movements on the Otley and Pella segments occurred nearly 15 years ago.
The Line traverses United States Postal Service Zip Codes 50169, 50228, 50170, 50214, and 50219.
IAIS states that, based on information in its possession, the Line does not contain federally granted rights-of-way. Any documentation in IAIS's possession will be made available promptly to those requesting it.
The interest of railroad employees will be protected by the conditions set forth in
By issuance of this notice, the Board is instituting an exemption proceeding pursuant to 49 U.S.C. 10502(b). A final decision will be issued by August 20, 2014.
Any OFA under 49 CFR 1152.27(b)(2) will be due by August 29, 2014, or 10 days after service of a decision granting the petition for exemption, whichever occurs sooner. Each OFA must be accompanied by a $1,600 filing fee.
All interested persons should be aware that, following abandonment of rail service and salvage of the Line, the Line may be suitable for other public use, including interim trail use. Any request for a public use condition under 49 CFR 1152.28 or for interim trail use/rail banking under 49 CFR 1152.29 will be due no later than June 11, 2014. Each trail use request must be accompanied by a $250 filing fee.
All filings in response to this notice must refer to Docket No. AB 414 (Sub-No. 8X) and must be sent to: (1) Surface Transportation Board, 395 E Street SW., Washington, DC 20423–0001; and (2) Thomas J. Litwiler, Fletcher & Sippel LLC, 29 North Wacker Drive, Suite 920, Chicago, IL 60606. Replies to the petition are due on or before June 11, 2014.
Persons seeking further information concerning abandonment procedures may contact the Board's Office of Public Assistance, Governmental Affairs and Compliance at (202) 245–0238 or refer
An environmental assessment (EA) (or environmental impact statement (EIS), if necessary) prepared by OEA will be served upon all parties of record and upon any agencies or other persons who commented during its preparation. Other interested persons may contact OEA to obtain a copy of the EA (or EIS). EAs in abandonment proceedings normally will be made available within 60 days of the filing of the petition. The deadline for submission of comments on the EA generally will be within 30 days of its service.
Board decisions and notices are available on our Web site at
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104–13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Form 4684, Casualties and Thefts.
Written comments should be received on or before July 21, 2014 to be assured of consideration.
Direct all written comments to Christie Preston, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the form and instructions should be directed to Kerry Dennis, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224 or through the Internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Notice.
The Department of Veterans Affairs (VA) is seeking nominees to be considered for membership on the Advisory Committee on Women Veterans (Committee) for the 2014–2015 membership cycle. The Committee is authorized by 38 U.S.C. § 542, to provide advice to the Secretary of Veterans Affairs (Secretary) on: the administration of VA's benefits and services (health care, rehabilitation benefits, compensation, outreach, and other relevant programs) for women Veterans; reports and studies pertaining to women Veterans; and the needs of women Veterans.
The Committee provides a Congressionally-mandated report to the Secretary each even-numbered year, which includes: an assessment of the needs of women Veterans, with respect to compensation, health care, rehabilitation, outreach, and other benefits and programs administered by VA; a review of the programs and activities of VA designed to meet such needs; and other recommendations (including recommendations for administrative and legislative action), as the Committee considers appropriate. The Committee reports to the Secretary through the Director of the Center for Women Veterans.
The Secretary appoints Committee member, and determines the length of
Self-nominations are acceptable. Letters of nomination from organizations or other individuals should also be submitted with the package. Non-Veterans are eligible for nomination. In accordance with the Obama Administration's policy regarding lobbyists serving on advisory boards and commissions (www.whitehouse.gov/the-press-office/presidential-memorandum-lobbyists-agency-boards-and-commissions), individuals who are Federally-registered lobbyists are prohibited from serving on Federal advisory committees.
The Committee is currently comprised of 12 members. By statute, the Committee consists of members appointed by the Secretary from the general public, including: representatives of women Veterans; individuals who are recognized authorities in fields pertinent to the needs of women Veterans, including the gender specific health-care needs of women; representatives of both female and male Veterans with service-connected disabilities, including at least one female Veteran with a service-connected disability and at least one male Veteran with a service-connected disability; and women Veterans who are recently separated from service in the Armed Forces.
The Committee meets at least two times annually, which may include a site visit to a VA field location. In accordance with the Federal Travel Regulation, all members receive travel expenses and a per diem allowance for any travel made in connection with their duties as members of the Committee. A copy of the Committee's most recent charter and a list of the current membership can be found at
The Department makes every effort to ensure that the membership of its advisory committees is fairly balanced, in terms of points of view represented. In the review process, consideration is given to nominees' potential to address the Committee's demographic needs (regional representation, race/ethnicity representation, professional expertise, war era service, gender, former enlisted or officer status, branch of service, etc.). Other considerations to promote a balanced membership include longevity of military service, significant deployment experience, ability to handle complex issues, experience running large organizations, and ability to contribute to the gender-specific health care and benefits needs of women Veterans.
Nominations for membership on the Committee must be received by June 30, 2014, no later than 4:00 p.m., eastern standard time. Packages received after this time will not be considered for the current membership cycle. All nomination packages should be sent to the Advisory Committee Management Office by email (recommended) or mail. Please see contact information below.
Advisory Committee Management Office (00AC), Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC, 20420,
Securities and Exchange Commission.
Proposed rule.
The Securities and Exchange Commission (“SEC” or “Commission”) proposes to amend Rule 17Ad–22 and add Rule 17Ab2–2 pursuant to Section 17A of the Securities Exchange Act of 1934 (“Exchange Act”) and the Payment, Clearing, and Settlement Supervision Act of 2010 (“Clearing Supervision Act”), adopted in Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”). Among other things, the proposed rules would establish standards for the operation and governance of certain types of registered clearing agencies that meet the definition of a “covered clearing agency.”
Submit comments on or before May 27, 2014.
Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Use the Federal eRulemaking Portal (
• Send paper comments to Kevin M. O'Neill, Deputy Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number S7–03–14.
To help us 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 (
Comments are also available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. 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.
Katherine Martin, Senior Special Counsel; Stephanie Park, Special Counsel; Mark Saltzburg, Special Counsel; Matthew Lee, Attorney-Adviser; and Abraham Jacob, Attorney-Adviser; Office of Clearance and Settlement, Division of Trading and Markets, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–7010, at (202) 551–5710.
The Commission proposes to amend Rule 17Ad–22 to add new Rule 17Ad–22(e) to establish requirements for risk management, operations, and governance of registered clearing agencies that meet the definition of a “covered clearing agency.” Covered clearing agencies would include registered clearing agencies that (i) have been designated as systemically important by the Financial Stability Oversight Council (“FSOC”) and for which the Commission is the supervisory agency, pursuant to the Clearing Supervision Act (“designated clearing agencies”), (ii) provide central counterparty (“CCP”) services for security-based swaps or are involved in activities the Commission determines to have a more complex risk profile, where in either case the Commodity Futures Trading Commission (“CFTC”) is not the supervisory agency for such clearing agency as defined in Section 803(8) of the Clearing Supervision Act, or (iii) are otherwise determined to be covered clearing agencies by the Commission. The Commission also proposes to add new Rule 17Ad–22(f) to codify the Commission's statutory authority and new Rule 17Ab2–2 to establish procedures for making determinations regarding covered clearing agencies under proposed Rule 17Ad–22(e). The Commission also proposes to amend existing Rule 17Ad–22(d) to limit its application to clearing agencies other than covered clearing agencies and to revise existing Rule 17Ad–22(a) to add 15 new definitions. The Commission has begun, and intends to continue, consultation with the FSOC and the Board of Governors of the Federal Reserve System (“the Board”) and has considered the relevant international standards as required by Section 805(a)(2)(A) of the Clearing Supervision Act.
When Congress added Section 17A to the Exchange Act as part of the Securities Acts Amendments of 1975, it directed the Commission to facilitate the establishment of a national system for the prompt and accurate clearance and settlement of securities transactions.
Section 17A of the Exchange Act and Rule 17Ab2–1 require entities to register with the Commission prior to performing the functions of a clearing agency.
The Commission drew on its experience regulating clearing agencies to address recent developments in the over-the-counter (“OTC”) derivatives markets. In December 2008, the Commission acted to facilitate the central clearing of credit default swaps (“CDS”) by permitting certain entities that performed CCP services to clear and settle CDS on a temporary, conditional basis.
On July 21, 2010, President Barack Obama signed the Dodd-Frank Act into law.
Title VII of the Dodd-Frank Act (“Title VII”) provides the Commission and the CFTC with enhanced authority to regulate certain OTC derivatives in response to the 2008 financial crisis.
The swap and security-based swap markets traditionally have been characterized by privately negotiated transactions entered into by two counterparties, in which each assumes the credit risk of the other counterparty.
Title VII also added new provisions to the Exchange Act that require entities performing the functions of a clearing agency with respect to security-based swaps (“security-based swap clearing agencies”) to register with the Commission and require the Commission to adopt rules with respect to security-based swap clearing agencies.
Title VII further provides that some of the entities that the Commission permitted to clear and settle CDS on a temporary, conditional basis prior to the
The Clearing Supervision Act, adopted in Title VIII of the Dodd-Frank Act (“Title VIII”), provides for enhanced regulation of financial market utilities (“FMUs”), such as clearing agencies that manage or operate a multilateral system for the purpose of transferring, clearing, or settling payments, securities, or other financial transactions among financial institutions or between financial institutions and the FMU.
Section 806(e) of the Clearing Supervision Act requires FMUs designated as systemically important to file 60 days advance notice of changes to its rules, procedures, or operations that could materially affect the nature or level of risk presented by the FMU (“Advance Notice”).
The Clearing Supervision Act also provides for enhanced coordination between the Commission, the Board, and the CFTC by facilitating examinations and information sharing. Under Section 807 of the Clearing Supervision Act, the Commission and the CFTC must consult annually with the Board regarding the scope and methodology of any examination of a designated FMU, and the Board is authorized to participate in any such examination.
Section 805(a) of the Clearing Supervision Act
On July 18, 2012, the FSOC designated as systemically important the following registered clearing agencies: CME, The Depository Trust Company (“DTC”), Fixed Income Clearing Corporation (“FICC”), ICE, National Securities Clearing Corporation (“NSCC”), and The Options Clearing Corporation (“OCC”).
On October 22, 2012, the Commission adopted Rule 17Ad–22 under the Exchange Act.
In proposing amendments to Rule 17Ad–22, the Commission considered international standards, as required by Section 805(a) of the Clearing Supervision Act, that are relevant to its supervision of covered clearing agencies.
The PFMI Report defines a “financial market infrastructure” (“FMI”) as a multilateral system among participating institutions, including the operator of the system, used for the purposes of clearing, settling, or recording payments, securities, derivatives, or other financial transactions.
The PFMI Report presumes that all CSDs, SSSs, CCPs, and TRs are systemically important in their home jurisdiction.
The Commission notes that the PFMI Report's definition of “financial market infrastructure” is consistent with the Commission's prior use of the term.
The Board applies these standards in its supervisory process and expects systemically important FMUs, as determined by the Board and subject to its authority, to complete a self-assessment against the standards set forth in the policy.
The Board has proposed to amend the standards in Regulation HH to replace the current standards for payment systems with standards based those set forth in the PFMI Report. It has also proposed to amend its Policy on Payments System Risk.
In addition, the Board and the Office of the Comptroller of the Currency have adopted rules implementing the material elements of the BCBS interim framework for capitalization of bank exposures to CCPs.
The Commission is proposing to amend Rule 17Ad–22 and add Rule 17Ab2–2 pursuant to Section 17A of the Exchange Act and the Clearing Supervision Act to provide a new regulatory framework for “covered clearing agencies,” as defined below.
Generally, Section 17A directs the Commission to facilitate the establishment of a national system for the prompt and accurate clearance and settlement of securities transactions, having due regard for the public interest, the protection of investors, the safeguarding of securities and funds, and the maintenance of fair competition among brokers and dealers.
Consistent with these statutory objectives, the Commission previously adopted Rule 17Ad–22(d) to establish minimum requirements for registered clearing agencies and indicated that it might consider further rulemaking at a later date.
The Commission has preliminarily chosen to retain Rule 17Ad–22(d) and to continue to apply it to registered clearing agencies that are not covered clearing agencies.
The Commission notes that it is not proposing to alter the existing requirements under Rule 17Ad–22(b), which establishes risk-management and participant access requirements for registered clearing agencies that perform CCP services for security-based swaps, or Rule 17Ad–22(c), which requires registered clearing agencies that provide CCP services to maintain a record of financial resources and all registered clearing agencies to post on their Web sites annual audited financial statements.
The Commission is proposing to revise Rule 17Ad–22(a) to account for new proposed definitions.
The Commission is proposing Rule 17Ad–22(e) to establish requirements for covered clearing agencies with respect to general organization,
The Commission preliminarily believes that the requirements of proposed Rule 17Ad–22(e) would help promote governance, operations, and risk management practices more closely tailored to the risks raised by registered clearing agencies that have been designated systemically important, are engaged in activities with a more complex risk profile, or are determined to be covered clearing agencies by the Commission, consistent with Section 17A of the Exchange Act. The Commission preliminarily believes these requirements would also enable consistent supervision of designated FMUs and would reflect the Commission's consideration of international standards, as contemplated by Section 17A(i) and the Clearing Supervision Act.
Part II.A first discusses the scope of proposed Rule 17Ad–22(e), the role that written policies and procedures play in framing the proposed rule, and the reasons for imposing certain frequency of review requirements throughout the proposed rules. It then discusses the anticipated impact of the proposed rules given the existing requirements applicable to registered clearing agencies under Rules 17Ad–22(b) through (d), with which a covered clearing agency must already be in compliance.
Part II.B next discusses the proposed rules under Rule 17Ad–22(e). Finally, Parts II.C, D, and E discuss, in turn, proposed Rule 17Ab2–2, proposed Rule 17Ad–22(f), and the proposed amendment to Rule 17Ad–22(d).
The Commission is proposing to add four terms to Rule 17Ad–22(a) to identify the registered clearing agencies that would be subject to proposed Rule 17Ad–22(e). First, the Commission is proposing to add Rule 17Ad–22(a)(9) to define “financial market utility” (“FMU”) as defined in Section 803(6) of the Clearing Supervision Act.
The Commission is also proposing Rule 17Ad–22(a)(16) to define “security-based swap” to mean security-based swap as defined in Section 3(a)(68) of the Exchange Act, 15 U.S.C. 78c(a)(68).
The Commission preliminarily believes there could be several different bases under which registered clearing agencies would be required to comply with proposed Rule 17Ad–22(e). For instance, because DTC, FICC, NSCC, and OCC are registered clearing agencies pursuant to Section 17A of the Exchange Act and are designated clearing agencies for which the Commission is the supervisory agency
By comparison, CME and ICE would not be subject to the proposed requirements for covered clearing agencies in Rule 17Ad–22(e) because (i) they have been designated as systemically important FMUs under Section 804 of the Clearing Supervision Act;
Two dormant clearing agencies, the Stock Clearing Corporation of Philadelphia (“SCCP”) and the Boston Stock Exchange Clearing Corporation (“BSECC”), have not been designated systemically important by the FSOC and are not involved in activities with a more complex risk profile.
Both SCCP and BSECC are currently registered with the Commission as clearing agencies but conduct no clearing or settlement activities.
Further, proposed Rule 17Ab2–2 would provide the Commission flexibility to determine that the operations or circumstances of a registered clearing agency, including a registered clearing agency that is exempt from certain requirements applicable to registered clearing agencies generally, warrant designation as a covered clearing agency.
The Commission preliminarily believes the requirements proposed in Rule 17Ad–22(e) aid the regulation of covered clearing agencies by, as noted above, establishing requirements more closely tailored to the risks they pose to the U.S. securities markets. For example, designated clearing agencies are systemically important because of their significance to the U.S. financial system and the risk that the failure of, or a disruption to, their functioning would increase the risk of significant liquidity or credit problems spreading among financial institutions, thereby threatening the stability of the U.S. financial system.
As noted above,
• Is the scope of proposed Rule 17Ad–22(e) appropriate? Why or why not? Is the scope sufficiently clear? Why or why not? Has the Commission provided sufficient guidance regarding the scope of the proposed rule? Are there aspects of the scope of the proposed rule for which the Commission should consider providing additional guidance? If so, please explain.
• Given that all non-dormant registered clearing agencies would either be covered clearing agencies subject to Commission supervision or be subject to CFTC regulation as designated clearing entities for which the CFTC is the supervisory agency, should the Commission replace the existing requirements under Rule 17Ad–22(d) with the requirements proposed under Rule 17Ad–22(e)? Why or why not?
• Is the Commission's proposed definition of “financial market utility” appropriate and sufficiently clear given the proposed requirements? Why or why not? Should the definition be modified? If so, how? Is there an
• Is the Commission's proposed definition of “designated clearing agency” appropriate and sufficiently clear given the requirements proposed? Why or why not? Should the definition be modified? If so, how? Is there an alternative definition the Commission should consider?
• Is the Commission's proposed definition of “clearing agency involved in activities with a more complex risk profile” appropriate and sufficiently clear given the requirements proposed? Why or why not? Should the definition be modified? If so, how? Is there an alternative definition the Commission should consider?
• Is the Commission's proposed definition of “covered clearing agency” appropriate and sufficiently clear given the requirements proposed? Why or why not? Should the definition be modified? If so, how? Is there an alternative definition the Commission should consider?
• Are the requirements in proposed Rule 17Ad–22(e) necessary, or do the existing provisions in Rule 17Ad–22(d) already sufficiently address the issues identified in this release as justification for increased regulation?
Proposed Rule 17Ad–22(e) would require covered clearing agencies to establish, implement, maintain and enforce written policies and procedures reasonably designed to, as applicable, fulfill the requirements set forth in paragraphs (e)(1) through (23) of the proposed rule. The Commission preliminarily believes that this approach would facilitate the Commission's supervision of covered clearing agencies, is appropriate given their role as SROs,
The Commission is proposing to require policies and procedures developed by each covered clearing agency to fulfill the requirements of proposed Rule 17Ad–22(e) because the Commission preliminarily believes that it is important to allow covered clearing agencies enough flexibility to use their market experience and understanding of their institutions to shape the rules, policies, and procedures implementing proposed Rule 17Ad–22(e). This proposed approach is consistent with the Commission's established approach for supervising SROs, and the Commission preliminarily believes continuing this practice under Rule 17Ad–22(e) will allow the Commission to continue to perform its supervisory function through the SRO rule filing process under Section 19(b) of the Exchange Act and Rule 19b–4,
The Commission anticipates that a covered clearing agency's rules, policies, and procedures will need to evolve over time so that it can adequately respond to changes in technology, legal requirements, the needs of its members and their customers, trading volumes, trading practices, linkages between financial markets, and the financial instruments traded in the markets that a covered clearing agency serves. Accordingly, the Commission preliminarily believes that covered clearing agencies should continually evaluate and make appropriate updates and improvements to their operations and risk management practices to facilitate prompt and accurate clearance and settlement.
Many of the policies and procedures requirements proposed in Rule 17Ad–22(e) specify a frequency of review. Generally, the proposed regularity of review falls into three categories— daily, monthly, or annually—and is based on the Commission's understanding of the current review practices generally at covered clearing agencies. The Commission's rationale for these differences is as follows:
•
•
•
Based on the Commission's experience supervising registered clearing agencies, and given the current requirements applicable to registered clearing agencies under Rule 17Ad–22, the Commission preliminarily anticipates that the degree of changes that covered clearing agencies may need to make to their policies and procedures to satisfy the proposed requirements of Rule 17Ad–22(e) would vary among the particular provisions of the proposed rule and depend in part on the business model and operations of the clearing agency itself, as discussed below. The Commission preliminarily believes that, for the provisions in its proposal where a similar existing requirement has been identified, covered clearing agencies may need to make only limited changes to update their policies and procedures, and the table below provides summary information regarding the Commission's preliminary assessment of the impact of the proposed rules:
With respect
For further discussion of the anticipated impact and costs and benefits of proposed Rule 17Ad–22(e), see Part IV.C.
The Commission generally requests comments on all aspects of proposed Rule 17Ad–22(e) and on all aspects of the definitions included in proposed Rule 17Ad–22(a), as discussed in more detail in Part II.B.
• Is each aspect of proposed Rules 17Ad–22(e)(1) through (23), including any terms used therein, sufficiently clear given the proposed requirements? Why or why not? Has the Commission provided sufficient guidance as to the meaning of each provision of the proposed rules? Are there aspects of the proposed rules for which the Commission should consider providing additional guidance? If so, please explain.
• Are the Commission's definitions in proposed Rule 17Ad–22(a) accurate, appropriate, and sufficiently clear? Why or why not? Should the definitions be modified? If so, how? Should the Commission adopt alternative definitions than those proposed? Are there additional terms used in Rule 17Ad–22(e) that should be defined? Please explain.
• Is the Commission's use of certain terms it believes to be commonly understood (
• Would the proposed rules require covered clearing agencies to change their current practices? If so, how? What are the expected costs and benefits to covered clearing agencies in connection with adding or revising their current practices with respect to the implementation of the Commission's proposed rules?
• Should the Commission consider an alternative approach with respect to written policies and procedures included in the proposed rules? Why or why not? If so, what alternative approaches should the Commission consider? Please explain in detail.
• Should the Commission's proposed rules be less or more prescriptive? Why or why not? If so, what alternative approaches should the Commission consider? Please explain in detail.
• Are there any other factors that the Commission should take into consideration with respect to the requirements of the proposed rules?
• Should there be a phase-in period with respect to any of the requirements of proposed Rule 17Ad–22(e) ? If so, what should the phase-in periods be? What facts and circumstances should the Commission consider in evaluating whether to adopt a potential phase-in period? Please explain in detail.
• Could the proposed rules affect the ability of covered clearing agencies to compete for certain types of business
• Are there significant operational or legal impediments to implementing the proposed rules? Would the proposed rules impact the ability of covered clearing agencies to clear certain products? Are any additional rules or regulations needed to facilitate compliance with the proposed rules?
• Are there any requirements under existing Rule 17Ad–22 that could be viewed as being consistent with the PFMI standards without being supplemented or replaced by new requirements in proposed Rule 17Ad–22(e)? Please explain in detail.
Proposed Rule 17Ad–22(e)(1) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for a well-founded, clear, transparent, and enforceable legal basis for each aspect of its activities in all relevant jurisdictions.
The Commission preliminarily believes that (i) the United States is the relevant jurisdiction for covered clearing agencies that perform the functions of a clearing agency in the United States for purposes of Rule 17Ad–22(e)(1), and (ii) that covered clearing agencies operating in multiple jurisdictions would be required to address any conflicts of laws issues that they may encounter.
Consistent with the Exchange Act requirements discussed above,
In addition, the Commission is proposing to add Rule 17Ad–22(a)(20) to define “transparent” to mean, for proposed Rules 17Ad–22(e)(1), (2), and (10), that relevant documentation is disclosed, as appropriate, to the Commission and other relevant authorities, clearing members and customers of clearing members, the owners of the covered clearing agency, and the public, to the extent consistent with other statutory and Commission requirements.
Separately, the Commission has proposed rules to require policies and procedures to protect the confidentiality of trading information and procedures.
As was the case when the Commission considered Rule 17Ad–22(d)(1), where a clearing agency is faced with significant uncertainty regarding legal risk, the Commission preliminary believes this uncertainty may undermine a covered clearing agency's ability to provide prompt and accurate clearance and settlement, to safeguard securities and funds and to provide fair procedures, as required under Section 17A of the Exchange Act. For example, where a covered clearing
Therefore, like Rule 17Ad–22(d)(1), the Commission preliminarily believes that proposed Rule 17Ad–22(e)(1) would support the effectiveness of a covered clearing agency's risk management procedures in two ways. First, by imposing requirements addressing legal risk, it would continue to promote effective risk management at covered clearing agencies. Second, the proposed rule would reinforce covered clearing agency policies and procedures regarding risks other than legal risk, including, among others, credit, liquidity, operational, and general business risk.
• Should the proposed rule include more specific requirements based on the type of business or the types of services offered by covered clearing agencies and/or whether the covered clearing agency operates in multiple jurisdictions? If so, are there any considerations, such as those concerning compliance with regulations in other jurisdictions, the Commission should take into account for covered clearing agencies operating in multiple jurisdictions?
• Should the Commission adopt more prescriptive or less prescriptive rules to define how covered clearing agencies would provide for a well-founded, clear, transparent, and enforceable legal basis? Why or why not? If so, what would those rules be?
• Should the Commission require a covered clearing agency to maintain documentation to demonstrate the legal adequacy of the mechanisms at the clearing agency that are in place to handle participant defaults? If so, what kinds of documentation should the Commission require?
• In proposing Rule 17Ad–22(a)(20), has the Commission taken the right approach with respect to requiring public disclosures? Why or why not? Should the Commission adopt rules that would require either more or less disclosure? Why or why not?
• What should be the minimum level of public disclosure required of a covered clearing agency? What information should a covered clearing agency be permitted to withhold? What form should that disclosure take? What content should be required? Please explain in detail.
Proposed Rule 17Ad–22(e)(2)(i) through (iv) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for governance arrangements that are clear and transparent, clearly prioritize the safety and efficiency of the covered clearing agency, and support the public interest requirements in Section 17A of the Exchange Act and the objectives of owners and participants.
Governance arrangements are critical to the sound operation of SROs, including covered clearing agencies.
Consistent with these requirements and the Exchange Act requirements discussed above,
As with Rule 17Ad–22(d)(8), the Commission preliminarily believes that requiring policies and procedures for clear and transparent governance arrangements support accountability in the decisions, rules, policies, and procedures of the covered clearing agency. Such policies and procedures requirements for governance arrangements provide owners, participants, and, if applicable, general members of the public, with an opportunity to comment on or otherwise provide input to governance arrangements and, in turn, provide a covered clearing agency with the opportunity to balance the potentially competing viewpoints of various stakeholders in its decision making.
In addition, proposed Rule 17Ad–22(e)(2)(iv) would require that the covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for governance arrangements establishing that the board of directors and senior management have appropriate experience and skills to discharge their duties and responsibilities.
The Commission preliminarily believes that directors serving on the board and board committees of a clearing agency play an important role in creating a framework that supports prompt and accurate clearance and settlement because of their role in the decision-making process within a clearing agency. Additionally, the Commission preliminarily believes that a covered clearing agency's senior management has an important role in ensuring, under the board's direction, that the clearing agency's activities are consistent with the objectives, strategy, and risk tolerance of the clearing agency, as determined by the board. Accordingly, the expertise and skills of senior management and directors serving on the board of a covered clearing agency are likely to affect its effective operation. For example, a lack of expertise by board members may deter them from challenging decisions by management and lessen the potential that management would escalate appropriate issues to the board for the board's consideration. Similarly, board members and management should not have conflicts of interests that could undermine the decision-making process within a covered clearing agency or interfere with fair representation and equitable treatment of clearing members or other market participants by a covered clearing agency.
The Commission believes that covered clearing agencies are well positioned to determine which individuals would have the appropriate experience, skills, incentives and integrity to discharge their duties and responsibilities that reflect the particular characteristics of each covered clearing agency. Accordingly, the Commission preliminarily believes that the proposed requirement for policies and procedures would provide the covered clearing agency with a process to evaluate the expertise and skills of board members and senior management, consistent with the particular circumstances of the covered clearing agency. Such policies and procedures may include provisions requiring the covered clearing agency to consider, for example, the specific qualifications, experience, competence, character, skills, incentives, integrity or other relevant attributes to support a conclusion that an individual nominee can appropriately serve as a board member or on senior management. Such policies and procedures could also include, among other things, requirements as to industry experience relevant to the services provided by the covered clearing agency, educational background, the absence of a criminal or disciplinary record, or other factors relevant to the qualifications of nominees being considered.
• Should the Commission require a covered clearing agency's policies and procedures to provide for governance arrangements that prioritize the safety and efficiency of the covered clearing agency? Why or why not?
• The Commission is not proposing at this time to require a covered clearing agency's policies and procedures provide for governance arrangements that also support the objectives of participants' customers, securities issuers and holders, and other stakeholders. Should the Commission consider such a requirement? Why or why not? Are existing protections under the Exchange Act, such as those in Section 17A(b)(3)(H) (requiring clearing agency rules to provide fair procedures to persons with respect to access to services offered by the clearing
• Should the Commission require a covered clearing agency's policies and procedures to provide for governance arrangements establishing that the board of directors and senior management have appropriate experience and skills to discharge their duties and responsibilities? Why or why not? Has the Commission provided sufficient guidance on what “experience and skills” would require? Why or why not?
• Are there any other requirements that should be included in the rule to promote clear and transparent governance arrangements?
• The Commission is not proposing at this time to require a covered clearing agency's policies and procedures provide for governance arrangements to ensure that lines of responsibility and accountability at the covered clearing agency are clear and direct. Should the Commission consider such a requirement? Why or why not?
• The Commission is not proposing at this time to require a covered clearing agency's policies and procedures provide for governance arrangements that ensure major decisions of the board of directors are disclosed to the public. Should the Commission consider such a requirement? Why or why not?
• Should there be a phase-in period for covered clearing agencies to comply with proposed Rule 17Ad–22(e)(2), such as until the next annual meeting of shareholders of the covered clearing agency or other time period? Why or why not?
• Are the governance requirements in proposed Rule 17Ad–22(e)(2) necessary to achieve the benefits discussed in Part IV.C.3.a.ii? Why or why not? For example, how and why would particular features of the proposed rules, such as expectations that directors and officers of covered clearing agencies have certain skills and experience, contribute to greater market stability and reduced risk of insufficient internal controls endangering broader financial stability? Are there existing requirements under Section 17A of the Exchange Act, such as the “fair representation” requirement in Section 17A(b)(3)(C), rules and regulations adopted by the Commission and applicable to SROs, or relevant interpretations published by the Commission that already provide a clear and sufficient basis for the Commission to supervise covered clearing agencies in the manner contemplated by proposed Rule 17Ad–22(e)(2) without adopting the proposed rule? What are the possible benefits of adopting the rule as proposed and what possible detriments may arise that the Commission should consider?
• Are there disclosures that a covered clearing agency should be required to make with respect to its governance arrangements? Why or why not? If so, what should be the form and content of those disclosures?
• Should the Commission require that the performance of the board of directors and senior management—individually and as a group—are reviewed on a regular basis? If so, how often should this review be conducted? Should this review be conducted independently?
• Should the board of directors of covered clearing agencies include individuals who are not executives, officers, or employees of the covered clearing agency, or an affiliate of the covered clearing agency? Should the board of directors of covered clearing agencies include an independent audit committee?
• Should the Commission be involved in and/or set requirements and standards with respect to board and management governance at covered clearing agencies? Does the Commission have the requisite statutory authority to adopt the rule proposals and matters addressed in the related questions set forth in this release as to governance arrangements, standards, composition, and qualifications of covered clearing agencies' boards and management? Is the Commission's oversight and establishment of corporate governance measures and standards at clearing agencies a proper and good use of Commission resources? What are the potential costs and benefits of these corporate governance provisions?
Proposed Rule 17Ad–22(e)(3) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain a sound risk management framework for comprehensively managing legal, credit, liquidity, operational, general business, investment, custody, and other risks that arise in or are borne by the covered clearing agency.
Existing Rules 17Ad–22(b) and (d) require registered clearing agencies to establish, implement, maintain and enforce written policies and procedures reasonably designed to meet several requirements that address risk management practices by registered clearing agencies that provide CCP services (Rules 17Ad–22(b)(1) through (4)), certain requirements regarding access to registered clearing agencies that provide CCP services (Rules 17Ad–22(b)(5) through (7)), and certain minimum standards for the operations of registered clearing agencies providing CCP or CSD services.
In addition, policies and procedures for the comprehensive management of risks have the potential to play an important role in making sure that covered clearing agencies better fulfill the Exchange Act requirements that the rules of a clearing agency be designed to protect investors and the public interest.
In addition, the Commission is proposing the requirements described below, which do not appear in existing Rules 17Ad–22(b) or (d). The Commission preliminarily believes these requirements would be appropriate for covered clearing agencies given the risks that their size, operation, and importance pose to the U.S. securities markets.
Proposed Rule 17Ad–22(e)(3)(i) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for risk management policies, procedures, and systems designed to identify, measure, monitor, and manage the range of risks that arise in or are borne by the covered clearing agency, and subject them to review on a specified periodic basis and approval by the board of directors annually.
The Commission preliminarily believes periodic review of the risk management policies and procedures would allow covered clearing agencies to assess whether the risk management policies and procedures should be updated to account for changing factors in the market and to address and codify in a uniform way the approach to new risks taken since the last periodic review. The Commission preliminarily believes that the board of directors of a covered clearing agency should be required to approve the risk management policies and procedures. The Commission preliminarily believes that, in complying with this requirement, a board of directors may want to subject all material components of the covered clearing agency's risk management policies and procedures to review pursuant to Rule 17Ad–22(e)(3)(i) due to the critical role that risk management plays in promoting prompt and accurate clearance and settlement.
Proposed Rule 17Ad–22(e)(3)(ii) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure it establishes plans for the recovery and orderly wind-down of the covered clearing agency necessitated by credit losses, liquidity shortfalls, losses from general business risk, or any other losses.
Securities exchanges, market participants, and investors rely upon the safe, sound, and efficient operations of covered clearing agencies, and accordingly the Commission preliminarily believes that a disorderly wind-down of a covered clearing agency would have systemic consequences.
Based on its supervisory experience, the Commission recognizes that covered clearing agencies operating in the market today each have relevant standards and practices relating to recovery and orderly wind-down with differing degrees of formality. The Commission therefore preliminarily expects that Rule 17Ad–22(e)(3)(ii) would require covered clearing agencies to review such standards and practices for sufficiency with respect to the safe operation of the covered clearing agency and revise such practices in a manner consistent with the findings of such review consistent with the proposed rule, if adopted, and the requirements of the Exchange Act.
Proposed Rule 17Ad–22(e)(3)(iii) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide risk management and internal audit personnel with sufficient authority, resources, independence from management, and access to the board of directors. The Commission preliminarily believes that a covered clearing agency could satisfy the policies and procedures requirement for independence from management by, for example, providing reporting lines for risk management functions that are clear and separate from those for other operations and providing for direct reporting to the board of directors or a relevant committee of the board. In that regard, proposed Rule 17Ad–22(e)(3)(iv) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide risk management and internal audit personnel with oversight by and a direct reporting line to a risk management committee and an audit committee of the board of directors, respectively. Furthermore, proposed Rule 17A–22(e)(3)(v) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for an independent audit committee.
The Commission preliminarily believes that a covered clearing agency should have an effective internal audit function in order to provide, among other things, a rigorous and independent assessment of the effectiveness of the clearing agency's
The Commission generally requests comments on all aspects of Proposed Rule 17Ad–22(e)(3). In addition, the Commission requests comments on the following specific issues:
• Should the Commission require a covered clearing agency's policies and procedures to maintain a sound risk management framework for comprehensively managing legal, credit, liquidity, operational, general business, investment, custody, and other risks that arise in or are borne by the covered clearing agency? Why or why not?
• Should the Commission require a covered clearing agency's policies and procedures include plans for the recovery and orderly wind-down of the covered clearing agency necessitated by credit losses, liquidity shortfalls, losses from general business risk, or any other losses? Why or why not?
• How and to whom should the board of directors communicate the results of its review of the risk management framework, if at all?
• Are there any other requirements that should be included in the rule to facilitate policies and procedures that maintain a sound risk management framework, including the proposed requirements for policies and procedures regarding board review and approval of risk management policies and policies and procedures with respect to recovery and orderly wind-down plans? Why or why not? For example, should the Commission require a covered clearing agency's policies and procedures to identify, measure, monitor, and manage the material risks that it poses to other entities, such as other financial market utilities, settlement banks, liquidity providers, or service providers, as a result of interdependencies? Why or why not?
• The Commission is not proposing at this time to require a covered clearing agency's policies and procedures to, in its comprehensive risk management framework, provide for criteria for the independence of audit committee members. Should the Commission consider requirements that specify such criteria? Why or why not? If so, should those criteria be similar to the audit committee independence requirements for listed companies in Rule 10A–3 under the Exchange Act?
Covered clearing agencies face a variety of financial risks from their participants and service providers, including credit or counterparty default risk, market risk, and liquidity risk. For example, for clearing agencies that provide CSD services, credit risk arises from the potential that a participant will not pay what it owes for securities that it has purchased or will not deliver securities that it has sold. For clearing agencies that clear and settle derivatives contracts, credit risk arises from the potential that a participant will not meet its margin or settlement obligations or pay any other amounts owed to the covered clearing agency.
Clearing agencies that provide CCP services take offsetting positions as the substituted counterparty to a transaction and, therefore, do not ordinarily face market risk except in the event of a participant default. In such an event, market risk takes two forms. First, the clearing agency may need to liquidate collateral posted by the defaulting participant. The clearing agency is therefore exposed to volatility in the market price of the defaulting participant's non-cash collateral that could result in the clearing agency having insufficient financial resources to cover the losses in the defaulting participant's open positions. Second, a clearing agency providing CCP services is subject to volatility in the market price of the defaulting participant's open positions during the interval between the point at which the clearing agency takes control of those positions and the point at which the clearing agency is able to offset, transfer, or liquidate those positions. A clearing agency faces the risk that its exposure to a participant can change as a result of a change in prices, positions, or both.
A clearing agency must be able to measure the counterparty credit exposures that it is expected to manage effectively. A clearing agency can ascertain its current credit exposure to each participant by marking each participant's outstanding positions to current market prices and (to the extent permitted by a clearing agency's rules and supported by law) netting any gains against any losses.
In addition to credit risk and market risk, clearing agencies also face liquidity or funding risk. Currently, to complete the settlement process, clearing agencies generally rely on incoming payments from participants in net debit positions in order to make payments to participants in net credit positions. If a participant does not have sufficient funds to make an incoming payment immediately when it is due (even though it may be able to pay at some future time), or if a settlement bank is unable to make an incoming payment on behalf of a participant, the clearing agency faces a funding shortfall. A clearing agency typically holds additional financial resources to cover potential funding shortfalls such as margin collateral or lines of credit. However, if collateral cannot be liquidated within a short time, or if lines of credit are unavailable, liquidity risk would be exacerbated.
Rules 17Ad–22(b)(1) through (4) concern risk management requirements for clearing agencies that perform CCP services (hereinafter “CCPs” in this part). Rule 17Ad–22(b)(1) requires that CCPs establish, implement, maintain and enforce written policies and procedures reasonably designed to measure their credit exposures at least once per day.
Proposed Rule 17Ad–22(e)(4) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively identify, measure, monitor, and manage its credit exposures to participants and those exposures arising from its payment, clearing, and settlement processes.
Proposed Rule 17Ad–22(e)(4)(i) would require a covered clearing to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain sufficient financial resources to cover its credit exposure to each participant fully with a high degree of confidence. The Commission's intention in proposing the term “high degree of confidence” is to refer to the statistical meaning of this term.
Proposed Rule 17Ad–22(e)(4)(ii) would require a covered clearing agency that provides CCP services, and that is “systemically important in multiple jurisdictions” or “a clearing agency involved in activities with a more complex risk profile,” to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain additional financial resources, to the extent not already maintained pursuant to proposed Rule 17Ad–22(e)(4)(i), at a minimum level necessary to enable it to cover a wide range of foreseeable stress scenarios, including but not limited to the default of the two participant families that would potentially cause the largest aggregate credit exposure for the covered clearing agency in extreme but plausible market conditions (hereinafter the “cover two” requirement).
Proposed Rule 17Ad–22(e)(4)(iii) would require a covered clearing agency that is not subject to proposed Rule 17Ad–22(e)(4)(ii) to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain additional financial resources, to the extent not already maintained pursuant to proposed Rule 17Ad–22(e)(4)(i), at the minimum to enable it to cover a wide range of foreseeable stress scenarios, including the default of the participant family that would potentially cause the largest aggregate credit exposure for the covered clearing agency in extreme but plausible market conditions (hereinafter the “cover one” requirement).
Also, as previously discussed, the Commission is proposing Rule 17Ad–22(a)(4) to define “clearing agency involved in activities with a more complex risk profile.”
Like the “cover two” requirement in Rule 17Ad–22(b)(3), which applies to registered clearing agencies that provide CCP services for security-based swaps,
In addition, the Commission is proposing the requirements described below. In discussing these requirements, the below sections describe how they differ from existing requirements in Rules 17Ad–22(b)(1) through (4) applicable to security-based swap clearing agencies, previously discussed above.
Proposed Rule 17Ad–22(e)(4)(iv) would require a covered clearing agency providing CCP services that is either systemically important in multiple jurisdictions or a complex risk profile clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to include prefunded financial resources, excluding assessments for additional guaranty fund contributions or other resources that are not prefunded, when calculating the financial resources available to meet the standards under proposed Rules 17Ad–22(e)(4)(i) through (iii), as applicable.
The Commission notes that while the ability to assess participants for contributions under applicable covered clearing agency governing documents, rules, or agreements could not be included in this calculation, previously paid-in participant contributions into a covered clearing agency default fund could be counted to the extent the clearing agency's rules, policies, or procedures permit such resources to be used in a manner equivalent to other financial resources in the default fund. Other sources of prefunded resources, such as margin previously posted to the clearing agency by participants, could also be treated in this manner. In addition, while the ability to draw down under a revolving loan facility could not be counted towards prefunded resources because funds from such loan facility would not be in the covered clearing agency's immediate possession, the covered clearing agency could count borrowed funds already drawn down, such as under a term loan or other credit facility.
Existing requirements under Rule 17Ad–22 do not include requirements for prefunded financial resources at registered clearing agencies. The proposed requirement reflects the Commission's recognition of the importance of a covered clearing agency meeting its default resource obligations, given the risks that its size, operation, and importance pose to the U.S. securities markets.
Proposed Rule 17Ad–22(e)(4)(v) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain the financial resources required under proposed Rules 17Ad–22(e)(4)(i) through (iii) in combined or separately maintained clearing or guaranty funds.
This requirement would be similar to the requirement in Rule 17Ad–22(b)(3) requiring a security-based swap clearing agency to have policies and procedures reasonably designed to maintain financial resources generally or in separately maintained funds.
Proposed Rule 17Ad–22(e)(4)(vi) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to test the sufficiency of its total financial resources available to meet the minimum financial resource requirements under proposed Rules 17Ad–22(e)(4)(i) through (iii), as applicable, by conducting a stress test of its total financial resources at least once each day using standard predetermined parameters and assumptions.
The proposed rule would also require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to conduct a comprehensive analysis on at least a monthly basis of the existing stress testing scenarios, models, and underlying parameters and assumptions, and consider modifications to ensure they are appropriate for determining the covered clearing agency's required level of default protection in light of current market conditions. When the products cleared or markets served by a covered clearing agency display high volatility, become less liquid, or when the size or concentration of positions held by the entity's participants increases
The proposed rule would also require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for the reporting of the results of this analysis to the appropriate decision makers at the covered clearing agency, including its risk management committee or board of directors, and to require the use of the results to evaluate the adequacy of and to adjust its margin methodology, model parameters, and any other relevant aspects of its credit risk management policies and procedures, in supporting compliance with the minimum financial resources requirements discussed above.
The Commission is also proposing to add Rule 17Ad–22(a)(18) to define “stress testing” to mean the estimation of credit and liquidity exposures that would result from the realization of extreme but plausible price changes or changes in other valuation inputs and assumptions.
The Commission preliminarily believes that the requirements in proposed Rule 17Ad–22(e)(4)(vi) are appropriate for testing the sufficiency of the financial resources of covered clearing agencies because, in certain market conditions, such as periods of high volatility or diminished liquidity, existing stress scenarios, models, or underlying parameters may no longer be valid or appropriate. Based on its supervisory experience, the Commission believes that certain, but not all, covered clearing agencies adjusted their stress testing scenarios following the 2008 financial crisis to incorporate larger debt, equity, and credit market shocks similar to those experienced during the crisis. Accordingly, the Commission preliminarily believes that specific policies and procedures contemplating actions to be taken by all covered clearing agencies in such circumstances are necessary to ensure the safe functioning of the covered clearing agencies as required by the Exchange Act,
Proposed Rule 17Ad–22(e)(4)(vii) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to require a conforming model validation for its credit risk models to be performed not less than annually or more frequently as may be contemplated by the covered clearing agency's risk management policies and procedures.
The Commission is proposing to add Rule 17Ad–22(a)(5) to define “conforming model validation” to mean an evaluation of the performance of each material risk management model used by a covered clearing agency, along with the related parameters and assumptions associated with such models.
The proposed rule differs from the existing requirement for security-based swap clearing agencies in Rule 17Ad–22(b)(4) by defining in explicit terms the requirements for a conforming model validation and by requiring it for credit risk models.
In contrast to proposed Rules 17Ad–22(a)(5) and (e)(4)(vii), Rule 17Ad–22(b)(4) requires only a model validation for margin models and does not specify the general elements of a model validation.
Proposed Rule 17Ad–22(e)(5) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to limit the assets it accepts as collateral to those with low credit, liquidity, and market risks, and also require policies that set and enforce appropriately conservative haircuts and concentration limits if the covered clearing agency requires collateral to manage its own or its participants' credit exposures.
Similarly, the Commission preliminarily believes that appropriately conservative haircuts and concentration limits would require a covered clearing agency to value assets in a manner that minimizes risk of loss or risk of delay in access to them.
The Commission is proposing Rule 17Ad–22(e)(5) to require policies and procedures with respect to specific practices to be followed by a covered clearing agency when managing collateral to ensure the safeguarding of funds, consistent with the requirements under the Exchange Act discussed above.
In addition, the Commission is proposing that a covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to include a not-less-than-annual review of the sufficiency of a covered clearing agency's collateral haircuts and concentration limits.
Generally, proposed Rule 17Ad–22(e)(6) would require a covered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to cover its credit exposures to its participants by establishing a risk-based margin system that is monitored by management on an ongoing basis and regularly reviewed, tested, and verified.
Rule 17Ad–22(b)(2) currently requires registered clearing agencies that provide CCP services to use risk-based models and parameters to set margin requirements, and to review such margin requirements and the risk-based models and parameters at least monthly,
The Commission notes that proposed Rule 17Ad–22(e)(6) is different from these existing requirements under Rule 17Ad–22, as discussed below. The proposed requirements reflect more specific recognition by the Commission of the importance margin plays in risk management by covered clearing agencies. The Commission preliminarily believes that these requirements for a covered clearing agency to periodically verify and modify margin requirements in light of changing market conditions would be appropriate to mitigate the risks posed by a covered clearing agency to financial markets in periods of financial stress considering the risks that its size, operation, and importance pose to the U.S. securities markets.
Proposed Rule 17Ad–22(e)(6)(i) would require a covered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to result in a margin system that at a minimum considers, and produces margin levels commensurate with, the risks and particular attributes of each relevant product, portfolio, and market.
Proposed Rule 17Ad–22(e)(6)(ii) would require a covered clearing agency that provides CCP services to establish implement, maintain and enforce written policies and procedures reasonably designed to ensure that the margin system would mark participant positions to market and collect margin, including variation margin or equivalent charges if relevant, at least daily, and include the authority and operational capacity to make intraday margin calls in defined circumstances.
Proposed Rule 17Ad–22(e)(6)(iii) would require a covered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to calculate margin sufficient to cover its potential future exposure to participants in the interval between the last margin collection and the close out of positions following a participant default.
The Commission preliminarily believes that, rather than establish specific criteria in advance, it is more appropriate to address liquidation periods separately with respect to each covered clearing agency through the Commission's supervisory process under Sections 17A and 19 of the Exchange Act,
Proposed Rule 17Ad–22(e)(6)(iv) would require a covered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure that it uses reliable sources of timely price data and procedures and sound valuation models for addressing circumstances in which pricing data are not readily available or reliable.
Proposed Rule 17Ad–22(e)(6)(v) would require a covered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure the use of an appropriate method for measuring credit exposure that accounts for relevant product risk factors and portfolio effects across products. Measuring such portfolio effects means a covered clearing agency may take into account certain netting procedures or
Under proposed Rule 17Ad–22(e)(6)(vi), in addition to the requirement discussed above in relation to monitoring by management on an ongoing basis, a covered clearing agency that provides CCP services would be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to regularly review, test, and verify its risk-based margin system by conducting backtests at least once each day and conducting a conforming sensitivity analysis of its margin resources and its parameters and assumptions for backtesting at least monthly, and consider modifications to ensure the backtesting practices are appropriate for determining the adequacy of its margin resources.
Backtesting is a technique used to compare the potential losses forecasted by a model with the actual losses that participants incurred, and is intended to reveal the accuracy of models. Misspecified or miscalibrated models may lead to errors in decision making. The Commission is proposing to require policies and procedures that provide for backtesting the margin models used by covered clearing agencies to help uncover and address possible errors in model design, misapplication of models, or errors in the inputs to, and assumptions underlying, margin models. The Commission is also proposing to add Rule 17Ad–22(a)(1) to define “backtesting” to mean an ex-post comparison of actual outcomes with expected outcomes derived from the use of margin models.
The Commission is also proposing to add Rule 17Ad–22(a)(6) to define “conforming sensitivity analysis” to mean a sensitivity analysis that considers the impact on the model of both moderate and extreme changes in a wide range of inputs, parameters, and assumptions, including correlations of price movements or returns if relevant, which reflect a variety of historical and hypothetical market conditions and actual and hypothetical portfolios of proprietary positions and, where applicable, customer positions. The Commission notes that “sensitivity analysis” is a commonly understood term among industry participants,
Under proposed Rule 17Ad–22(e)(6)(vi), the policies and procedures for model review, testing, and verification requirements would include policies and procedures for conducting a conforming sensitivity analysis more frequently than monthly when the products cleared or markets served display high volatility, become less liquid, or when the size or concentration of positions held by participants increases or decreases significantly.
By proposing the requirement for conducting a conforming sensitivity analysis, the Commission expects that feedback generated by these analyses would improve the performance of risk-based margin systems used by covered clearing agencies and therefore better ensure the safe functioning of covered clearing agencies. Additionally, the Commission preliminarily believes that conforming sensitivity analysis may help a covered clearing agency discover and address shortcomings in its margin models that would not otherwise be revealed through backtesting and is accordingly appropriate given the risks
Rule 17Ad–22(b)(4) currently requires a registered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for an annual model validation consisting of evaluating the performance of the clearing agency's margin models and the related parameters and assumptions associated with such models by a qualified person who is free from influence from the persons responsible for the development or operation of the models being validated. Under proposed Rule 17Ad–22(e)(6)(vii), a covered clearing agency that provides CCP services would be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to require not less than annually a conforming model validation of the covered clearing agency's margin system and related models.
The Commission preliminarily believes the proposed approach of requiring policies and procedures that subject a covered clearing agency's models to review by such parties would be relevant to ensuring the safe operation of covered clearing agencies and will help to ensure that covered clearing agencies have the opportunity to benefit from the views of a qualified person free from influence and incorporate alternative risk management methodologies into their models as appropriate. The Commission preliminarily believes this is important for covered clearing agencies given the risks that a covered clearing agency's size, operation, and importance pose to the U.S. securities markets.
Proposed Rule 17Ad–22(e)(7) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively measure, monitor, and manage the liquidity risk that arises in or is borne by it, by meeting, at a minimum, the ten requirements specified below.
Liquidity risk describes the risk that an entity will be unable to meet financial obligations on time due to an inability to deliver funds or securities in the form required though it may possess sufficient financial resources in other forms. Although Rule 17Ad–22(d)(11) currently requires, among other things, that a registered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to take timely action to contain liquidity pressures and to continue to meet obligations in the event of a participant default, the Commission does not currently have requirements for policies and procedures of registered clearing agencies regarding the management of liquidity risk with the level of specificity proposed in Rule 17Ad–22(e)(7). Given the risks that a covered clearing agency's size, operation, and importance pose to the U.S. securities markets, the proposed requirements would require a covered clearing agency to maintain sufficient liquidity resources to ensure they are prepared to meet their payment obligations in order to facilitate the prompt and accurate clearance and settlement of securities transactions.
Proposed Rule 17Ad–22(e)(7)(i) would require that a covered clearing agency's policies and procedures be reasonably designed to ensure that it maintains sufficient liquid resources in all relevant currencies to effect same-day and, where appropriate, intraday and multiday settlement of payment obligations with a high degree of confidence under a wide range of potential stress scenarios that includes the default of the participant family that would generate the largest aggregate payment obligation for it in extreme but plausible market conditions. As noted above, maintaining sufficient liquidity resources helps ensure that a covered clearing agency is prepared to meet its payment obligations in order to facilitate the prompt and accurate clearance and settlement of securities transactions
Proposed Rule 17Ad–22(e)(7)(ii) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure it holds qualifying liquid resources sufficient to meet the minimum liquidity resource requirement in each relevant currency for which the covered clearing agency has payment obligations owed to clearing members.
• Cash held either at the central bank of issue or at creditworthy commercial banks;
• assets that are readily available and convertible into cash through either:
○ Prearranged funding arrangements without material adverse change limitations, such as committed lines of credit, foreign exchange swaps, and repurchase agreements, or
○ other prearranged funding arrangements determined to be highly reliable even in extreme but plausible market conditions by the board of directors of the covered clearing agency following a review conducted for this purpose not less than annually; and
• other assets that are readily available and eligible for pledging to (or conducting other appropriate forms of transactions with) a relevant central bank, if the covered clearing agency has access to routine credit at such central bank.
The Commission preliminarily believes that this requirement is appropriate, given the risks that its size, operation, and importance pose to the U.S. securities markets, and will help ensure that a covered clearing agency has sufficient liquid resources, as determined by stress testing, to effect settlement of payment obligations with a high degree of confidence under a wide range of potential stress scenarios.
For similar reasons, the Commission preliminarily believes it is appropriate to include in the definition of qualifying liquid resources assets that a central bank would permit a covered clearing agency to use as collateral, to the extent such covered clearing agency has access to routine credit at such central bank.
With regard to assets convertible into cash, the Commission preliminarily notes that the mere ownership of assets that a covered clearing agency may consider readily available and also may consider readily convertible into cash, based on factors such as the historical volume of trading in a particular market for such asset, may not be sufficient alone to make the assets count towards qualifying liquid resources unless one of the above-referenced prearranged funding arrangements is in place under which the covered clearing agency would receive cash in a timely manner. The prearranged funding arrangements would be in place to cover any shortfall. The Commission, however, preliminarily considers committed funding arrangements to be reasonably capable of being established by covered clearing agencies in the relevant commercial lending markets and other funding arrangements to be reasonably capable of being assessed for reliability by the boards of directors of covered clearing agencies following consideration of the relevant circumstances, and therefore preliminarily believes the standard to be sufficiently clear to allow for it to be interpreted and applied in practice by covered clearing agencies. Further, the Commission preliminarily notes that, in complying with proposed Rule 17Ad–22(e)(7), covered clearing agencies should consider the lower of the value of the assets capable of being pledged and the amount of the commitment (or the equivalent availability under a highly reliable prearranged facility) as the amount that counts towards qualifying liquid resources in the event there is any expected difference between the two.
In defining the proposed requirements for qualifying liquid resources, the Commission preliminarily believes that it would be appropriate to provide covered clearing agencies with the flexibility to use highly reliable funding arrangements in addition to committed arrangements for purposes of using assets other than cash to meet the proposed requirements of Rule 17Ad–22(e)(7).
For similar reasons, the Commission preliminarily believes it is appropriate to include in the definition of qualifying liquid resources assets that a central bank would permit a covered clearing agency to use as collateral.
Proposed Rule 17Ad–22(e)(7)(iii) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure it uses accounts and services at a Federal Reserve Bank, pursuant to Section 806(a) of the Clearing Supervision Act,
Proposed Rule 17Ad–22(e)(7)(iv) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure it undertakes due diligence to confirm that it has a reasonable basis to believe each of its liquidity providers, whether or not such liquidity provider is a clearing member, has sufficient information to understand and manage the liquidity provider's liquidity risks, and the capacity to perform as required under its commitments to provide liquidity.
The Commission preliminarily intends for the term “due diligence” to have the same meaning as what this term is commonly understood to mean by market participants. Consequently, in order to comply with the requirements of proposed Rule 17Ad–22(e)(7) and to form a reasonable basis regarding a liquidity provider's understanding and management of liquidity risks and operational capacity, the Commission expects a covered clearing agency would ordinarily not rely on representations of the liquidity provider to this effect and instead conduct its own investigation into the liquidity provider's business. A covered clearing agency should consider implementing due diligence procedures that provide a sufficient basis for its belief, given its business and the nature of its liquidity providers. Procedures for purposes of forming a reasonable basis could include, for example, interviewing the liquidity provider's staff and reviewing both public and non-public documents that would allow the covered clearing agency to gather information about relevant factors, including but not limited to the strength of the liquidity provider's financial condition, its risk management capabilities, and its internal controls.
The Commission preliminarily believes that proposed Rule 17Ad–22(e)(7)(iv) is appropriate because a covered clearing agency needs to soundly manage its relationships with liquidity providers given the risks posed to the U.S. securities markets by its size, operation, and importance. In addition, Proposed Rule 17Ad–22(e)(7)(iv) would reinforce proposed Rule 17Ad–22(e)(7)(ii) and the definition of qualifying liquid resources in proposed Rule 17Ad–22(a)(15), which contemplate potential reliance on liquidity providers where a covered clearing agency would seek to use assets other than cash for purposes of complying with proposed Rule 17Ad–22(e)(7)(ii) and would need to transact with a liquidity provider to convert such assets into cash. Should a committed or prearranged funding arrangement prove to be unreliable at the time a covered clearing agency needs to utilize it because of liquidity problems at the lender itself, this failure may trigger a liquidity problem at the covered clearing agency, which would raise systemic risk concerns for the U.S. securities markets. These types of problems at a liquidity provider, by indirectly affecting a covered clearing agency, could undermine the national system for the prompt and accurate clearance and settlement of securities transactions.
Proposed Rule 17Ad–22(e)(7)(v) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure that the covered clearing agency maintains and, on at least an annual basis,
In addition, proposed Rule 17Ad–22(e)(7)(v) would reinforce proposed Rule 17Ad–22(e)(7)(ii) and the definition of qualifying liquid resources in proposed Rule 17Ad–22(a)(15), which contemplate potential reliance on liquidity providers where a covered clearing agency would seek to use assets other than cash for purposes of complying with proposed Rule 17Ad–22(e)(7)(ii) and would need to transact with a liquidity provider to convert such assets into cash. If procedures or operational capacity for accessing liquidity under committed or prearranged funding arrangements fail to function as planned and in a timely manner, the covered clearing agency may fail to meet its payment obligation, which would raise systemic risk concerns for the U.S. markets and could undermine the national system for the prompt and accurate clearance and settlement of securities transactions. Proper preparation for a liquidity shortfall scenario could also promote members' confidence in the ability of a covered clearing agency to perform its obligations, which can mitigate the risk of contagion during stressed market conditions. The Commission preliminarily believes this is important for covered clearing agencies given the risks that a covered clearing agency's size, operation, and importance pose to the U.S. securities markets.
The Commission preliminarily believes that testing of access to liquidity resources could include efforts by a covered clearing agency to verify that a liquidity provider is able to provide the relevant liquidity resource in the manner intended under the terms of the funding arrangement and without
The Commission preliminarily believes the proposed requirement that testing of a covered clearing agency's access to liquidity be conducted at least annually with each liquidity provider to be a reasonable step to ensure the objectives of the Exchange Act are achieved in practice. The Commission understands such tests are routinely performed currently by certain registered clearing agencies but are subject to variation due, in part, to the absence of a regulatory requirement and the incremental time and attention needed to conduct the tests. The Commission preliminarily anticipates the effect of the proposed rule will be to require the development of more uniform liquidity testing practices by covered clearing agencies, and has accordingly proposed to allow covered clearing agencies to assess the practicability of such testing to provide them with reasonable flexibility to design the tests to suit the circumstances of the covered clearing agency and its particular liquidity arrangements.
Proposed Rule 17Ad–22(e)(7)(vi)(A) through (C) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to determine the amount and regularly test the sufficiency of the liquid resources held for purposes of meeting the minimum liquid resource requirement of proposed Rule 17Ad–22(e)(7)(i) by (A) conducting a stress test of its liquidity resources at least once each day using standard and predetermined parameters and assumptions;
The Commission preliminarily believes that proposed Rules 17Ad–22(e)(7)(vi)(A) through (D) would require a covered clearing agency to take reasonable steps to ensure the adequacy of liquid resources in practice. Given the risks that a covered clearing agency's size, operation, and importance pose to the U.S. securities markets, in addition to the potential consequences to the U.S. financial system of a failure of a covered clearing agency, the Commission preliminarily believes that requiring a covered clearing agency to devote additional time and attention to testing the sufficiency of its liquid resources, relative to a registered clearing agency generally, is appropriate. The Commission preliminarily believes that the requirements in proposed Rule 17Ad–22(e)(7)(vi) are appropriate for testing the sufficiency of liquid resources of covered clearing agencies because, in certain market conditions, such as periods of high volatility or diminished liquidity, existing stress scenarios, models, or underlying parameters may no longer be valid or appropriate. For example, covered clearing agencies may have adjusted their financial resources models following the 2008 financial crisis to account for larger debt, equity, and credit market shocks than would have been contemplated by those models prior to the crisis. Accordingly, the Commission preliminarily believes that specific policies and procedures specifying actions to be taken by covered clearing agencies to maintain sufficient liquid resources would contribute to the safe functioning of the covered clearing agency as required by the Exchange Act,
One of the appropriate methods of preparation by a covered clearing agency would be, in the Commission's preliminary view, the testing of the sufficiency of liquidity that it might need under certain extreme but plausible parameters and assumptions. The Commission preliminarily believes that conducting stress testing of liquidity would allow a covered clearing agency to understand its level of resilience and adjust its operations accordingly to address areas of inadequacy. The Commission preliminarily believes that by testing under extreme but plausible scenarios, covered clearing agencies, and in particular those designated systemically important, would be better prepared in the event that equivalent or similar scenarios actually occurred.
Proposed Rule 17Ad–22(e)(7)(vii) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to result in performing an annual or more frequent conforming model validation of its liquidity risk models.
In addition, the Commission preliminary believes that an annual cycle is appropriate for the reasons described in Part II.A.3.
The Commission preliminarily believes that such annual conforming model validation would provide feedback on the performance of such liquidity risk models conducted by a qualified person who is free from influence from the persons responsible for the development or operation of the liquidity risk model, as contemplated by the definition of “conforming model validation” in proposed Rule 17Ad–22(a)(5), and incorporate alternative liquidity risk management methodologies into their models as appropriate. Generally, the Commission preliminarily considers that a person is free from influence when that person does not perform functions associated with the clearing agency's models (except as part of the annual model validation) and does not report to a person who performs these functions. Preliminarily, the Commission would not expect policies and procedures adopted pursuant to this proposed requirement to require the clearing agency to detach model review from model development or to maintain two separate quantitative teams. By reacting to such feedback, a covered clearing agency may improve the functioning of its liquidity risk model. The Commission notes that misspecified or miscalibrated liquidity risk models may lead to errors in decision making. The Commission preliminarily believes that the proposed rule is appropriate following consideration of the Exchange Act requirements discussed above
Proposed Rule 17Ad–22(e)(7)(viii) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to address foreseeable liquidity shortfalls that would not be covered by its liquid resources and seek to avoid unwinding, revoking, or delaying the same-day settlement of payment obligations.
Proposed Rule 17Ad–22(e)(7)(ix) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to describe its process for replenishing any liquid resources that it may employ during a stress event.
Proposed Rule 17Ad–22(e)(7)(x) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure it, at least once a year, evaluates the feasibility of maintaining sufficient liquid resources at a minimum in all relevant currencies to effect same-day and, where appropriate, intraday and multiday settlement of payment obligations with a high degree of confidence under a wide range of foreseeable stress scenarios that includes, but is not limited to, the default of the two participant families that would potentially cause the largest aggregate credit exposure for the covered clearing agency in extreme but plausible market conditions if the covered clearing agency provides CCP services and is either systemically important in multiple jurisdictions or a clearing agency involved in activities with a more complex risk profile.
Rule 17Ad–22 does not currently provide specific requirements regarding the sizing and testing of liquid resources or what types of financial resources would qualify as liquid. However, the financial crisis of 2008 demonstrated the plausibility of the default of two large participants in a clearing agency over a brief period.
The Commission also preliminarily believes that, with greater emphasis being placed on the role of CCPs in the financial system, the requirement in proposed Rule 17Ad–22(e)(7)(x) for CCPs to review and consider the feasibility of meeting a higher liquidity risk management standard is appropriate. While Rule 17Ad–22(e)(7)(x) would impose on certain covered clearing agencies' policies and procedures requirements to conduct an annual analysis of the feasibility of maintaining “cover two” for liquidity, such covered clearing agencies would not be mandated to adopt a “cover two” approach regarding liquidity risk management. The responsibility for such a determination would remain with the boards of directors of covered clearing agencies following a review of the information produced pursuant to proposed Rule 17Ad–22(e)(7)(x).
The Commission preliminarily believes that it may be appropriate for a covered clearing agency that provides CCP services to maintain liquidity coverage at levels higher than other clearing agencies due to the heightened need to ensure the safe operation of covered clearing agencies given their importance to the U.S. financial markets and the risks attributable to the products they clear, but also that covered clearing agencies not subject to a “cover two” requirement should have flexibility to evaluate the results of an annual feasibility study and to make their own determinations as to whether a “cover two” approach to liquidity risk management is necessary or appropriate. Furthermore, the Commission notes that if, following completion of a feasibility study as contemplated in proposed Rule 17Ad–22(e)(7)(x), a covered clearing agency makes a determination to move beyond “cover one” for liquidity that would be required under proposed Rule 17Ad–22(e)(7)(i), such covered clearing agency would not be limited to sizing its qualifying liquid resources to cover the default of its two largest participant families. In such case, the covered clearing agency could select a level of liquid resources exceeding “cover one” that it deems most appropriate to the management of liquidity risk, which could be either less than, equal to, or more than “cover two.”
Based on its supervisory experience, the Commission also preliminarily believes that, in sizing its liquid resources to exceed “cover one,” a covered clearing agency may take into account a variety of factors, including, but not limited to, (i) the business model of the covered clearing agency, such as a utility model (which may be also referred to as an “at cost” model) versus a for-profit model; (ii) diversification of its members' business models as they impact the members' ability to supply liquidity to the covered clearing agency; (iii) concentration of membership of the covered clearing agency, as the breadth of the membership may affect the ability to draw liquidity from members; (iv) levels of usage of the covered clearing agency's services by members, as the concentration of demand on the covered clearing agency's services may bear upon potential liquidity needs; (v) the relative concentration of members' market share in the cleared products; (vi) the degree of alignment of interest between member ownership of the covered clearing agency and the provision of funding to the covered clearing agency; and (vii) the nature of, and risks associated with, the products cleared by the covered clearing agency.
The Commission generally requests comments on all aspects of proposed Rules 17Ad–22(e)(4), (5), (6), and (7) and proposed Rules 17Ad–22(a)(5), (6), (14), (15), (17), (18), and (19). In particular, the Commission requests comments on the following issues:
• Has the Commission provided sufficient guidance for Rule 17Ad–22(e)(4) regarding the meaning of the requirement to cover credit exposures to each participant “fully with a high degree of confidence”? Has the Commission provided sufficient guidance regarding the meaning of the requirement to maintain the financial resources required under proposed Rules 17Ad–22(e)(4)(i) through (iii), as applicable, “in combined or separately maintained clearing or guaranty funds”? Has the Commission provided sufficient guidance regarding the use of “high volatility” and “become less liquid”? Why or why not?
• Is the Commission's proposed requirement to cover credit exposures to each participant “fully with a high degree of confidence” in proposed Rule 17Ad–22(e)(4) appropriate? Why or why not?
• Should a covered clearing agency's policies and procedures provide for the measurement of credit exposures more frequently than once per day? Why or why not? If so, how frequently? What factors should be considered in determining the minimum frequency?
• Should the Commission require a covered clearing agency's policies and procedures to limit the assets it accepts as collateral to those with low credit, liquidity, and market risks? Why or why not? Has the Commission provided sufficient guidance regarding what constitutes “low credit, liquidity, and market risks”? Why or why not? If not, what additional guidance should the Commission consider providing?
• Should the Commission require a covered clearing agency's policies and procedures to set and enforce appropriately conservative haircuts and concentration limits if the covered clearing agency requires collateral to manage its or its participants' credit exposure? Why or why not? Has the Commission provided sufficient guidance on what would constitute “appropriately conservative haircuts and concentration limits”? Why or why not? Should the Commission adopt different standards? If so, what should those standards be? Please explain in detail.
• Are there any other requirements that should be included in proposed Rule 17Ad–22(e)(5) to facilitate policies and procedures that address collateral? Why or why not? Are there any requirements that should be removed? Why or why not? For instance, should the Commission require policies and procedures that avoid concentrated holdings of any particular kind of asset, such as those that would significantly impair the covered clearing agency's ability to liquidate such assets quickly without significant adverse price effects? Should the Commission require policies and procedures that avoid concentrated holdings under certain conditions?
• Has the Commission provided sufficient guidance for Rule 17Ad–22(e)(6) regarding “margin levels commensurate with, the risks and particular attributes of each relevant product, portfolio, and market”? Has the Commission provided sufficient guidance regarding what a “reliable” source of timely price data is? Why or why not? Should the Commission use a different standard? If so, what should that standard be? Please explain in detail.
• Is the requirement in proposed Rule 17Ad–22(e)(6)(i) regarding policies and procedures reasonably designed to result in a margin system that at a minimum considers, and produces margin levels commensurate with, the risks and particular attributes of each relevant product, portfolio, and market appropriate? Why or why not?
• Is the Commission's approach in proposed Rule 17Ad–22(e)(6)(iii),
• Are there any other requirements that should be included in proposed Rule 17Ad–22(e)(6) to facilitate policies and procedures that address margin? Why or why not? For instance, should the Commission require policies and procedures that address minimum liquidation periods for products cleared by covered clearing agencies? Why or why not?
• Has the Commission provided sufficient guidance for Rule 17Ad–22(e)(7) regarding what constitutes the “relevant currency” in holding qualifying liquid resources? Has the Commission provided sufficient guidance regarding the “due diligence” with respect to liquidity providers? Has the Commission provided sufficient guidance regarding what constitutes “foreseeable” liquidity shortfalls? Why or why not?
• Has the Commission provided sufficient guidance regarding what constitutes “regularly” testing the sufficiency of liquid resources under proposed Rule 17Ad–22(e)(7)(vi)? Why or why not? How frequently should a covered clearing agency test the sufficiency of its liquid resources? Please explain.
• Does the set of minimum requirements for policies and procedures under proposed Rule 17Ad–22(e)(7) sufficiently address liquidity risks? Why or why not? Should the Commission adopt other requirements for addressing liquidity risk?
• Is the proposed definition of “qualifying liquid resources” under Rule 17Ad–22(a)(15) accurate, appropriate, and sufficiently clear given the requirements proposed? Why or why not? Should all types of assets be subject to prearranged funding arrangements? Should the proposed definition distinguish among them by asset, product type, or liquidity? Are there alternative definitions the Commission should consider?
• Is the meaning of the term “due diligence” under Rule 17Ad–22(7)(iv) sufficiently clear? Why or why not?
• Is the proposed definition of “systemically important in multiple jurisdictions” under Rule 17Ad–22(a)(19) accurate, appropriate, and sufficiently clear given the requirements proposed? Why or why not? Are there alternative definitions the Commission should consider? How should the Commission assess another regulator or jurisdiction's determination that a covered clearing agency is systemically important in multiple jurisdictions? Please explain.
• Is the Commission's proposed approach to “cover one” and “cover two” with respect to credit risk appropriate? Should the Commission expand or contract the scope of covered clearing agencies subject to a “cover two” requirement beyond those systemically important in multiple jurisdictions or those involved in activities with a more complex risk profile? Why or why not? Is the “cover two” approach, in which the covered clearing agency must have policies and procedures requiring financial resources sufficient to cover the default of the two participant families that would potentially cause the largest aggregate credit exposure for the covered clearing agency in extreme but plausible market conditions, appropriate? Should the Commission require policies and procedures that provide for financial resources in excess of “cover two”? Why or why not? If so, what would be the potential costs and benefits?
• Is the Commission's proposed approach to “cover one” and “cover two” with respect to liquidity risk appropriate? Should the Commission require policies and procedures that would provide for maintaining qualifying liquid resources equal to “cover two,” rather than policies and procedures for a feasibility analysis with regard to “cover two”? Why or why not?
• Should the Commission include more specific requirements for policies and procedures regarding stress testing that take into account, for example, relevant peak historic price volatilities, shifts in other market factors such as price determinants and yield curves, multiple defaults over various time horizons, simultaneous pressures in funding and asset markets, or a spectrum of forward-looking stress scenarios in a variety of extreme but plausible market conditions? Why or why not?
• Is the requirement to require policies and procedures for reporting the results of a conforming sensitivity analysis to the appropriate decision makers at the covered clearing agency appropriate? Why or why not? Has the Commission sufficiently described who the appropriate decision makers are? Please explain.
• Do any of the proposed rules for financial risk management differentiate between clearing agencies based on factors that should not be determinative,
Proposed Rule 17Ad–22(e)(8) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to define the point at which settlement is final no later than the end of the day on which the payment or obligation is due and, where necessary or appropriate, intraday or in real time.
Rule 17Ad–22(d)(12) currently requires registered clearing agencies to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure that final settlement occurs no later than the end of the settlement day and to require that intraday or real-time finality be provided where necessary to reduce risks.
As with Rule 17Ad–22(d)(12), the Commission preliminarily believes that proposed Rule 17Ad–22(e)(8) is appropriate for covered clearing agencies, given the risks that a covered clearing agency's size, operation, and importance pose to the U.S. securities markets, for the following reasons. First, the Commission preliminarily believes that defining the point at which settlement is final may assist in the potential wind-down of a member in the event of insolvency because it provides the covered clearing agency with information regarding the member's open positions. As an example, clearly defining the point at which settlement is final might include establishing a cut-off point after which unsettled payments, transfer instructions, or other obligations may not be revoked by a clearing member. Clearly defining the point at which settlement is final could also provide to clearing members the necessary guidance from the covered clearing agency to permit extensions for members with operating problems. For example, the covered clearing agency may establish rules governing the approval and duration of such extensions.
Second, the Commission preliminarily believes that a covered clearing agency's policies and procedures should require completing final settlement no later than the end of the day on which the payment or obligation is due and that practices creating material uncertainty regarding when final settlement will occur or permit the back-dating or “as of” dating of a transaction that settles after the end of the day on which the payment or obligation is due would not comply with this requirement. The Commission preliminarily believes that final settlement has the effect of reducing the buildup of exposures between clearing members and the clearing agency, and final settlement no later than the end of the day on which the payment or obligation is due limits these exposures to the change in price between valuation and the end of the day. Accordingly, deferring final settlement beyond the end of the day on which the payment or obligation is due would allow these exposures to increase in size, thereby creating the potential for credit and liquidity pressures for members and other market participants and potentially increasing systemic risk.
Third, the Commission preliminarily believes that a covered clearing agency's policies and procedures, where necessary and appropriate, should require intraday or real-time finality in order to reduce risk in circumstances where uncertainty regarding finality may impede the clearing agency's ability to facilitate prompt and accurate clearance and settlement, cause the clearing agency's members to fail to meet their obligations, or otherwise disrupt the securities markets. The Commission preliminarily believes that such efforts would be necessary and appropriate when, for example, the risks in question are material or when the opportunity to require intraday or real-time finality is available and it would be reasonable, whether in economic or other terms, to do so.
• Should the Commission require a covered clearing agency's policies and procedures to define the point at which settlement is final no later than the end of the day on which the payment or obligation is due, as in the proposed rule, or no later than the end of the settlement date, as in existing Rule 17Ad–22(d)(12) applicable to registered clearing agencies? Please explain.
• What changes, if any, would be created by the proposed requirements for settlement finality? Does the proposed rule affect certain, identifiable categories of market participants differently than others, such as smaller entities or entities with limited operations in the United States? If so, how?
• Are there operational, legal, or regulatory impediments to intraday or real-time settlement finality? Will the proposed standard make it harder for covered clearing agencies to conduct certain types of business for which intraday or real-time finality may be difficult? Are any additional rules or regulations needed to encourage intraday or real-time finality to reduce risks?
• Are there circumstances when the requirements of intraday, real-time, or end-of-day settlement finality proposed by the rule are not feasible or are not beneficial? If so, in what circumstances?
Proposed Rule 17Ad–22(e)(9) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure it considers conducting its money settlements in central bank money, where available and determined to be practical by the board of directors of the covered clearing agency, and minimizes and manages credit and liquidity risk arising from conducting its money settlements in commercial bank money if central bank money is not used by the covered clearing agency.
The Commission notes that, in some cases, for example, the use of central bank money may not be practical, as direct access to all central bank accounts and payment services may not be available to certain clearing agencies or members, and, for clearing agencies working under different currencies, certain central bank accounts may not be operational at the time money settlements occur.
As with Rule 17Ad–22(d)(5), the Commission is proposing Rule 17Ad–22(e)(9) to provide assurance that funds transfers are final when effected.
The Commission notes that there are a number of arrangements that a covered
The proposed rule would also permit a covered clearing agency to use multiple settlement banks in order to monitor and manage concentration of payments among its commercial settlement banks. In those circumstances, policies and procedures would be required to consider the degree to which concentration of a covered clearing agency's exposure to a commercial settlement bank is affected or increased by multiple relationships with the settlement bank, including (i) where the settlement bank is also a participant in the covered clearing agency, or (ii) where the settlement bank provides back-up liquidity resources to the covered clearing agency.
• Should the Commission require a covered clearing agency's policies and procedures to conduct its money settlements in central bank money, where available and determined to be practical by the board of directors of the covered clearing agency? Why or why not? Has the Commission provided sufficient guidance on what would be “practical” in this context? Why or why not?
• Should the Commission require a covered clearing agency's policies and procedures to minimize and manage credit and liquidity risk arising from conducting its money settlements in commercial bank money if central bank money is not used by the covered clearing agency? Why or why not?
• Are there other requirements that the Commission should apply to money settlements, such as requiring policies and procedures with respect to the minimum number of banks that a covered clearing agency may use to effect money settlements with its participants in order to avoid reliance on a small number of such banks? Should the Commission require policies and procedures specifying the characteristics of financial institutions that may be used by clearing agencies for settlement purposes? Why or why not?
• Should the Commission require a covered clearing agency's policies and procedures to establish and monitor adherence to criteria based on high standards for the covered clearing agency's settlement banks? For example, should the Commission require that criteria to consider the applicable regulatory and supervisory frameworks, creditworthiness, capitalization, access to liquidity, and operational reliability? Why or why not?
• Should the Commission require a covered clearing agency's policies and procedures to monitor and manage the concentration of credit and liquidity exposures to its commercial settlement banks? Why or why not?
• Should rules for money settlements established by the Commission be uniform for all types of money settlements, or are there circumstances in which it would be appropriate for covered clearing agencies to accept a higher degree of money settlement risk, such as when transacting in certain product categories or with certain types of customers? Why or why not?
Proposed Rule 17Ad–22(e)(10) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to establish and maintain transparent written standards that state its obligations with respect to the delivery of physical instruments and operational practices that identify, monitor, and manage the risk associated with such physical deliveries.
The proposed requirement is similar to the requirement applicable to registered clearing agencies in Rule 17Ad–22(d)(15), but the proposed rule also requires that such standards be transparent at covered clearing agencies.
The Commission preliminarily believes that the proposed requirement for a covered clearing agency to maintain transparent written standards that state its obligations with respect to physical deliveries would help to ensure that members and their customers have information that is likely to enhance their understanding of their rights and responsibilities with respect to using the clearance and settlement services of a covered clearing agency.
The Commission acknowledges that practices regarding physical delivery vary based on the types of assets that a covered clearing agency settles.
The Commission notes that CDS employing the contractual term “physical delivery” or similar language, which upon an event of default are settled by “physical delivery” of the instrument (as such terms are used in the agreement) to the protection seller by the protection buyer are not within the scope of this rule merely because of such contractual terminology where they are not delivered in paper form (but are delivered through book entry or electronic transfer).
The proposed rule would also require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to identify, monitor, and manage the risks that arise in connection with their obligations for physical deliveries.
The Commission preliminarily notes that certain risks associated with physical deliveries could stem from operational limitations with respect to assuring receipt of and processing of physical deliveries. Other operational risks may relate to personnel, which can be mitigated by having policies and procedures designed to review and assess the qualifications of potential employees, including reference and background checks and employee training, among other things. Further operational risks include theft, loss, counterfeiting, and deterioration of or damage to assets.
• Should the Commission require a covered clearing agency's policies and procedures to establish and maintain transparent written standards that state its obligations with respect to the delivery of physical instruments? Why or why not? Are there physical delivery obligations that a covered clearing agency's policies and procedures should not be required to state through transparent written standards? If so, please explain.
Proposed Rule 17Ad–22(e)(11) would apply only to a covered clearing agency providing CSD services (hereinafter a “covered CSD” in this part).
This definition is currently codified at 17 CFR 240.17Ad–22(a)(2).
Like existing Rule 17Ad–22(d)(10), proposed Rule 17Ad–22(e)(11)(i) would, among other things, require a covered CSD to have policies and procedures to maintain securities in an immobilized or dematerialized form for transfer by book entry.
The Commission notes that, while registered clearing agencies that provide CSD services are already subject to this requirement under Rule 17Ad–22(d)(10), the Commission is proposing Rule 17Ad–22(e)(10) as part of a comprehensive set of rules for regulating covered clearing agencies. Because Rule 17Ad–22(d)(10) already contains this requirement, however, the Commission anticipates that covered clearing agencies may need to make only limited changes to update their policies and procedures to comply with this requirement under the proposed rule.
As with Rule 17Ad–22(d)(10), the Commission notes that the proposed requirement for policies and procedures to cover maintaining securities in an immobilized form is not intended to prohibit a covered CSD from holding physical securities certificates on behalf of its members for purposes other than to facilitate immobilization where such securities currently continue to exist in paper form. In this regard, the Commission believes it would be useful to describe three relevant features of the current U.S. market. First, in order for securities to be offered and sold publicly, the offer or sale of the securities generally must be registered with the Commission or subject to an exemption from registration.
Second, U.S. law generally does not provide for a federal corporate law or corporate charter. Instead, states currently permit corporations to issue stock certificates to registered owners. While the market in the United States has made advances in immobilizing and dematerializing securities, no federal statute or regulation prohibits the issuance of paper certificates to registered owners of a class of securities registered under the Exchange Act or companies that file periodic reports with the Commission. Accordingly, the Commission's rules do not prohibit, and in some respects contemplate, the issuance of securities certificates.
Third, some broker-dealers in the United States no longer operate vaults in which to hold securities certificates registered in the names of their customers where such customers seek a third-party to physically hold their certificates. In such cases, broker-dealers (without an in-house vault) may utilize the vault services of the CSD of which they are a participant in order to be able to offer such custody service to their customers.
The Commission also notes that the proposed rule is not intended to alter the following practices in the U.S. market. Proposed Rule 17Ad–22(e)(11) would not prohibit a covered CSD from providing custody-only services for purposes not intended to promote immobilization to facilitate street name transfer but solely to hold these securities for third parties. Likewise, proposed Rule 17Ad–22(e)(11) would not prohibit a covered CSD from holding American depositary shares in custody.
In addition, the Commission preliminarily believes that the policies and procedures of a covered CSD should be required to ensure the integrity of securities issues and minimize and manage the risks associated with the safekeeping and transfer of securities, given the risks that a covered CSD's size, operation, and importance pose to the U.S. securities markets, for the following reasons. First, the preservation of the rights of issuers and holders of securities is necessary for the orderly functioning of the securities markets.
In addition, the Commission is proposing the requirements described below. Although Rule 17Ad–22(d)(10) does not include similar requirements, the Commission anticipates that, based on the current practices of registered CSDs in the United States, a registered CSD may need to make only limited changes to update its policies and procedures to comply with the below proposed requirements.
Proposed Rule 17Ad–22(e)(11)(ii) would require a covered CSD to establish, implement, maintain and enforce written policies and procedures reasonably designed to implement internal auditing and other controls to safeguard the rights of securities issuers and holders and prevent the unauthorized creation or deletion of securities.
The Commission preliminarily believes that the proposed requirement to safeguard the rights of issuers and holders is appropriate because, while issuers and holders may not be participants in a covered CSD, they access its services through covered CSD immobilization or dematerialization of securities and thus a failure to safeguard securities by the CSD may adversely affect issuers or holders, including for example by creating legal problems related to unauthorized issuance of securities, dilution of a holder's ownership interest or the holder's claim on the security as beneficial owner where holding indirectly through a member of the CSD.
As noted above, the preservation of the rights of securities issuers and holders is necessary for the orderly functioning of the securities markets. Accordingly, the Commission preliminarily believes the proposed rule is appropriate to help ensure that a covered clearing agency can verify that its records are accurate and provide a complete accounting of its securities issues.
Proposed Rule 17Ad–22(e)(11)(ii) would require a covered CSD to establish, implement, maintain and enforce written policies and procedures reasonably designed to conduct periodic and at least daily reconciliation of securities issues it maintains.
The Commission notes that CSDs in the United States currently do not provide registrar or transfer agent services to record name owners of securities. CSD services that facilitate book-entry transfer are limited to holding jumbo/global certificates in custody or, through sub-custodian relationships with the transfer agent for a particular issuer via the Fast Automated Securities Transfer (“FAST”) system, which is used to maintain jumbo/global record ownership position balances of the CSD's holdings in a particular issue.
Proposed Rule 17Ad–22(e)(11)(iii) would require a covered CSD to establish, implement, maintain and enforce written policies and procedures reasonably designed to protect assets against custody risk through appropriate rules and procedures consistent with relevant laws, rules, and regulations in jurisdictions where it operates.
Such custody risk may be related to physical delivery risk, which proposed Rule 17Ad–22(e)(10) would require a covered clearing agency's policies and procedures to identify, monitor, and manage.
The Commission also preliminarily notes that increased dematerialization would not eliminate the applicability of the requirement to protect assets against custody risk. When held in electronic custody through accounting entries, such as through electronic sub-custody
The Commission generally requests comments on all aspects of proposed Rule 17Ad–22(e)(11). In addition, the Commission requests comments on the following specific issues:
• Should the Commission require a covered CSD's policies and procedures to maintain securities in an immobilized or dematerialized form for their transfer by book entry? Why or why not? Are there any circumstances under which this would be inappropriate? Please explain.
• Should the Commission require a covered CSD's policies and procedures to ensure the integrity of securities issues? Why or why not?
• Should the Commission require a covered CSD's policies and procedures to protect assets against custody risk through appropriate rules and procedures consistent with relevant laws, rules, and regulations in jurisdictions where it operates? Why or why not?
• Are there any other requirements that should be included in the proposed rule to promote sound practices at covered CSDs? For instance, should the Commission require a covered CSD's policies and procedures to include provisions to identify, measure, monitor, and manage its risks from other activities that it may perform? Should the Commission require a covered CSD's policies and procedures to employ a robust system that ensures segregation between the CSD's own assets and the securities of its participants and segregation among the securities of participants? Why or why not?
Proposed Rule 17Ad–22(e)(12) would apply to transactions cleared by a covered clearing agency that involve the settlement of two linked obligations.
Rule 17Ad–22(d)(13) similarly requires that a registered clearing agency's policies and procedures be reasonably designed to eliminate principal risk by linking securities transfers to funds transfers in a way that achieves delivery versus payment (“DVP”),
The Commission notes that ensuring settlement finality only when settlement of the corresponding obligation is final—regardless of whether a covered clearing agency settles on a gross or net basis—may require corresponding policies and procedures that address legal, contractual, operational, and other risks.
Market confidence, in addition to public confidence more generally, hinges in large part on the dependability and promptness of the clearing and settlement systems underlying a given market. If CCPs are unable to promptly and fully give to clearing members access to funds due, they and other market participants may lose confidence in the settlement process.
As under Rule 17Ad–22(d)(13), a covered clearing agency can link securities transfers to funds transfers and mitigate principal risk in connection with settlement through DVP settlement mechanisms. DVP is achieved in the settlement process when the mechanisms facilitating settlement ensure that delivery occurs only if payment occurs.
• Should the Commission require a covered clearing agency's policies and procedures to, if the covered clearing agency settles transactions that involve the settlement of two linked obligations, eliminate principal risk by conditioning the final settlement of one obligation upon the final settlement of the other? Should the Commission impose this policy and procedure requirement regardless of whether the covered clearing agency settles on a gross or net basis, as proposed? Should the Commission impose this policy and procedure requirement regardless of when finality occurs, as proposed? Why or why not?
• Does the proposed rule affect certain identifiable categories of covered clearing agencies differently than others, such as clearing agencies with more
• Are there operational or legal impediments to implementing the proposed rule? Would the proposed rule make it more difficult for covered clearing agencies to conduct certain types of business that may require a longer settlement cycle, for reasons outside of their control? Are any additional rules or regulations needed to support achievement of the proposed rule?
• Are there circumstances when ensuring that the settlement of an obligation is final if and only if the settlement of the corresponding obligation is final is not feasible or practicable? If so, when?
Proposed Rule 17Ad–22(e)(13) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure that the covered clearing agency has the authority and operational capacity to take timely action to contain losses and liquidity demands and continue to meet its obligations in the event of a participant default.
As with Rule 17Ad–22(d)(11), the Commission believes that proposed Rule 17Ad–22(e)(13) is appropriate given the importance of having established procedures in the event a covered clearing agency faces a member default. The proposed rule would continue to provide certainty and predictability to market participants about the measures a clearing agency will take in the event of a participant default as default procedures, among other things, are meant to reduce the likelihood that a default by one or more participants will disrupt the clearing agency's operations. By establishing, implementing, maintaining and enforcing such policies and procedures, a covered clearing agency should be in a better position to continue providing its services in a manner that promotes prompt and accurate clearance and settlement during times of market stress.
The proposed rule would also require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure that it can take timely action to contain losses and liquidity pressures and to continue meeting its obligations when due in the event of a member default.
A covered clearing agency should also have the operational capacity to comply with the proposed requirements to contain losses. The Commission preliminarily believes that the following measures would help promote such operational capacity: (i) Establishing training programs for employees involved in default matters to ensure policies are well implemented; (ii) developing a communications strategy for communicating with stakeholders, including the Commission, concerning defaults; and (iii) making sure the proper tools and resources (whether these are personnel or other) required are available to close out, transfer, or hedge open positions of a defaulting member promptly even in the face of rapid market movements.
In addition, based on its supervisory experience, the Commission preliminarily believes that a covered clearing agency's default procedures would generally include the following: (i) The action that may be taken (
In addition, proposed Rule 17Ad–22(e)(13) would include the requirements described below, for which no comparable requirements under Rule 17Ad–22(d) are applicable to registered clearing agencies. The Commission preliminarily believes the proposed requirements are appropriate for covered clearing agencies given the risks that a covered clearing agency's size, operation, and importance pose to the U.S. securities markets.
Proposed Rule 17Ad–22(e)(13)(i) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to address the allocation of credit losses it may face if its collateral and other resources are insufficient to fully cover its credit exposures, including the repayment of any funds the covered clearing agency may borrow from liquidity providers.
The Commission preliminarily believes that this requirement is appropriate because requiring that policies and procedures address key aspects of the allocation of credit losses would provide certainty and predictability about the measures available to a covered clearing agency in the event of a default. Such certainty and predictability would facilitate the orderly handling of member defaults and would enable members to understand their obligations to the covered clearing agency in extreme circumstances. In some instances, managing a member default may involve hedging open positions, funding collateral so that the positions can be closed out over time, or both. A covered clearing agency may also decide to auction or allocate open positions to its participants. To the extent possible, the Commission believes a covered clearing agency would allow non-defaulting members to continue to manage their positions in the ordinary course. By addressing the allocation of credit losses, the covered clearing agency would have policies and procedures intended to address the resolution of a member default where its collateral and other financial resources are insufficient to cover credit losses.
Proposed Rule 17Ad–22(e)(13)(ii) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to describe its process to replenish any financial resources it may use following a member default or other event in which use of such resources is contemplated.
The Commission preliminarily believes this requirement is appropriate because the absence of procedures to replenish resources may undermine a covered clearing agency's ability to contain losses and liquidity pressures. The Commission also preliminarily believes that a covered clearing agency's rules and procedures to draw on financial resources will support the proposed rule's other requirements to contain losses and liquidity pressures. Such procedures commonly specify the order of use of different types of resources, including (i) assets provided by the defaulting member (such as margin or other collateral), (ii) the guaranty fund of the covered clearing agency, (iii) capital calls on members, and (iv) credit facilities. In addition, the Commission preliminarily believes a covered clearing agency could satisfy the proposed requirement by having policies and procedures that describe (i) how resources that have been depleted as a result of a member default would be replenished over time and (ii) what burdens a non-defaulting member may bear.
Proposed Rule 17Ad–22(e)(13)(iii) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to require its members and, when practicable, other stakeholders to participate in the testing and review of its default procedures, including any close out procedures. The proposed rule would also require policies and procedures providing for such testing and review to occur at least annually and following material changes thereto.
The Commission preliminarily believes that including members and other stakeholders in such testing will help to ensure that procedures will be practical and effective in the face of an actual default. In addition to the relevant employees, members, and other stakeholders that would be involved in testing default procedures, a covered clearing agency may determine, as appropriate, to include members of its board of directors or similar governing body, and to invite linked clearing agencies, significant indirect participants, providers of credit facilities, and other service providers to participate. The Commission preliminarily believes requiring member and, where practicable, stakeholder participation in periodic testing is appropriate because successful default management will require coordination among these parties, particularly during periods of market stress.
The Commission generally requests comments on all aspects of proposed Rule 17Ad–22(e)(13). In addition, the Commission requests comments on the following specific issues:
• Should the Commission require a covered clearing agency's policies and procedures to ensure the covered clearing agency has the authority and operational capacity to take timely action to contain losses and liquidity demands and continue to meet its obligations? Should the proposed rule include minimum requirements, as proposed? Why or why not?
• Should the Commission require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to require its members and, when practicable, other stakeholders to participate in the testing and review of its default procedures? Why or why not? Is it appropriate for stakeholders other than a covered clearing agency's participants to participate in the testing and review of its default procedures? Why or why not? Should the Commission require policies and procedures that would require stakeholders to be included in testing unless a determination is made by the
• Should the Commission require policies and procedures regarding specific default procedures for covered clearing agencies, or should they have discretion to create their own default procedures consistent with the proposed rule? If the latter, how much flexibility should a covered clearing agency have in its policies and procedures regarding the time it takes to manage a default and liquidate positions?
Proposed Rule 17Ad–22(e)(14) would apply to a covered clearing agency that is either a security-based swap clearing agency or a complex risk profile clearing agency.
The Commission preliminarily believes that proposed Rule 17Ad–22(e)(14) is appropriate because it facilitates the protection of customer collateral and positions by requiring a covered clearing agency's policies and procedures to prescribe means for holding or accounting for them separately from the assets of the clearing agency member providing services to the customer.
The Commission preliminarily believes that proposed Rule 17Ad–22(e)(14) should apply only to security-based swap clearing agencies and complex risk profile clearing agencies because existing rules applicable to broker-dealers address customer security positions and funds in cash securities and listed option markets, thereby promoting segregation and portability and protecting customer positions and funds.
The first step required by Rule 15c3–3 is that a carrying broker must maintain physical possession or control of all fully paid and excess margin securities of their customers.
The second step is that a carrying broker-dealer must maintain a reserve of cash or qualified securities in an account at a bank that is at least equal in value to the net cash owed to customers, including cash obtained from the use of customer securities. The account must be titled “Special Reserve Bank Account for the Exclusive Benefit of Customers.” The amount of net cash owed to customers is computed pursuant to a formula set forth in Exhibit A to Rule 15c3–3. Under the customer reserve formula, the broker-dealer adds up customer credit items (
In addition, records of customer positions are subject to broker-dealer recordkeeping rules. Exchange Act Rules 17a–3 and 17a–4 require records be kept for certain periods of time, such as three or six year periods depending upon the type of record.
The Commission also notes that, separately, it has proposed Rule 18a–4 to apply customer protection rules to security-based swap dealers and major security-based swap participants. The approach in proposed Rule 18a–4 was modeled on the customer protection scheme under Rule 15c3–3 for broker-dealers.
In addition, in so limiting the scope of proposed Rule 17Ad–22(e)(14), the Commission intends to avoid requiring changes to the existing structure of cash securities and listed options markets in the United States where registered clearing agencies that provide CSD or CCP services play a central role. Transactions in the U.S. cash security and listed options markets are characterized by the following features: (i) Customers of members generally do not have an account at a clearing agency;
The Commission notes that segregation can be achieved either through an omnibus account structure, as is common in the U.S. securities markets today, or an individual account structure. An omnibus account structure, where all collateral belonging to all customers of a particular member is commingled and held in a single account segregated from that of the member, might not be as operationally intensive as an individual account structure. Omnibus accounts may expose a customer to “fellow-customer risk” (
An omnibus account structure may be more efficient when porting positions and collateral for a group of customers subject to a defaulting member (where there has been no customer default or where customer collateral is legally protected on an individual basis). Omnibus accounts may also foster portability depending on whether the covered clearing agency collects margin on a gross or net basis. Margin calculated on a gross basis to support individual customer portfolios may result in less efficient netting with respect to members; however, it may eliminate the possibility of under-margined customer positions when ported. As a result, a clearing agency may be able to port in bulk or piecemeal the positions of a customer of a member that has defaulted. When margin is collected on a net basis, there may be a risk that full portability cannot be achieved if under-margining means that porting will depend on the ability and willingness of customers to provide additional collateral where transferee members are unwilling to accept the porting to them of under-margined positions.
Alternatively, an individual account structure may also provide a high degree of protection from the default of another customer of a member, as a customer's collateral is intended to be used to cover losses associated solely with the default of that customer. In the event of a member failure (whether or not due to a customer default), clear and reliable identification of a customer's collateral may promote portability of an individual customer's positions and collateral or, alternatively, expedite their return to the customer. Maintaining individual accounts, however, can be operationally and resource intensive for a covered clearing agency and could impact the overall efficiency of its clearing operations. An individual account structure may also impact margin collection practices at a covered clearing agency, as the individual account structure may be inconsistent with net collection of margin because it may be impractical for the covered clearing agency to allocate the net margin to individual customers rather than among omnibus accounts.
The Commission preliminarily notes that a covered clearing agency subject to the proposed rule would be required to structure its portability arrangements in a way that makes it highly likely that the positions and collateral of a defaulting member's customers will be effectively transferred to one or more other members. The Commission also preliminarily notes that the following methods may assist a covered clearing agency in achieving portability: (i) Identifying positions that belong to customers; (ii) identifying and asserting rights to related collateral held by or through the covered clearing agency; (iii) identifying potential members to accept the positions and collateral; (iv) disclosing relevant information to such members so that they can evaluate the counterparty credit and market risk associated with the customers and positions, respectively; (v) transferring positions and related collateral to one or more members; and (vi) carrying out default management procedures in an orderly manner.
Finally, where a covered clearing agency's policies and procedures facilitating portability permit a transfer of specific positions and collateral that is not performed with the consent of the member to whom they are transferred, the Commission preliminarily believes that a covered clearing agency could satisfy this requirement by having policies and procedures that set out the circumstances where this may occur. In addition, the Commission preliminarily notes that the portability requirement does not apply only upon default of a member; a covered clearing agency should have policies and procedures that facilitate porting in the normal course of business, such as when a customer ends its relationship with a member to start a new relationship with a different member, or as a result of other events, such as a merger involving the member.
• Should the Commission require a covered clearing agency's policies and procedures to enable the segregation and portability of positions of a participant's customers and the collateral provided to the covered clearing agency with respect to those positions? Why or why not?
• Should the Commission require a covered clearing agency's policies and procedures to effectively protect the positions of a participant's customers and related collateral from the default or insolvency of that participant? Why or why not?
• Does the proposed rule affect certain identifiable categories of covered clearing agencies differently than others in ways not discussed in this proposing release? If so, how? Should the requirements under the proposed rule apply to certain identifiable categories of covered clearing agencies in addition to security-based swap and complex risk profile clearing agencies, as proposed? Please explain.
Proposed Rule 17Ad–22(e)(15) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to identify, monitor, and manage its general
Proposed Rule 17Ad–22(e)(15) is designed to help mitigate the potential impairment of a covered clearing agency's status as a going concern resulting from general business losses, such as a decline in revenues or an increase in expenses resulting in expenses that exceed revenues and a loss that must be charged against the covered clearing agency's capital.
In addition, the Commission is proposing the requirements described below. Registered clearing agencies are not subject to similar rules under Rule 17Ad–22, but the Commission preliminarily believes the proposed requirements are appropriate for covered clearing agencies given the risks that a covered clearing agency's size, operation, and importance pose to the U.S. securities markets and are consistent with the Exchange Act requirements discussed above.
Proposed Rule 17Ad–22(e)(15)(i) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to determine the amount of liquid net assets funded by equity based upon its general business risk profile and the length of time required to achieve a recovery or orderly wind-down, as appropriate, of its critical operations and services if such action is taken.
Proposed Rule 17Ad–22(e)(15)(ii) would require a clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for holding liquid net assets funded by equity equal to the greater of either six months of its current operating expenses or the amount determined by the board of directors to be sufficient to ensure a recovery or orderly wind-down of critical operations and services of the covered clearing agency, as contemplated by the plans established under proposed Rule 17Ad–22(e)(3)(ii).
The Commission preliminarily believes that the requirements for a covered clearing agency's policies and procedures regarding liquid net assets are necessary to ensure that a covered clearing agency's general business risk management is sufficiently robust to facilitate either its orderly recovery or wind-down. The Commission is proposing these requirements to ensure that a covered clearing agency's policies and procedures clearly define what liquid net assets are sufficient under Rule 17Ad–22(e)(15) and to require a covered clearing agency to maintain, pursuant to its policies and procedures, liquid net assets appropriate to cover general business risk in addition to those resources appropriate for managing participant default, credit losses, or liquidity shortfalls. Based on its supervisory experience, the Commission preliminarily believes that a covered clearing agency could satisfy this requirement by having policies and procedures that limit appropriate liquid net assets to cash or cash equivalents because these types of assets would best facilitate continued operations if a clearing agency experienced general business losses.
In addition, the Commission preliminarily believes a covered clearing agency may exclude depreciation and amortization expenses from its calculation of current operating expenses because depreciation and amortization expenses are non-cash expenses and accordingly would not have an effect on a covered clearing agency's cash flow, which might affect its ability to continue operations as a going concern.
The Commission also preliminarily believes that a backward-looking calculation of operating expenses based on the income statement for the most recently ended fiscal year would not be the type of policy and procedure sufficient to comply with the proposed requirements regarding current operating expense.
The proposed rule also requires a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for monitoring its business operations and reducing the likelihood of losses, which the Commission believes furthers the requirements of the Exchange Act discussed above.
Because of the integral role that liquid net assets play in supporting the recovery or orderly wind-down of a covered clearing agency in the event of a business loss, the Commission is proposing requirements for a clearing agency's policies and procedures to require liquid net assets, funded by equity, equal to the greater of six months of operating expenses or an amount determined by the board of directors to be sufficient to facilitate an orderly recovery or wind-down of critical operations and services. The Commission preliminarily believes this is appropriate because liquid net assets allow the covered clearing agency to continue operations as a going concern by acting as a cushion while the covered clearing agency is in recovery or wind-down.
Proposed Rule 17Ad–22(e)(15)(iii) would further require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for maintaining a viable plan, approved by the board of directors and updated at least annually, for raising additional equity should its equity fall close to or below the amount required by the proposed rule as discussed above.
As noted above, because of the reliance of securities markets, market participants, and investors on the safe, sound, and efficient operations of covered clearing agencies, a disorderly failure of a covered clearing agency would have systemic consequences. The proposed rule requires a covered clearing agency to maintain a viable plan to raise additional equity in the event that its liquid net assets funded by equity fall close to or below the amount required by the proposed rule.
The Commission generally requests comments on all aspects of proposed Rule 17Ad–22(e)(15). In addition, the Commission requests comments on the following specific issues:
• Should the Commission require a covered clearing agency's policies and procedures to identify, monitor, and manage the covered clearing agency's general business risk? Why or why not? Are there other requirements that the Commission should include in proposed Rule 17Ad–22(e)(15) to address the general business risk management at covered clearing agencies?
• Is the proposed requirement for a covered clearing agency's policies and procedures to hold liquid net assets funded by equity equal to the greater of either (x) six months of the covered clearing agency's current operating expenses or (y) the amount determined by the board of directors to be sufficient to ensure a recovery or orderly wind-down of critical operations and services of the covered clearing agency appropriate? Why or why not? Under the proposed requirement for policies and procedures, is six months of operating expenses appropriate? Should the Commission adopt a different standard, such as three, nine, or twelve
• Should the Commission require a covered clearing agency's policies and procedures to hold liquid net assets in addition to resources held to cover participant defaults or other risks covered under the credit risk standard in Rule 17Ad–22(b)(3)? Under the credit risk standard in proposed Rules 17Ad–22(e)(4)(i) through (iii), as applicable? Under the liquidity risk standard in proposed Rules 17Ad–22(e)(7)(i) and (ii), as applicable? Why or why not? Has the Commission provided sufficient guidance regarding what constitutes “liquid net assets”? Why or why not?
• Should a covered clearing agency be required to provide notice to the Commission at any time before its liquid net assets reach the minimum required amount? If so, at what amount should the requirement apply,
• Regarding securities that are cash equivalents and therefore liquid net assets, should the Commission establish requirements for policies and procedures that discount the value of these securities compared to their fair value?
Proposed Rule 17Ad–22(e)(16) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to safeguard its own and its participants' assets and minimize the risk of loss and delay in access to these assets.
Custody risk is the risk of loss on assets held in custody in the event of a custodian's (or subcustodian's) insolvency, negligence, fraud, or poor administration. Investment risk is the risk of loss faced by a clearing agency when it invests its own or its participants' assets. In each case, the risk is the likelihood that assets securing participant obligations to the covered clearing agency or otherwise needed for the clearing agency to meet its own obligations would be unavailable or insufficient when the covered clearing agency needs to draw on them. Failure by a clearing agency to hold assets in instruments with minimal credit, market, and liquidity risk may limit the clearing agency's ability to retrieve these assets promptly. That, in turn, can cause the clearing agency to fail to meet its settlement obligations to its participants or cause the clearing agency's participants to fail to meet their obligations. Accordingly, as under Rule 17Ad–22(d)(3), the Commission believes it is appropriate to continue to limit such risks to ensure the proper functioning of a covered clearing agency pursuant to Section 17A of the Exchange Act.
Under existing Rule 17Ad–22(d)(3), the members of a registered clearing agency typically deposit securities with the clearing agency, or the clearing agency holds assets that secure the participants' obligations to it and may invest these assets. In such circumstances, the clearing agency is exposed to custody and investment risk. The Commission is aware that, currently, clearing agencies ordinarily seek to minimize the risk of loss or delay in access by holding assets that are highly liquid (
• Should the Commission require a covered clearing agency's policies and procedures to invest its own and its participants' assets in instruments with minimal credit, market, and liquidity risks? Why or why not?
• Should the Commission require a covered clearing agency's policies and procedures to minimize the risk of loss and delay in access to its own and its participants' assets? Why or why not?
• Has the Commission provided sufficient guidance regarding what instruments have “minimal credit, market, and liquidity risks”? Should the Commission further specify what kinds of assets would be appropriate under the proposed requirement, such as investments that are secured by, or are claims on, high-quality obligors and investments that allow for timely liquidation with little, if any, adverse price effect? Why or why not?
• Should covered clearing agencies ever be permitted to hold assets in instruments that do not have minimal credit, market, and liquidity risk? If so, why and under what circumstances? What type of measures should covered clearing agencies have in place to minimize the risk of loss from delays in accessing these assets? Should the proposed rule specify any such requirements? Should the Commission develop more specific criteria regarding how covered clearing agencies may hold or invest assets?
Proposed Rule 17Ad–22(e)(17) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to manage the covered clearing agency's operational risk.
As with Rule 17Ad–22(d)(4), the Commission preliminarily believes that the requirements in proposed Rule 17Ad–22(e)(17)(i) through (iii) should help covered clearing agencies and its participants continue to address and manage risks posed by potential operational deficiencies. Specifically, to help limit disruptions that may impede the proper functioning of a covered clearing agency, the Commission preliminarily believes it is imperative that covered clearing agencies review their operations for potential weaknesses and develop appropriate systems, controls, and procedures to address weaknesses the proposed rule seeks to mitigate.
The Commission intends for proposed Rule 17Ad–22(e)(17) to supplement the existing guidance provided by the Commission in its Automation Review Policy (“ARP”) statements
Generally, the guidance in ARP I and ARP II provides for the following activities by clearing agencies: (1) Performing periodic risk assessments of its automated data processing (“ADP”) systems and facilities; (2) providing for the selection of the clearing agency's independent auditors by non-management directors and authorizing such non-management directors to review the nature, scope, and results of all audit work performed; (3) having an adequately staffed and competent internal audit department; (4) furnishing annually to participants audited financial statements and an opinion from an independent public accountant as to the clearing agency's system of internal control—including unaudited quarterly financial statements also should be provided to participants upon request; and (5) developing and maintaining plans to assure the safeguarding of securities and funds, the integrity of the ADP system, and recovery of securities, funds, or data under a variety of loss or destruction scenarios.
• Should the Commission require a covered clearing agency's policies and procedures to manage its operational risks by establishing and maintaining a business continuity plan that addresses events posing a significant risk of disrupting operations? Why or why not? Has the Commission provided sufficient guidance on what an event “posing a significant risk of disrupting operations” would be?
• Should the Commission's proposal require a specific methodology to identify and mitigate operational risk? If so, what is the methodology and why should this methodology be imposed?
• Is the Commission's proposed approach with respect to ensuring that systems have a high degree of security, resiliency, and operational reliability appropriate and sufficiently clear? Why or why not?
• Are there any other requirements that should be included in the rule to facilitate policies and procedures for operational risk management? Why or why not?
• Should the Commission adopt additional policies and procedures requirements for business continuity planning? If so, please explain in detail.
Proposed Rule 17Ad–22(e)(18) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to establish objective, risk-based, and publicly
In addition to the requirements described above,
The Commission notes that the elements of Rule 17Ad–22(d)(2)(i), regarding policies and procedures requiring participants to have financial resources and robust operational capacity to meet obligations arising from participation are also reflected in other proposed rules, including Rules 17Ad–22(e)(4) and (17).
Appropriate minimum operational, legal, and capital requirements for membership that are maintained and enforced through the supervisory practices of a clearing agency help to ensure all members will be reasonably capable of meeting their various obligations to the clearing agency in stressed market conditions and upon member default. Member defaults challenge the safe functioning of a clearing agency by creating credit and liquidity risks, which impede a clearing agency's ability to settle securities transactions in a timely manner. Ensuring that clearing members meet objective levels of operational and financial soundness helps to counterbalance the potential for cascading effects on other participants and limit the potential of a systemic disruption in the U.S. securities markets. Fair and open access to all parties meeting the objective criteria for participation similarly helps to ensure wide participation and thereby increase beneficial risk mitigating effects.
Accordingly, the Commission preliminarily believes Rule 17Ad–22(e)(18) is appropriate because it would promote membership standards at covered clearing agencies that are likely to limit the potential for member defaults and, as a result, losses to non-defaulting members in the event of a member default. The proposed rule has similar requirements to those applied to registered clearing agencies under Rule 17Ad–22(d)(2) but would also explicitly require a covered clearing agency's policies and procedures to establish publicly disclosed criteria for participation, which permit fair and open access by direct and, where relevant, indirect participants and other FMUs, and also require that the criteria be risk-based, in addition to objective.
In addition, the Commission is proposing a requirement that covered clearing agencies establish, implement, maintain and enforce written policies and procedures reasonably designed to require participants to have sufficient financial resources and robust operational capacity to meet obligations arising from participation in the clearing agency and to monitor compliance with participation requirements on an ongoing basis. Rule 17Ad–22(d)(2)(i) and (ii) also require a registered clearing agencies to establish, implement, maintain and enforce written policies and procedures reasonably designed to have procedures in place to require participants to have sufficient financial resources and robust operational capacity to meet obligations arising from participation in the clearing agency and to monitor that participation requirements are met on an ongoing basis.
• Should the Commission require a covered clearing agency's policies and procedures to monitor compliance with its participation requirements on an ongoing basis? Why or why not? Would a more specific monitoring requirement be appropriate? For example, should this requirement specify a frequency of review? Why or why not? If so, what would be the appropriate frequency of review? Please explain.
• Would it be appropriate for the Commission to require a covered clearing agency's policies and procedures to provide for different categories of participation? If so, please explain in detail what these different categories would be and why they would be appropriate.
Proposed Rule 17Ad–22(e)(19) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to identify, monitor, and manage the material risks to the covered clearing agency arising from arrangements in which firms that are indirect participants in the covered clearing agency rely on the services provided by direct participants in the covered clearing agency to access the covered clearing agency's payment, clearing, or settlement facilities (hereinafter “tiered participation arrangements”).
Registered clearing agencies are currently not subject to rules regarding tiered participation arrangements under existing Rule 17Ad–22. The Commission preliminarily believes the proposed rule is appropriate for covered clearing agencies, given the risks that a covered clearing agency's size, operation, and importance pose to the U.S. securities markets, and is consistent with the requirements of the Exchange Act discussed above.
The Commission has previously noted that, in situations where direct access to clearing agencies is limited by reasonable participation standards, firms that do not meet these standards may still be able to access clearing agencies through correspondent clearing arrangements with direct participants.
In addition, the Commission is proposing to require that a covered clearing agency establish, implement, maintain and enforce written policies and procedures reasonably designed to regularly review the material risks to the covered clearing agency arising from such tiered participation arrangements.
The operational, financial, and other interconnections between direct and indirect participants to tiered participation arrangements are subject to market forces and can therefore change over time. Because direct and indirect participants collectively contribute to the operational and financial stability of a covered clearing agency, the Commission preliminarily believes that the requirement to regularly review a covered clearing agency's tiered participation arrangements supports the Exchange Act requirements that clearing agencies be able to facilitate prompt and accurate clearance and settlement, protect investors and the public interest, and ensure the safeguarding of securities and funds in the custody or control of the clearing agency or for which the clearing agency is responsible.
• Should the Commission require a covered clearing agency's policies and procedures to identify, monitor and manage the material risks to the covered clearing agency arising from arrangements in which firms that are indirect participants in the covered clearing agency rely on the services provided by direct participants to access the covered clearing agency's payment, clearing, or settlement facilities? Why or why not?
• Has the Commission provided sufficient guidance regarding who would be “indirect participants” and “direct participants”? Why or why not?
Proposed Rule 17Ad–22(e)(20) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to identify, monitor, and manage risks related to any link with one or more other clearing agencies, FMUs, or trading markets.
In addition to the requirements discussed above,
Accordingly, the Commission is proposing Rule 17Ad–22(e)(20) to ensure that covered clearing agencies identify and assess the potential sources of risk arising from a link arrangement and incorporate that analysis into its risk management policies and procedures. In certain cases, the creation of a link may raise risks similar to those raised by tiered participation arrangements and participant requirements, discussed above: Namely, the interconnections between the clearing agency and the other entity may increase the risks to the clearing agency stemming from, among other things, the risks of participant default, credit losses, or liquidity shortfalls arising through the linked entity rather than the clearing agency's own operations.
• Should the Commission require a covered clearing agency's policies and procedures to identify, monitor, and manage risks related to any link the covered clearing agency establishes with one or more other clearing agencies, FMUs, or trading markets? Why or why not?
• Is the definition of “link” in proposed Rule 17Ad–22(a)(10) appropriate and sufficiently clear in light of the proposed requirements? Why or why not? Is there an alternative definition that the Commission should consider?
Proposed Rule 17Ad–22(e)(21) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure that it is efficient and effective in meeting the requirements of its participants and the markets it serves.
Proposed Rule 17Ad–22(e)(21) would further require a covered clearing agency's management to regularly review the efficiency and effectiveness of its (i) clearing and settlement arrangements; (ii) operating structure, including risk management policies, procedures, and systems; (iii) scope of products cleared, settled, or recorded; and (iv) use of technology and communication procedures.
For purposes of the proposed rule, efficiency refers generally to the efficient use of resources by a clearing agency to perform its functions, and effectiveness refers to its ability to meet its intended goals and objectives. A covered clearing agency that operates inefficiently or functions ineffectively may distort financial activity and market structure, increasing not only the risks borne by its members, but also the risks of indirect participants, such as the customers of participants or other buyers and sellers of securities. If a covered clearing agency is inefficient, a participant may choose not to trade or may choose to settle bilaterally, which could potentially result in greater risks to the U.S. financial system than would otherwise occur in the presence of a more efficiently functioning covered clearing agency.
In addition to the requirements discussed above,
The Commission is also proposing to require that a covered clearing agency regularly review the items identified in Rule 17Ad–22(e)(21)(i) through (iv) because the Commission preliminarily believes that they are reflective of key aspects of a clearing agency's business necessary for efficient and effective operation. Moreover, because technology, sound practices, market forces, and the number and characteristics of participants may change over time, the Commission preliminarily believes that measures of efficiency and effectiveness must be subject to policies and procedures for regular review.
• Has the Commission provided sufficient guidance on what policies and procedures would be necessary to ensure that a covered clearing agency is “efficient and effective” in meeting the requirements of the proposed rule? Why or why not?
• Is the proposed requirement for a covered clearing agency's policies and procedures to regularly review the following aspects of its business and operations appropriate: Clearing and settlement arrangements; operating structure, including risk management policies, procedures, and systems; the scope of products cleared, settled, or recorded; and the use of technology and communication procedures? Why or why not? Should the Commission require that other aspects of a covered clearing agency's business and operations be subject to regular review?
Proposed Rule 17Ad–22(e)(22) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure that it uses, or at a minimum accommodates, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, and settlement.
The ability of participants to communicate with a covered clearing agency in a timely, reliable, and accurate manner is important to achieving prompt and accurate clearance and settlement. The Commission preliminarily believes that requiring policies and procedures in line with internationally accepted communication procedures and standards is appropriate for a covered clearing agency for two reasons. First, internationally accepted communication procedures and standards, because they are widely accepted and adopted standards, reduce the likelihood of errors and technical complexity in the clearance and settlement process, thereby reducing risks and costs, improving efficiency, and reducing barriers to entry. Such procedures and standards would include standardized protocols for exchanging messages and reference data for identifying financial instruments and counterparties.
Second, internationally accepted communication procedures and standards ensure effective communication with direct and indirect participants, which the Commission preliminarily believes is important for covered clearing agencies, given the global nature of their businesses. Securities markets in the United States are among the largest and most actively traded in the world, with direct and indirect participants from numerous other countries that necessitate the development and use of internationally accepted communication procedures and standards. Accordingly, the Commission preliminarily believes that covered clearing agencies are likely to be engaged in transactions across borders, where standardized communications protocols and mechanisms are essential to ensure prompt and accurate clearance and settlement.
• Should the Commission require a covered clearing agency's policies and procedures to use, or at a minimum accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, and settlement? Why or why not?
• Is the Commission's assumption that covered clearing agencies are already using internationally accepted communication procedures correct? Why or why not?
• Has the Commission provided sufficient guidance on what “relevant internationally accepted communication procedures and standards” would be appropriate under the proposed policies and procedures requirement? Why or why not?
Proposed Rule 17Ad–22(e)(23) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain clear and comprehensive rules and procedures that provide for the specific disclosures enumerated in the rule, as discussed below.
The Commission is proposing Rule 17Ad–22(e)(23) as part of a comprehensive set of rules for regulating covered clearing agencies that is consistent with and comparable to other domestic and international standards for FMIs.
The Commission notes that Rule 17Ad–22(c)(2) currently requires a registered clearing agency, within 60 days after the end of its fiscal year, to post on its Web site its annual audited financial statements.
Rule 17Ad–22(d)(9) currently requires registered clearing agencies to have policies and procedures to facilitate disclosures similar to proposed Rule 17Ad–22(e)(23)(ii), but does not require policies and procedures similar to proposed Rules 17Ad–22(e)(23)(i) and (iii). The Commission preliminarily believes these additional requirements are appropriate for a covered clearing agency given the risks that a covered clearing agency's size, operation, and importance pose to the U.S. securities markets because these disclosures provide the relevant authorities with information that further facilitates supervision of the covered clearing agency, including information that may allow the relevant authorities to better assess the covered clearing agency's observance of risk management requirements and better identify possible risks posed by the covered clearing agency, and provide relevant stakeholders with information regarding risks associated with participation in a covered clearing agency.
In addition to the Exchange Act requirements described above,
Pursuant to existing Commission regulations, changes to the rules of an SRO, including clearing agencies, are required to be available on the SRO's Web site and are published by the Commission.
The Commission notes that these policies and procedures requirements are intended in part to codify disclosure practices currently undertaken by some registered clearing agencies on an elective basis.
Below is a discussion of the specific disclosures required under the proposed rule, which are not similarly required of registered clearing agencies under Rule 17Ad–22(d)(9). The Commission preliminarily believes that these additions to a covered clearing agency's disclosure practices are important to ensure clearing members and the public have access to up-to-date information about the covered clearing agency's activities, policies, and procedures, which would promote confidence in its operations and thereby contribute to the prompt and accurate clearance and settlement of securities transactions.
Proposed Rule 17Ad–22(e)(23)(iv) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain clear and comprehensive rules and procedures that provide for a comprehensive public disclosure of its material rules, policies, and procedures regarding governance arrangements and legal, financial, and operational risk management, accurate in all material respects at the time of publication, including (i) a general background of the covered clearing agency, including its function and the market it serves, basic data and performance statistics on its services and operations, such as basic volume and value statistics by product type, average aggregate intraday exposures to its participants, and statistics on the covered clearing agency's operational reliability, and a description of its general organization, legal and regulatory framework, and system design and operations; (ii) a standard-by-standard summary narrative for each applicable standard set forth in proposed Rules 17Ad–22(e)(1) through (22) with sufficient detail and context to enable the reader to understand its approach to controlling the risks and addressing the requirements in each standard; (iii) a summary of material changes since the last update of the disclosure; and (iv) an executive summary of the key points regarding each.
The Commission preliminarily believes that disclosure of the above required information will provide participants with the information necessary to, at a minimum, identify and evaluate the risks and costs associated with use of the covered clearing agency, thereby promoting transparency and enhancing competition and market discipline. The Commission preliminarily believes it would also provide other stakeholders, including regulators and the public, with information that facilitates informed oversight and decision-making regarding covered clearing agencies.
Proposed Rule 17Ad–22(e)(23)(v) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure the comprehensive public disclosure required under proposed Rule 17Ad–22(e)(23)(iv) is updated not less than every two years, or more frequently following changes to its system or the environment in which it operates to the extent necessary, to ensure statements previously provided remain accurate in all material respects.
The Commission preliminarily believes that this requirement would help provide participants, regulators, other stakeholders, and the public with disclosures that are current, accurate, and comprehensive, thereby promoting transparency and enhancing competition and market discipline. The Commission preliminarily believes it would also provide other stakeholders, including regulators and the public, with timely information that facilitates informed oversight and decision-making regarding covered clearing agencies, thereby promoting the clearing agency obligations required under Section 17A of the Exchange Act.
The Commission generally requests comments on all aspects of proposed Rule 17Ad–22(e)(23). In addition, the Commission requests comments on the following specific issues:
• Should the Commission require a covered clearing agency's policies and procedures to maintain clear and comprehensive rules and procedures that provide for the specific disclosures proposed under Rule 17Ad–22(e)(23)? Why or why not? Are there rules and procedures that should not be fully disclosed to participants? Please explain in detail what such rules and procedures would be and why they should not be disclosed to participants.
• In imposing certain minimum requirements for policies and procedures regarding the comprehensive public disclosure, has the Commission provided sufficient guidance regarding what elements must appear in the disclosure? Should different elements appear? Should the Commission require policies and procedures to update the comprehensive public disclosure every two years, as proposed? Should the Commission require policies and procedures to update the comprehensive public disclosure more frequently following changes to its system or the environment in which it operates to the extent necessary to ensure the statements provided remain accurate in all material respects? Why or why not?
• Are certain ways that covered clearing agencies communicate information to market participants more effective than others? For example, does including information in a covered clearing agency's rulebook or published interpretive materials provide adequate notice of the risks and costs of being a participant to persons that are not currently participants in the covered clearing agency? Why or why not?
• Should the types of information that a covered clearing agency discloses under the proposed rule be generally available to the public? Should any categories of the information required to be disclosed under the proposed rule be restricted to certain parties only, such as clearing members or the Commission itself? Why or why not?
• Should the Commission require covered clearing agencies to make public disclosures of information contained in their audited financial statements that would provide a discussion and analysis of the covered clearing agency's financial condition, in particular with respect to liquidity, capital resources, and results of operations, similar to the Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure required under Items 303(a)(1) through (3) of Regulation S–K?
• Should the Commission require that policies and procedures pursuant to proposed Rule 17Ad–22(e)(23) specify a certain form for the disclosures (
The Commission is proposing Rule 17Ab2–2 to establish procedures for the Commission to make determinations affecting covered clearing agencies.
The Commission notes that under proposed Rule 17Ad–22(e), five active registered clearing agencies would meet the definition of a covered clearing agency without action under proposed Rule 17Ab2–2 by the Commission.
Under proposed Rule 17Ab2–2(a), the Commission may, if it deems appropriate, upon application by any registered clearing agency or member thereof, or on its own initiative, determine whether a registered clearing agency should be considered a covered clearing agency.
The Commission preliminarily believes that proposed Rule 17Ab2–2(a) would provide the Commission with the flexibility necessary to achieve the goals of Section 17A of the Exchange Act,
Under proposed Rule 17Ab2–2(b), the Commission may, if it deems appropriate, upon application by any clearing agency or member thereof, or on its own initiative, determine whether a covered clearing agency meets the definition of “systemically important in multiple jurisdictions.”
The Commission preliminarily believes that it should propose the procedures set forth in Rule 17Ab2–2(b) for designating a covered clearing agency as systemically important in multiple jurisdictions. Accordingly, the Commission is proposing Rule 17Ab2–2(b) to provide procedures for determining when a clearing agency has become systemically important in multiple jurisdictions. In this regard, the Commission preliminarily believes that proposed Rule 17Ab2–2(b)(ii) is consistent with Section 804(a)(2)(D) of the Clearing Supervision Act.
Under proposed Rule 17Ab2–2(c), the Commission may, if it deems appropriate, determine whether any of the activities of a clearing agency providing central counterparty services, in addition to clearing agencies registered with the Commission for the purpose of clearing security-based swaps, have a more complex risk profile.
The Commission preliminarily believes that proposed Rule 17Ab2–2(c) would provide the Commission with the flexibility necessary to achieve the goals of Section 17A of the Exchange Act,
The Commission generally requests comments on all aspects of proposed Rule 17Ab2–2. In addition, the Commission requests comments on the following specific issues:
• Should the Commission establish procedures for making determinations affecting covered clearing agencies? Why or why not?
• In determining whether a clearing agency should be considered a covered clearing agency, should the Commission consider characteristics such as the clearing of financial instruments that are characterized by discrete jump-to-default price changes or that are highly correlated with potential participant defaults, as proposed? Why or why not? Are there particular other characteristics that the Commission should consider? If so, please explain the relevance of those characteristics in detail.
• Does the proposed rule sufficiently describe the types of factors that would be considered when the Commission considers a determination that a registered clearing agency is a covered clearing agency? What factors should be considered?
• Should the Commission, if it deems appropriate, determine whether a covered clearing agency is systemically important in multiple jurisdictions? Why or why not? If not, what alternative approach should the Commission use to assess whether a covered clearing agency is systemically important in multiple jurisdictions? For instance, what weight should the Commission give to determinations by other jurisdictions or regulators regarding the systemic importance in multiple jurisdictions of a covered clearing agency? Is it appropriate for the Commission to assess whether such determination was made through a process that includes consideration of whether the foreseeable effects of a failure or disruption of the designated clearing agency could threaten the stability of each relevant jurisdiction's financial system, as proposed? Please explain. Are there particular other factors that the Commission should consider? If so, please explain the relevance of those characteristics in detail.
• Does the proposed rule sufficiently describe the types of factors that would be considered when the Commission considers a determination that a covered clearing agency is systemically important in multiple jurisdictions? What factors should be considered?
• In determining whether any of the activities of a clearing agency providing CCP services have a more complex risk profile, should the Commission consider characteristics such as the clearing of financial instruments that are characterized by discrete jump-to-default price changes or that are highly correlated with potential participant defaults, as proposed? Why or why not? Are there particular other characteristics that the Commission should consider? If so, please explain the relevance of those characteristics in detail.
• Does the proposed rule sufficiently describe the types of factors that would be considered when the Commission considers a determination that a clearing agency is a complex risk profile clearing agency? What factors should be considered?
• Does the proposed process for determinations under Rule 17Ab2–2 conflict with the PFMI Report's use of “systemic importance in multiple jurisdictions” and “more complex risk profile” activities? If so, please explain.
The Commission is proposing Rule 17Ad–22(f) to codify its special enforcement authority over designated clearing agencies for which the Commission acts as the supervisory agency, pursuant to the Clearing Supervision Act. Under Section 807(c) of the Clearing Supervision Act, for purposes of enforcing the provisions of the Clearing Supervision Act, a designated clearing agency is subject to, and the Commission has authority under, the provisions of subsections (b) through (n) of Section 8 of the Federal Deposit Insurance Act in the same manner and to the same extent as if a designated clearing agency were an insured depository institution and the Commission were the appropriate Federal banking agency for such insured depository institution.
To facilitate consistency with proposed Rule 17Ad–22(e), the Commission is proposing to amend Rule 17Ad–22(d). Rule 17Ad–22(d) sets forth certain minimum requirements for the operation and governance of registered
The Paperwork Reduction Act of 1995 (“PRA”)
Certain provisions of the proposed rules would impose new “collection of information” requirements within the meaning of the PRA. Accordingly, the Commission has submitted the information to the OMB for review in accordance with 44 U.S.C. 3507 and 5 CFR 1320.11. A title and control number already exists for Rule 17Ad–22 adopted in October 2012 (OMB Control No. 3235–0695 for “Clearing Agency Standards for Operation and Governance”). Because the Commission is proposing to revise the collection of information under this proposed rulemaking for amendments to Rule 17Ad–22, the Commission will use OMB Control No. 3235–0695 for the collections of information for proposed Rule 17Ad–22(e).
Additionally, proposed Rule 17Ab2–2 would contain a new collection of information requirement for PRA purposes. The title of the new collection of information under this proposed rulemaking is Determinations Affecting Covered Clearing Agencies (a proposed new collection of information).
The Commission preliminarily believes information that would be required to be collected by virtue of written policies and procedure requirements contained in this proposed rulemaking reflects to a degree existing practices at covered clearing agencies.
With regard to proposed Rule 17Ad–22(e), given that several provisions of the proposed rule are intended to be consistent with Rule 17Ad–22, the Commission preliminarily believes that covered clearing agencies currently in compliance with the requirements of existing Rule 17Ad–22 may already have some written rules and procedures similar to those in proposed Rule 17Ad–22(e). Accordingly, when covered clearing agencies review and update their policies and procedures in order to come into compliance with proposed Rule 17Ad–22(e), the Commission preliminarily believes that the PRA burden would vary across the requirements of proposed Rule 17Ad–22(e), based on the complexities of the requirements under each paragraph of the proposed rule and the extent to which covered clearing agencies currently comply with the proposed requirements under their existing policies and procedures.
The portions of proposed Rule 17Ad–22(e) for which the PRA burden is preliminarily expected to be higher are the provisions contemplating requirements not addressed in Rule 17Ad–22, as discussed in Part II.A.4. Because these proposed requirements may not reflect established practices of covered clearing agencies or reflect the normal course of their activities, the PRA burden for these proposed rules may entail both initial one-time burdens to create new written policies and procedures and ongoing burdens. The expected PRA burden for the proposed rules is discussed in detail below.
In addition to the collection of information requirements imposed under proposed Rule 17Ad–22(e), proposed Rule 17Ab2–2 also would contain collection of information requirements for PRA purposes. Proposed Rule 17Ab2–2 establishes a process for making determinations regarding whether or not a clearing agency would be a covered clearing agency and whether a covered clearing agency is either involved in activities with a more complex risk profile or systemically important in multiple jurisdictions.
Proposed Rule 17Ad–22(e)(1) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for a well-founded, clear, transparent and enforceable legal basis for each aspect of its activities in all relevant jurisdictions.
Proposed Rule 17Ad–22(e)(2) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for governance arrangements that are clear and transparent, clearly prioritize the safety and efficiency of the covered clearing agency, and support the public interest requirements of Section 17A of the Exchange Act, and the objectives of owners and participants. Proposed Rule 17Ad–22(e)(2) would also require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for governance arrangements reasonably designed to establish that the covered clearing agency's board of directors and senior management have appropriate experience and skills to discharge their duties and responsibilities.
The purpose of this collection of information is to promote boards of directors that are composed of qualified members and that exercise oversight of the covered clearing agency's management, while also prioritizing the safety and efficiency of the covered clearing agency and supporting the public interest.
Proposed Rule 17Ad–22(e)(3) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain a sound risk management framework for comprehensively managing legal, credit, liquidity, operational, general business, investment, custody, and other risks that arise in or are borne by the covered clearing agency. Under the proposed rule, risk management policies, procedures, and systems must provide for the identifying, measuring, monitoring, and managing of risks that arise in or are borne by the covered clearing agency. Such policies and procedures must be subject to review on a specified periodic basis and be approved by the board of directors annually. The proposed rule would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for plans for the recovery and orderly wind-down of the covered clearing agency in the event of credit losses, liquidity shortfalls, losses from general business risk, or any other losses. The proposed rule would also require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to establish that risk management and internal audit personnel have sufficient resources, authority, and independence from management. The proposed rule would further require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to establish that risk management and internal audit personnel have a direct reporting line to, and are overseen by, a risk management committee and an audit committee of the board of directors, respectively. The proposed rule would also require policies and procedures providing for an independent audit committee.
The purpose of this collection of information is to enhance a covered clearing agency's ability to identify, monitor, and manage the risks clearing agencies face, including by subjecting the relevant policies and procedures to regular review, and to facilitate an orderly recovery and wind-down process in the event that a covered clearing agency is unable to continue operating as a going concern.
Proposed Rule 17Ad–22(e)(4) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively identify, measure, monitor, and manage its credit exposures to each participant and those exposures arising from payment, clearing, and settlement processes. Proposed Rule 17Ad–22(e)(4)(i) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain sufficient financial resources to cover its credit exposure to each member fully with a high degree of confidence. To the extent not already maintained pursuant to proposed Rule 17Ad–22(e)(4)(i), a covered clearing agency that provides CCP services would also have to establish, implement, maintain, and enforce written policies and procedures to meet either the “cover one” requirement under proposed Rule 17Ad–22(e)(4)(iii) or, if it is a complex risk profile clearing agency or systemically important in multiple jurisdictions, the “cover two” requirement under proposed Rule 17Ad–22(e)(4)(ii).
Proposed Rule 17Ad–22(e)(4)(iv) would require covered clearing agencies to establish, implement, maintain and enforce written policies and procedures reasonably designed to cover its credit exposures by including prefunded financial resources and excluding assessments for additional guaranty fund contributions or other resources that are not prefunded, when calculating financial resources available to meet the requirements under proposed Rules 17Ad–22(e)(4)(i) through (iii), as applicable.
Proposed Rule 17Ad–22(e)(4)(v) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain the financial resources required under proposed Rules 17Ad–22(e)(4)(i) through (iii), as applicable, in combined or separately maintained clearing or guaranty funds, and to test the sufficiency of its total financial resources by conducting a stress test of total financial resources once each day
Proposed Rule 17Ad–22(e)(4)(vi) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to test the sufficiency of its total financial resources available to meet the minimum financial resource requirements under proposed Rules 17Ad–22(e)(4)(i) through (iii), as applicable, by conducting stress tests and other comprehensive analyses. Specifically, those would include conducting a stress test of its total financial resources once each day using standard predetermined parameters and assumptions. It would also include conducting a comprehensive analysis on at least a monthly basis of the existing stress testing scenarios, models, and underlying parameters and assumptions, and considering modifications to ensure that they are appropriate for determining the covered clearing agency's required level of default protection in light of current market conditions. It would also include conducting a comprehensive analysis of stress testing scenarios, models, and underlying parameters and assumptions more frequently than monthly when the products cleared or markets served display high volatility, become less liquid, or when the size or concentration of positions held by its participants increases significantly. It would also include reporting the results of this analysis to appropriate decision makers, including its risk management committee or board of directors, and to use these results to evaluate the adequacy of and adjust its margin methodology, model parameters, models used to generate clearing or guaranty fund requirements, and any other relevant aspects of its credit risk management policies and procedures, in supporting compliance with the minimum financial resources requirements discussed above.
Finally, proposed Rule 17Ad–22(e)(4)(vii) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to require the covered clearing agency to perform a conforming model validation for its credit risk models at least annually, or more frequently if dictated by the covered clearing agency's risk management policies and procedures established under proposed Rule 17Ad–22(e)(3).
Rule 17Ad–22(e)(5) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to limit the assets it accepts as collateral to those with low credit, liquidity, and market risks. It also would require policies that set and enforce appropriately conservative haircuts and concentration limits if the covered clearing agency requires collateral to manage its or its participants' credit exposure and would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to require a not-less-than-annual review of the sufficiency of its collateral haircut and concentration limits.
Proposed Rule 17Ad–22(e)(6) would require a covered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to cover its credit exposures to its participants by establishing a risk-based margin system. The proposed rule would require such margin system to consider, and produce margin levels commensurate with, the risks and particular attributes of each relevant product, portfolio, and market. Furthermore, under the proposed rule the margin system would mark participant positions to market and collect margin, including variation margin or equivalent charges if relevant, at least daily, and include the authority and operational capacity to make intraday margin calls in defined circumstances. The proposed rule also requires policies and procedures with respect to the following: The calculation of margin sufficient to cover a covered clearing agency's potential future exposure to participants in the interval between the last margin collection and close out of positions following a participant default; the use of reliable sources of timely price data and procedures and sound valuation models for addressing circumstances in which pricing data are not readily available or reliable; and the use of an appropriate method for measuring credit exposure that accounts for relevant product risk factors and portfolio effects across products.
In addition to requiring policies and procedures with respect to a risk-based margin system, proposed Rule 17Ad–22(e)(6) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to regularly review, test, and verify risk-based margin systems by conducting backtests at least once each day and, at least monthly, a conforming sensitivity analysis of its margin resources and its parameters and assumptions for backtesting, and consider modifications to ensure the backtesting practices are appropriate for determining the adequacy of its margin resources. Such review, testing, and verification would include conducting a conforming sensitivity analysis more frequently than monthly when the products cleared or markets served display high volatility, become less liquid, or when the size or concentration of positions held by participants increase or decrease significantly. The proposed rule would also require a covered clearing agency providing CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to report the results of such conforming sensitivity analysis to appropriate decision makers, including its risk management committee or board of directors, and use these results to evaluate the adequacy of and adjust its margin methodology, model parameters, and any other relevant aspects of its credit risk management policies and procedures. Finally, under such policies and procedures, a not less than annual conforming model validation would be required for the covered clearing agency's margin system and related models.
Proposed Rule 17Ad–22(e)(7) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively measure, monitor, and manage the liquidity risk that arises in or is borne by the covered clearing agency, including measuring, monitoring, and managing its settlement and funding flows on an ongoing and timely basis and its use of intraday liquidity. Under the proposed rule, a covered clearing agency would be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain sufficient liquid resources in all relevant currencies to effect same-day and,
For the purposes of meeting such liquid resource requirements, a covered clearing agency would be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to require the holding of qualifying liquid resources in each relevant currency for which clearing activities are performed, limited to (i) cash at the central bank of issue or at creditworthy commercial banks; (ii) assets that are readily available and convertible into cash through prearranged funding arrangements without material adverse change provisions, such as committed lines of credit, committed foreign exchange swaps, committed repurchase agreements, and other prearranged funding arrangements determined to be highly reliable even in extreme but plausible market conditions by the board of directors, following an annual review conducted for this purpose; and (iii) other assets that are readily available and eligible for pledging to (or conducting other appropriate forms of transactions with) a relevant central bank, provided that the covered clearing agency had access to routine credit at the central bank.
With respect to a covered clearing agency's sources of liquidity, the proposed rule would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to undertake due diligence to confirm that it has a reasonable basis to believe each of its liquidity providers, whether or not such liquidity provider is a clearing member, has sufficient information to understand and manage the liquidity provider's liquidity risks, and the capacity to perform as required under its commitments to provide liquidity. Furthermore, under such policies and procedures, on at least an annual basis, a covered clearing agency would be required to maintain and test with each liquidity provider to the extent practicable the covered clearing agency's procedures and operational capacity for accessing each type of liquidity resource by conducting stress testing of its liquidity resources using standard and predetermined parameters and assumptions at least once each day. Additionally, a covered clearing agency would be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to determine the amount and regularly test the sufficiency of the liquid resources held for purposes of meeting the minimum liquid resource requirement by (i) conducting a stress test of its liquidity resources using standard and predetermined parameters and assumptions at least once each day; and (ii) conducting a comprehensive analysis of the existing stress testing scenarios, models, and underlying parameters and assumptions used in evaluating liquidity needs and resources, and considering modifications to ensure they are appropriate in light of current and evolving market conditions at least once a month and more frequently when products cleared or markets served display high volatility, become less liquid, or when the size or concentration of positions held by participants increase significantly.
Under such policies and procedures required by the proposed rule, stress test results must be reported to appropriate decision makers, including the risk management committee or board of directors, at the covered clearing agency for use in evaluating the adequacy of and adjusting its liquidity risk management policies and procedures. A covered clearing agency would also be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to perform an annual conforming model validation of its liquidity risk models and would be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to address foreseeable liquidity shortfalls that would not be covered by its liquid resources and to seek to avoid unwinding, revoking, or delaying the same-day settlement of payment obligations. Additionally, a covered clearing agency would be required to establish, implement, maintain and enforce written policies and procedures that describe the covered clearing agency's process to replenish any liquid resources that may be employed during a stress event.
Finally, a covered clearing agency would be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to require the covered clearing agency to undertake an analysis at least once a year that evaluates the feasibility of maintaining sufficient liquid resources at a minimum in all relevant currencies to effect same-day and, where appropriate, intraday and multiday settlement of payment obligations with a high degree of confidence under a wide range of foreseeable stress scenarios that includes, but is not limited to, the default of the two participant families that would potentially cause the largest aggregate credit exposure for the covered clearing agency in extreme but plausible market conditions if the covered clearing agency provides central counterparty services and is either systemically important in multiple jurisdictions or a clearing agency involved in activities with a more complex risk profile.
The purpose of this information collection is to enable a covered clearing agency to be able to effectively identify and limit exposures to participants, to maintain sufficient collateral or margin, and to satisfy all of its settlement obligations in the event of a participant default.
Proposed Rule 17Ad–22(e)(8) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to define the point at which settlement is final no later than the end of the day on which the payment or obligation is due and, where necessary or appropriate, either intraday or in real time.
Proposed Rule 17Ad–22(e)(9) would require covered clearing agencies to establish, implement, maintain and enforce written policies and procedures reasonably designed to have the covered clearing agency conduct its money settlements in central bank money, where available and determined to be
Proposed Rule 17Ad–22(e)(10) would require a covered clearing agency to establish, implement, maintain and enforce written policies reasonably designed to set forth transparent written standards regarding a clearing agency's obligations with respect to the delivery of physical instruments, as well as operational practices that identify, monitor, and manage the risk associated with such physical deliveries.
The purpose of this information collection is to promote consistent standards of timing and reliability in the settlement process, promote reliability in a covered clearing agency's settlement operations, and to provide a covered clearing agency's participants with information necessary to evaluate the risks and costs associated with participation in the covered clearing agency.
The purpose of this collection of information is to reduce securities transfer processing costs and risks associated with securities settlement and custody, increase the speed and efficiency of the settlement process, and eliminate risk in transactions with linked obligations.
Proposed Rule 17Ad–22(e)(11) would require a covered CSD to establish, implement, maintain and enforce written policies and procedures reasonably designed to implement internal auditing and other controls to safeguard the rights of securities issuers and holders and prevent the unauthorized creation or deletion of securities. A covered CSD would also be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to conduct periodic and at least daily reconciliation of securities issues that the CSD maintains. Additionally, the proposed rule would require a covered CSD to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain securities in an immobilized or dematerialized form, ensure the integrity of securities issues, and minimize and manage the risks associated with the safekeeping and transfer of securities, as well as protect assets against custody risk.
Proposed Rule 17Ad–22(e)(12) would require a covered clearing agency that settles transactions involving the settlement of two linked obligations to establish, implement, maintain and enforce written policies and procedures reasonably designed to eliminate principal risk by conditioning the final settlement of one obligation upon the final settlement of the other, irrespective of whether the covered clearing agency settles on a gross or net basis and when finality occurs.
The purpose of this collection of information is to facilitate the functioning of a covered clearing agency in the event that a participant fails to meet its obligations, as well as limit the extent to which a participant's failure can spread to other participants or the covered clearing agency itself, and to ensure the safe and effective holding and transfer of customers' positions and collateral in the event of a participant's default or insolvency.
Proposed Rule 17Ad–22(e)(13) would require covered clearing agencies providing CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure that a covered clearing agency subject to this rule has sufficient authority and operational capability to contain losses and liquidity demands in a timely fashion and continue to meet its own obligations. The proposed rule would also require that a covered clearing agency subject to the rule establish, implement, maintain and enforce written policies and procedures reasonably designed to address the allocation of credit losses it may face if its collateral or other resources are insufficient to fully cover its credit exposures, describe the process whereby the clearing agency would replenish any financial resources it may use following a default or other event in which the use of such resources is contemplated, and require participants and other stakeholders, to the extent applicable, to participate in the testing and review of its default procedures, including any close out procedures. Under such policies and procedures, the testing and review must occur at least annually and following any material changes thereto.
Proposed Rule 17Ad–22(e)(14) would require a covered clearing agency that provides CCP services for security-based swaps or engages in activities that the Commission has determined to have a more complex risk profile to establish, implement, maintain and enforce written policies and procedures reasonably designed to enable the segregation and portability of positions of a participant's customers and collateral and effectively protect such positions and collateral from the default or insolvency of that participant.
The purpose of this collection of information is to mitigate the potential impairment of a covered clearing agency as a result of a decline in revenues or increase in expenses, to limit disruptions that may impede the proper functioning of a covered clearing agency, and to improve the ability of a covered clearing agency to meet its settlement obligations.
Proposed Rule 17Ad–22(e)(15) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to identify, monitor, and manage general business risk and hold sufficient liquid net assets funded by equity to cover potential general business losses so that the covered clearing agency can continue operations and services as a going concern if losses materialize. Covered clearing agencies would also be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to determine the amount of liquid net assets funded by equity based upon the general risk profile of that clearing agency and the
Proposed Rule 17Ad–22(e)(16) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to safeguard its own assets, as well as the assets of its participants, and to minimize the risk of loss and delay in access to such assets. A covered clearing agency would be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to invest such assets in instruments with minimal credit, market and liquidity risks.
Proposed Rule 17Ad–22(e)(17) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to manage operational risk. A covered clearing agency would be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to identify the plausible sources of operational risk, both internal and external, and mitigate their impact through the use of appropriate systems, policies, procedures, and controls. A covered clearing agency would also be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure that systems have a high degree of security, resiliency, operational reliability, and adequate, scalable capacity. The proposed rule would also require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to establish and maintain a business continuity plan that addresses events posing a significant risk of disrupting operations.
The purpose of the collection of information is to enable a covered clearing agency to ensure that only entities with sufficient financial and operational capacity are direct participants in the covered clearing agency while ensuring that all qualified persons can access a covered clearing agency's services; to enable a covered clearing agency to monitor that participation requirements are met on an ongoing basis and to identify a participant experiencing financial difficulties before the participant fails to meet its settlement obligations; and to enable a covered clearing agency to identify and manage risks posed by non-member entities.
Proposed Rule 17Ad–22(e)(18) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to establish objective, risk-based, and publicly disclosed criteria for participation, which permit fair and open access by direct and, where relevant, indirect participants and other FMUs, and require participants to have sufficient financial resources and robust operational capacity to meet obligations arising from participation in the clearing agency. A covered clearing agency would also be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to monitor compliance with such participation requirements on an ongoing basis.
Proposed Rule 17Ad–22(e)(19) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to identify, monitor, and manage the material risks to the covered clearing agency arising from arrangements in which firms that are indirect participants rely on services provided by direct participants to access the covered clearing agency's payment, clearing, or settlement facilities.
Proposed Rule 17Ad–22(e)(20) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to identify, monitor, and manage risks related to any link with one or more other clearing agencies, FMUs, or trading markets.
The purpose of this collection of information is to ensure that the services provided by a covered clearing agency do not become inefficient and to promote the sound operation of a covered clearing agency. The collection of information is also intended to ensure the prompt and accurate clearance and settlement of securities transactions by enabling participants to communicate with a clearing agency in a timely, reliable, and accurate manner.
Proposed Rule 17Ad–22(e)(21) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to require the covered clearing agency to be efficient and effective in meeting the requirements of its participants and the markets it serves. Additionally, the rule would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to have the management of a covered clearing agency regularly review the efficiency and effectiveness of the covered clearing agency's (i) clearing and settlement arrangement; (ii) operating structure, including risk management policies, procedures, and systems; (iii) scope of products cleared, settled, or recorded; and (iv) use of technology and communications procedures.
Proposed Rule 17Ad–22(e)(22) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to use, or at a minimum, accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, and settlement.
Proposed Rule 17Ad–22(e)(23) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain clear and comprehensive rules and procedures that provide for (i) publicly disclosing all relevant rules and material procedures, including key aspects of default rules and procedures; (ii) providing sufficient information to enable participants to identify and evaluate the risks, fees, and other material costs incurred by participating in a covered clearing agency; and (iii) publicly disclosing relevant basic data on transaction volume and values. The proposed rule would also require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain clear and comprehensive rules and procedures that provide for a comprehensive public disclosure of its material rules, policies, and procedures regarding governance arrangements and legal, financial, and operational risk management that is accurate in all material respects at the time of publication and to update this public disclosure every two years, or more frequently following changes to the clearing agency's system or the environment in which it operates to the extent necessary to ensure that previous statements remain accurate in all material respects.
Proposed Rule 17Ab2–2 establishes a process for making determinations regarding whether a clearing agency is a covered clearing agency and whether a covered clearing agency is either involved in activities with a more complex risk profile or systemically important in multiple jurisdictions.
The Commission estimates that the majority of the proposed requirements under proposed Rule 17Ad–22(e) would apply to five registered clearing agencies. The proposed requirements in proposed Rules 17Ad–22(e)(1) through (23) would impose a PRA burden on covered clearing agencies. A covered clearing agency is defined under proposed Rule 17Ad–22(a)(7) as any designated clearing agency, clearing agency involved in activities with a more complex risk profile for which the CFTC is not the supervisory agency as defined in Section 803(8) of the Clearing Supervision Act, or a clearing agency determined by the Commission to be a covered clearing agency pursuant to proposed Rule 17Ab2–2.
In addition to the four designated clearing agencies for which the Commission is the supervisory agency, a fifth clearing agency would also be subject to the proposed rules as a complex risk profile clearing agency that provides CCP services for security-based swaps for which the CFTC is not the supervisory agency under the Clearing Supervision Act.
While the proposed rules would be applicable to the five registered clearing agencies currently captured by the definition of covered clearing agency, the Commission estimates that two additional entities may seek to register with the Commission and that one of these entities may seek to register in order to provide CCP services for security-based swaps. Upon registration, these two entities may be deemed covered clearing agencies and would be subject to proposed Rule 17Ad–22(e).
The number of covered clearing agencies subject to proposed Rule 17Ad–22(e) could increase if the FSOC designates additional clearing agencies as systemically important.
With regard to proposed Rule 17Ab2–2, the Commission preliminarily estimates for purposes of the PRA analysis that two registered clearing agencies or their members on their behalf will apply for a Commission determination, or may be subject to a Commission-initiated determination, regarding whether the registered clearing agency is a covered clearing agency, whether a registered clearing agency is involved in activities with a more complex risk profile, or whether a covered clearing agency is systemically important in multiple jurisdictions.
The Commission preliminarily believes that the potential PRA burden imposed by the requirements under proposed Rule 17Ad–22(e) will vary depending on the requirement in question because registered clearing agencies are subject to existing requirements under Rule 17Ad–22 that, in some cases, are similar to those in proposed Rule 17Ad–22(e), as discussed in Part II.
First, because proposed Rules 17Ad–22(e)(1), (8) through (10), (12), (14),
Second, because proposed Rules 17Ad–22(e)(2), (3), (5), (11), (13), (17), (18), (20), and (21) contain provisions that are similar to those under existing Rule 17Ad–22 but would impose additional requirements that do not appear in existing Rule 17Ad–22, the Commission preliminarily believes that covered clearing agencies may need to make changes to update their policies and procedures to satisfy the proposed requirements. In these cases, as an example, a covered clearing agency may need to review and amend its existing rule book, policies, and procedures but may not need to develop, design, or implement new operations and practices to satisfy the proposed requirements.
Third, for proposed Rules 17Ad–22(e)(4), (6), (7), (15), (19), and (23), for which no similar existing requirements under Rule 17Ad–22 have been identified,
The Commission requests comment regarding the accuracy of the estimates discussed below.
Proposed Rule 17Ad–22(e)(1) contains substantially the same requirements as Rule 17Ad–22(d)(1).
Proposed Rule 17Ad–22(e)(1) would also impose ongoing burdens on a respondent clearing agency. The proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the
Proposed Rule 17Ad–22(e)(2) contains some provisions that are similar to Rule 17Ad–22(d)(8), but also adds additional requirements that do not appear in existing Rule 17Ad–22.
Proposed Rule 17Ad–22(e)(2) would also impose ongoing burdens on a respondent clearing agency. The proposed requirement would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Proposed Rule 17Ad–22(e)(3) would require a covered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for a sound risk management framework.
Proposed Rule 17Ad–22(e)(3) would also impose ongoing burdens on a respondent clearing agency. The proposed requirement would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule and activities related to preparing documents facilitating a periodic review of the risk management framework. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
The Commission preliminarily believes that the estimated PRA burdens for proposed Rule 17Ad–22(e)(4) would be more significant, as changes to existing policies and procedures would involve more than adjustments and may require a respondent clearing agency to make substantial changes to its policies and procedures.
Proposed Rule 17Ad–22(e)(4) would also impose ongoing burdens on a respondent clearing agency. The proposed rule would require ongoing monitoring and compliance activities
Respondent clearing agencies that would be subject to proposed Rule 17Ad–22(e)(5) may already have some written policies and procedures designed to address the collateral risks borne by these entities.
Proposed Rule 17Ad–22(e)(5) would also impose ongoing burdens on a respondent clearing agency. The proposed requirement would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule and would also result in an annual review of collateral haircuts and concentration limits. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
The Commission preliminarily believes that the estimated PRA burdens for proposed Rule 17Ad–22(e)(6) would be more significant and may require a respondent clearing agency to make substantial changes to its policies and procedures.
Proposed Rule 17Ad–22(e)(6) would also impose ongoing burdens on a respondent clearing agency. The proposed requirement would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule and activities associated with the daily backtesting and monthly (or more frequent) sensitivity analysis requirements and annual model validation. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
The Commission preliminarily believes that the estimated PRA burdens for proposed Rule 17Ad–22(e)(7) would be more significant and may require a respondent clearing agency to make substantial changes to its policies and procedures.
Proposed Rule 17Ad–22(e)(7) would also impose ongoing burdens on a respondent clearing agency. The proposed requirement would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule as well as activities related to the testing of sufficiency of liquidity resources and the testing of access to liquidity providers. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Proposed Rule 17Ad–22(e)(8) contains substantially similar provisions to Rule 17Ad–22(d)(12).
Proposed Rule 17Ad–22(e)(8) would also impose ongoing burdens on a respondent clearing agency. The proposed requirements would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rules. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Proposed Rule 17Ad–22(e)(9) contains substantially similar provisions to Rule 17Ad–22(d)(5).
Proposed Rule 17Ad–22(e)(9) would also impose ongoing burdens on a respondent clearing agency. The proposed requirement would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Proposed Rule 17Ad–22(e)(10) contains substantially similar provisions to Rule 17Ad–22(d)(15).
Proposed Rule 17Ad–22(e)(10) would also impose ongoing burdens on a respondent clearing agency. The proposed requirement would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Proposed Rule 17Ad–22(e)(11) contains similar provisions to Rule 17Ad–22(d)(10).
Proposed Rule 17Ad–22(e)(11) would also impose ongoing burdens on the respondent clearing agency providing CSD services. The proposed requirement would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Proposed Rule 17Ad–22(e)(12) contains substantially similar provisions to Rule 17Ad–22(d)(13).
Proposed Rule 17Ad–22(e)(12) would also impose ongoing burdens on a covered clearing agency. The proposed requirement would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Proposed Rule 17Ad–22(e)(13) would require a respondent clearing agency to have written policies and procedures reasonably designed to address participant default and ensure that the clearing agency can contain losses and liquidity demands and continue to meet its obligations. Proposed Rule 17Ad–22(e)(13) contains similar provisions to Rule 17Ad–22(d)(11) but would also impose additional requirements that do not appear in existing Rule 17Ad–22.
Proposed Rule 17Ad–22(e)(13) would also impose ongoing burdens on a respondent clearing agency. Specifically, the proposed rule would require annual review and testing of a clearing agency's default policies and procedures. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Registered clearing agencies that provide CCP services for security-based swaps generally have written policies and procedures regarding the segregation and portability of customer positions and collateral as a result of applicable regulations but not existing Rule 17Ad–22.
Proposed Rule 17Ad–22(e)(14) would also impose ongoing burdens on a respondent clearing agency that provides CCP services for security-based swaps. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Respondent clearing agencies would be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to identify and manage general business risks borne by the clearing agency. Policies and procedures governing the identification and mitigation of general business risk are not currently required under existing Rule 17Ad–22 and, as a result, the Commission preliminarily believes that the estimated PRA burdens for proposed Rule 17Ad–22(e)(15) would be more significant and may require a respondent clearing agency to make substantial changes to its policies and procedures.
Proposed Rule 17Ad–22(e)(15) would also imposed ongoing burdens on a respondent clearing agency. Proposed Rule 17Ad–22(e)(15) would require a respondent clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain a viable plan, approved by its board of directors and updated at least annually, for raising additional equity in the event that the covered clearing agency's liquid net assets fall below the level required by the proposed rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
A registered clearing agency is currently required to have written policies and procedures reasonably designed to address, in large part, the safeguarding of assets of its assets and those of its participants under Rule 17Ad–22(d)(3).
Proposed Rule 17Ad–22(e)(16) would also impose ongoing burdens on a respondent clearing agency. It would require ongoing monitoring and compliance activities with respect to the policies and procedures implemented in response to the requirements of the proposed rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Proposed Rule 17Ad–22(e)(17) contains similar requirements to those under Rule 17Ad–22(d)(4) but would also impose additional requirements that do not appear in existing Rule 17Ad–22.
Proposed Rule 17Ad–22(e)(17) would also impose ongoing burdens on a respondent clearing agency. Specifically, the proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Proposed Rule 17Ad–22(e)(18) contains similar requirements to those in existing Rules 17Ad–22(b)(5) through (7) and (d)(2).
Proposed Rule 17Ad–22(e)(18) would also impose ongoing burdens on a respondent clearing agency. Specifically, the proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Respondent clearing agencies would be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to address material risks associated from tiered participation arrangements as required by proposed Rule 17Ad–22(e)(19). Tiered participation arrangements are not addressed in existing Rule 17Ad–22. To the extent that a respondent clearing agency has not addressed tiered participation arrangements in its policies and procedures, the Commission preliminarily believes that the respondent clearing agency would need to create policies and procedures to address these proposed requirements. In this regard, the PRA burden for proposed Rule 17Ad–22(e)(19) would impose one-time initial burdens to create policies and procedures. The Commission preliminarily estimates that proposed Rule 17Ad–22(e)(19) would impose an aggregate one-time burden on respondent clearing agencies of 308 hours to create said policies and procedures.
Proposed Rule 17Ad–22(e)(19) would also impose ongoing burdens on a respondent clearing agency. Specifically, the proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Registered clearing agencies are currently required to have written policies and procedures reasonably designed to manage risks related to links between the clearing agency and others under Rule 17Ad–22(d)(7). Proposed Rule 17Ad–22(e)(20) contains similar requirements, but also imposes additional requirements.
Proposed Rule 17Ad–22(e)(20) would also impose ongoing burdens on a respondent clearing agency. Specifically, the proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the rule. Based on the Commission's previous estimates for ongoing monitoring and compliance
Registered clearing agencies are currently required to have written policies and procedures requiring the clearing agency to be cost effective with respect to meeting the requirements of its participants and the markets it serves under Rule 17Ad–22(d)(6), and proposed Rule 17Ad–22(e)(21) contains similar requirements but also imposes new requirements.
Proposed Rule 17Ad–22(e)(21) would also impose ongoing burdens on a respondent clearing agency. The proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures required under the proposed rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Respondent clearing agencies would be required to establish, implement, maintain and enforce written policies and procedures reasonably designed to implement the requirements of proposed Rule 17Ad–22(e)(22) with respect to the use of relevant internationally accepted communication procedures and standards. Although registered clearing agencies are not subject to an existing similar requirement under Rule 17Ad–22, the Commission understands that covered clearing agencies currently use the relevant internationally accepted communication procedures and standards and expects a covered clearing agency would need to make only limited changes to satisfy the requirements under the proposed rule.
Proposed Rule 17Ad–22(e)(22) would also impose ongoing burdens on a respondent clearing agency. Specifically, the proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
Proposed Rule 17Ad–22(e)(23) contains similar requirements to Rule 17Ad–22(d)(9) but also imposes substantial new requirements.
Proposed Rule 17Ad–22(e)(23) would also impose ongoing burdens on a respondent clearing agency. Specifically, the proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad–22,
The aggregate initial burden for respondent clearing agencies under proposed Rule 17Ad–22(e) would be 10,664 hours. The aggregate ongoing burden for respondent clearing agencies under proposed Rule 17Ad–22(e) would be 3,460 hours.
Proposed Rule 17Ab2–2 would govern Commission determinations as to whether a registered clearing agency is a covered clearing agency and whether a covered clearing agency is either involved in activities with a more complex risk profile or systemically important in multiple jurisdictions.
The collection of information relating to proposed Rules 17Ad–22(e)(1) through (3), 17Ad–22(e)(4)(ii) through (v), 17Ad–22(e)(7)(i) through (ix), and 17Ad–22(e)(8) through (23) would be mandatory for all respondent clearing agencies. The collection of information requirement relating to proposed Rule 17Ad–22(e)(4)(i) and 17Ad–22(e)(7)(x) would be mandatory for a respondent clearing agency that provides CCP services and that is designated by the Commission either as systemically important in multiple jurisdictions or as a complex risk profile clearing agency. The collection of information requirement relating to proposed Rule 17Ad–22(e)(6) would be mandatory for a respondent clearing agency that provides CCP services.
The collection of information requirement relating to proposed Rule 17Ab2–2 is voluntary.
The Commission preliminarily expects that the written policies and procedures generated pursuant to proposed Rule 17Ad–22(e) would be communicated to the members, subscribers, and employees (as applicable) of all entities covered by the proposed rule and the public (as applicable). To the extent that this information is made available to the Commission, it would not be kept confidential. Such policies and procedures would be required to be preserved in accordance with, and for periods specified in, Exchange Act Rules 17a–1
To the extent that the Commission receives confidential information pursuant to the collection of information under proposed Rule 17Ab2–2, the Commission preliminarily expects such information would be kept confidential subject to the provisions of applicable law.
The Commission invites comments on all of the above estimates. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission requests comment in order to (a) evaluate whether the collection of information is necessary for the proper performance of our functions, including whether the information will have practical utility; (b) evaluate the accuracy of our estimates of the burden of the collection of information; (c) determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; (d) evaluate whether there are ways to minimize the burden of the collection of information on those who respond, including through the use of automated collection techniques or other forms of information technology; and (e) determine whether there are cost savings associated with the collection of information that have not been identified in this proposal.
Persons submitting comments on the collection of information requirements should direct them to the Office of Management and Budget, Attention: Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and should also send a copy of their comments to Kevin M. O'Neill, Deputy Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090, with reference to File No. S7–03–14. Requests for materials submitted to OMB by the Commission with regard to this collection of information should be in writing, with reference to File No. S7–03–14, and be submitted to the Securities and Exchange Commission, Office of Investor Education and Advocacy, 100 F Street NE., Washington, DC 20549–0213. As OMB is required to make a decision concerning the collections of information between 30 and 60 days after publication, a comment to OMB is best assured of having its full effect if OMB receives it by April 25, 2014.
The purpose of the proposed amendments to Rule 17Ad–22 and of proposed Rule 17Ab2–2 is to establish requirements for the operation and governance of registered clearing agencies that meet the definition of a “covered clearing agency.” Registered clearing agencies have become an essential part of the infrastructure of the U.S. securities markets. Many securities transactions are centrally cleared and settled, and central clearing and settlement is becoming more prevalent in the security-based swap markets. For example, DTCC reported processing $1.6 quadrillion in transactions in 2012.
ICE began clearing corporate single-name CDS in December 2009, and as of February 1, 2013, had cleared $1.9 trillion gross notional of single-name CDS on 153 North American corporate reference
ICEEU began clearing CDS on single-name corporate reference entities in December 2009, and, as of February 1, 2013, had cleared €1.6 trillion in gross notional of single-name CDS on 121 European corporate reference entities.
The mandated central clearing and settlement of security-based swaps wherever possible and appropriate, a core component of Title VII, reinforces this need.
Clearing agencies have several incentives to implement comprehensive risk management programs. First, the ongoing viability of a clearing agency depends on its reputation and the confidence that market participants have in its services. Clearing agencies therefore have an incentive to minimize the likelihood that a member default or operational outage would disrupt settlement. Second, some clearing agencies, including those that mutualize default risks, contribute a portion of their own capital as part of their contingent resources. Clearing agencies with such capital contributions to their contingent resources thus have an economic interest in sound risk management. Registered clearing agencies are SROs that enforce applicable rules and requirements under Commission oversight and are also in certain instances subject to CFTC oversight.
Nevertheless, clearing agencies' incentives for sound risk management may be tempered by pressures to reduce costs and maximize profits that are distinct from the public interest goals set forth in governing statutes, such as financial stability, and may result in clearing agencies choosing tradeoffs between the costs and benefits of risk management that are not socially efficient. Because the current market for clearing services is characterized by high barriers to entry and limited competition,
As discussed in more detail below, the proposed amendments to Rule 17Ad–22 represent a strengthening of the Commission's regulation of registered clearing agencies. The Commission preliminarily believes that the more specific requirements imposed by the proposed amendments will further mitigate potential moral hazard associated with risk management at covered clearing agencies. For instance, in the absence of policies and procedures that require periodic stress-testing and validation of credit and liquidity risk models, clearing agencies could potentially choose to recalibrate models in periods of low volatility and avoid recalibration in periods of high volatility, causing them to underestimate the risks they face.
The Commission also preliminarily believes that the additional specificity of proposed Rule 17Ad–22(e), along with proposed testing requirements, would be more effective at mitigating these particular manifestations of incentive misalignments than existing Rule 17Ad–22. The Commission preliminarily believes, as a result, that a general benefit of the proposed amendments would be reductions in the likelihood of CCP failure that result from improved safeguards. This general benefit would be realized to the extent that clearing agencies do not already conform to new requirements under the proposed amendments. Despite the potential incentive problems noted above and perhaps in anticipation of regulatory efforts, some registered clearing agencies have taken steps to update their policies and procedures in accordance with the standards contained in the proposed rules. The Commission notes that in some instances the proposed rules establish as a minimum regulatory requirement
In analyzing the economic consequences and effects of the rules proposed in this release, the Commission has been guided by the objectives of Section 17A of the Exchange Act to have due regard for the public interest, the protection of investors, the safeguarding of securities and funds, the maintenance of fair competition, and to otherwise further the purposes of the Exchange Act through the registration and regulation of clearing agencies.
The Commission preliminarily believes that the proposed amendments to Rule 17Ad–22 and proposed Rule 17Ab2–2 are consistent with the goals of Section 17A of the Exchange Act, to promote the prompt and accurate clearing and settlement of transactions in securities, of the Clearing Supervision Act, to enhance the supervision and oversight of clearing entities, and of Title VII, to create a robust regulatory structure for security-based swaps. In proposing these rules, the Commission is also mindful of the benefits that would accrue through maintaining consistency with regulations adopted by the Board and the CFTC.
The Commission is sensitive to the economic consequences and effects of the proposed rules, including their benefits and costs. In proposing these rules, the Commission has been mindful of the economic consequences of the decisions it makes regarding the scope of applying the proposed rules to covered clearing agencies. Moreover, the Commission acknowledges that, since many of the proposed rules require a covered clearing agency to adopt new policies and procedures, the economic effects and consequences of the proposed rules include those flowing from the substantive results of those new policies and procedures. Under Section 3(f) of the Exchange Act, whenever the Commission engages in rulemaking under the Exchange Act and is required to consider or determine whether an action is necessary or appropriate in the public interest, it must consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.
The Commission has attempted, where possible, to quantify the benefits and costs anticipated to flow from the proposed rules. In some cases, as indicated below, data to quantify the benefits and costs associated with the proposed rules are unavailable. For example, implementing policies and procedures that require stress testing of financial resources available to a covered clearing agency at least once each day may require additional investment in infrastructure, but the particular infrastructure requirements will depend on existing systems and a covered clearing agency's choice of modeling techniques. In other cases, quantification depends heavily on factors outside the control of the Commission, particularly with regard to the number of potential new entrants affected by the proposed rules that in the future may be designated systemically important by the FSOC.
Overall, the Commission preliminarily believes that the proposed rules represent improvements in risk management, be it systemic, legal, credit, liquidity, general business, custody, investment, or operational risk, in keeping with the requirements of Section 17A of the Exchange Act and the Dodd-Frank Act. The Commission preliminarily believes that the proposed rules will result in an increase in financial stability insofar as they result in minimum standards at covered clearing agencies that are higher than those standards implied by current practices at covered clearing agencies. In particular cases, such as new requirements related to management of liquidity risk and general business risk, stability may arise as a result of higher risk management standards at covered clearing agencies that effectively lower the probability that either covered clearing agencies or their members default. As explained in Part IV.C.2, reduced default probabilities for covered clearing agencies may, in turn, improve efficiency and capital formation.
To assess the economic effects of the proposed rules, including possible
More specifically, the baseline includes existing legal requirements applicable to registered clearing agencies providing CCP or CSD services as they exist at the time of this proposal, including applicable rules adopted by the Commission. Rule 17Ad–22 established a regulatory framework for registered clearing agencies, including security-based swap clearing agencies deemed registered pursuant to the Dodd-Frank Act.
In terms of current practice, registered clearing agencies are required to operate in compliance with the requirements set forth in Rule 17Ad–22, though they may vary in the particular ways they meet these requirements. Some variation in practices across clearing agencies derives from the products they clear and the markets they serve. Additionally, the Commission understands that certain registered clearing agencies have already adopted practices consistent with several of the standards set forth in the PFMI Report. Accordingly, because proposed Rule 17Ad–22(e) and proposed Rule 17Ab2–2 result in general consistency with the standards set forth in the PFMI Report, the Commission preliminarily believes the resulting benefits and costs to covered clearing agencies would, in some cases, be incremental because of the relationship between existing requirements applicable to registered clearing agencies,
In order to consider the broader implications of these proposed rules on market activity, including possible effects on efficiency, competition, and capital formation, the baseline also considers the current state of clearing and settlement services, including the number of registered clearing agencies, the distribution of members across these clearing agencies, and the volume of transactions these clearing agencies process. There are currently six registered clearing agencies that provide CCP services and one registered clearing agency that provides CSD services. As shown in Table 1, membership rates vary across these clearing agencies. Together, registered clearing agencies processed over $2 quadrillion in financial market transactions in 2012.
Registered clearing agencies are currently characterized by specialization and limited competition. Clearing and settlement services exhibit high barriers to entry and economies of scale. These features of the existing market, and the resulting concentration of clearing and settlement within a handful of entities, informs our examination of effects of the proposed amendments and rules on competition, efficiency, and capital formation.
The proposed amendments to Rule 17Ad–22 and proposed Rule 17Ab2–2 fit within the Commission's broad approach to regulation of the national system for clearance and settlement that comprises the baseline for the Commission's economic analysis. Key elements of the current regulatory framework for registered clearing agencies are Section 17A of the Exchange Act,
Title VII, in response to the 2008 financial crisis, provides the Commission and the CFTC with authority to regulate the mandatory exchange trading and central clearing and settlement of swaps that formerly may have been OTC derivatives.
The Clearing Supervision Act, adopted in Title VIII, provides for enhanced regulation of FMUs, such as clearing agencies, and for enhanced coordination between the Commission,
Rule 17Ad–22 under the Exchange Act, adopted in 2012, requires a registered clearing agency to establish, implement, maintain and enforce written policies and procedures that are reasonably designed to meet certain minimum requirements for their operations and risk management practices on an ongoing basis. These requirements are designed to work in tandem with the SRO rule filing process and the requirement in Section 17A that the Commission must make certain determinations regarding a clearing agency's rules and operations for purposes of initial and ongoing registration.
In addition to requirements under the Exchange Act, the Dodd-Frank Act, and Rule 17Ad–22, other regulatory efforts are relevant to our analysis of the economic effects of proposed Rule 17Ad–22(e). In July 2012, the BCBS published the Basel III capital requirements, which set forth interim rules governing the capital charges arising from bank exposures to CCPs related to OTC derivatives, exchange-traded derivatives, and securities financing transactions.
New capital charges under the Basel III framework relate to a bank's trade exposure and default fund exposure to a CCP and are a function of multiplying these exposures by a corresponding risk weight. Historically, these exposures have carried a risk weight of zero. As banking regulators adopt rules consistent with the Basel III capital requirements, however, these weights will increase. The risk weight assigned under the Basel III capital requirements varies depending on whether the counterparty is a QCCP. For example, risk weights for trade exposures to a CCP generally would vary between 20% and 100% depending on the CCP's credit quality, while trade exposures to a QCCP would carry only a 2% risk weight.
In some jurisdictions, banking regulators have already adopted rules that implement many requirements under the Basel III framework. For example, in its Capital Requirements Directive IV, which went into effect on July 17, 2013, the E.U. incorporated into its own legal framework the Basel III framework. Article 301 contains rules governing bank exposures to CCPs that are consistent with the Basel III framework. Similarly, the BCBS reports that the Basel III capital requirements, with the exception of capital conservation buffers and countercyclical buffers, are currently in force for Japanese banks.
In the United States, on July 9, 2013, the Board and the Office of the Comptroller of the Currency jointly issued regulatory capital rules for U.S. banks consistent with the Basel III framework. Upon its effective date of January 1, 2014, the Regulatory Capital Rules subject bank exposures to CCPs and QCCPs to increased risk weights as specified in the Basel III framework.
In Europe, under EMIR, legal persons incorporated under the law of an E.U. member state will only be able to use non-E.U. CCPs if those CCPs have been recognized under EMIR. Further, only non-E.U. CCPs recognized under EMIR will meet the conditions necessary to be considered a QCCP for E.U. purposes. Article 25 of EMIR outlines a recognition procedure for non-E.U. CCPs and Article 89 provides a timeline for recognition.
Additionally, the Basel III capital requirements, as adopted by the Board, the Office of the Comptroller of the Currency, and banking regulators in other jurisdictions, impose new capital requirements related to unconditionally cancellable commitments and other off-balance sheet exposures. For example, the Board and the Office of the Comptroller of the Currency will require banks to include 10% of the notional amount of unconditionally cancellable commitments in their calculation of total leverage exposure.
Efforts by the Board and the CFTC to adopt rules that are consistent with the standards set forth in the PFMI Report are also relevant to the economic analysis of the proposed rules.
In proposing the amendments to Rule 17Ad–22 and new Rule 17Ab2–2, the Commission is mindful of these regulations proposed by the Board and adopted by the CFTC, which seek to establish standards for designated FMUs and establish standards for certain DCOs, respectively.
Current industry practices are a critical element of the economic baseline for registered clearing agencies. Registered clearing agencies are required to operate in compliance with existing Rule 17Ad–22 and, the Commission understands, have begun implementing some of the standards set forth in the PFMI Report. Because proposed Rule 17Ad–22(e) is consistent with those standards and furthers the objectives of Section 17A of the Exchange Act, the Clearing Supervision Act, and Title VII of the Dodd-Frank Act, the Commission preliminarily believes that the proposed rule represents, where it imposes higher minimum standards on covered clearing agencies, an additional step towards improved risk management.
An overview of current practices is set forth below and includes discussion of covered clearing agency policies and procedures regarding general organization and risk management, including the management of legal, credit, liquidity, business, custody, investment, and operational risk. This discussion is based on the Commission's general understanding of current practices as of the date of this proposal, reflects the Commission's experience supervising registered clearing agencies, and is intended solely for the purpose of analyzing the economic effects of the Commission's proposal. The Commission notes that in each case, as SROs, registered clearing agencies are required to submit any proposed rule or any proposed change in, addition to, or deletion from the rules of the clearing agency to the Commission for review.
Legal risk is the risk that a registered clearing agency's rules, policies, or procedures may not be enforceable and concerns, among other things, its contracts, the rights of members, netting arrangements, discharge of obligations, and settlement finality. Cross-border activities of a registered clearing agency may also present elements of legal risk.
Rule 17Ad–22(d)(1) requires a registered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for a well-founded, transparent, and enforceable legal framework for each aspect of its activities in all relevant jurisdictions.
Rule 17Ad–22(d)(8) requires a registered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to have governance arrangements that are clear and transparent to fulfill the public interest requirements in Section 17A of the Exchange Act applicable to clearing agencies, to support the objectives of owners and participants, and to promote the effectiveness of the clearing agency's risk management procedures.
Each registered clearing agency has a board that governs its operations and supervises senior management. Each registered clearing agency also has an independent audit committee of the board and has established a board committee or committee of members tasked with overseeing the clearing agency's risk management functions. The boards of registered clearing agencies that would be subject to proposed Rule 17Ad–22(e) as covered clearing agencies currently include non-management members.
Rules 17Ad–22(b) and (d) require registered clearing agencies to establish, implement, maintain and enforce written policies and procedures reasonably designed to measure and mitigate credit exposures, identify operational risks, evaluate risks arising in connection with cross-border and domestic links for the purpose of clearing or settling trades, achieve DVP settlement, and implement risk controls to cover the clearing agency's credit exposures to participants.
In addition to meeting these requirements, the Commission understands that registered clearing agencies also specify actions to be taken when their resources are insufficient to cover losses faced by the registered clearing agency.
Registered clearing agencies that provide CCP services have a variety of options available to mitigate the financial risks to which they are exposed. While the manner in which a CCP chooses to mitigate these financial risks depends on the precise nature of the CCP's obligations, a common set of procedures have been implemented by many CCPs to manage credit and liquidity risks. Broadly, these procedures enable CCPs to manage their risks by reducing the likelihood of member defaults, limiting potential losses and liquidity pressure in the event of a member default, implementing mechanisms that allocate losses across members, and providing adequate resources to cover losses and meet payment obligations as required.
Registered clearing agencies that provide CCP services must be able to effectively measure their credit exposures in order to properly manage those exposures. A CCP faces the risk that its exposure to a member can change as a result of a change in prices, positions, or both. CCPs can ascertain current credit exposures to each member by, in some cases, marking each member's outstanding contracts to current market prices and, to the extent permitted by their rules and supported by law, by netting any gains against any losses. Rule 17Ad–22 includes certain requirements related to financial risk management by CCPs, including requirements to measure credit exposures to members and to use margin requirements to limit these exposures. These requirements are general in nature and provide registered clearing agencies flexibility to measure credit risk and set margin. Within the bounds of Rule 17Ad–22, CCPs may employ models and choose parameters that they conclude are appropriate to the markets they serve.
The current practices of registered clearing agencies that provide CCP services generally include the following procedures: (1) Measuring credit exposures at least once a day; (2) setting margin coverage at a 99% confidence level over some set period; (3) using risk-based models; (4) establishing a fund that mutualizes losses of defaults by one or more participants that exceed margin coverage; (5) maintaining sufficient financial resources to withstand the default of at least the largest participant family,
Rule 17Ad–22(b)(1) requires a registered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to measure their credit exposures at least once per day.
Rule 17Ad–22(b)(3) requires a registered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain sufficient financial resources to withstand, at a minimum, a default by the participant family to which it has the largest exposure in extreme but plausible market conditions.
Under existing rules, CCPs collect contributions from their members for the purpose of establishing guaranty or clearing funds to mutualize losses under extreme but plausible market conditions. Currently, the guaranty funds or clearing funds consist of liquid assets and their sizes vary depending on a number of factors, including the products the CCP clears and the characteristics of CCP members. In particular, the guaranty funds for CCPs that clear security-based swaps are relatively larger, as measured by the size of the fund as a percentage of the total and largest exposures, than the guaranty or clearing funds maintained by CCPs for other financial instruments. CCPs generally take the liquidity of collateral into account when determining member obligations. Applying haircuts to assets posted as margin, among other things, mitigates the liquidity risk associated with selling margin assets in the event of a participant default.
Rule 17Ad–22(b)(2) requires a registered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to use margin requirements to limit their exposures to participants.
Registered clearing agencies that provide CCP services take positions as substituted counterparties once their trade guarantee goes into effect. Therefore, if a counterparty whose obligations the registered clearing agency has guaranteed defaults, the covered clearing agency may face market risk, which can take one of two forms. First, a covered clearing agency is subject to the risk of movement in the market prices of the defaulting member's open positions. Where a seller defaults and fails to deliver a security, the covered clearing agency may need to step into the market to buy the security in order to complete settlement and deliver the security to the buyer. Similarly, where a buyer defaults, the covered clearing agency may need to meet payment obligations to the seller. Thus, in the interval between when a member defaults and when the covered clearing agency must meet its obligations as a substituted counterparty in order to complete settlement, market price movements expose the covered clearing agency to market risk. Second, the covered clearing agency may need to liquidate non-cash margin collateral posted by the defaulting member. The covered clearing agency is therefore exposed to the risk that erosion in market prices of the collateral posted by the defaulting member could result in the covered clearing agency having insufficient financial resources to cover the losses in the defaulting member's open positions.
To manage their exposure to market risk resulting from fulfilling a defaulting member's obligations, registered clearing agencies compute margin requirements using inputs such as portfolio size, volatility, and sensitivity to various risk factors that are likely to influence security prices. Moreover, since the size of price movements is, in part, a function of time, registered clearing agencies may limit their exposure to market risk by marking participant positions to market daily and, in some cases, more frequently. CCPs also use similar factors to determine haircuts applied to assets posted by members in satisfaction of margin requirements. To manage market risk associated with collateral liquidation, CCPs consider the current prices of assets posted as collateral and price volatility, asset liquidity, and the correlation of collateral assets and a member's portfolio of open positions. Further, because CCPs need to value their margin assets in times of financial stress, their rulebooks may include features such as market-maker domination charges that increase clearing fund obligations regarding open positions of members in securities in which the member serves as a dominant market maker. The reasoning behind this charge is that, should a member default, liquidity in products in which the member makes markets may fall, leaving these positions more difficult to liquidate for non-defaulting participants.
Rule 17Ab–22(b)(2) also requires a registered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide for risk-based models and parameters to set margin requirements.
Prior to this standard, banks measured value-at-risk using a range of confidence intervals from 90–99%.
Since its adoption in 1998, the standard has become a generally recognized practice of banks to quantify credit risk as the worst expected loss that a portfolio might incur over an appropriate time horizon at a 99% confidence interval.
Rule 17Ad–22(b)(2) also requires a registered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to review such margin requirements and the related risk-based models and parameters at least monthly.
In addition to credit risk and the aforementioned market risk, registered clearing agencies also face liquidity or funding risk. Currently, to complete the settlement process, registered clearing agencies that employ netting rely on incoming payments from participants in net debit positions in order to make payments to participants in net credit positions. If a participant does not have sufficient funds or securities in the form required to fulfill a payment obligation immediately when due (even though it may be able to pay at some future time), or if a settlement bank is unable to make an incoming payment on behalf of a participant, a registered clearing agency may face a funding shortfall. Such funding shortfalls may occur due to a lack of financial resources necessary to meet delivery or payment obligations, however even registered clearing agencies that do hold sufficient financial resources to meet their obligations may not carry those in the form required for delivery or payments to participants.
A registered clearing agency that provides CCP services may hold additional financial resources to cover potential funding shortfalls in the form of collateral. As noted above, CCPs may take the liquidity of collateral into account when determining member obligations. Applying haircuts to illiquid assets posted as margin mitigates the liquidity risk associated with selling margin assets in the event of participant default. Some registered CCPs also arrange for liquidity provision from other financial institutions using lines of credit. Additionally, some registered clearing agencies enter into prearranged funding agreements with their members pursuant to their rules. For example, members of one registered clearing agency are obligated to enter into repurchase agreements against securities that would have been delivered to a defaulting member.
No rule under the Exchange Act currently requires a registered clearing agency through its written policies and procedures to address liquidity risk.
Rule 17Ad–22(d)(5) requires a registered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to employ money settlement arrangements that eliminate or strictly limit the clearing agency's settlement bank risks and require funds transfers to the clearing agency to be final when effected.
Rule 17Ad–22(d)(10) requires a registered clearing agency that provides CSD services to establish, implement, maintain and enforce written policies and procedures reasonably designed to maintain securities in an immobilized or dematerialized form for transfer by book entry to the greatest extent possible. Currently, some securities, such as mutual fund securities and government securities, are issued primarily or solely on a dematerialized basis. Dematerialized shares do not exist as physical certificates but are held in book entry form in the name of the owner (which, where the master security holder file is not maintained on paper due to the use of technology, is also referred to as electronic custody). Other types of securities may be issued in the form of one or more physical security certificates, which could be held by the CSD to facilitate immobilization. Alternatively, securities may be held by the beneficial owner in record name, in the form of book-entry positions, where the issuer offers the ability for a security holder to hold through the direct registration system.
When a trade occurs, the depository's accounting system credits one participant account and debits another participant account. Transactions between counterparties in dematerialized shares are recorded by the registrar responsible for maintaining the paper or electronic register of security holders, such as by a transfer agent, and reflected in customer accounts.
Registered CSDs currently reconcile ownership positions in securities against CSD ownership positions on the security holders list daily, mitigating the risk of unauthorized creation or deletion of shares.
Rule 17Ad–22(d)(13) requires a registered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to eliminate principal risk by linking securities transfers to funds transfers in a way that achieves delivery versus payment,
For example, one registered clearing agency has rules governing its continuous net settlement (“CNS”) system, under which it becomes the counterparty for settlement purposes at the point its trade guarantee attaches, thereby assuming the obligation of its members that are receiving securities to receive and pay for those securities, and the obligation of members that are delivering securities to make the delivery. Unless the clearing agency has invoked its default rules, it is not obligated to make those deliveries until it receives from members with delivery obligations deliveries of such securities; rather, deliveries that come into CNS ordinarily are promptly redelivered to parties that are entitled to receive them through an allocation algorithm. Members are obligated to take and pay for securities allocated to them in the CNS process. These rules also provide mechanisms to allow receiving members a right to receive high priority in the allocation of deliveries, and also permit a member to buy-in long positions that have not been delivered to it by the close of business on the scheduled settlement date.
Rule 17Ad–22(d)(11) requires a registered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to make key aspects of its default procedures publicly available and establish default procedures that ensure it can take timely action to contain losses and liquidity pressures and to continue meeting its obligations in the event of a participant default. The rules of registered clearing agencies typically state what constitutes a default, identify whether the board or a committee of the board may make that determination, and describe what steps the clearing agency may take to protect itself and its members. In this regard, registered clearing agencies typically attempt, among other things, to hedge and liquidate a defaulting member's positions. Rules of registered clearing agencies also include information about the allocation of losses across available financial resources.
No rule under the Exchange Act currently requires a registered clearing agency through its written policies and procedures to enable the portability of positions of a member's customers and the collateral provided in connection therewith. Additionally, no rule under the Exchange Act currently requires a registered clearing agency through its written policies and procedures to protect the positions of a member's customers from the default or insolvency of the member.
Business risk refers to the risks and potential losses arising from a registered clearing agency's administration and operation as a business enterprise that are neither related to member default nor separately covered by financial resources designated to mitigate credit or liquidity risk. While Rule 17Ad–22 sets forth requirements for registered clearing agencies to identify, monitor, and mitigate or eliminate a broad array of risks through written policies and procedures, no rule under the Exchange Act expressly requires a registered clearing agency through its written policies and procedures to identify, monitor, and manage general business risk or to meet a capital requirement. Nonetheless, registered clearing agencies currently have certain internal controls in place to mitigate business risk. Some clearing agencies, for instance, have policies and procedures that identify an auditor who is responsible for examining accounts, records, and transactions, as well as other duties prescribed in the audit program. Other registered clearing agencies allow members to collectively audit the books of the clearing agency on an annual basis, at their own expense.
Registered clearing agencies face default risk from commercial banks that they use to effect money transfers among participants, to hold overnight deposits, and to safeguard collateral. Rule 17Ad–22(d)(3) requires a registered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to (i) hold assets in a manner that minimizes risk of loss or delay in its access to them; and (ii) invest assets in instruments with minimal credit, market, and liquidity risks.
Operational risk refers to a broad category of potential losses arising from deficiencies in internal processes, personnel, and information technology. Registered clearing agencies face operational risk from both internal and external sources, including human error, system failures, security breaches, and natural or man-made disasters. Rule 17Ad–22(d)(4) requires a registered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to identify sources of operational risk and to minimize those risks through the development of appropriate systems, controls and procedures.
As a result, registered clearing agencies have developed and currently maintain plans to assure the safeguarding of securities and funds, the integrity of automated data processing systems, and the recovery of securities, funds, or data under a variety of loss or destruction scenarios.
Rule 17Ad–22(b)(5) requires a registered clearing agency that provides CCP services to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide the opportunity for a person that does not perform any dealer or security-based swap dealer services to obtain membership on fair and reasonable terms at the clearing agency to clear securities for itself or on behalf of other persons.
In addition, Rule 17Ad–22(d)(2) requires a registered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to require participants to have sufficient financial resources and robust operational capacity to meet obligations arising from participation in the clearing agency, have procedures in place to monitor that participation requirements are met on an ongoing basis, and have participation requirements that are objective and publicly disclosed, and permit fair and open access.
Registered clearing agencies use an ongoing monitoring process to help them understand relevant changes in the financial condition of their members and to mitigate credit risk exposure of the clearing agency to its members. The risk management staff analyzes financial statements filed with regulators, as well as information obtained from other SROs and gathered from various financial publications, so that the clearing agency may evaluate, for instance, whether members maintain sufficient financial resources and robust operational capacity to meet their obligations as participants in the clearing agency pursuant to existing Rule 17Ad–22(d)(2)(i).
Table 1 contains membership statistics for registered clearing agencies.
Tiered participation arrangements occur when clearing members (direct participants) provide access to clearing services to third parties (indirect participants). No rule under the Exchange Act currently requires a registered clearing agency through its written policies and procedures to identify, monitor, and manage material risks arising from tiered participation arrangements. The Commission understands, however, that certain registered clearing agencies have policies and procedures currently in place in order to identify, monitor, or manage such arrangements. Specifically, such clearing agencies rely on information gathered from, and distributed by, direct participants in order to manage these tiered participation arrangements. For example, under some covered clearing agencies' rules, direct participants generally have the responsibility to indicate to the clearing agency whether a transaction submitted for clearing represents a proprietary or customer position. Such rules further require direct participants to calculate, and notify the clearing agency of the value of, each customer's collateral. Direct participants also communicate with indirect participants regarding the clearing agency's margin and other requirements.
Rule 17Ad–22(d)(7) requires a registered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to evaluate the potential sources of risks that can arise when the clearing agency establishes links either cross-border or domestically to clear or settle trades, and ensure that the risks are managed prudently on an ongoing basis.
Each registered clearing agency is linked to other clearing organizations, trading platforms, and service providers. For instance, a link between U.S. and Canadian clearing agencies allows U.S. members to clear and settle valued securities transactions with participants of a Canadian securities depository. The link is designed to facilitate cross-border transactions by allowing members to use a single depository interface for U.S. and Canadian dollar transactions and eliminate the need for split inventories.
Rule 17Ad–22(d)(6) requires a registered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to require the clearing agency to be cost-effective in meeting the requirements of participants while maintaining safe and secure operations.
Although no rule under the Exchange Act expressly requires a registered clearing agency through its written policies and procedures to use or accommodate relevant internationally accepted communication procedures and standards, the Commission believes that registered clearing agencies already use these standards. Registered clearing agencies typically rely on electronic communication with market participants, including members. For example, some registered clearing agencies have rules in place stating that clearing members must retrieve instructions, notices, reports, data, and other items and information from the clearing agency through electronic data retrieval systems. Some registered clearing agencies have the ability to rely on signatures transmitted, recorded, or stored through electronic, optical, or similar means. Other clearing agencies have policies and procedures that provide for certain emergency meetings using telephonic or other electronic notice.
Transparency requirements and disclosures by registered clearing agencies serve to limit the size of potential information asymmetries between registered clearing agencies, their members, and market participants. Rule 17Ad–22(d)(9) requires a registered clearing agency to establish, implement, maintain and enforce written policies and procedures reasonably designed to provide market participants with sufficient information for them to identify and evaluate risks and costs associated with using the clearing agency's services.
Besides providing market participants with information on the risks and costs associated with their services, registered clearing agencies regularly provide information to their members to assist them in managing their risk exposures and potential funding obligations. Some of these disclosures may be common to all members—such as information about the composition of clearing fund assets—while other disclosures that concern particular positions or obligations may only be made to individual members.
Currently, although Rule 17Ad–22(d) applies to registered clearing agencies, no mechanism exists for the Commission to make determinations with regard to covered clearing agencies of the type that would occur under proposed Rule 17Ab2–2.
The discussion below sets forth the potential economic effects stemming from the proposed rules. The section begins by framing more general economic issues related to the proposed amendments to Rule 17Ad–22 and proposed Rule 17Ab2–2. The discussion that follows considers the effects of the proposed rules on efficiency, competition, and capital formation. The section ends with a discussion of the benefits and costs flowing from specific provisions of the proposed amendments to Rule 17Ad–22 and proposed Rule 17Ab2–2.
The proposed amendments to Rule 17Ad–22, taken as a whole, would likely produce economic effects that are either conditioned on multiple provisions of proposed Rule 17Ad–22(e) being implemented as a set or are simply common to multiple provisions of the proposal. Since these economic effects are attributable in some way to each of the individual subsections of proposed Rule 17Ad–22(e), this section considers potential impacts of the proposed amendments, as a whole, through their effects on systemic risk, the discretion with which covered clearing agencies operate, market integrity, concentration in the market for clearing services and among clearing members, and QCCP status.
A large portion of financial activity in the United States ultimately flows through one or more registered clearing agencies that would become covered clearing agencies under the proposed rules. These clearing agencies have direct links to members and indirect links to the customers of members. They are also linked to each other through common members, operational processes, and in some cases cross-margining and cross-guaranty agreements. These linkages allow covered clearing agencies to provide opportunities for risk-sharing but also allow them to serve as potential conduits for risk transmission. Covered clearing agencies play an important role in fostering the proper functioning of financial markets. If they are not effectively managed, however, they may transmit financial shocks, particularly on days of market stress.
The centralization of clearance and settlement activities at covered clearing agencies allows market participants to reduce costs, increase operational efficiency, and manage risks more effectively.
The Commission recognizes that the degree of discretion permitted by the proposed rules partially determines their economic effect. Even where current practices at covered clearing agencies would not need to change significantly to comply with the proposed rules, covered clearing agencies could still potentially face costs associated with the limitations on discretion that will result from the proposed rules, including costs related to limiting a clearing agency's flexibility to respond to changing economic environments. For example, to the extent that covered clearing agencies currently in compliance with the proposed rules value the ability to periodically allow net liquid assets to drop below the minimum level specified by the proposed rules, they may incur additional costs because under the proposed rules they lose the option to do so.
Although there may be costs to limiting the degree of discretion covered clearing agencies have over risk management policies and procedures, the Commission preliminarily believes there are also potential benefits. As discussed above, clearing agencies may not fully internalize the social costs of poor internal controls and thus, given additional discretion, may not craft appropriate risk management policies and procedures. For example, even if existing regulation provides clearing agencies with the incentives necessary to manage risks appropriately in a static sense, they may not provide clearing agencies with incentives to update their risk management programs in response to dynamic market conditions. Additionally, efforts at cost reduction or profit maximization could encourage clearing agencies to reduce the quality of risk management by, for example, choosing to update parameters and assumptions rapidly in periods of low volatility while maintaining stale parameters and assumptions in periods of high volatility. By reducing covered clearing agencies' discretion over their policies and procedures, the proposed amendments to Rule 17Ad–22 may reduce the likelihood that risk management practices lag behind changing market conditions by requiring periodic analysis of model performance while paying particular attention to periods of high volatility or low liquidity.
Subjecting covered clearing agencies to more specific requirements may have other benefits for cleared markets as well. Recent academic research has explored the ways in which regulation affects liquidity in financial markets when participants are “ambiguity averse,” where ambiguity is defined as uncertainty over the set of payoff distributions for an asset.
The Commission preliminarily believes that the proposed amendments to Rule 17Ad–22 could provide the benefit of reduced potential for market fragmentation that may arise from different requirements across regulatory regimes. These benefits would flow to markets that are also supervised by the Board and the CFTC, and internationally, since cleared markets are global in nature and linked to one another through common participants.
Based on its consultation and coordination with other regulators, the Commission preliminarily believes its proposal is consistent and comparable, where possible and appropriate, with the rules and policy statement proposed by the Board and the rules adopted by the CFTC. The Board's proposed revisions to its PSR Policy incorporate only the headline principles contained in the PFMI Report and are consistent with the Commission's approach in proposed Rule 17Ad–22(e).
With respect to the rules proposed by the Board and adopted by the CFTC, in
In this case, the Commission notes that regulators have taken slightly different approaches to achieving disclosure of rules, key procedures, and market data. The CFTC requires disclosure through the CPSS–IOSCO Disclosure Framework.
The following discussion provides examples of proposed rule provisions that are representative of the differences between the Commission's proposal and the Board's proposal and the CFTC's final rules, where the Commission is proposing more detailed requirements than those proposed by the Board or adopted by the CFTC:
• In proposing Rule 17Ad–22(e)(4), the Commission would explicitly permit a covered clearing agency's policies and procedures to be reasonably designed to maintain financial resources either in combined or separately maintained clearing or default funds. Rules proposed by the Board and adopted by the CFTC do not include a comparable provision. The Commission preliminarily believes this requirement is appropriate because permitting a covered clearing agency to maintain a separate default fund for purposes of complying with proposed Rules 17Ad–22(e)(4)(ii) and (iii) increases the range of options available to covered clearing agencies when complying with this requirement and, when used appropriately, will allow a covered clearing agency to distribute the costs and responsibilities of clearing membership more equitably among clearing members.
• In proposing Rule 17Ad–22(e)(7), the Commission would permit a covered clearing agency's policies and procedures to include as qualifying liquid resources (i) assets that are readily available and convertible into cash through prearranged funding arrangements determined to be highly reliable even in extreme but plausible market conditions by the board of directors of the covered clearing agency, following a review conducted for this purpose not less than annually, and (ii) other assets that are readily available and eligible for pledging to a relevant central bank, if the covered clearing agency has access to routine credit at such central bank that permits said pledges or other transactions by the covered clearing agency. Rules proposed by the Board do not include a provision comparable to either of these two proposed requirements, and rules adopted by the CFTC do not include a provision including as qualifying liquid resources assets readily available and eligible for pledging to a central bank.
The Commission preliminarily believes this requirement is appropriate given the specific circumstances of the U.S. securities markets. U.S. securities markets are among the largest and most liquid in the world, and CCPs operating in the United States are also among the largest in the world. The resulting peak liquidity demands of CCPs are therefore proportionately large on both an individual and an aggregate basis, and the ability of CCPs to satisfy a requirement limiting qualifying liquid resources to committed facilities could be constrained by the capacity of traditional liquidity sources in the U.S. banking sector in certain circumstances. The Commission preliminarily believes that limiting the funding arrangements that are included within the definition of qualifying liquid resources to committed funding arrangements is not appropriate in the case of the U.S. securities markets and expanding the concept of qualifying liquid resources to include other highly reliable funding arrangements is necessary and appropriate to ensure the proper functioning of covered clearing agencies under the Exchange Act. For similar reasons, the Commission preliminarily believes it is appropriate to include in the definition of qualifying liquid resources assets that a central bank would permit a covered clearing agency to use as collateral, to the extent such covered clearing agency has access to routine credit at such central bank.
• In proposing Rule 17Ad–22(e)(13), the Commission would explicitly require a covered clearing agency's policies and procedures to be reasonably designed to ensure that the covered clearing agency has the authority and operational capacity to contain losses and liquidity demands in a timely manner and to continue to meet its obligations by, among other things, addressing the allocation of credit losses the covered clearing agency may face. Rules proposed by the Board and adopted by the CFTC do not include a comparable provision to address the allocation of credit losses.
• In proposing Rule 17Ad–22(e)(18), the Commission would explicitly require a covered clearing agency's policies and procedures to be reasonably designed to require monitoring of compliance with access and participation requirements. Rules proposed by the Board and adopted by the CFTC do not include a comparable provision. The Commission preliminarily believes this requirement is consistent with Exchange Act provisions requiring registered clearing agencies to have rules designed to not permit unfair discrimination in the admission of participants because it helps ensure that a covered clearing agency complies with its own membership requirements.
• In proposing Rule 17Ad–22(e)(19), the Commission would explicitly require a covered clearing agency's policies and procedures to be reasonably designed to require regular review of its tiered participation arrangements. Rules proposed by the Board and adopted by the CFTC do not include a comparable provision. The
The following discussion provides examples of proposed rule provisions that are representative of the differences between the Commission's proposal and the Board's proposal and the CFTC's final rules, where the Commission is proposing requirements that are more general than those proposed by the Board or adopted by the CFTC:
• In proposing Rule 17Ad–22(e)(2), the Commission would not require a covered clearing agency's policies and procedures to be reasonably designed to include requirements for disclosure of board decisions, review of the performance of the board of directors and individual directors, documentation and disclosure of governance arrangements, procedures for managing conflicts of interests involving board members, and oversight of the risk function. Rules adopted by the CFTC include such requirements.
• In proposing Rules 17Ad–22(e)(4) and (e)(7), the Commission would not require a covered clearing agency's policies and procedures for stress testing its financial resources and liquid resources, respectively, to cover specific stress scenarios, as rules adopted by the CFTC do.
• In proposing Rule 17Ad–22(e)(5), the Commission would not specifically require, as the CFTC does in its rules, a covered clearing agency's policies and procedures to be reasonably designed to (i) establish prudent valuation practices and develop haircuts that are tested regularly and take into account stressed market conditions (including to reduce the need for procyclical adjustments); (ii) avoid concentrated holdings of certain assets where it could significantly impair the ability to liquidate such assets quickly without significant adverse price effects; and (iii) use a collateral management system that is well designed and operationally flexible, such that it, among other things, accommodates changes in the ongoing monitoring and management of collateral; and (iv) allow for the timely valuation of collateral and execution of any collateral or margin calls.
• In proposing Rule 17Ad–22(e)(6), the Commission also would not require a covered clearing agency's policies and procedures to be reasonably designed to determine the appropriate historic time period for the margin methodology based on the characteristics of each product, spread, account, or portfolio or to require specifying minimum liquidation periods for different types of derivatives. Rules adopted by the CFTC include such requirements.
These differences between the Commission's proposal and the Board's proposed rules and the CFTC's final rules are provided here as examples of the differences observed between the respective rule sets and do not constitute an exhaustive list. In preliminarily formulating the specific requirements of the proposed rules in furtherance of Section 17A of the Exchange Act, the Commission was guided by its experience in supervising registered clearing agencies, including through the SRO rule filing process under Section 19(b) of the Exchange Act and Rule 19b–4, periodic inspections and examinations, and other monitoring of the activities of registered clearing agencies.
Further, CPSS–IOSCO members are also in various stages of implementing the standards set forth in the PFMI Report into their own regulatory regimes, and the Commission preliminarily believes that proposing a set of requirements generally consistent with the relevant international standards would result in diminished likelihood that participants in cleared markets would restructure and operate
Failure to maintain consistency with other regulators may disrupt cleared markets in a number of ways. Significant differences across regulatory regimes may encourage participants to restructure their operations in order to avoid a particular regulatory regime.
In the case of clearing agency standards, there are additional motivations for consistency with other regulatory requirements. The Commission preliminarily believes that such consistency would prevent the application of inconsistent regulatory burdens and thereby reduce the likelihood that participants in cleared markets would restructure and operate in less-regulated markets. Additionally, such consistency would allow foreign bank clearing members and foreign bank customers of clearing members of covered clearing agencies to be subject to lower capital requirements under the Basel III framework.
The economic effects associated with the proposed rules may also be partially determined by the economic characteristics of clearing agencies. Generally, the economic characteristics of FMIs, including clearing agencies, include specialization, economies of scale, barriers to entry, and a limited number of competitors.
The centralization of clearing activities in a relatively small number of clearing agencies somewhat insulated from market forces may result in a reduction in their incentives to innovate and to invest in the development of appropriate risk management practices on an ongoing basis, particularly when combined with the cost reduction pressures noted above in Part IV.A.
Market power may raise particular issues with respect to the allocation of benefits and costs flowing from these proposed rules and precipitate changes in the structure of the financial networks that are served by covered clearing agencies. For example, as a result of limited competition,
If incremental increases in costs lead clearing agencies to charge higher prices for their services, then certain clearing members may choose to terminate membership and cease to clear transactions for their customers. Should this occur the result may be further concentration among clearing members, where each remaining member clears a higher volume of transactions. In this case, clearing agencies and the financial markets they serve would be more exposed to these larger clearing members. These remaining clearing members may, however, each internalize more of the costs their activity in cleared markets imposes on the financial system.
The increased importance of a small set of clearing members, in turn, may result in firms not previously systemically important increasing in systemic importance. This is particularly true for clearing members that participate in multiple markets, both cleared and not cleared.
An effect of the proposed amendments to Rule 17Ad–22 is that covered clearing agencies required to comply with the proposed rules may be more likely to qualify as QCCPs in non-U.S. jurisdictions that have adopted the Basel III framework's QCCP definition. Under the Basel III framework, a QCCP is defined as an entity operating as a CCP that is prudentially supervised in a jurisdiction where the relevant regulator has established, and publicly indicated that it applies to the CCP on an ongoing basis, domestic rules and regulations that are consistent with the standards set forth in the PFMI Report.
The Basel III framework affects capital requirements for bank exposures to central counterparties in two important ways. The first relates to trade exposures, defined under the Basel III capital requirements as the current and potential future exposure of a clearing member or indirect participant in a CCP arising from OTC derivatives, exchange-traded derivatives transactions, and securities financing transactions. If these exposures are held against a QCCP, they will be assigned a risk weight of 2%. In contrast, exposures against non-qualifying CCPs do not receive lower capital requirements relative to bilateral exposures and are assigned risk weights between 20% and 100%, depending on counterparty credit risk. Second, the Basel III capital requirements impose a cap on risk weights applied to default fund contributions, limiting risk-weighted assets (subject to a 1250% risk weight) to a cap of 20% of a clearing member's trade exposures against a QCCP. This is in contrast to treatment of exposures against non-qualifying CCPs, which are uncapped and subject to a 1250% risk weight. Because QCCP status generally impacts capital treatment, any benefits of attaining QCCP status will likely accrue, at least in part, to foreign clearing members or foreign indirect participants subject to the Basel III capital requirements.
Non-U.S. banks that are constrained by Basel III tier one capital requirements would face a shock to risk-weighted assets once capital rules come into force.
In quantifying the benefits of achieving QCCP status, the Commission based its estimate on publicly available information with regard to OCC.
The Commission's analysis is limited in several respects and relies on several assumptions. First, a limitation of our proxy for trade exposures and our use of OCC's clearing fund is that the account balances include deposits by bank clearing members, who would experience lower capital requirements under the Basel III framework, and non-bank clearing members who would not. The Commission preliminarily assumes, for the purposes of establishing an upper bound for the benefits to market participants that are associated with QCCP status for OCC under the proposed rules, that the balance of both OCC's margin account and OCC's default fund are attributable only to bank clearing members. Additionally, we assume an extreme case where, in the absence of QCCP status, trade exposures against a CCP would be assigned a 100% risk weight, causing the largest possible shock to risk-weighted assets for affected banks.
Concluding that lower capital requirements on trade exposures to OCC would produce effects in the real economy also requires that certain conditions exist. Agency problems, taxes, or other capital market imperfections could result in banks targeting a particular capital structure. Further, capital constraints on bank clearing members subject to the Basel III framework should bind so that higher capital requirements on bank clearing members subject to the Basel III framework in the absence of QCCP status would cause these banks to exceed capital constraints if they chose to redistribute capital to shareholders or invest capital in projects with returns that exceed their cost of capital. Using publically available data, however, it is not currently possible to determine whether capital constraints will bind for bank clearing members when rules applying Basel III capital requirements come into force, so to estimate an upper bound for the effects of QCCP status on bank clearing members we assume that tier one capital constraints for all bank clearing members of OCC would bind in an environment with zero weight placed on bank exposures to CCPs.
For the purposes of quantifying potential benefits from QCCP status, the Commission has also assumed that banks choose to adjust to new capital requirements by deleveraging. In particular, the Commission assumed that banks would respond by reducing risk-weighted assets equally across all risk classes until they reach the minimum tier one capital ratio under the Basel framework of 8.5%. We measure the ongoing costs to each non-U.S. bank by multiplying the implied change in total assets by each bank's return on assets, estimated using up to 12 years of annual financial statement data.
The Basel III capital requirements for exposures to CCPs yield additional benefits for QCCPs that the Commission is currently unable to quantify due to lack of data concerning client clearing arrangements by banks. For client exposures to clearing members, the Basel III capital requirements allow participants to reflect the shorter close-out period of cleared transactions in their capitalized exposures. The Basel III framework's treatment of exposures to CCPs also applies to client exposures to CCPs through clearing members. This may increase the likelihood that bank clients of bank clearing members that are subject to the Basel III capital requirements share some of the benefits of QCCP status.
Furthermore, the fact that the Basel III capital requirements apply to bank clearing members may have important implications for competition and concentration. While the proposed rules may extend lower capital requirements against exposures to CCPs to non-U.S. bank clearing members of covered clearing agencies,
In addition to benefits for bank clearing members, certain benefits resulting from QCCP status may also accrue to covered clearing agencies. If banks value lower capital requirements attributable to QCCP status, bank clearing members may prefer membership at QCCPs to membership at CCPs that are not QCCPs. A flight of clearing members from covered clearing agencies in the absence of QCCP status would result in default-related losses being mutualized across a narrower member base. If the flight from covered clearing agencies results in lower transactional volume at these clearing agencies, then economies of scale may be lost, resulting in higher clearing fees and higher transaction costs in cleared products.
The proposed amendments to Rule 17Ad–22 and proposed Rule 17Ab2–2 have the potential to affect competition, efficiency, and capital formation. As with the rest of the benefits and costs associated with the proposed amendments to Rule 17Ad–22, the Commission preliminarily believes that several of the effects described below only occur to the extent that covered clearing agencies do not already have operations and governance mechanisms
Two important characteristics of the market for clearance and settlement services are high fixed costs and economies of scale. Large investments in risk management and information technology infrastructure costs, such as financial data database and network maintenance expenses, are components of high fixed costs for clearing agencies. Consequently, the clearance and settlement industry exhibits economies of scale in that the average total cost per transaction, which includes fixed costs, diminishes with the increase in transaction volume as high fixed costs are spread over a larger number of transactions.
Furthermore, high fixed costs translate into barriers to entry that preclude competition. Lower competition is an important source of market power for clearing agencies. As a result, clearing agencies possess the ability to exert market power and influence the fees charged for clearance and settlement services in the markets they serve.
Even if they could not take advantage of a marginal increase in market power, clearing agencies may use their market power to pass any increases in costs that flow from the proposed amendments to their members. This may be especially true in the cases of member-owned clearing agencies, such as DTC, FICC, NSCC, and OCC, where members lack the opportunity to pass costs through to outside equity holders. Allowing clearing members to serve on the board of directors of a covered clearing agency may align a covered clearing agency's incentives with its membership. Certain complications may also arise, however, when clearing members sit on boards of covered clearing agencies as members of the board and may choose to allocate the costs of enhanced risk management inefficiently across potential competitors, in an effort to reduce their own share of these costs.
Members who are forced to internalize the costs of additional requirements under the proposed rules may seek to terminate their membership. Additionally, prospective clearing members may find it difficult to join clearing agencies, given the additional costs they must internalize.
The Commission also acknowledges that proposed Rule 17Ad–22(e)(19) may affect competition among firms that choose to become clearing members, and those who provide clearing services indirectly, through a clearing member. Monitoring and managing the risks associated with indirect participation in clearing may be costly. If monitoring and managing the risks associated with indirect participation in clearing proves costly for clearing agencies and if clearing agencies are able to pass the additional costs related to monitoring and managing risks to clearing members, it may cause marginal clearing members unable to absorb these additional costs to exit. While these exits may be socially efficient, since they reflect the internalization of costs otherwise imposed upon other participants in cleared markets through increased probability of clearing agency default, they may nevertheless result in lower competition among clearing members for market share, potentially providing additional market power to the clearing members that remain.
The Commission preliminarily believes, however, that management of risks from indirect participation is important in mitigating the risks that clearing agencies pose to financial stability. The tiered participation risk exposures, including credit, liquidity, and operational risks inherent in indirect participation arrangements, may present risks to clearing agencies, their members, and to the broader financial markets. For instance, if the size of an indirect participant's positions is large relative to a clearing member's capacity to absorb risks, this may increase the clearing member's default risk. Consequently, a clearing agency with indirect participation arrangements may be exposed to the credit risk of an indirect participant through its clearing members. Similarly, a margin call on, or a default by, an indirect participant could constrain liquidity of its associated clearing members, making it more difficult for these members to manage their positions at the clearing agency.
The consistency across regulatory frameworks contemplated by the proposed rules may also affect competition. Financial markets in cleared products are global, encompassing many countries and regulatory jurisdictions. Consistency with international regulatory frameworks may facilitate entry of clearing agencies into new markets. By contrast, conflicting or duplicative regulation across jurisdictions, or even within jurisdictions, may cause competitive friction that inhibits entry and helps clearing agencies behave like local monopolists. Consistency in regulation can facilitate competition among clearing agencies so long as regulation is not so costly as to discourage participation in any market. Additionally, the Commission preliminarily believes that proposed Rule 17Ad–22(e)(23) may facilitate competition among clearing agencies across jurisdictions by requiring public disclosures that enable market participants to compare clearing agencies more easily.
The consistency across regulatory requirements contemplated by the proposed rules may affect competition among banks in particular. Clearing derivative and repurchase agreement transactions through QCCPs will result in lower capital requirements for banks under the Basel III capital requirements. Therefore, consistency with the standards set forth in the PFMI Report may allow banks that clear these products through covered clearing agencies to compete on equal terms with banks that clear through other clearing agencies accorded QCCP status. This effect potentially countervails higher barriers to entry that enhanced risk management standards may impose on clearing members by lowering the marginal cost of clearing these transactions. Furthermore, covered clearing agencies potentially compete with one another for volume from clearing members. Since clearing members receive better treatment for exposures against QCCPs, clearing
The ability of covered clearing agencies to obtain QCCP status may also affect competition among clearing agencies. Under the Basel III framework, QCCP status would have practical relevance only for covered clearing agencies providing CCP services for derivatives, security-based swaps, and securities financing transactions. To the extent that the proposed rules increase the likelihood that banking regulators that have implemented the Basel III framework in their jurisdiction recognize covered clearing agencies as QCCPs, banks that clear at covered clearing agencies will experience lower capital requirements. Since clearing agencies may compete for volume from clearing members that are also banks, the proposed rules may remove a competitive friction between covered clearing agencies and other clearing agencies that enjoy recognition as QCCPs by banking regulators. As a corollary, the proposed rules could potentially disadvantage any registered clearing agencies that are not covered clearing agencies.
Further competitive effects may flow from the proposal as a result of the determinations under proposed Rule 17Ab2–2 for clearing agencies engaged in activities with a more complex risk profile and clearing agencies that are systemically important in multiple jurisdictions. These entities will be responsible for maintaining additional financial resources sufficient to cover the default of the two participant families that would potentially cause the largest aggregate credit exposures in extreme but plausible market conditions as well as undertake an annual feasibility analysis for extending liquidity risk management from “cover one” to “cover two.” These clearing agencies will have to collect these resources from participants, either through higher margin requirements or guaranty fund contributions, or indirectly through third-party borrowing arrangements secured by member resources. Regardless of how clearing agencies obtain these additional resources, the requirement to do so potentially raises the costs to use services provided by covered clearing agencies which could, at the margin, shift transactional volume to clearing agencies that fall outside the scope determined by proposed Rule 17Ab2–2, where competing clearing agencies exist, or opt out of clearing altogether.
The proposed amendments to Rule 17Ad–22 may affect efficiency in a number of ways, though as discussed previously, most of these effects will only flow to the extent that covered clearing agencies do not already comply with the proposed amendments. First, because the proposed amendments result in general consistency with the standards set forth in the PFMI Report and requirements proposed by the Board and adopted by the CFTC, consistency likely fosters efficiency by reducing the risk that covered clearing agencies will be faced with conflicting or duplicative regulation when clearing financial products across multiple regulatory jurisdictions.
Consistency across regulatory regimes in multiple markets may also result in efficiency improvements. Fully integrated markets would allow clearing agencies to more easily exploit economies of scale because clearing agencies tend to have low marginal costs and, thus, could provide clearance and settlement services over a larger volume of transactions at a lower average cost. Differences in regulation, on the other hand, may result in market fragmentation, allowing clearing agencies to operate as local monopolists. The resulting potential for segmentation of clearing and settlement businesses along jurisdictional lines may lead to overinvestment in the provision of clearing services and reductions in efficiency as clearing agencies open and operate solely within jurisdictional boundaries. If market segmentation precludes covered clearing agencies from clearing transactions for customers located in another jurisdiction with a market too small to support a local clearing agency, fragmentation may result in under-provisioning of clearing and settlement services in these areas, in turn reducing the efficiency with which market participants share risk.
The proposed amendments may also affect efficiency directly if they mitigate covered clearing agencies' incentives to underinvest in risk management and recovery and wind-down procedures. CCP default and liquidation is likely a costly event, so to the extent that the proposed rules mitigate the risk of CCP default and prescribe rules for orderly recovery and wind-down, they will produce efficiency benefits. Another direct effect on efficiency may come if registered clearing agencies attempt to restructure their operations in ways that would allow them to fall outside of the scope of proposed Rule 17Ad–22(e).
Finally, price efficiency and the efficiency of risk sharing among market participants may be affected by the proposed amendments. On one hand, the cost of a transaction includes costs related to counterparty default that are typically unrelated to fundamental asset payoffs. Academic research using credit default swap transaction data has revealed a statistically significant, though economically small, relationship between the credit risk of a counterparty and the spreads implicit in transaction prices.
The implications for capital formation that flow from these proposed rules stem mainly from incremental costs that result from compliance with more specific standards and benefits in the form of more efficient risk sharing.
In cases where current practice falls short of the proposed amendments, covered clearing agencies may have to invest in infrastructure or make other expenditures to come into compliance, which may divert capital from other uses. In line with our previous discussion of cost allocation in the market for clearing services, these resources may come from clearing members and their customers.
At the same time, the Commission preliminarily believes that the standards contemplated under the proposed rules may foster capital formation. As mentioned earlier, clearing agencies that are less prone to failure may help reduce transaction costs in the markets they clear.
If, on balance, the proposed amendments cause transaction costs to decrease in cleared markets, then the expected value of trade may increase. Counterparties that are better able to diversify risk through participation in cleared markets may be more willing to invest in the real economy rather than choosing to engage in precautionary savings.
The discussion below outlines the costs and benefits preliminarily considered by the Commission as they relate to the rules being proposed today. These specific costs and benefits are in addition to the more general costs and benefits anticipated under the Commission's proposal discussed in Part IV.C.1 and include, in particular, the costs and benefits stemming from the availability of QCCP status under the Basel III capital requirements. Many of the costs and benefits discussed below are difficult to quantify. This is particularly true where clearing agency practices are anticipated to evolve and adapt to changes in technology and other market developments. The difficulty in quantifying costs and benefits of the proposed rules is further exacerbated by the fact that in some cases the Commission lacks information regarding the specific practices of clearing agencies that could assist in quantifying certain costs. For example, as noted in Part IV.C.3.a.iv(4), without detailed information about the composition of illiquid assets held by clearing agencies and their members, the Commission cannot provide reasonable estimates of costs associated with satisfying substantive requirements under proposed Rules 17Ad–22(e)(7)(i) and (ii). Another example, discussed in Part IV.C.3.a.iv(5), is testing and validation of financial risk models, where the Commission is only able to estimate that costs will fall within a range. In this case, the costs associated with substantive requirements under the proposed rules may depend on the types of risk models employed by clearing agencies, which are, in turn, dictated by the markets they serve. As a result, much of the discussion is qualitative in nature, though where possible, the costs and benefits have been quantified.
The Commission recognizes that the scope of the proposed rules is an important determinant of their economic effect. Having considered the anticipated costs associated with the proposed rules, the Commission preliminarily believes that it is appropriate to limit the application of proposed Rule 17Ad–22(e) to covered clearing agencies, as these are the registered clearing agencies for which the benefits of the proposed rules are the greatest. In particular, as discussed below, the Commission preliminarily believes that an important benefit resulting from the enhanced risk management requirements in the proposed rules is a reduction in the risk of a failure of a covered clearing agency. For example, for designated clearing agencies these benefits may be significant due to their size, exposure to, and interconnectedness with market participants, and the effect their failure may have on markets, market participants, and the broader financial system. For complex risk profile clearing agencies, significant benefits may flow as a result of their higher baseline default risk.
As an alternative, the Commission could have proposed to extend the scope of proposed Rule 17Ad–22(e) to cover all registered clearing agencies. The Commission preliminarily acknowledges, however, that costs of compliance with the proposed rules may represent barriers to entry for clearing agencies. By continuing to apply Rule 17Ad–22(d) to registered clearing agencies that are not covered clearing agencies, the Commission preliminary believes that the proposed scope Rule 17Ad–22(e) appropriately preserves the potential for innovation in the establishment and operation of registered clearing agencies.
Because, as noted above, proposed Rule 17Ad–22(e)(1) would require substantially the same set of policies and procedures as Rule 17Ad–22(d)(1),
Each covered clearing agency has a board of directors that governs its operations and oversees its senior management. Proposed Rule 17Ad–22(e)(2) would establish more detailed requirements for governance arrangements at covered clearing agencies relative to those imposed on
The Commission understands that any covered clearing agency subject to the proposed rule has policies and procedures in place that clearly prioritize the risk management and efficiency of the clearing agency. However, the Commission preliminarily believes that covered clearing agencies do not already have in place policies and procedures with respect to other requirements under proposed Rule 17Ad–22(e)(2). Based on its supervisory experience, the Commission preliminarily believes that some covered clearing agencies may need to update their policies and procedures to comply with proposed Rule 17Ad–22(e)(2)(iv). These updates will entail certain basic compliance costs, and covered clearing agencies may also incur assessment costs related to analyzing current governance arrangements in order to determine the extent to determine which they do not meet the requirements of the proposed amendments. The estimated costs in terms of paperwork are discussed in Part III.D.1. If, as a result of new policies and procedures, a covered clearing agency is required to recruit new directors, the Commission preliminarily estimates a cost per director of $73,000.
While there are potential costs associated with compliance, the Commission preliminarily believes that benefits would potentially accrue from these requirements. Specifically, the Commission preliminarily believes that enhanced governance arrangements would further promote safety and efficiency at the clearing agency—motives that may not be part of a clearing agency's governance arrangements in the absence of regulation. Policies and procedures required under the proposed rules would also reinforce governance arrangements at covered clearing agencies by requiring board members and senior management to have appropriate experience and skills to discharge their duties and responsibilities.
Compliance with these proposed requirements could reduce the risk that insufficient internal controls within a covered clearing agency endanger broader financial stability. While the benefits of compliance are difficult to quantify, the Commission preliminarily believes that they flow predominantly from a reduced probability of covered clearing agency default.
The Commission preliminarily believes that proposed Rule 17Ad–22(e)(3) would aid covered clearing agencies in implementing a systematic process to examine risks and assess the probability and impact of those risks.
Additionally, the proposed rule extends requirements under Rules 17Ad–22(d)(4) and 17Ad–22(d)(11) by requiring plans for recovery and wind-down.
Based on its supervisory experience, the Commission preliminarily believes that all covered clearing agencies have an independent audit committee of the board and most covered clearing agencies already have some rules governing recovery and wind-down of clearing operations but have plans that vary in their degree of formality. As a result, the benefits and costs associated with these requirements will likely be limited to incremental changes associated with covered clearing agencies' review of their policies and procedures for recovery and wind-down and to registered clearing agencies that move into the set of covered clearing agencies.
Proposed Rule 17Ad–22(e)(4) would establish requirements for credit risk management by covered clearing agencies.
While requiring “cover two” for complex risk profile clearing agencies and for covered clearing agencies designated systemically important in multiple jurisdictions would place additional burdens on the affected clearing agencies, the Commission preliminarily believes that the requirement is appropriate because disruption to these entities due to member default carries relatively higher expected costs than for other covered clearing agencies. These relatively higher expected costs arise from the fact that covered clearing agencies designated systemically important in multiple jurisdictions are exposed to foreign financial markets and may serve as a conduit for the transmission of risk; for complex risk profile clearing agencies, high expected costs may arise from discrete jump-to-default price changes in the products they clear and higher correlations in the default risk of members.
Proposed Rule 17Ad–22(e)(4)(vi) and (vii) would also impose additional costs by requiring additional measures to be taken with respect to the testing of a covered clearing agency's financial resources and model validation of a covered clearing agency's credit risk models. These requirements do not currently exist as part of the standards applied to registered clearing agencies.
Frequent monitoring and stress testing of total financial resources, conforming model validations, and reporting of results of the monitoring and testing to appropriate personnel within the clearing agency could help rapidly identify any gaps in resources required to ensure stability, even in scenarios not anticipated on the basis of historical data. Moreover, the requirement to test and, when necessary, update the assumptions and parameters supporting models of credit risk will support the adjustment of covered clearing agency financial resources to changing financial conditions, and mitigate the risk that covered clearing agencies will strategically manage updates to their risk models in support of cost reduction or profit maximization.
Proposed Rule 17Ad–22(e)(5) would require a covered clearing agency to have policies and procedures reasonably designed to limit the assets it accepts as collateral to those with low credit, liquidity, and market risks, and to set and enforce appropriately conservative haircuts and concentration limits. Collateral haircut and concentration limit models would be subject to a not-less-than-annual review of their sufficiency.
By focusing on the nature of assets and not on accounts, the Commission preliminarily believes the proposed rule may allow covered clearing agencies the ability to manage collateral more efficiently. In particular, under the proposed rule, a covered clearing agency would have the option of accepting collateral that is riskier than cash and holding this collateral at commercial banks, potentially increasing default risk exposure. On the other hand, the requirement to regularly review concentration limits and haircuts mitigates the risk that a covered clearing agency's collateral policies fail to respond to changing economic conditions. Based on its supervisory experience, the Commission understands that all registered clearing agencies that would meet the definition of a covered clearing agency already conform to the requirements under the proposed rule related to the nature of assets they may accept as collateral and the haircuts and concentration limits they apply to collateral assets, so the associated costs and benefits that would result from these requirements would apply only if registered clearing agencies not already in compliance were to become covered clearing agencies.
As a result of the proposed rule, these covered clearing agencies and registered clearing agencies that become covered clearing agencies may experience additional costs as a result of the proposed annual review requirements for the sufficiency of collateral haircut and concentration limit models. Based on its supervisory experience, the Commission preliminarily believes that many clearing agencies that require collateral would need to develop policies and procedures to review haircuts and concentration limits annually. Enforcement of the proposed
Proposed Rule 17Ad–22(e)(6) would require a covered clearing agency that provides CCP services to have policies and procedures reasonably designed to require it to cover credit exposures using a risk-based margin system and to establish minimum standards for such a system. It would require these policies and procedures to cover daily collection of variation margin. The proposed rule also requires a set of policies and procedures generally designed to support a reliable margin system. Among these are policies and procedures to ensure the use of reliable price data sources and appropriate methods for measuring credit exposure, which could improve margin system accuracy. Finally, covered clearing agencies would be required to have policies and procedures related to the testing and verification of margin models.
Similar to proposed Rules 17Ad–22(e)(4) and (7), covered clearing agencies that do not already engage in backtesting of margin resources at least once each day or engage in a monthly analysis of assumptions and parameters, as well as registered clearing agencies that enter into the set of covered clearing agencies in the future, may incur incremental compliance costs as a result of the proposed rule. Since margin plays a key role in clearing agency risk management, however, requiring that margin be periodically verified and modified as a result of changing market conditions may mitigate the risks posed by covered clearing agencies to financial markets in periods of financial stress. Further, periodic review of model specification and parameters reduces the likelihood that covered clearing agencies opportunistically update margin models in times of low volatility and fail to update margin models in times of high volatility. A range of costs for verification and modification of margin models is discussed in Part IV.C.3.a.iv(5). Further, since risk-based initial margin requirements may cause market participants to internalize some of the costs borne by the CCP as a result of large or risky positions,
Proposed Rule 17Ad–22(e)(7) would require a covered clearing agency to have policies and procedures reasonably designed to effectively monitor, measure, and manage liquidity risk.
Enhanced liquidity risk management may produce additional benefits. Clearing members would face less uncertainty over whether a covered clearing agency has the liquidity resources necessary to make prompt payments which would reduce any need to hedge the risk of nonpayment. Potential benefits from enhanced liquidity risk management may also extend beyond members of covered clearing agencies or markets for centrally cleared and settled securities. Clearing members are often members of larger financial networks, and the ability of a covered clearing agency to meet payment obligations to its members can directly affect its members' ability to meet payment obligations outside of the cleared market. Thus, management of liquidity risk may mitigate the risk of contagion between asset markets.
Based on its supervisory experience, the Commission preliminarily believes that some covered clearing agencies would need to create new policies and procedures, or update existing policies and procedures, to meet requirements under the various subsections of proposed Rule 17Ad–22(e)(7). These actions would entail compliance costs, as noted in Part III.B.2. Further, the Commission preliminarily believes that for some covered clearing agencies the proposed requirements would require them to establish new practices. The cost of adherence to the proposed rule would likely be passed on to market participants in cleared markets, as discussed in more detail below.
Under proposed Rule 17Ad–22(e)(7)(i), a covered clearing agency would be required to have policies and procedures reasonably designed to require maintaining sufficient resources to achieve “cover one” for liquidity risk. This requirement mirrors the “cover one” requirement for credit risk in proposed Rule 17Ad–22(e)(4)(iii). Based on its supervisory experience, the Commission preliminarily believes that many covered clearing agencies do not currently meet a “cover one” requirement for liquidity and thus will likely incur costs to comply with this proposed rule. As discussed earlier, whether covered clearing agencies choose to gather liquidity directly from members or instead choose to rely on third-party arrangements, the costs of liquidity may be passed on to other market participants, eventually
Under proposed Rule 17Ad–22(e)(7)(ii), a covered clearing agency would be required to have policies and procedures reasonably designed to ensure that it meets the minimum liquidity resource requirement in proposed Rule 17Ad–22(e)(7)(i) with qualifying liquid resources.
Based on its supervisory experience, the Commission preliminarily believes that some covered clearing agencies currently do not meet the proposed liquidity requirements with qualifying liquid resources. As an alternative to the proposed rules, the Commission could have restricted the definition of qualifying liquid resources to assets held by covered clearing agencies. These covered clearing agencies and the markets they serve would benefit from the proposed minimum requirements for liquidity resources in terms of the reduced risk of liquidity shortfalls and associated contagion risks described above. However, qualifying liquid resources may be costly for covered clearing agencies to maintain on their own balance sheets. Such resources carry an opportunity cost. Assets held as cash are, by definition, not available for investment in less liquid assets that may be more productive uses of capital. This cost may ultimately be borne by clearing members who contribute liquid resources to covered clearing agencies to meet minimum requirements under proposed Rule 17Ad–22(e)(7)(ii) and their customers.
The Commission notes that, under the proposed rules, covered clearing agencies have flexibility to meet their qualifying liquid resource requirements in a number of ways. In perfect capital markets, maintaining on-balance-sheet liquidity resources should be no more costly than entering into committed lines of credit or prearranged funding agreements backed by less-liquid assets that would allow these assets to be converted into cash. However, market frictions, such as search frictions, may enable banks to obtain liquidity at lower cost than other firms. In the presence of such frictions, obtaining liquidity using committed and uncommitted funding arrangements provided by banks may prove a less costly option for some covered clearing agencies than holding additional liquid resources on their balance sheets. In particular, the Commission preliminarily believes that requiring covered clearing agencies to enter into committed or uncommitted funding arrangements would decrease the costs that would be experienced by them in the event they sought to liquidate securities holdings during periods of market disruptions and increase the likelihood that they meet funding obligations to market participants by reducing the risk of delay in converting non-cash assets into cash.
The Commission notes that committed or uncommitted funding arrangements would only count towards minimum requirements to the extent that covered clearing agencies had securities available to post as collateral, so use of these facilities may require covered clearing agencies to require their members to contribute more securities. If these securities are costly for clearing members to supply, then additional required contributions to meet minimum requirements under proposed Rule 17Ad–22(e)(7)(ii) may impose burdens on clearing members and their customers. Similarly, prearranged funding arrangements may entail implicit costs to clearing members. Prearranged funding arrangements could impose costs on clearing members if they are obligated to contribute securities towards a collateral pool that the covered clearing agency would use to back borrowing. Alternatively, clearing members may be obligated under a covered clearing agency's rules to act as counterparties to repurchase agreements. Under the latter scenario, clearing members would bear costs associated with accepting securities in lieu of cash. Additionally, the Commission notes certain explicit costs specifically associated with these arrangements outlined below.
Counterparties to committed arrangements allowable under proposed Rule 17Ad–22(a)(15) charge covered clearing agencies a premium to provide firm liquidity commitments and additional out-of-pocket expenses will be incurred establishing and maintaining committed liquidity arrangements. The Commission preliminarily estimates that the total cost of committed funding arrangements will be approximately 30 basis points per year, including upfront fees, legal fees, commitment fees, and collateral agent fees.
A covered clearing agency may alternatively use a prearranged funding arrangement determined to be highly reliable in extreme but plausible market conditions to raise liquid resources backed by non-cash assets but that does not require firm commitments from liquidity providers. This strategy would avoid certain of the explicit fees associated with firm commitments, while incurring costs related to the annual review and maintenance of such arrangements. Based on its supervisory experience and discussions with market participants, the Commission preliminarily believes the cost associated with commitment fees to be between 5 and 15 basis points per year. Given the 30 basis point cost associated with committed funding arrangements, mentioned above, uncommitted facilities could entail costs of between 15 and 25 basis points.
Finally, covered clearing agencies that have access to routine credit at a central bank could meet the qualifying liquid resources requirement with assets that are pledgeable to a central bank. The Commission notes that this may represent the lowest cost option for covered clearing agencies, but understands that this latter provision would represent an advantage only if and when a covered clearing agency receives the benefit of access to routine central bank borrowing. The Commission anticipates that at such future time access to routine credit at a central bank would provide covered clearing agencies with additional flexibility with respect to resources used to comply with the liquidity risk management requirements of proposed Rules 17Ad–22(e)(7)(i) and (ii).
The total cost of maintaining qualifying liquid resources pursuant to proposed Rules 17Ad–22(e)(7)(i) and (ii) is composed of the cost of each liquidity source including assets held by covered clearing agencies, committed credit facilities and prearranged funding agreements, multiplied by the quantity of each of these liquidity sources held by covered clearing agencies. The Commission is unable to quantify the cost of cash held by clearing agencies and securities required to back credit facilities since such estimates would require detailed information about additional required contributions of clearing members under the proposed rules, as well as clearing members' best alternative to holding cash and securities.
Taking the sum of these current qualifying liquid resources over all covered clearing agencies and subtracting this from the sum of the “cover one” guaranty fund requirement over all covered clearing agencies results in the total shortfall relative to minimum requirements under proposed Rules 17Ad–22(e)(7)(i) and (ii). The Commission further assumed that covered clearing agencies would cover this shortfall using prearranged funding agreements backed by additional securities posted to guaranty funds by clearing members. Finally, the Commission multiplied the total prearranged funding amount by between 0.15% and 0.25% to arrive at a range of ongoing costs.
U.S. Treasury securities would not fall under the proposed definition of qualifying liquid resources. The Commission understands that U.S. Treasury markets represent some of the largest and most liquid markets in the world, see Part IV.B.3.f.ii, and that, in “flights to quality” and “flights to liquidity” in times of financial stress, U.S. Treasuries trade at a premium to other assets.
Taking the sum of these current qualifying liquid resources over all covered clearing agencies and subtracting this from the sum of cover one guaranty fund requirement over all covered clearing agencies results in the total shortfall relative to minimum requirements under proposed Rules 17Ad–22(e)(7)(i) and (ii) if U.S. government and agency securities were considered qualifying liquid resources. As above, the Commission further assumed that covered clearing agencies would cover this shortfall using prearranged funding agreements backed by additional securities posted to guaranty funds by clearing members and multiplied this amount by between 0.15% and 0.25% to arrive at a range of ongoing costs.
Proposed Rule 17Ad–22(e)(7)(iii) concerns access to accounts and services at a central bank, when available and where practical.
Proposed Rules 17Ad–22(e)(7)(iv) and (v) address relations between covered clearing agencies and their liquidity providers. The Commission preliminarily believes that a key benefit of these proposed rules would be an increased level of assurance that liquidity providers would be able to supply liquidity to covered clearing agencies on demand. Such assurance is especially important because of the possibility that covered clearing agencies may rely on outside liquidity providers to convert non-cash assets into cash using prearranged funding arrangements or committed facilities, pursuant to proposed Rule 17Ad–22(e)(7)(ii) and the definition of qualifying liquid resources in proposed Rule 17Ad–22(a)(15). The required policies and procedures would ensure the covered clearing agency undertakes due diligence to confirm that it has a reasonable basis to believe each of its liquidity providers understand the liquidity risk borne by the liquidity provider, and that the liquidity provider would have the capacity to provide liquidity under commitments to the covered clearing agency. Finally, covered clearing agencies would be required, under the proposed rule, to maintain and test the covered clearing agency's procedures and operational capacity for accessing liquidity under their agreements. The Commission preliminarily believes that, besides the costs associated with new or updated policies and procedures discussed in Part III.B.2, covered clearing agencies and liquidity providers may experience costs associated with the proposed rules as a result of the requirement to test liquidity resources, such as, for example, fees associated with conducting test draws on a covered clearing agency's credit lines. Costs associated with ongoing monitoring and compliance related to testing are included in the Commission's estimate of quantifiable costs presented in Part IV.C.3.d.
Proposed Rules 17Ad–22(e)(7)(vi) and (vii) may impose costs on covered clearing agencies as a result of requirements for testing the sufficiency of liquidity resources and validating models used to measure liquidity risk. The testing and model validation requirements of these proposed rules are similar to requirements for testing and model validation for credit risk in proposed Rules 17Ad–22(e)(4)(vi) and (vii), and the Commission preliminarily believes that these proposed rules would yield similar benefits. Frequent monitoring and testing liquidity resources could help rapidly identify any gaps in resources required to meet payment obligations. Moreover, the requirement to test and, when necessary, update the assumptions and parameters supporting models of liquidity risk will support the adjustment of covered clearing agency liquidity resources to changing financial conditions and mitigate the risk that covered clearing agencies will strategically manage updates to their liquidity risk models in support of cost-reduction or profit-maximization.
Proposed Rule 17Ad–22(e)(7)(viii) addresses liquidity shortfalls at a covered clearing agency, and the Commission preliminarily believes the proposed rule would reduce ambiguity related to settlement delays in the event of liquidity shocks. Among other things, by requiring procedures that seek to avoid delay of settlement payments, this proposed rule would require covered clearing agencies to address liquidity concerns in advance rather than relying on strategies of delaying accounts payable in the event of liquidity shocks. As discussed previously, effective liquidity risk management by covered clearing agencies that serves to eliminate uncertainty on the part of clearing members that payments by the covered clearing agency will be made on time may allow these clearing members to allocate their liquidity resources to more efficient uses than holding precautionary reserves.
Proposed Rule 17Ad–22(e)(7)(ix) would require a covered clearing agency to have policies and procedures reasonably designed to describe its process for replenishing any liquid resources that it may employ during a stress event.
Finally, proposed Rule 17Ad–22(e)(7)(x) would require a covered clearing agency that provides CCP services and is either systemically important in multiple jurisdictions or is a clearing agency involved in activities with a more complex risk profile to conduct a feasibility analysis for “cover
Proposed Rules 17Ad–22(e)(4) through (7) include requirements for covered clearing agencies to have policies and procedures reasonably designed to test and validate models related to financial risks. Covered clearing agencies may incur additional costs under expanded and more frequent testing of financial resources if the proposed requirements for testing and validation do not conform to practices currently used by covered clearing agencies.
Based on its supervisory experience and discussions with industry participants, the Commission preliminarily believes that startup costs to support testing and validation of credit risk, margin, and liquidity risk models at covered clearing agencies could fall in the range of $5 million to $25 million for each covered clearing agency. This range primarily reflects investments in information technology to process data already available to covered clearing agencies for stress testing and validation purposes. The range's width reflects differences in markets served by, as well as the scope of operations of, each covered clearing agency. Based on its supervisory experience and discussions with industry participants, the Commission estimates a lower bound of $1 million per year for ongoing costs related to testing of risk models.
Should each covered clearing agency choose to hire external consultants for the purposes of performing model validation required under proposed Rules 17Ad–22(e)(4) and 17Ad–22(e)(7) through written policies and procedures, the Commission preliminarily estimates the ongoing cost associated with hiring such consultants would be approximately $4,388,160 in the aggregate.
The Commission previously estimated that ongoing costs associated with hiring external consultants to fulfill the requirements of Rule 17Ad–22(b)(4) would be approximately $3.9 million per year.
The Commission acknowledges that it could have, as an alternative, proposed rules that would require testing and validation of financial risk models at covered clearing agencies at different frequencies. For example, the Commission could have required backtesting of margin resources less frequently than daily. Such a policy could imply less frequent adjustments in margin levels that may result in over- or under-margining. The Commission preliminarily believes that the frequencies of testing and validation of financial risk models that it has proposed are appropriate given the risks faced by covered clearing agencies and current market practices related to frequency of meetings of risk management committees and boards of directors at covered clearing agencies.
Proposed Rules 17Ad–22(e)(8) through (10) require covered clearing agencies to have policies and procedures reasonably designed to address settlement risk. Many of the issues raised by settlement are similar to those raised by liquidity. Uncertainty in settlement may make it difficult for clearing members to fulfill their obligations to other market participants within their respective financial networks if they hold back precautionary reserves, as discussed above. Based on its supervisory experience, the Commission preliminarily believes that the benefits and costs for the majority of covered clearing agencies will likely be limited. Registered clearing agencies that enter into the set of covered clearing agencies in the future, by contrast, may bear more significant costs as a result of the enhanced standards.
Settlement finality is important to market participants for a number of reasons. Reversal of transactions can be costly to participants. For example, if transactions are reversed, buyers and sellers of securities may be exposed to additional market risk as they attempt to reestablish desired positions in cleared products. Similarly, reversal of transactions may render participants expecting to receive payment from the covered clearing agency unable to fulfill payment obligations to their counterparties, exposing these additional parties to the transmitted credit risk. Finally, settlement finality can help facilitate default management procedures by covered clearing agencies since they improve transparency of members' positions. Unless settlement finality is established by covered clearing agencies, market participants may attempt to hedge reversal risk for themselves. This could come at the cost of efficiency if it means that, on the margin, participants are less likely to use cleared products as collateral in other financial transactions.
In addition, settlement in central bank money, where available and determined to be practical by the board of directors of the covered clearing agency, as the proposed rules would require, greatly reduces settlement risk related to payment agents. Using central bank accounts to effect settlement rather than settlement banks removes a link from the intermediation chain associated with clearance and settlement. As a result, a covered clearing agency would be less exposed to the default risk of its settlement banks. In cases where settlement banks maintain links to other covered clearing agencies, for example as liquidity providers or as members, reducing exposure to settlement bank default risk may be particularly valuable.
As in the case of proposed Rule 17Ad–22(e)(7)(iii), the Commission acknowledges there may be circumstances in which covered clearing agencies either do not have access to central bank account services or the use of such services is impractical. Accordingly, the Commission preliminarily believes it is appropriate to allow covered clearing agencies the flexibility to also use commercial bank account services to effect settlement, subject to a requirement that covered clearing agencies monitor and manage the risks associated with such arrangements.
CSDs play a key role in modern financial markets. For many issuers, many transactions in their securities involve no transfer of physical certificates.
Paperless trade generally improves transactional efficiency. Book-entry transfer of securities may facilitate conditional settlement systems required by proposed Rule 17Ad–22(e)(12). For example, book-entry transfer in a delivery versus payment system allows securities to be credited to an account immediately upon debiting the account for the payment amount. Institutions and individuals may elect to no longer hold and exchange certificates that represent their ownership of securities. An early study showed that the creation of DTC resulted in a 30–35% reduction in the physical movement of certificates.
For markets to realize the transactional benefits of paperless trade, however, requires confidence that CSDs can correctly account for the number of securities in their custody and for the book entries that allocate these securities across participant accounts. In order to realize these benefits, the proposed rules also require covered CSDs to establish, implement, maintain and enforce written policies and procedures reasonably designed to ensure the integrity of securities issues, minimize the risks associated with transfer of securities, and protect assets against custody risk. Based on its supervisory experience, the Commission preliminarily believes that registered CSDs already have infrastructure in place to meet these requirements. However, CSDs may face incremental compliance costs in instances where they must modify their rules in order to implement appropriate controls. Compliance costs may be higher for potential new CSDs that are determined to be covered clearing agencies in the future.
Clearance and settlement of transactions between two parties to a trade involves an exchange of one obligation for another. Regarding transactions in securities, these claims can be securities or payments for securities. A particular risk associated with transactions is principal risk, which is the risk that only one obligation is successfully transferred between counterparties. For example, in a purchase of common stock, a party faces principal risk if, despite successfully paying the counterparty for the purchase, the counterparty may fail to deliver the shares.
The proposed requirements under Rule 17Ad–22(e)(12) are substantially the same as those in Rule 17Ad–22(d)(13).
Proposed Rule 17Ad–22(e)(13) would require covered clearing agencies to have policies and procedures for participant default with additional specificity relative to current requirements for registered clearing agencies under Rule 17Ad–22(d)(11). In particular, proposed Rule 17Ad–22(e)(13) requires policies and procedures that address the allocation of credit losses that exceed default resources, repayment of liquidity providers, replenishment of financial resources, and testing and review of default procedures.
Based on its supervisory experience, the Commission preliminarily believes all covered clearing agencies currently test and review default procedures at least annually, so the costs of this requirement would apply only to registered clearing agencies that may enter into the set of covered clearing agencies in the future. Most covered clearing agencies, however, will be required to update their policies and procedures as a result of proposed Rules 17Ad–22(e)(13)(i) and (ii). Clearing members may experience benefits from proposed Rule 17Ad–22(e)(13)(i), which requires covered clearing agencies to provide disclosure to members regarding the allocation of default losses when these losses exceed the level of financial resource it has available. As a result of this additional transparency, clearing members may experience an improved ability to manage their expectations of potential obligations against the covered clearing agency, which may increase the likelihood of orderly wind-downs in the event of member default. Crafting such allocation plans by covered clearing agencies may entail certain compliance costs, as previously discussed in Part III.D.5.a and as discussed further in Part IV.C.3.d. Further, covered clearing agencies may allocate default losses in a number of ways that may themselves have implications for participation, competition, and systemic risk.
As an alternative to the proposed rules, the Commission could have proposed more prescriptive requirements for default procedures at covered clearing agencies. The Commission preliminarily believes that differences in cleared assets and in the characteristics of clearing members supports allowing each covered clearing agency flexibility in choosing its own default procedures pursuant to proposed Rule 17Ad–22(e)(13).
In addition to loss allocation plans, proposed Rule 17Ad–22(e)(13) contains new provisions related to the replenishment of financial resources and testing and review of default procedures that do not appear in Rule
Segregation and portability of customer positions serves a number of useful purposes in cleared markets. In the normal course of business, the ability to efficiently identify and move an individual customer's positions and collateral between clearing members enables customers to easily terminate a relationship with one clearing member and initiate a relationship with another. This may facilitate competition between clearing members by ensuring customers are free to move their accounts from one clearing member to another based on their preferences, without being unduly limited by operational barriers.
Segregation and portability may be especially important in the event of participant default. By requiring that customer collateral and positions remain segregated, covered clearing agencies can facilitate, in the event of a clearing member's insolvency, the recovery of customer collateral and the movement of customer positions to one or more other clearing members. Further, portability of customer positions may facilitate the orderly wind down of a defaulting member if customer positions may be moved to a non-defaulting member. Porting of positions in a default scenario may yield benefits for customers if the alternative is closing-out positions at one clearing member and reestablishing them at another clearing member. The latter strategy would cause customers to bear transactions costs, which might be especially high in times of financial stress.
The Commission notes that, in its preliminary view, these proposed rules are flexible in their approach to implementing segregation and portability requirements. The most efficient means of implementing these requirements may depend on the products that a covered clearing agency clears as well as other business practices at a covered clearing agency. For example, a clearing agency's decision whether or not to collect margin on a gross or net basis may bear on its decision to port customer positions and collateral on an individual or omnibus basis, and while an individual account structure may provide a higher degree of protection from a default by another customer, it may be operationally and resource intensive for a covered clearing to implement and may reduce the efficiency of its operations.
As a result, the costs and benefits of proposed Rule 17Ad–22(e)(14) will depend on specific rules implemented by covered clearing agencies as well as how much these rules differ from current practice. Based on its supervisory experience, the Commission preliminarily believes that the current practices at covered clearing agencies to which the proposed rule would apply already meets segregation requirements under the proposed rule, so any costs and benefits for covered clearing agencies would flow from implementing portability requirements, though it potentially raises a barrier to entry for security-based swap clearing agencies or clearing agencies involved in activities with a more complex risk profile that seek to become covered clearing agencies.
While proposed Rules 17Ad–22(e)(4) and 17Ad–22(e)(7) require that covered clearing agencies have policies and procedures reasonably designed to address credit risk and liquidity risk, proposed Rule 17Ad–22(e)(15) requires that covered clearing agencies have policies and procedures reasonably designed to address general business risk. The Commission preliminarily believes that general business losses experienced by covered clearing agencies represent a distinct risk to cleared markets, given limited competition and specialization of clearing agencies. In this regard, the loss of clearing services due to general business losses would likely result in major market disruption. The proposed rule requires a covered clearing agency to have policies and procedures reasonably designed to mitigate the risk that business losses result in the disruption of clearing services. Under these policies and procedures covered clearing agencies would hold sufficient liquid resources funded by equity to cover potential general business losses, which at a minimum would constitute six months of operating expenses. The Commission preliminarily believes that the benefits of such policies and procedures would flow primarily from covered clearing agencies that would be required to increase their holdings of liquid net assets funded by equity, enabling them to sustain their operations for sufficient time and achieve orderly wind-down if such action is eventually necessary.
The Commission could have proposed a higher or lower minimum level of resources, for example, corresponding to one quarter of operating expenses or one year of operating expenses. The Commission preliminarily believes, however, that the rules, as proposed, afford covered clearing agencies sufficient flexibility in determining the level of resources to hold while maintaining a minimum standard that supports continued operations in the event of general business losses. As another alternative, the Commission could have allowed covered clearing agencies additional flexibility in determine the nature of the financial resources held to mitigate the effects of general business risk or the means by which these resources are funded. The Commission preliminarily believes, however, that by specifying that these resources be liquid in nature, the proposed rule would limit any delays by covered clearing agencies that suffer business losses from paying expenses required for continued operations. Additionally, by specifically requiring that a covered clearing agency draw liquid net resources from members as equity capital, the proposed rules may also encourage members to more closely monitor the business operations of a covered clearing agency, which may reduce the likelihood of losses.
Based on its supervisory experience Commission preliminarily believes that certain covered clearing agencies would be required to establish and maintain policies and procedures providing for specified levels of equity capital and higher levels of liquid net assets than they would in the absence of proposed Rule 17Ad–22(e)(15).
Table 2 identifies cash and cash equivalents as liquid assets and averages this over the same five-year period. A key shortcoming of using publicly available financial data is the difficulty in determining how much of a firm's cash and cash equivalents are funded by either equity or liabilities, or both. To this end, the Commission considered two different cases.
Table 2. Hypothetical Additional Equity Necessary to Meet Requirements Under Proposed Rule 17Ad–22(e)(15), in Millions of Dollars, Based on Years 2008–2012.
Absent market frictions, a change in capital structure should have no effect on the value of a covered clearing agency.
To estimate these costs, the Commission applied the capital asset pricing model to observed returns for CME and ICE, two clearing agencies that have publicly-traded equity outstanding.
The Commission calculated this data using Daily/Monthly U.S. Stock Files© 2012 Center for Research in Security Prices (CRSP), The University of Chicago Booth School of Business, and Thomson Reuters Datastream.
Clearing agencies that issue equity in order to satisfy the new requirements would additionally face costs related to issuance. The Commission preliminarily recognizes that the cost of maintaining additional equity resembles an insurance premium against the losses
Proposed Rule 17Ad–22(e)(16) requires a covered clearing agency to have policies and procedures reasonably designed to safeguard both their own assets as well as the assets of participants, broadening the requirement applicable to registered clearing agencies in Rule 17Ad–22(d)(3) to the protection of participants' assets.
The Commission preliminarily believes that this may have benefits in terms of protecting against systemic risk, to the extent that covered clearing agencies to this point have treated their own assets differently by applying greater safeguards to those assets than with respect to assets of their members and members' clients. Protection of member assets is important to cleared markets because, for example, the assets of a member in default serve as margin and represent liquidity supplies that a covered clearing agency may access to cover losses. If covered clearing agencies can quickly access these liquidity sources, they may be able to limit losses to non-defaulting members.
Participants may benefit from proposed Rule 17Ad–22(e)(16) in other ways. Requiring a covered clearing agency's policies and procedures to safeguard its assets and participant assets and to invest in assets with minimal credit, liquidity, and market risk may reduce uncertainty in the value of participant assets and participants' exposure to mutualized losses. This may allow participants to deploy their own capital more efficiently. Furthermore, easy access to their own capital enables members to more freely terminate their participation in covered clearing agencies.
Based on its supervisory experience, the Commission preliminarily believes that current practices at covered clearing agencies meet the requirements under proposed Rule 17Ad–22(e)(16) in most cases, so the additional costs and benefits flowing from these requirements would be generally limited to registered clearing agencies that may enter the set of covered clearing agencies in the future.
Because, as noted above, proposed Rule 17Ad–22(e)(17) would require substantially the same set of policies and procedures as Rule 17Ad–22(d)(4),
As discussed earlier, covered clearing agencies play an important role in the markets they serve. They often enjoy a central place in financial networks that enables risk sharing, but may also enable them to serve as conduits for the transmission of risk throughout the financial system. Proposed Rules (18) through (20) require covered clearing agencies to have policies and procedures reasonably designed to explicitly consider and manage the risks associated with the particular characteristics of their network of direct members, the broader community of customers, and other parties that rely on the services provided by the covered clearing agencies or other partners that the covered clearing agency is connected to through relevant linkages. The Commission preliminarily believes that these efforts carry benefits insofar as they reduce the extent to which covered clearing agencies may impose negative externalities on financial markets.
As economies of scale contribute to the business dynamics of clearing and settlement, there is often only one clearing agency or a small number of clearing agencies for a particular class of security. Consequently, membership in a clearing agency may influence competitive dynamics between members and indirect participants, such as intermediaries, in cleared markets. Members and indirect participants may compete for the same set of customers, but indirect participants must have relationships with members to access clearing services. Members, therefore, may have incentives in place to extract economic rents from indirect participants by imposing higher fees or restricting access to clearing services.
Permitting fair and open access to clearing agencies and their services may promote competition among market participants and may result in lower costs and efficient clearing and settlement services. Open access to clearing agencies may reduce the likelihood that credit and liquidity risk become concentrated among a small number of clearing members, each of which retain a large number of indirect participants through tiered arrangements. Further, links between clearing agencies may facilitate risk management across multiple security classes and improve the efficiency of collateral arrangements.
While fair and open access to clearing agencies may promote competition and enhance the efficiency of clearing and settlement services, these improvements should not come at the expense of prudent risk management. The soundness of clearing members contributes directly to the soundness of a clearing agency and mutualization of losses within clearing agencies expose each clearing member to the default risk of every other clearing member. Accordingly, it is important for clearing agencies to control and effectively manage the risks to which they are exposed by their direct and indirect participants by establishing risk-related requirements for participation.
Based on its supervisory experience, the Commission preliminarily believes that current practices among most covered clearing agencies involve a mix of objective financial and business requirements stipulated in publicly-available rulebooks and discretion exercised by the covered clearing agency. As a result and based on its supervisory experience, the Commission preliminarily believes that some changes to policies and procedures at covered clearing agencies may be required under the proposed rule.
The Commission preliminarily believes that proposed Rule 17Ad–22(e)(19) may improve covered clearing agencies' ability to manage its exposure to market participants that are not clearing members, but access payment, clearing, or settlement facilities through their relationships with clearing members. A covered clearing agency that is able to effectively manage its exposure to its members but fails to identify, monitor, and manage its exposures to non-member firms may overlook dependencies that are critical to the stability of cleared markets. This is particularly true if indirect participants in the covered clearing agency are large and might potentially precipitate the default of one or more direct members.
The data necessary to compute summary statistics that would be helpful in quantifying the costs and benefits of the proposed rule, including those that would indicate the size of indirect participants and the volume of transactions in which they are involved, are not available. Nevertheless, the Commission is sensitive to the fact that costs associated with the proposed rules may result in concentration of clearing services among fewer clearing members. Part of this process of consolidation may mean an increase in the volume of trading activity that involves indirect members, making identification of risks associated with indirect members even more critical. Based on its supervisory experience, however, the Commission preliminarily believes that certain covered clearing agencies already have policies and procedures in place that would satisfy the requirements of the proposed rule even in the absence of such explicit requirements under existing rules. Costs and benefits from the proposed rule would come from those other registered clearing agencies that require updates to their policies and procedures to come into compliance with the proposed rule.
The Commission is sensitive to the fact that indirect participants play a key role in maintaining competition in markets for intermediation of trading in securities insofar as they offer investors a broader choice of intermediaries to deal with in centrally cleared and settled securities markets. If elements of policies and procedures under this rule make indirect participation marginally more costly, then transactions costs for investors may increase.
Links between clearing agencies and their members are only one way that clearing agencies interface with the financial system. A clearing agency may also establish links with other clearing agencies and FMUs through a set of contractual and operational arrangements. For a clearing agency, the primary purpose of establishing a link would be to expand its clearing and settlement services to additional financial instruments, markets, and institutions. Established links among clearing agencies and FMUs may enable direct and indirect market participants to have access to a broader spectrum of clearing and settlement services.
Sound linkages between clearing agencies that provide CCP services may also provide their customers with more efficient collateral arrangements and cross-margining benefits. Cross-margining potentially relaxes liquidity constraints in the financial system by reducing total required margin collateral. Resources that would otherwise be posted as margin may be allocated to more productive investment opportunities.
A clearing agency that establishes a link or multiple links may also impose costs on participants in markets it clears by indirectly exposing them to systemic risk from linked entities. The Commission acknowledges that clearing agencies that form linkages may be exposed to additional risks, including credit and liquidity risks, as a consequence of these links. Links may, however, produce benefits for members to the extent that diversification and hedging across their combined portfolio reduces their margin requirements. At the same time, because such an agreement requires the linked clearing agencies to each guarantee cross-margining participants' obligations to the other clearing agency, cross-margining potentially exposes members of one clearing agency to default risk from members of the other.
By requiring that covered clearing agencies have policies and procedures reasonably designed to identify, monitor, and manage risks related to any link, proposed Rule 17Ad–22(e)(20), like Rule 17Ad–22(d)(7), reduces the likelihood that such links serve as channels for systemic risk transmission. Because proposed Rule 17Ad–22(e)(20) differs only marginally from Rule 17Ad–22(d)(7), the Commission preliminarily believes that the costs and benefits flowing from the proposed rule will be incremental, to the extent that the additional specificity in proposed Rule 17Ad–22(e)(20) causes covered clearing agencies to modify current practices. The Commission has aggregated these costs below.
Proposed Rule 17Ad–22(e)(21) would impose on covered clearing agencies requirements in addition to those currently applied to registered clearing agencies under Rule 17Ad–22(d)(6) by also requiring covered clearing agencies to have policies and procedures that ensure that a covered clearing agency's management review efficiency and effectiveness in four key areas:
• Efficiency and effectiveness in clearing and settlement arrangements may reduce participants' transaction costs and enhance liquidity by reducing the amount of collateral that customers must provide for transactions and the opportunity cost associated with providing such collateral. Where appropriate, net settlement arrangements can reduce collateral requirements. Similarly, clearing arrangements that include a broad scope of products enable clearing members to take advantage of netting efficiencies across positions.
• Efficient and effective operating structures, including risk management policies, procedures, and systems, may reduce the likelihood of failures that may lead to impairment of a clearing agency's capacity to complete settlement and interfering with its ability to monitor and manage credit exposures.
• An efficient scope of products that a clearing agency clears, settles, or records may provide its participants and customers with more efficient collateral arrangements and cross-margining benefits that ultimately reduce transaction costs and improve liquidity in cleared markets.
• Efficient and effective use of technology and communication procedures facilitates effective payment, clearing and settlement, and recordkeeping.
The Commission preliminarily believes that requirements related to efficient operation of covered clearing agencies are appropriate given the market power enjoyed by these entities, as discussed in Part IV.C.1.d. Limited competition in the market for clearing services may blunt incentives for covered clearing agencies to cost effectively provide high quality services to market participants in the absence of regulation.
Based on its supervisory experience, the Commission preliminarily believes that some covered clearing agencies would be required to make updates to their policies and procedures as a result of the proposed rule. As a result, the Commission expects incremental costs and benefits to flow from the proposed rule only to the extent that this additional specificity causes covered clearing agencies to modify current practices.
Based on its supervisory experience, the Commission preliminarily believes that some changes to policies and procedures would be necessary to meet requirements under proposed Rule 17Ad–22(e)(22).
Enhanced disclosure may also improve the efficiency of transactions in cleared products and improve financial stability more generally by improving the ability of members of covered clearing agencies to manage risks and assess costs. Additional information would reduce the potential for uncertainty on the part of clearing members regarding their obligations to covered clearing agencies. Proposed Rule 17Ad–22(e)(23) requires a covered clearing agency to establish, implement, maintain, and enforce written policies and procedures reasonably designed to require specific disclosures. As in Rules 17Ad–22(d)(9) and (11), covered clearing agencies would be required under proposed Rule 17Ad–22(e)(23) to disclose default procedures to the public and disclose sufficient information to participants to allow them to manage the risks, fees, and other material costs associated with membership.
Under proposed Rule 17Ad–22(e)(23), a covered clearing agency must establish, implement, maintain and enforce written policies and procedures reasonably designed to update, on a biannual basis, public disclosures that describe the covered clearing agency's market and activities, along with information about the agency's legal, governance, risk management, and operating frameworks, including specifically covering material changes since the last disclosure, a general background on the covered clearing agency, a rule-by-rule summary of compliance with proposed Rules 17Ad–22(e)(1) through (22), and an executive summary. The proposed rule adds a new requirement, relative to existing requirements for registered clearing agencies under Rule 17Ad–22(d)(9), to update the disclosure biannually and to include, among other things, specific data elements, including details about system design and operations, transaction values and volumes, average intraday exposure to participants, and statistics on operational reliability.
Additional transparency may have benefits for participants and cleared markets more generally. For example, if information about the systems that support a covered clearing agency is public, investors may be more certain that the market served by this agency is less prone to disruption and more accommodating of trade. Furthermore, public disclosure of detailed operating data may facilitate evaluation of each covered clearing agency's operating record by market participants. Further, under proposed Rule 17Ad–22(e)(23)(iv), these disclosures would be made about specific categories that potentially facilitate comparisons between covered clearing agencies. Additional availability of information on operations may increase the likelihood that clearing agencies compete to win market share from participants that value operational stability. This additional market discipline may provide additional incentives for covered clearing agencies to maintain reliability. Finally, updating the public disclosure every two years or more frequently following certain changes as required pursuant to proposed Rule 17Ad–22(e)(23)(v) would support the benefits of enhanced public disclosures by ensuring that information provided to the public remains up-to-date. The Commission preliminarily believes this would reduce the likelihood that market participants are forced to evaluate covered clearing agencies on the basis of stale data.
Clearing members, in particular, may benefit from additional disclosure of risk management and governance arrangements. These details potentially have significant bearing on clearing members' risk management because they may remove uncertainty surrounding members' potential obligations to a covered clearing agency. In certain circumstances, additional disclosures may reveal to members that the expected costs of membership exceed the expected benefits of membership, and that exit from the clearing agency may be privately optimal. In addition to the costs of concentration among members discussed in earlier sections, the Commission also recognizes the potential for systemic benefits from termination. Member exit on the basis of more precise information may reduce the risk posed to other financial market participants by members who, given additional information, might prefer to terminate their membership, due to an inability to manage the risks to which a covered clearing agency exposes them. While exit from clearing agencies may have consequences for competition among clearing members, the Commission preliminarily believes that encouraging the participation of firms that are not able to bear the risks of membership is not an appropriate means of mitigating the effects of market power on participants in cleared markets.
Based on its supervisory experience, the Commission preliminarily believes that some covered clearing agencies will require changes to policies and procedures as a result of the proposed rules. Compliance costs associated with changes to policies and procedures, biannual review and disclosure of additional data are included in implementation costs, below.
Proposed Rule 17Ad–22(e) would subject covered clearing agencies to requirements that are in many instances more specific than requirements under Rule 17Ad–22(d) and in some cases produce new obligations to establish, implement, maintain and enforce written policies and procedures reasonably designed to test, report, and disclose key elements of a covered clearing agency's performance, risk management, and operations.
Proposed Rule 17Ab2–2 provides procedures for the Commission to determine on its own initiative, or upon voluntary application by a registered clearing agency, whether a registered clearing agency is a covered clearing agency and therefore is subject to proposed Rule 17Ad–22(e). It also provides procedures for the Commission to determine whether a covered clearing agency is systemically important in multiple jurisdictions or has a complex risk profile and therefore should be subject to stricter risk management standards under proposed Rule 17Ad–22(e).
Proposed Rule 17Ab2–2(a) provides procedures for the Commission to determine whether a registered clearing agency that is otherwise not a designated clearing agency or a complex risk profile clearing agency is a covered clearing agency on the basis of the products it clears or other characteristics the Commission may deem appropriate under the circumstances. While the Commission preliminarily believes the current scope of proposed Rule 17Ad–22(e) is appropriate,
Proposed Rule 17Ab2–2(b) includes criteria the Commission may consider in determining whether a covered clearing agency is systemically important in multiple jurisdictions. Two of these criteria are based on input from a set of other bodies comprised of FSOC and regulators in other jurisdictions. As a result, it is possible that the flow of costs and benefits from proposed Rule 17Ad–22(e) may be partially determined by the decisions of other regulatory bodies.
Proposed Rule 17Ab2–2(c), by contrast, suggests characteristics of the financial products that a clearing agency clears as a basis upon which the Commission may determine that a clearing agency's activity has a complex risk profile.
The impact of proposed rules that determine the application of enhanced requirements could have direct costs on registered clearing agencies in the form of legal or consulting costs incurred as a result of seeking a determination from the Commission. In instances where these clearing agencies choose to apply to the Commission for status as a covered clearing agency under proposed Rule 17Ab2–2(a), the Commission preliminarily believes that a registered clearing agency's voluntary application would suggest that the applicant's private benefits from regulation under proposed Rule 17Ad–22(e) justify its costs.
Quantifiable costs related to determinations under proposed Rule a17Ab2–2 are noted in Part IV.C.3.d.
Indirect effects of the determination process may have important economic effects on the ultimate volume of clearing activity, beyond the economic effects of the proposed requirements themselves. An important feature of proposed Rule 17Ab2–2 is providing transparency for the determinations process. On one hand, transparency may allow clearing agencies to plan for new obligations under proposed Rule 17Ad–22(e); on the other, transparency may allow clearing agencies to restructure their business to avoid falling within the scope of proposed Rule 17Ad–22(e).
To the extent that proposed Rule 17Ad–22(e), if adopted as proposed, may increase costs relative to their peers for covered clearing agencies, clearing agencies whose activities have a more complex risk profile, and clearing agencies systemically important in multiple jurisdictions, clearing agencies may have incentives to restructure their businesses strategically to avoid these Commission determinations or otherwise exit any services made prohibitively expensive by such determinations. Such potential consequential effects would be among the considerations for the Commission to review in connection with any specific decision under proposed Rule 17Ab2–2. Restructuring may involve spinning off business lines into separate entities, limiting the scope of clearing activities to certain markets, or limiting the scale of clearing activities within a single market.
Any one of these responses could result in inefficiencies. As suggested in Part IV.C.2.b, registered clearing agencies may incur costs as a result of attempts to restructure. Clearing agencies that break up along product lines or fail to consolidate when consolidation is efficient may fail to take advantage of economies of scope and result in inefficient use of collateral.
Proposed Rule 17Ad–22(f) includes a provision that specifies Commission authority over designated clearing agencies for which it is the supervisory agency. Since this provision codifies existing statutory authority, the Commission does not anticipate any economic effects from this proposed rule.
As discussed above, the proposed amendments to Rule 17Ad–22 and proposed Rule 17Ab2–2 would impose certain costs on covered clearing agencies. As discussed in Part IV.C.3.a.ii, if a covered clearing agency is required to recruit new directors, the Commission preliminarily estimates a cost per director of $73,000.
In addition, proposed Rules 17Ad–22(e)(3), (4), (6), (7), (15) and (21) all include elements of review by either a covered clearing agency's board or its management on an ongoing basis. The Commission preliminarily estimates the cost of ongoing review for these proposed rules at approximately $39,312 per year.
For a new entrant into the set of covered clearing agencies from the set of registered clearing agencies, the Commission preliminarily estimates the startup compliance costs associated with policies and procedures to be $592,215,
A benefit of the proposed rules that the Commission is able to quantify is the impact of QCCP status of OCC to non-U.S. bank clearing members at OCC. This benefit comes as a result of lower capital requirements against exposures to QCCPs relative to non-qualifying CCPs. In Part IV.C.1.e, the Commission provided an estimate of the upper bound of this benefit, $600 million per year, or 0.60% of the aggregate 2012 net income reported by bank clearing members at OCC. The Commission preliminarily believes that the actual benefits flowing from QCCP status would likely be higher due to benefits for foreign bank members of FICC and ICEEU, in addition to the benefits with respect to OCC discussed above.
The Commission preliminarily believes that the proposed rules will result in an increase in financial stability insofar as they result in minimum standards at covered clearing agencies that are higher than those standards implied by current practices at covered clearing agencies. Some of this increased stability may come as a result of lower activity as the proposed rules cause participants to internalize a greater proportion of the costs that their activity imposes on the financial system, reducing the costs of default, conditional on a default event occurring. Increased stability may also come as a result of higher risk management standards at covered clearing agencies that effectively lower the probability that either covered clearing agencies or their members default.
The Commission preliminarily believes that clearance and settlement of securities and security-based swaps is fundamental to the stability of financial markets. As discussed above, clearing agencies may not fully consider the costs they could impose on financial market participants.
The Commission generally requests comment about its preliminary analysis of the economic effects of the proposed rules and any qualitative and quantitative data that would facilitate an evaluation and assessment of the economic effects of this proposal. In addition, the Commission requests comment on the following specific issues:
• Has the Commission appropriately identified the relevant costs and benefits associated with each requirement under proposed Rule 17Ad–22(e)? Why or why not?
• Are there any provisions of proposed Rule 17Ad–22(e) for which the costs of enhanced risk management standards appear inappropriate relative to the benefits of such standards, particularly given existing requirements under Rule 17Ad–22(d)? Please explain.
• Would particular provisions of proposed Rule 17Ad–22(e) improve or diminish competition between covered clearing agencies? Which provisions are likely to have such effects and through what transmission channels?
• Would the scope of proposed Rule 17Ad–22(e) have implications for competition between covered clearing agencies and registered clearing agencies that are not covered clearing agencies?
• Would particular provisions of proposed Rule 17Ad–22(e) improve or diminish competition between members of covered clearing agencies? Are there any provisions that would allow a subset of members to compete on better terms than other members?
• How would the effects of QCCP status will be allocated across members? Can market participants provide any qualitative or quantitative data to help the Commission evaluate the effects of QCCP status on clearing members and any heterogeneity in trade exposures and default fund exposures to covered
• Would bank clearing members to be constrained by the Basel III capital requirements? Do bank clearing members typically target tier one or total capital ratios as a business practice?
• In areas where existing requirements under Rule 17Ad–22(d) could be viewed as being consistent with the PFMI, and so could potentially earn QCCP status for covered clearing agencies, do the costs of additional requirements under proposed Rule 17Ad–22(e) appear appropriate relative to benefits of these requirements, aside from QCCP status? Please explain.
• Does the Commission's proposed definition of qualifying liquid resources adequately reflect the ability with which covered clearing agency assets may be used to meet funding obligations? Has the Commission adequately assessed the costs and benefits of requiring funding arrangements before considering non-cash resources “qualifying”?
• What would be the potential costs and benefits of requiring covered clearing agencies to hold liquid net assets in accordance with proposed Rule 17Ad–22(e)(15)? Can you provide qualitative and quantitative data to aid the Commission in evaluating these potential costs and benefits?
• Has the Commission adequately assessed the risks posed by indirect participation at covered clearing agencies? Can you provide qualitative and quantitative data to aid the Commission in evaluating the level of indirect participation in cleared markets, the heterogeneity of indirect participation across clearing members and the implications for networks of exposures in cleared markets?
The Regulatory Flexibility Act (“RFA”) requires the Commission, in promulgating rules, to consider the impact of those rules on small entities.
The proposed amendments to Rule 17Ad–22 and proposed Rule 17Ab2–2 would apply to covered clearing agencies, which would include registered clearing agencies that are designated clearing agencies, complex risk profile clearing agencies, or clearing agencies that otherwise have been determined to be covered clearing agencies by the Commission. For the purposes of Commission rulemaking and as applicable to the proposed amendments to Rule 17Ad–22 and proposed Rule 17Ab2–2, a small entity includes, when used with reference to a clearing agency, a clearing agency that (i) compared, cleared, and settled less than $500 million in securities transactions during the preceding fiscal year, (ii) had less than $200 million of funds and securities in its custody or control at all times during the preceding fiscal year (or at any time that it has been in business, if shorter), and (iii) is not affiliated with any person (other than a natural person) that is not a small business or small organization.
Based on the Commission's existing information about the clearing agencies currently registered with the Commission,
In addition, OCC cleared more than 4 billion contracts and held margin of $78.8 billion at the end of 2012.
For the reasons described above, the Commission certifies that the proposed amendments to Rule 17Ad–22 and proposed Rule 17Ab2–2 would not have a significant economic impact on a substantial number of small entities for purposes of the RFA. The Commission requests comment regarding this certification. The Commission requests that commenters describe the nature of any impact on small entities, including clearing agencies and counterparties to security and security-based swap transactions, and provide empirical data to support the extent of the impact.
Under the Small Business Regulatory Enforcement Fairness Act of 1996,
Pursuant to the Exchange Act, particularly Section 17A thereof, 15 U.S.C. 78q–1, and Section 805 of the Clearing Supervision Act, 12 U.S.C. 5464, the Commission proposes to amend Rule 17Ad–22 and proposes new Rule 17Ab2–2.
Reporting and recordkeeping requirements, Securities.
In accordance with the foregoing, Title 17, Chapter II of the Code of Federal Regulations is proposed to be amended as follows:
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78d, 78e, 78f, 78g, 78i, 78j, 78j–1, 78k, 78k–1, 78l, 78m, 78n, 78n–1, 78
Section 240.17Ad–22 is also issued under 12 U.S.C. 5461
(a) The Commission may, if it deems appropriate, upon application by any clearing agency or member of a clearing agency, or on its own initiative, determine whether a registered clearing agency should be considered a covered clearing agency. In determining whether a clearing agency should be considered a covered clearing agency, the Commission may consider:
(1) Characteristics such as the clearing of financial instruments that are characterized by discrete jump-to-default price changes or that are highly correlated with potential participant defaults; or
(2) Such other characteristics as it deems appropriate in the circumstances.
(b) The Commission may, if it deems appropriate, upon application by any clearing agency or member of a clearing agency, or on its own initiative, determine whether a covered clearing agency is systemically important in multiple jurisdictions. In determining whether a covered clearing agency is systemically important in multiple jurisdictions, the Commission may consider:
(1) Whether the covered clearing agency is a designated clearing agency;
(2) Whether the clearing agency has been determined to be systemically important by one or more jurisdictions other than the United States through a process that includes consideration of whether the foreseeable effects of a failure or disruption of the designated clearing agency could threaten the stability of each relevant jurisdiction's financial system; or
(3) Such other factors as it may deem appropriate in the circumstances.
(c) The Commission may, if it deems appropriate, determine whether any of the activities of a clearing agency providing central counterparty services, in addition to clearing agencies registered with the Commission for the purpose of clearing security-based swaps, have a more complex risk profile. In determining whether a clearing agency's activity has a more complex risk profile, the Commission may consider:
(1) Characteristics such as the clearing of financial instruments that are characterized by discrete jump-to-default price changes or that are highly correlated with potential participant defaults; or
(2) Such other characteristics as it deems appropriate in the circumstances, as factors supporting a finding of a more complex risk profile.
(d) The Commission shall publish notice of its intention to consider making a determination under paragraph (a), (b), or (c) of this section, together with a brief statement of the grounds under consideration therefor, and provide at least a 30-day public comment period prior to any such determination, giving all interested persons an opportunity to submit written data, views, and arguments concerning such proposed determination. The Commission may provide the clearing agency subject to the proposed determination opportunity for hearing regarding the proposed determination.
(e) Notice of determinations under paragraph (a), (b), or (c) of this section shall be given by prompt publication thereof, together with a statement of written reasons therefor.
(f) For purposes of this rule, the terms
The revisions and additions read as follows:
(a)
(1)
(2)
(3)
(4)
(i) Provides central counterparty services for security-based swaps;
(ii) Has been determined by the Commission to be involved in activities with a more complex risk profile at the time of its initial registration; or
(iii) Is subsequently determined by the Commission to be involved in activities with a more complex risk profile pursuant to § 240.17Ab2–2(c).
(5)
(6)
(i) Considers the impact on the model of both moderate and extreme changes in a wide range of inputs, parameters, and assumptions, including correlations of price movements or returns if relevant, which reflect a variety of historical and hypothetical market
(ii) When performed by or on behalf of a covered clearing agency involved in activities with a more complex risk profile, considers the most volatile relevant periods, where practical, that have been experienced by the markets served by the clearing agency; and
(iii) Tests the sensitivity of the model to stressed market conditions, including the market conditions that may ensue after the default of a member and other extreme but plausible conditions as defined in a covered clearing agency's risk policies.
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(i) Cash held either at the central bank of issue or at creditworthy commercial banks;
(ii) Assets that are readily available and convertible into cash through prearranged funding arrangements without material adverse change provisions, such as:
(A) Committed arrangements, including:
(
(
(
(B) Other prearranged funding arrangements determined to be highly reliable even in extreme but plausible market conditions by the board of directors of the covered clearing agency following a review conducted for this purpose not less than annually; and
(iii) Other assets that are readily available and eligible for pledging to (or conducting other appropriate forms of transactions with) a relevant central bank, if the covered clearing agency has access to routine credit at such central bank that permits said pledges or other transactions by the covered clearing agency.
(16)
(17)
(18)
(19)
(20)
(d) Each registered clearing agency that is not a covered clearing agency shall establish, implement, maintain and enforce written policies and procedures reasonably designed to, as applicable:
(e) Each covered clearing agency shall establish, implement, maintain and enforce written policies and procedures reasonably designed to, as applicable:
(1) Provide for a well-founded, clear, transparent, and enforceable legal basis for each aspect of its activities in all relevant jurisdictions.
(2) Provide for governance arrangements that:
(i) Are clear and transparent;
(ii) Clearly prioritize the safety and efficiency of the covered clearing agency;
(iii) Support the public interest requirements in Section 17A of the Exchange Act (15 U.S.C. 78q–1) applicable to clearing agencies, and the objectives of owners and participants; and
(iv) Establish that the board of directors and senior management have appropriate experience and skills to discharge their duties and responsibilities.
(3) Maintain a sound risk management framework for comprehensively managing legal, credit, liquidity, operational, general business, investment, custody, and other risks that arise in or are borne by the covered clearing agency, which:
(i) Includes risk management policies, procedures, and systems designed to identify, measure, monitor, and manage the range of risks that arise in or are borne by the covered clearing agency,
(ii) Includes plans for the recovery and orderly wind-down of the covered clearing agency necessitated by credit losses, liquidity shortfalls, losses from general business risk, or any other losses;
(iii) Provides risk management and internal audit personnel with sufficient authority, resources, independence from management, and access to the board of directors;
(iv) Provides risk management and internal audit personnel with a direct reporting line to, and oversight by, a risk management committee and an audit committee of the board of directors, respectively; and
(v) Provides for an independent audit committee.
(4) Effectively identify, measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes, including by:
(i) Maintaining sufficient financial resources to cover its credit exposure to each participant fully with a high degree of confidence;
(ii) To the extent not already maintained pursuant to paragraph (e)(4)(i) of this section, for a covered clearing agency providing central counterparty services that is either systemically important in multiple jurisdictions or a clearing agency involved in activities with a more complex risk profile, maintaining additional financial resources at the minimum to enable it to cover a wide range of foreseeable stress scenarios that include, but are not limited to, the default of the two participant families that would potentially cause the largest aggregate credit exposure for the covered clearing agency in extreme but plausible market conditions;
(iii) To the extent not already maintained pursuant to paragraph (e)(4)(i) of this section, for a covered clearing agency not subject to paragraph (e)(4)(ii) of this section, maintaining additional financial resources at the minimum to enable it to cover a wide range of foreseeable stress scenarios that include, but are not limited to, the default of the participant family that would potentially cause the largest aggregate credit exposure for the covered clearing agency in extreme but plausible market conditions;
(iv) Including prefunded financial resources, excluding assessments for additional guaranty fund contributions or other resources that are not prefunded, when calculating the financial resources available to meet the standards under paragraphs (e)(4)(i) through (iii) of this section, as applicable;
(v) Maintaining the financial resources required under paragraphs (e)(4)(i) through (iii) of this section, as applicable, in combined or separately maintained clearing or guaranty funds;
(vi) Testing the sufficiency of its total financial resources available to meet the minimum financial resource requirements under paragraphs (e)(4)(i) through (iii) of this section, as applicable, by:
(A) Conducting a stress test of its total financial resources once each day using standard predetermined parameters and assumptions;
(B) Conducting a comprehensive analysis on at least a monthly basis of the existing stress testing scenarios, models, and underlying parameters and assumptions, and considering modifications to ensure they are appropriate for determining the covered clearing agency's required level of default protection in light of current and evolving market conditions;
(C) Conducting a comprehensive analysis of stress testing scenarios, models, and underlying parameters and assumptions more frequently than monthly when the products cleared or markets served display high volatility or become less liquid, and when the size or concentration of positions held by the covered clearing agency's participants increases significantly; and
(D) Reporting the results of its analyses under paragraphs (e)(4)(iv)(B) and (C) of this section to appropriate decision makers at the covered clearing agency, including but not limited to, its risk management committee or board of directors, and using these results to evaluate the adequacy of and adjust its margin methodology, model parameters, models used to generate clearing or guaranty fund requirements, and any other relevant aspects of its credit risk management framework, in supporting compliance with the minimum financial resources requirements set forth in paragraphs (e)(4)(i) through (iii) of this section; and
(vii) Performing a conforming model validation for its credit risk models to be performed not less than annually or more frequently as may be contemplated by the covered clearing agency's risk management framework established pursuant to paragraph (e)(3) of this section.
(5) Limit the assets it accepts as collateral to those with low credit, liquidity, and market risks, and set and enforce appropriately conservative haircuts and concentration limits if the covered clearing agency requires collateral to manage its or its participants' credit exposure; and require a review of the sufficiency of its collateral haircuts and concentration limits to be performed not less than annually.
(6) Cover, if the covered clearing agency provides central counterparty services, its credit exposures to its participants by establishing a risk-based margin system that, at a minimum:
(i) Considers, and produces margin levels commensurate with, the risks and particular attributes of each relevant product, portfolio, and market;
(ii) Marks participant positions to market and collects margin, including variation margin or equivalent charges if relevant, at least daily and includes the authority and operational capacity to make intraday margin calls in defined circumstances;
(iii) Calculates margin sufficient to cover its potential future exposure to participants in the interval between the last margin collection and the close out of positions following a participant default;
(iv) Uses reliable sources of timely price data and procedures and sound valuation models for addressing circumstances in which pricing data are not readily available or reliable;
(v) Uses an appropriate method for measuring credit exposure that accounts for relevant product risk factors and portfolio effects across products;
(vi) Is monitored by management on an ongoing basis and regularly reviewed, tested, and verified by:
(A) Conducting backtests of its margin resources at least once each day using standard predetermined parameters and assumptions;
(B) Conducting a conforming sensitivity analysis of its margin resources and its parameters and assumptions for backtesting on at least a monthly basis, and considering modifications to ensure the backtesting practices are appropriate for determining the adequacy of the covered clearing agency's margin resources;
(C) Conducting a conforming sensitivity analysis of its margin resources and its parameters and assumptions for backtesting more frequently than monthly during periods of time when the products cleared or markets served display high volatility or become less liquid, and when the size or concentration of positions held by the covered clearing agency's participants increases or decreases significantly; and
(D) Reporting the results of its analyses under paragraphs (e)(6)(vi)(B) and (C) of this section to appropriate decision makers at the covered clearing
(vii) Requires a conforming model validation for the covered clearing agency's margin system and related models to be performed not less than annually, or more frequently as may be contemplated by the covered clearing agency's risk management framework established pursuant to paragraph (e)(3) of this section.
(7) Effectively measure, monitor, and manage the liquidity risk that arises in or is borne by the covered clearing agency, including measuring, monitoring, and managing its settlement and funding flows on an ongoing and timely basis, and its use of intraday liquidity by, at a minimum, doing the following:
(i) Maintaining sufficient liquid resources at the minimum in all relevant currencies to effect same-day and, where appropriate, intraday and multiday settlement of payment obligations with a high degree of confidence under a wide range of foreseeable stress scenarios that includes, but is not limited to, the default of the participant family that would generate the largest aggregate payment obligation for the covered clearing agency in extreme but plausible market conditions;
(ii) Holding qualifying liquid resources sufficient to meet the minimum liquidity resource requirement under paragraph (e)(7)(i) of this section in each relevant currency for which the covered clearing agency has payment obligations owed to clearing members;
(iii) Using the access to accounts and services at a Federal Reserve Bank, pursuant to Section 806(a) of the Payment, Clearing, and Settlement Supervision Act of 2010 (12 U.S.C. 5465(a)), or other relevant central bank, when available and where determined to be practical by the board of directors of the covered clearing agency, to enhance its management of liquidity risk;
(iv) Undertaking due diligence to confirm that it has a reasonable basis to believe each of its liquidity providers, whether or not such liquidity provider is a clearing member, has:
(A) Sufficient information to understand and manage the liquidity provider's liquidity risks; and
(B) The capacity to perform as required under its commitments to provide liquidity to the covered clearing agency;
(v) Maintaining and testing with each liquidity provider, to the extent practicable, the covered clearing agency's procedures and operational capacity for accessing each type of relevant liquidity resource under paragraph (e)(7)(i) of this section at least annually;
(vi) Determining the amount and regularly testing the sufficiency of the liquid resources held for purposes of meeting the minimum liquid resource requirement under paragraph (e)(7)(i) of this section by, at a minimum:
(A) Conducting a stress test of its liquidity resources at least once each day using standard and predetermined parameters and assumptions;
(B) Conducting a comprehensive analysis on at least a monthly basis of the existing stress testing scenarios, models, and underlying parameters and assumptions used in evaluating liquidity needs and resources, and considering modifications to ensure they are appropriate for determining the clearing agency's identified liquidity needs and resources in light of current and evolving market conditions;
(C) Conducting a comprehensive analysis of the scenarios, models, and underlying parameters and assumptions used in evaluating liquidity needs and resources more frequently than monthly when the products cleared or markets served display high volatility, become less liquid, when the size or concentration of positions held by the clearing agency's participants increases significantly and in other appropriate circumstances described in such policies and procedures; and
(D) Reporting the results of its analyses under paragraphs (e)(6)(vii)(B) and (C) of this section to appropriate decision makers at the covered clearing agency, including but not limited to, its risk management committee or board of directors, and using these results to evaluate the adequacy of and adjust its liquidity risk management methodology, model parameters, and any other relevant aspects of its credit risk management framework;
(vii) Performing a conforming model validation of its liquidity risk models not less than annually or more frequently as may be contemplated by the covered clearing agency's risk management framework established pursuant to paragraph (e)(3) of this section;
(viii) Addressing foreseeable liquidity shortfalls that would not be covered by the covered clearing agency's liquid resources and seek to avoid unwinding, revoking, or delaying the same-day settlement of payment obligations;
(ix) Describing the covered clearing agency's process to replenish any liquid resources that the clearing agency may employ during a stress event; and
(x) Undertaking an analysis at least once a year that evaluates the feasibility of maintaining sufficient liquid resources at a minimum in all relevant currencies to effect same-day and, where appropriate, intraday and multiday settlement of payment obligations with a high degree of confidence under a wide range of foreseeable stress scenarios that includes, but is not limited to, the default of the two participant families that would potentially cause the largest aggregate payment obligation for the covered clearing agency in extreme but plausible market conditions if the covered clearing agency provides central counterparty services and is either systemically important in multiple jurisdictions or a clearing agency involved in activities with a more complex risk profile.
(8) Define the point at which settlement is final no later than the end of the day on which the payment or obligation is due and, where necessary or appropriate, intraday or in real time.
(9) Conduct its money settlements in central bank money, where available and determined to be practical by the board of directors of the covered clearing agency, and minimize and manage credit and liquidity risk arising from conducting its money settlements in commercial bank money if central bank money is not used by the covered clearing agency.
(10) Establish and maintain transparent written standards that state its obligations with respect to the delivery of physical instruments, and establish and maintain operational practices that identify, monitor, and manage the risks associated with such physical deliveries.
(11) When the covered clearing agency provides central securities depository services:
(i) Maintain securities in an immobilized or dematerialized form for their transfer by book entry, ensure the integrity of securities issues, and minimize and manage the risks associated with the safekeeping and transfer of securities;
(ii) Implement internal auditing and other controls to safeguard the rights of securities issuers and holders and prevent the unauthorized creation or deletion of securities, and conduct periodic and at least daily reconciliation of securities issues it maintains; and
(iii) Protect assets against custody risk through appropriate rules and procedures consistent with relevant laws, rules, and regulations in jurisdictions where it operates.
(12) Eliminate principal risk by conditioning the final settlement of one obligation upon the final settlement of the other, regardless of whether the covered clearing agency settles on a gross or net basis and when finality occurs if the covered clearing agency settles transactions that involve the settlement of two linked obligations.
(13) Ensure the covered clearing agency has the authority and operational capacity to take timely action to contain losses and liquidity demands and continue to meet its obligations by, at a minimum, doing the following:
(i) Addressing allocation of credit losses the covered clearing agency may face if its collateral and other resources are insufficient to fully cover its credit exposures, including the repayment of any funds the covered clearing agency may borrow from liquidity providers;
(ii) Describing the covered clearing agency's process to replenish any financial resources it may use following a default or other event in which use of such resources is contemplated; and
(iii) Requiring the covered clearing agency's participants and, when practicable, other stakeholders to participate in the testing and review of its default procedures, including any close-out procedures, at least annually and following material changes thereto.
(14) Enable, when the covered clearing agency provides central counterparty services for security-based swaps or engages in activities that the Commission has determined to have a more complex risk profile, the segregation and portability of positions of a participant's customers and the collateral provided to the covered clearing agency with respect to those positions and effectively protect such positions and related collateral from the default or insolvency of that participant.
(15) Identify, monitor, and manage the covered clearing agency's general business risk and hold sufficient liquid net assets funded by equity to cover potential general business losses so that the covered clearing agency can continue operations and services as a going concern if those losses materialize, including by:
(i) Determining the amount of liquid net assets funded by equity based upon its general business risk profile and the length of time required to achieve a recovery or orderly wind-down, as appropriate, of its critical operations and services if such action is taken;
(ii) Holding liquid net assets funded by equity equal to the greater of either (x) six months of the covered clearing agency's current operating expenses, or (y) the amount determined by the board of directors to be sufficient to ensure a recovery or orderly wind-down of critical operations and services of the covered clearing agency, as contemplated by the plans established under paragraph (e)(3)(ii) of this section, and which:
(A) Shall be in addition to resources held to cover participant defaults or other risks covered under the credit risk standard in paragraph (b)(3) or paragraphs (e)(4)(i) through (iii) of this section, as applicable, and the liquidity risk standard in paragraphs (e)(7)(i) and (ii) of this section; and
(B) Shall be of high quality and sufficiently liquid to allow the covered clearing agency to meet its current and projected operating expenses under a range of scenarios, including in adverse market conditions; and
(iii) Maintaining a viable plan, approved by the board of directors and updated at least annually, for raising additional equity should its equity fall close to or below the amount required under paragraph (e)(15)(ii) of this section.
(16) Safeguard the covered clearing agency's own and its participants' assets, minimize the risk of loss and delay in access to these assets, and invest such assets in instruments with minimal credit, market, and liquidity risks.
(17) Manage the covered clearing agency's operational risks by:
(i) Identifying the plausible sources of operational risk, both internal and external, and mitigating their impact through the use of appropriate systems, policies, procedures, and controls;
(ii) Establishing and maintaining policies and procedures reasonably designed to ensure that systems have a high degree of security, resiliency, operational reliability, and adequate, scalable capacity; and
(iii) Establishing and maintaining a business continuity plan that addresses events posing a significant risk of disrupting operations.
(18) Establish objective, risk-based, and publicly disclosed criteria for participation, which permit fair and open access by direct and, where relevant, indirect participants and other financial market utilities, require participants to have sufficient financial resources and robust operational capacity to meet obligations arising from participation in the clearing agency, and monitor compliance with such participation requirements on an ongoing basis.
(19) Identify, monitor, and manage the material risks to the covered clearing agency arising from arrangements in which firms that are indirect participants in the covered clearing agency rely on the services provided by direct participants to access the covered clearing agency's payment, clearing, or settlement facilities.
(20) Identify, monitor, and manage risks related to any link the covered clearing agency establishes with one or more other clearing agencies, financial market utilities, or trading markets.
(21) Be efficient and effective in meeting the requirements of its participants and the markets it serves, and have the covered clearing agency's management regularly review the efficiency and effectiveness of its:
(i) Clearing and settlement arrangements;
(ii) Operating structure, including risk management policies, procedures, and systems;
(iii) Scope of products cleared, settled, or recorded; and
(iv) Use of technology and communication procedures.
(22) Use, or at a minimum accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, and settlement.
(23) Maintain clear and comprehensive rules and procedures that provide for the following:
(i) Publicly disclosing all relevant rules and material procedures, including key aspects of its default rules and procedures;
(ii) Providing sufficient information to enable participants to identify and evaluate the risks, fees, and other material costs they incur by participating in the covered clearing agency;
(iii) Publicly disclosing relevant basic data on transaction volume and values;
(iv) Providing a comprehensive public disclosure of its material rules, policies, and procedures regarding governance arrangements and legal, financial, and operational risk management, accurate in all material respects at the time of publication, that includes:
(A)
(B)
(C)
(
(
(
(D)
(v) Updating the public disclosure under paragraph (e)(23)(iv) of this section every two years, or more frequently following changes to its system or the environment in which it operates to the extent necessary to ensure statements previously provided under paragraph (e)(23)(iv) of this section remain accurate in all material respects.
(f) For purposes of enforcing the Payment, Clearing, and Settlement Supervision Act of 2010 (12 U.S.C. 5461
By the Commission.
Proposed rule document 2014–05806 was originally published on pages 16865 through 16975 in the issue of Wednesday, March 26, 2014. In that publication the footnotes contained erroneous entries. The corrected document is republished in its entirety.
Executive Office of the President, Office of Management and Budget.
Notice of solicitation of comments for the 2018 SOC revision.
Under 31 U.S.C. 1104(d) and 44 U.S.C. 3504(e), the Office of Management and Budget (OMB) announces the review of the
To ensure consideration, all comments must be received in writing on or before July 21, 2014. Comments received with subject “2018 SOC” by the date specified above will be included as part of the official record. Please be aware that mail processing at Federal facilities may be delayed by security screening. Respondents are encouraged to send comments via email, FAX, or via
As indicated in the
Paul Bugg, Office of Information and Regulatory Affairs, OMB, 10201 New Executive Office Building, 725 17th Street NW., Washington, DC 20503; email:
The U.S. Federal statistical system is decentralized, with 13 statistical agencies that have data collection as their primary mission and over 100 other agencies that collect data along with carrying out another primary mission. OMB coordinates the Federal statistical system by developing and overseeing the implementation of Government-wide principles, policies, standards, and guidelines concerning the presentation and dissemination of statistical information. The Standard Occupational Classification (SOC) is one of several standard classification systems established by OMB to ensure coordination of Federal statistical activities. All Federal agencies that publish occupational data for statistical purposes are required to use the SOC to increase data comparability (and thus, data utility) across Federal programs.
The SOC classifies all occupations in the economy, including private, public, and military occupations, in order to provide a means to compare occupational data produced for statistical purposes across agencies. It is designed to reflect the current occupational work structure in the U.S. and to cover all occupations in which work is performed for pay or profit. Information about occupations—employment levels, trends, pay and benefits, demographic characteristics, skills required, and many other items—is widely used by individuals, businesses, researchers, educators, and public policy-makers. The SOC helps ensure that occupational data produced across the Federal statistical system are comparable and can be used together in analysis. It is important to note that the SOC is designed and maintained solely for statistical purposes. Consequently, although the classification may also be used for various nonstatistical purposes (e.g., for administrative, regulatory, or taxation functions), the requirements of government agencies or private users that choose to use the SOC for nonstatistical purposes play no role in its development or revision.
To reflect changes in the economy and in the nature of work, the revision of the SOC must be considered periodically. The SOC was first issued in 1977, with a subsequent revision in 1980. Although the 1980 SOC was the basis for the occupational classification system used in the Census of Population and Housing in 1980 and 1990, neither the 1977 nor the 1980 SOC was widely used for other Federal data sources. With the implementation of the 2000 SOC, for the first time all major occupational data sources produced by the Federal statistical system provided comparable data, greatly improving the utility of the data. The 2010 SOC revision structured data collection, improved comparability, and maintained currency.
The SOCPC, comprised of representatives from nine Federal
The 2010 SOC revision resulted in both major and minor changes to the 2000 SOC. Although the 2010 SOC retained the basic 2000 SOC major group structure, its revisions increased clarity, corrected errors, and accounted for changes in technology and in the nature or organization of work in our economy. The 821 detailed occupations in the 2000 SOC expanded to 840 in 2010—a net increase that combined some occupations with others and added new ones as well. Meanwhile, almost half of the detailed occupations in the 2010 SOC remained the same as in 2000. However, there were significant updates to information technology, healthcare, and human resource occupations.
The 2010 SOC formalized a set of Coding Guidelines to help data collectors code occupations more consistently and to help data users better understand how occupations are classified. The Direct Match Title File was also introduced as a new feature. The Direct Match Title File lists associated job titles for detailed SOC occupations. Each of these titles is directly matched to a single SOC occupation. All workers with a job title listed in the Direct Match Title File are classified in only one detailed SOC occupation code. Documents related to the Direct Match Title File are available at
OMB charged the SOCPC to continue as a standing committee to facilitate smooth processes for supporting the use of the SOC and for conducting future SOC revisions.
OMB has requested that the SOCPC review the 2010 SOC for possible revision for 2018. Given the multiple interdependent programs that rely on the SOC, coordinating the decennial revisions of the SOC with these programs is best accomplished by timing revisions of the SOC for the year following North American Industry Classification System revisions, which occur for years ending in 2 and 7. The next such year is 2018, which has the additional benefit of coinciding with the beginning year of the American Community Survey five-year set of surveys that bracket the 2020 Decennial Census. Thus, OMB is soliciting comments for revision of the SOC for 2018 and plans to do so every 10 years thereafter.
OMB and the SOCPC solicit and welcome comments related to any aspect of occupational classification, especially comments concerning the following items which are described in more detail below:
• The proposed revision to the 2010 SOC Classification Principles;
• the intention to retain the 2010 SOC Coding Guidelines;
• the intention to retain the 2010 SOC Major Group structure;
• the correction, change, or combination of 2010 SOC detailed occupations; and
• proposals for new detailed occupations.
The SOC Classification Principles form the basis on which the SOC is structured and provide a foundation for classification decisions. The SOCPC proposes to modestly revise the 2010 SOC Classification Principles, available at
Accordingly, the proposed revisions to the 2010 Classification Principles for use in the 2018 SOC would result in the following set of SOC Classification Principles:
1. The SOC covers all occupations in which work is performed for pay or profit, including work performed in family-operated enterprises by family members who are not directly compensated. It excludes occupations unique to volunteers. Each occupation is assigned to only one occupational category at the most detailed level of the classification.
2. Occupations are classified based on work performed and, in some cases, on the skills, education and/or training needed to perform the work.
3. Workers primarily engaged in planning and the directing of resources are classified in management occupations in Major Group 11–0000. Duties of these workers may include supervision.
4. Supervisors of workers in Major Groups 13–0000 through 29–0000 usually have work experience and perform activities similar to those of the workers they supervise, and therefore are classified with the workers they supervise.
5. Workers in Major Group 31–0000 Healthcare Support Occupations assist and are usually supervised by workers in Major Group 29–0000 Healthcare Practitioners and Technical Occupations, and therefore there are no first-line supervisor occupations in Major Group 31–0000.
6. Workers in Major Groups 33–0000 through 53–0000 whose primary duty is supervising are classified in the appropriate first-line supervisor category because their work activities are distinct from those of the workers they supervise.
7. Apprentices and trainees are classified with the occupations for which they are being trained, while helpers and aides are classified separately because they are not in training for the occupation they are helping.
8. If an occupation is not included as a distinct detailed occupation in the structure, it is classified in an appropriate “All Other,” or residual, occupation. “All Other” occupations are placed in the structure when it is determined that the detailed occupations comprising a broad occupation group do not account for all of the workers in the group. These occupations appear as the last occupation in the group with a code ending in “9” and are identified in their title by having “All Other” appear at the end.
9. The U.S. Bureau of Labor Statistics and the U.S. Census Bureau are charged with collecting and reporting data on total U.S. employment across the full spectrum of SOC major groups. Thus, for a detailed occupation to be included in the SOC, either the Bureau of Labor Statistics or the Census Bureau must be able to collect and report data on that occupation.
10. To maximize the comparability of data, time series continuity is maintained to the extent possible.
The SOC Coding Guidelines are intended to assist users when assigning SOC codes and titles to survey responses, and in other coding activities. The SOCPC does not propose any revisions to the Coding Guidelines that governed the 2010 SOC; however, suggestions from the public are welcome.
1. A worker should be assigned to an SOC occupation code based on work performed.
2. When workers in a single job could be coded in more than one occupation, they should be coded in the occupation that requires the highest level of skill. If there is no measurable difference in skill requirements, workers should be coded in the occupation in which they spend the most time. Workers whose job is to teach at different levels (e.g., elementary, middle, or secondary) should be coded in the occupation corresponding to the highest educational level they teach.
3. Data collection and reporting agencies should assign workers to the most detailed occupation possible. Different agencies may use different levels of aggregation, depending on their ability to collect data. For more information on data produced using the SOC, see the Frequently Asked Questions (FAQs) section of the 2010 SOC User Guide, available at
4. Workers who perform activities not described in any distinct detailed occupation in the SOC structure should be coded in an appropriate “All Other” or residual occupation. These residual occupational categories appear as the last occupation in a group with a code ending in “9” and are identified by having the words “All Other” appear at the end of the title.
5. Workers in Major Groups 33–0000 through 53–0000 who
6. Licensed and non-licensed workers performing the same work should be coded together in the same detailed occupation, except where specified otherwise in the SOC definition.
The 2010 SOC classifies workers at four levels of aggregation: (1) Major Group; (2) Minor Group; (3) Broad Occupation; and (4) Detailed Occupation.
All occupations are clustered into one of the following 23 Major Groups:
In order to ensure consistency and satisfy a strong user preference for time series continuity in occupational employment and wage data, the SOCPC proposes that no changes be made to the current Major Groups as denoted in the
Generally, the definitions for SOC detailed occupations contain the minimum description needed to determine which workers would be classified in a particular occupation. Comments are welcome on corrections concerning typographical or definitional errors and other changes to the existing detailed occupations, including the combination of occupations. Suggested changes to existing detailed occupations may address the occupational title, definition, or its placement in the structure.
In addition, each SOC occupation has one or more Illustrative Examples, drawn from the Direct Match Title File, referenced above. Comments are invited on Illustrative Examples or Direct Match Titles that should be added, moved, or deleted. Detailed information on the purpose, structure, and the components of SOC definitions is available on the BLS SOC Web site at
The SOCPC also invites proposals for new detailed occupations or the splitting of occupations, as warranted by changes in the economy, technology, and business practices that affect how employers structure work. Suggestions should be guided by the 2010 SOC Classification Principles and the proposed changes to the Classification Principles, above. In particular, suggestions should specifically address Classification Principles 2 and 9, as discussed below.
Classification Principle 2 dictates that the nature of the work performed is the main criterion for classifying a detailed occupation and determining where to place it in the structure. Thus, the SOCPC needs specific information describing the work performed by workers in the occupation, such as specific duties and tasks. This information is useful in evaluating whether the work performed in a recommended new occupation is sufficiently different from work performed in existing occupations, and to determine where in the classification structure a new occupation should be
Classification Principle 9 pertains to collectability—that is, whether data can actually be collected on the occupation. For a detailed occupation to be included in the SOC, either BLS or the Census Bureau must be able to collect and report data on the occupation. BLS and the Census Bureau are responsible for producing data across the entire range of occupations in the U.S. labor market, and conduct comprehensive household and business surveys that collect occupational data.
Collectability is partly a function of the size of the occupation—it must be large enough to be detected in sample household or business surveys. However, the SOCPC will not use a specific employment size cut-off to determine its recommendations to OMB. This is because small occupations that are concentrated in certain industries or geographic areas may be collectable, while occupations of similar or larger employment that are spread throughout the economy may not be collectable. Therefore, size is not the only consideration in collectability. Collectability is also related to the type of data collection used, specifically the comprehensive household and business surveys conducted by BLS and the Census Bureau.
In general, household surveys collect less information on the occupation of individuals than is possible in business surveys. For example, the Current Population Survey (CPS) and the American Community Survey (ACS)—both of which are household surveys—measure occupation by collecting the individual's job title and a very brief description of the person's most important activities or duties. In most household surveys, coders are not able to recontact the respondent for clarification. Since less information is available for assigning classification codes, household surveys generally provide less occupational detail than business surveys. Thus, occupational categories with fine distinctions from one another may not be collectable in household surveys. However, household surveys, such as the CPS and ACS, are the main sources of demographic information on workers by occupation, especially educational attainment, gender, age, and race/ethnicity. In addition, the CPS and ACS are the main sources of occupational data for parts of the workforce not covered by business surveys, namely the self-employed, unpaid family workers, and workers in private households and most agricultural industries. Occupations that are primarily comprised of these types of workers or mainly found in private households or agriculture therefore must be collectable on household surveys.
Business surveys collect data on occupations directly from employers. These surveys rely on the employer for information about the workers' duties, and often coders may recontact the employer to obtain clarifications. Thus, it is often possible to obtain detailed information about the work performed, providing occupational coders with more detail than is possible in most household surveys. Business surveys provide data on employment, wages, and benefits by occupation, and sometimes on other characteristics of the job or worker. In general, however, business surveys do not provide demographic information, nor do they include the self-employed, unpaid family workers, workers in private households, or workers in most agricultural industries.
Suggestions for new detailed occupations should also consider the proposed Classification Principle 10, above. To maintain the utility of the SOC, the SOCPC's recommendations to OMB will reflect the importance of maintaining time series continuity. To the extent possible, new occupations proposed for the 2018 SOC should be easily cross-walked to the 2010 SOC.
When reviewing and evaluating individual proposals, the SOCPC will consider the degree to which a proposed addition relates to a
The following information will assist the SOCPC in its consideration of comments on the review and possible revision of the 2010 SOC (particularly, for proposals of new detailed occupations):
1.
2.
3.
4.
5.
6.
7.
8.
9.
Public comments in response to this and related
1. Carefully review the Classification Principles and Coding Guidelines, as these guide the SOCPC's recommendations. Comments that reflect these principles and guidelines are likely to be more pertinent to the SOCPC's deliberations.
2. Carefully review the elements of an SOC detailed occupation as described in “Revising the Standard Occupational Classification” available at
3. Provide information on the nature of the work performed, including specific activities and tasks. This is the most important type of information for new occupations. Indications of activities that are required, and those that “may” be performed, by the worker are also helpful. Suggestions for a potential 2018 SOC code, title, and definition would be useful.
4. Prepare well-organized and concise comments. The SOCPC expects to receive hundreds of comments.
5. Include in the proposals a detailed description of the occupation together with an estimate of employment, and address the ability to collect data on the occupation, along with comments indicating how suggested changes will better reflect the current occupational structure in the U.S. economy.
OMB expects to consider the final recommendations and approve the final 2018 SOC by spring 2017. After the 2018 SOC is approved, the SOCPC will prepare the 2018 SOC Manual and supporting materials, make them available to the public, and continue its role of maintaining the classification leading up to the next revision.
Executive Office of the President, Office of Management and Budget.
Notice of Solicitation for Proposals To Revise Portions of NAICS for 2017.
Under the authority of the Budget and Accounting Procedures Act of 1950 (31 U.S.C. 1104(d)) and the Paperwork Reduction Act of 1995 (44 U.S.C. 3504(e)), the Office of Management and Budget (OMB), through its Economic Classification Policy Committee (ECPC), is soliciting proposals from the public for changes to the structure and content of the North American Industry Classification System (NAICS) for inclusion in a potential 2017 revision. There are six parts in the
In soliciting comments about revising NAICS, the ECPC does not intend to open the entire classification for substantial change in 2017. The ECPC will consider public comments and proposals for changes or modifications that advance the goals of NAICS as outlined in Part I of the
To ensure consideration of your comments or proposals related to the potential revision of NAICS for 2017 as detailed in this notice, comments must be in writing and received no later than July 21, 2014. Please be aware of delays in mail processing at Federal facilities due to tightened security. Respondents are encouraged to send both a hard copy and a second copy via fax or email (discussed in
Correspondence concerning the ECPC's intent to review and possibly revise NAICS for 2017, comments on the business organization clarifications, and all proposals for new industries in NAICS for 2017 should be sent to John Murphy, Chair, Economic Classification Policy Committee, Census Bureau, Room 8K157, Washington, DC 20233–6500. Because of delays in the receipt of regular mail related to security screening, respondents are encouraged to also submit comments by email to
Comments may also be sent via
All comments regarding this notice received via the Web site, email, fax, hardcopy, or other means, are part of the public record as submitted. For this reason, do not include in your comments information of a confidential nature, such as sensitive personal information or proprietary information. If you send an email comment, your email address will be automatically captured and included as part of the comment that is placed in the public docket. Please note that responses to this public comment request containing any routine notice about the confidentiality of the communication will be treated as public comments that may be made available to the public notwithstanding the inclusion of the routine notice.
Please consider including contact information and a phone number or email address with your comments to facilitate follow-up if necessary.
John Murphy, Chair, Economic Classification Policy Committee, Census Bureau, Room 8K157, Washington, DC 20233–6500. Mr. Murphy can be reached at (301) 763–5172, by fax at (301) 763–8744, or by email at
The
NAICS is a system for classifying establishments (individual business locations) by type of economic activity. Its purposes are: (1) To facilitate the collection, tabulation, presentation, and analysis of data relating to establishments; and (2) to promote uniformity and comparability in the presentation and analysis of statistical data describing the North American economy. Federal statistical agencies use NAICS to collect or publish data by industry. It is also widely used by State agencies, trade associations, private businesses, and other organizations.
Mexico's
For these three countries, NAICS provides a consistent framework for the collection, tabulation, presentation, and analysis of industry statistics used by government policy analysts, by academics and researchers, by the business community, and by the public. Please note that NAICS is designed and maintained solely for statistical purposes to improve and keep current this Federal statistical standard. Consequently, although the classification may also be used for various nonstatistical purposes (e.g., for administrative, regulatory, or taxation functions), the requirements of government agencies or private users that choose to use NAICS for nonstatistical purposes play no role in its development or revision.
The four principles that guided the initial development of NAICS were:
(1) NAICS is erected on a production-oriented conceptual framework. This means that producing units that use the same or similar production processes are grouped together in NAICS.
(2) NAICS gives special attention to developing production-oriented classifications for (a) new and emerging industries, (b) service industries in general, and (c) industries engaged in the production of advanced technologies.
(3) Time series continuity is maintained to the extent possible.
(4) The system strives for compatibility with the two-digit level of the International Standard Industrial Classification of All Economic Activities (ISIC, Rev. 3) of the United Nations.
The ECPC is committed to maintaining the principles of NAICS as it develops further refinements. NAICS uses a hierarchical structure to classify establishments from the broadest level to the most detailed level using the following format:
The implementation of the first vintage of NAICS—NAICS 1997—affected almost half of the industries that were available for use under the 1987 Standard Industrial Classification (SIC). OMB's final decisions for the adoption of NAICS for the United States were published in the
The development of NAICS represented a significant improvement over the previous industry classification systems used in North America. To ensure the accuracy, timeliness, and relevance of the classification, NAICS is reviewed every five years to determine what, if any, changes are required. The ECPC recognizes the costs involved when implementing industry classification revisions in statistical programs and the costs for data users when there are disruptions in the availability of data. The ECPC also recognizes the economic, statistical, and policy implications that arise when the industry classification system does not identify and account for important economic developments. Balancing the costs of change against the potential for more accurate and relevant economic statistics requires significant input from data producers, data providers, and data users.
NAICS was developed to be a dynamic industry classification. Every five years, the classification is reviewed to determine the need to identify new and emerging industries. The ECPC is soliciting public comments on the advisability of revising NAICS for new and emerging industries in 2017 and soliciting proposals for these new industries.
When developing proposals for new and emerging industries, please note that there are two separate economic classification initiatives underway in the United States. NAICS, the industry classification, is the subject of this notice, while the complementary North American Product Classification System (NAPCS) initiative is currently in development. The NAPCS product system described below will complement the NAICS industry system and provide an alternate way of classifying output.
NAICS was developed to classify units according to their production function. NAICS results in industries that group units undertaking similar activities using similar resources but does not necessarily group all similar products or outputs. NAPCS is being developed to classify the outputs of units, or in other words their products or transactions, within a demand-based conceptual framework. For example, the hypothetical product of a flu shot can be provided by a doctor's office, a hospital, or a walk-in clinic. Because these three units are classified to three different NAICS industries, data users who want information about all flu shots provided must be able to identify the individual products coming out of the units, which NAPCS is designed to do. Thus, in many cases, the need for specific statistical data can be met by aggregating product data across industries rather than by creating a new industry. This is particularly true with NAICS, which groups establishments into industries based on their primary production function. Proposals for new industries in NAICS for 2017 will be evaluated within the context of the industry classification system to determine the most appropriate resolution. For a detailed description of the NAPCS initiative, see the April 16, 1999,
Proposals for new industries will be evaluated using a variety of criteria. As previously mentioned, each proposal will be evaluated based on the
Proposals for new or revised industries should be consistent with the production-oriented conceptual framework incorporated into the principles of NAICS. When formulating proposals, please note that an industry classification system groups the economic activities of producing units, which means that the activities of similar producing units cannot be separated in the industry classification system.
Proposals must be in writing and include the following information:
(a) Specific economic activities to be covered by the proposed industry, the proposed industry's production processes, its specialized labor skills, and any unique materials used. This detail should demonstrate that the proposed industry will group establishments with similar production processes that are unique and clearly separable from the production processes of other industries.
(b) Relationship of the proposed industry to existing NAICS United States 2012 six-digit national industries.
(c) Documentation of the size and importance of the proposed industry in the United States.
(d) Information about the proposed industry in Canada and Mexico if available.
Proposals will be collected, reviewed, and analyzed. As necessary, proposals for change will be negotiated with our partners in Canada and Mexico. When this process is complete, the OMB will publish a
Due to increasing printing costs and the accessibility of information on the Internet, the ECPC is considering disseminating NAICS United States 2017 electronically on the official NAICS Web site (
The ECPC is soliciting proposals for updating the structure of the oil and gas industries in Subsector 211, Oil and Gas Extraction. Since first defined in NAICS 1997, these industries continue to advance in the equipment and processes employed to produce oil and gas. With these changes, the ECPC is soliciting proposals on how the NAICS structure in this area can better reflect these advancements. Of particular interest are comments concerning onshore and offshore extraction, as well as conventional and unconventional methods of extraction. Proposals for change will be negotiated with our partners in Canada and Mexico, as trilateral agreement extends to the 5-digit NAICS industry level in this area of the structure.
Recent years have witnessed rapid and widespread specialization in goods manufacturing as global competition has motivated producers to seek more efficient production methods. This has resulted in outsourcing manufacturing transformation activities (i.e., the actual physical, chemical or mechanical transformation of inputs into new outputs) to specialized establishments, both foreign and domestic. NAICS 2007 did not provide clear guidance on classification of units that control the entire process but subcontract out all manufacturing transformation activities. To address this shortcoming, the ECPC chartered a subcommittee to study the issue and provide classification guidance that would result in consistent classification of outsourcing establishments and comparable data for these outsourcing establishments across various statistical programs. As a result of that research, the ECPC recommended to OMB a classification of establishments that bear the overall responsibility and risk for bringing together all processes necessary for the production of a good in the manufacturing sector, even if the actual transformation is 100 percent outsourced.
OMB recognized that, from a conceptual standpoint, at the most aggregate level, goods producers arrange for and bring together all of the factors of production necessary to produce a good. Goods producers accept the entrepreneurial risk of producing and bringing goods to market. When individual steps in the complete process are outsourced, an establishment should remain classified in the manufacturing sector. Accordingly, OMB accepted the ECPC recommendation that factoryless goods producers (FGPs) be classified in manufacturing.
Implementing the guidance to classify establishments that outsource manufacturing transformation in the manufacturing sector of NAICS will potentially affect multiple agencies and programs within those agencies. Variations in classification from differing interpretations prior to OMB's guidance will result in differing impacts.
It is important to both statistical agencies and other data users to be able to distinguish between definitional and economic changes so that they can create continuous time series and accurately analyze data changes over time. The inclusion of revenues from FGP activities in manufacturing will effectively change the traditional definition of manufacturing, and is expected to affect statistical estimates at the national, State and regional levels. This includes statistical outputs such as the value of shipments for manufacturing industries, value of sales for wholesale trade industries, product data, material costs and other expenses, price indexes, labor and multifactor productivity series, and the national accounts. The ability to consistently identify establishments as FGPs and the
The following paragraphs present a partial list of the statistics that are subject to change based on this decision.
Quarterly Census of Employment and Wages (QCEW), Current Employment Statistics (CES), Job Openings and Labor Turnover Survey (JOLTS), Producer Price Index Program (PPI), Major Sector Productivity, Industry Productivity, Occupational Employment Statistics (OES), and other BLS programs that produce estimates using the NAICS classification system.
Industry Accounts (including Input-Output tables), International Area, National Income and Product Accounts, Regional Accounts, and other BEA programs that produce estimates using the NAICS classification system.
Industry statistics from the Economic Census; Annual and Monthly Wholesale Trade Surveys; the Annual Survey of Manufacturers; Monthly Manufacturers' Inventories, Shipments, and Orders (M3); Manufacturing and Energy Consumption Survey (MECS); County Business Patterns (CBP); Quarterly Survey of Plant Capacity Utilization (QPC); Annual Capital Expenditures Survey (ACES); Business R&D and Innovation Survey (BRDIS); Business Expense Survey (BES); Quarterly Financial Report (QFR); and other series that are published using NAICS.
The level of impact will vary across programs and agencies based on the intensity of outsourcing.
The decision to classify FGPs in manufacturing was included in the
While research is continuing, the ECPC is soliciting additional public comments on the advisability of classifying FGPs in the manufacturing sector of NAICS. A more complete discussion of the recommendation is available at:
No significant errors or omissions have been identified in NAICS 2012. Any errors or omissions that are identified in NAICS in the future will be corrected and posted on the official NAICS Web site at
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Supplemental notice of proposed rulemaking.
On December 15, 2011, the U.S. Department of Energy (DOE) issued a notice of proposed rulemaking (NOPR) to establish test procedures (TP) for high-intensity discharge (HID) lamps (herein referred to as the December 2011 TP NOPR). In this supplemental notice of proposed rulemaking (SNOPR), DOE updates the industry standards proposed to be incorporated by reference in the December 2011 TP NOPR and proposes to revise or eliminate certain definitions relevant to HID lamps. DOE also provides clarification and additional background information on ambient temperature conditions, and revises proposed ambient air speed requirements. DOE revises its proposed sampling plan as well. In addition, DOE removes the directional lamp requirements and proposed lumen maintenance test method included in the December 2011 TP NOPR. The other provisions of the December 2011 TP NOPR are unaffected by this SNOPR.
DOE will accept comments, data, and information regarding this SNOPR submitted no later than June 23, 2014. See section IV, “Public Participation,” for details.
Any comments submitted must identify the SNOPR for test procedures for high-intensity discharge lamps and provide docket number EERE–2010–BT–TP–0044 and/or regulatory information number (RIN) 1904–AC37. Comments may be submitted using any of the following methods:
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A link to the docket Web page can be found at:
For further information on how to submit a comment and review other public comments, contact Ms. Brenda Edwards at (202) 586–2945 or by email:
Title III, Part B of the Energy Policy and Conservation Act of 1975 (Pub. L. 94–163, 42 U.S.C. 6291,
Under EPCA, the energy conservation program consists essentially of four parts: (1) Testing, (2) labeling, (3) Federal energy conservation standards, and (4) certification and enforcement procedures. The testing requirements consist of test procedures that manufacturers of covered products must use as the basis for (1) certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA (42 U.S.C. 6295(s) and 6316(a)), and (2) making representations about the efficiency of those products (42 U.S.C. 6315(b)). Similarly, DOE must use these test procedures to determine whether the products comply with any relevant standards promulgated under EPCA (42 U.S.C. 6295(s) and 6316(a)(1)).
EPCA requires DOE to prescribe testing requirements for HID lamps within 30 months after issuance of a positive determination that energy conservation standards are technologically feasible and economically justified, and would result in significant energy savings. (42 U.S.C. 6317(a)(1)) DOE published a positive final determination for HID lamps on July 1, 2010. 75 FR 37975.
Under 42 U.S.C. 6314, EPCA sets forth the criteria and procedures DOE must follow when prescribing or amending test procedures for covered equipment. EPCA provides in relevant part that any test procedures prescribed or amended under this section shall be reasonably designed to produce test results that measure energy efficiency, energy use, or estimated annual operating cost of a covered product or equipment during a representative average use cycle or period of use, as determined by the Secretary of Energy, and shall not be unduly burdensome to conduct. (42 U.S.C. 6314(a)(2))
DOE published a NOPR on December 15, 2011 (herein referred to as the December 2011 TP NOPR) proposing test procedures for HID lamps to measure efficacy, color characteristics, and lumen maintenance. 76 FR 77914. DOE presented the December 2011 TP NOPR at a public meeting on January 19, 2012 (herein referred to as the January 2012 TP public meeting). Comments received in response to the December 2011 TP NOPR and a transcript of the public meeting are available at
Based on comments received on the December 2011 TP NOPR, and subsequent additional research, DOE proposes to revise and clarify the proposed HID lamp test procedures. In this SNOPR, DOE provides interested parties with an opportunity to comment on these revised and new proposals, described in section II.
In this SNOPR, DOE updates the industry standards proposed to be incorporated by reference in the December 2011 TP NOPR and proposes revisions to three elements of the December 2011 TP NOPR: (1) Definitions; (2) ambient testing conditions for temperature and air speed; and (3) sampling plan. These revisions address comments from interested parties and incorporate recent research on HID lamps. This SNOPR also removes the directional lamp and lumen maintenance testing requirements included in the December 2011 TP NOPR.
In this SNOPR, DOE revises the December 2011 TP NOPR proposed definitions relevant to HID lamps in 10 CFR part 431 for “basic model,” “directional lamp,” “lamp efficacy,” and “lamp wattage,” and proposes to eliminate the terms “beam angle,”
In the December 2011 TP NOPR, DOE proposed to incorporate by reference six industry standards and test procedures. 77 FR 77914, 77916 (Dec. 15, 2011). These references were American National Standards Institute (ANSI) C78.379–2006, “For Electric Lamps—Classification of the Beam Patterns of Reflector Lamps”; ANSI C78.389–R2009, “For Electric Lamps—High Intensity Discharge—Methods of Measuring Characteristics” (sections 1.0, 2.0, 3.0, and Figure 1); International Commission on Illumination (CIE) 13.3–1995, “Technical Report: Method of Measuring and Specifying Colour Rendering Properties of Light Sources”; CIE 15:2004, “Technical Report: Colorimetry”; Illuminating Engineering Society of North America (IES) LM–51–00, “Approved Method for the Electrical and Photometric Measurements of High Intensity Discharge Lamps” (sections 1.0, 3.2, 9.0, 10.0, 11.0, and 12.0); and IES LM–47–01, “Approved Method for Life Testing of High Intensity Discharge Lamps.” In today's SNOPR, DOE proposes to update its references to incorporate IES LM–51–13, “Approved Method for the Electrical and Photometric Measurements of High Intensity Discharge Lamps.” DOE also proposes to incorporate by reference one additional standard: IES LM–78–07, “IESNA Approved Method for Total Luminous Flux Measurement of Lamps Using an Integrating Sphere Photometer.”
During the January 2012 HID TP public meeting, Intertek commented that IES LM–47–01 was more than 10 years old and had been updated. (Intertek, Public Meeting Transcript, No. 5 at p. 121)
Intertek also commented during the January 2012 HID TP public meeting that IES LM–51–00 was expected to be revised in the latter part of 2012. (Intertek, Public Meeting Transcript, No. 5 at p. 121) DOE notes that a revised version of IES LM–51 (IES LM–51–13) has been released, which DOE proposes to incorporate by reference in this SNOPR.
The National Electrical Manufacturers Association (NEMA) expressed general support for LM–51, but requested more specificity related to instrumentation, and suggested that DOE incorporate by reference IES LM–78–07. (NEMA, No. 6 at p. 8)
In the December 2011 TP NOPR, DOE proposed definitions for the following terms based on the EPCA definitions of these terms: “Ballast” (42 U.S.C. 6291(58)), “color rendering index” (42 U.S.C. 6291(30)(J)), “correlated color temperature” (42 U.S.C. 6291(30)(K)), “high-intensity discharge lamp” (42 U.S.C. 6291(46)), “mercury vapor lamp” (42 U.S.C. 6291(47)(A)), and “metal halide lamp” (42 U.S.C. 6291(63)). 76 FR 77914, 77917–18 (Dec. 15, 2011). These EPCA definitions remain unchanged by this SNOPR.
As explained in section II.B.1 of this SNOPR, DOE proposed to establish definitions of “beam angle,” “directional lamp,” “high-pressure sodium lamp,” “lamp electrical power input,” “lamp efficacy,” “lamp wattage,” “lumen maintenance,” “rated luminous flux or rated lumen output,” and “self-ballasted lamp” in the December 2011 TP NOPR. Many of the proposed definitions were identical or very similar to the definitions set forth in 10 CFR part 430 for consumer products. Since the publication of the December 2011 TP NOPR, DOE has determined that changes are warranted for some of the proposed definitions, and that others are not necessary (“beam angle,” “lamp electrical power input,” “lumen maintenance,” and “rated luminous flux or rated lumen output”) to include in the test procedures for HID lamps.
As discussed in sections II.B.2 and II.B.3 of this SNOPR, respectively, DOE also proposed in the December 2011 TP NOPR to amend the definition of “ballast efficiency” and to establish a definition of “basic model” for HID lamps. In this SNOPR, DOE withdraws the amendment proposed in the December 2011 TP NOPR and proposes to retain the existing definition of “ballast efficiency.” In addition, DOE proposes revisions to the definition of “basic model” for HID lamps set forth in the December 2011 TP NOPR.
In the December 2011 TP NOPR, DOE proposed to define “beam angle” as “the beam angle (or angles) as measured according to the requirements of ANSI C78.379, including complex beam angles as described in ANSI C78.379.” 76 FR 77914, 77917 (Dec. 15, 2011). In comments on the NOPR, NEMA agreed with the proposed definition of beam angle (NEMA, No. 6 at p. 4), and DOE received no other comments supporting or opposing this proposed definition. DOE notes, however, that, as stated in the April 2013 HID lamps energy conservation standards (ECS) Interim Analysis public meeting. DOE is not considering standards for directional lamps in the HID lamps energy conservation standards (Docket No. EERE–2010–BT–STD–0043, DOE, Public Meeting Transcript, No. 23, at p. 18).
In the December 2011 TP NOPR, DOE proposed to adopt a definition of “color rendering index” (CRI) based on the EPCA definition of the same term. 76 FR 77914, 77917 (Dec. 15, 2011);
In the December 2011 TP NOPR, DOE proposed to adopt the EPCA definition of “correlated color temperature” (CCT) (42 U.S.C. 6291(30)(K)), which defines the term as “the absolute temperature of a blackbody whose chromaticity most nearly resembles that of the light source.” 76 FR 77914, 77917 (Dec. 15, 2011). DOE received no comments supporting or opposing this proposed definition and maintains the proposal for this SNOPR.
In the December 2011 TP NOPR, DOE proposed to define “directional lamp” as “a lamp emitting at least 80 percent of its light output within a solid angle of π steradians (corresponding to a cone with an angle of 120 degrees).” 76 FR 77914, 77917 (Dec. 15, 2011). NEMA agreed with the proposed definition of directional lamp. (NEMA, No. 6 at p. 4) DOE received no other comments supporting or opposing the proposed definition. DOE proposes to modify the definition to also incorporate the construction of the lamp. DOE proposes a revised definition of “directional lamp” as “a lamp with an integral reflector, emitting at least 80 percent of its light output within a solid angle of π steradians (corresponding to a cone with an angle of 120 degrees)” in this SNOPR to clarify the lamp type that DOE is considering excluding from coverage in the ongoing HID lamps standards rulemaking (Docket No. EERE–2010–BT–STD–0043).
In this SNOPR, DOE proposes to add a definition of “initial lumen output” to provide additional clarity. Initial lumen output is the measured amount of light that a lamp provides at the beginning of its life. An initial lumen output measurement is required to calculate lamp efficacy. Therefore, DOE proposes a definition of “initial lumen output” as “the measured lumen output after the lamp is seasoned, then initially energized and stabilized, using the lamp seasoning and stabilization procedures in section 10 CFR 431.454(b)(1).”
In the December 2011 TP NOPR, DOE proposed to define “high-pressure sodium lamp” (HPS) as “a high-intensity discharge lamp in which the major portion of the light is produced by radiation from sodium vapor operating at a partial pressure of about 6,670 pascals (approximately 0.066 atmospheres or 50 torr) or greater.” 76 FR 77914, 77917 (Dec. 15, 2011). NEMA agreed with the proposed definition of “high-pressure sodium lamp” (NEMA, No. 6 at p. 5), and DOE received no other comments supporting or opposing this proposed definition. Therefore, DOE retains this definition in this SNOPR.
In the December 2011 TP NOPR, DOE proposed a definition for “lamp efficacy” similar to that set forth at 10 CFR part 430, subpart B, appendix R,
NEMA disagreed with DOE's use of “rated luminous flux or rated lumen output” as an equivalent to “measured lamp lumen output,” stating that the terms “rated” and “measured” are not interchangeable. (NEMA, No. 6 at pp. 2, 5) NEMA suggested that DOE instead use the definition for lamp efficacy in IES RP–16–10, “Nomenclature and Definitions for Illuminating Engineering” (RP–16). (NEMA, No. 6 at p. 5) NEMA refined its comments during the March 2012 framework public meeting for the HID lamps energy conservation standards (herein referred to as the March 2012 ECS public meeting), stating that upon a second review of RP–16, “lamp efficacy” is not defined, but “luminous efficacy” is defined, and encouraged DOE to use “luminous efficacy” as the appropriate term. (Docket No. EERE–2010–BT–STD–0043, NEMA, Public Meeting Transcript, No. 6 at p. 40) The RP–16 definition for “luminous efficacy of a source of light” is “. . . the quotient of the luminous flux emitted by the total lamp power input. It is expressed in lm/W.”
DOE acknowledges that “lamp efficacy” is not defined in RP–16, but notes that “lamp efficacy,” rather than “luminous efficacy,” is used for all other covered lamps and is the common term in the lighting industry. Therefore, in this SNOPR, DOE proposes to keep the term “lamp efficacy,” but to revise the definition proposed in the December 2011 TP NOPR.
DOE acknowledges NEMA's statement that a rated value is a value declared by the manufacturer to represent the long-term average of any given parameter. (NEMA, No. 6 at p. 2) DOE proposes to revise the definition of “lamp efficacy” to be consistent with the definition of “lamp efficacy” in EPCA and simply use the terms “lumen output” and “wattage.” DOE includes additional language in its test procedures that qualifies lamp lumen output and wattage as “measured.”
The proposed definition for “lamp efficacy” in the December 2011 TP NOPR specified that efficacy values (lumens per watt) be rounded to the nearest tenth. Lamp manufacturers OSRAM SYLVANIA and Philips Electronics (Philips) commented that HID lamp measurements vary widely because of the lamp chemistry used in HID lamps, the operating characteristics of high-lumen-output HID lamps, and the sheer light output of HID lamps (ranging from a few thousand to over a hundred thousand lumens), and stated that rounding calculated efficacies to the nearest tenth implies a measurement accuracy that is not achievable. (OSRAM SYLVANIA, Public Meeting Transcript, No. 5 at p. 32; Philips, Public Meeting Transcript, No. 5 at p.
DOE's proposed definition for “lamp efficacy” was based on the definition in the test procedures for general service fluorescent lamps, general service incandescent lamps, and incandescent reflector lamps (GSFL/GSIL/IRL) at 10 CFR part 430, subpart B, appendix R. For GSFL/GSIL/IRL, rounding lamp efficacy values to the nearest tenth is appropriate given the equipment and instrumentation used to measure lumen output and lamp wattage for these lamp types. Because the same equipment and instrumentation is used to measure these quantities for HID lamps, DOE believes lamp efficacy for HID lamps should also be rounded to the nearest tenth of a lumen per watt. DOE agrees with NEMA, however, that rounding requirements should not be part of the definition of lamp efficacy, and believes that rounding should instead be addressed in any future reporting requirements for HID lamps.
DOE notes that manufacturers have commented that HID lamps exhibit more measurement variation than other lighting technologies. DOE plans to account for measurement variation in the energy conservation standards rulemaking for HID lamps and welcomes comments on sources of measurement variation and any supporting data in that rule process.
DOE reviewed comments received on the December 2011 TP NOPR as well as alternative definitions of lamp efficacy. To be consistent with EPCA, DOE proposes to revise the definition of “lamp efficacy” for HID lamps as follows: “the lumen output of a lamp divided by its wattage, expressed in lumens per watt (LPW).”
In the December 2011 TP NOPR, DOE proposed to define “lamp electrical power input” as “the total electrical power input to the lamp, including both arc and cathode power where appropriate, at the reference condition, in units of watts.” 76 FR 77914, 77918 (Dec. 15, 2011). This definition is the same as that set forth at 10 CFR part 430, subpart B, appendix R.
NEMA disagreed with the proposed definition, noting that HID lamps do not have cathodes (or use cathode power), and that arc power constitutes total lamp input power. (NEMA, Public Meeting Transcript, No. 5 at pp. 44–45) DOE received no other comments related to the proposed definition.
DOE acknowledges that arc power constitutes total lamp electrical power input for HID lamps. “Lamp electrical power input” is therefore the same as “lamp wattage,” which DOE also defined in the December 2011 TP NOPR. 76 FR 77914, 77918 (Dec. 15, 2011). As discussed earlier in this document, DOE proposes to use the term “lamp wattage” instead of “lamp electrical power input” in its revised definition for “lamp efficacy.” Therefore, in this SNOPR, DOE withdraws the proposed definition of “lamp electrical power input” for HID lamps as proposed in the December 2011 TP NOPR.
In the December 2011 TP NOPR, DOE proposed to define “lamp wattage” as “the total electrical power required by a lamp in watts, measured following the initial aging period referenced in the relevant industry standard.” The proposed definition interpreted the EPCA definition of “lamp wattage” for this rulemaking. 76 FR 77914, 77918 (Dec. 15, 2011);
In this SNOPR, DOE proposes to modify its original proposed definition of “lamp wattage” to more closely parallel the EPCA definition of “lamp wattage,” and to reference the applicable IES lamp seasoning provisions required to support lamp wattage measurements. Specifically, DOE proposes to replace “measured following the initial aging period referenced in the relevant industry standard” with “after the initial seasoning period referenced in section 6.2.1 of IES LM–51–13.”
Therefore, DOE proposes in this SNOPR to define “lamp wattage” as “the total electrical power consumed by a lamp in watts, after the initial seasoning period referenced in section 6.2.1 of IES LM–51–13.”
As previously discussed in this SNOPR, DOE is proposing a new definition of “lamp efficacy” in which the term “measured lamp electrical power in watts” is replaced with “wattage.” DOE defined “lamp wattage” in the December 2011 TP NOPR and interprets it as equivalent to the term “wattage.”
In the December 2011 TP NOPR, DOE proposed to define “lumen maintenance” as “the luminous flux or lumen output at a given time in the life of the lamp and expressed as a percentage of the rated luminous flux or rated lumen output, respectively.” 76 FR 77914, 77918 (Dec. 15, 2011). This definition is the same as that set forth for medium-base compact fluorescent lamps (CFLs) at 10 CFR part 430, subpart B, appendix W, section (2)(c).
Pacific Gas and Electric Company, San Diego Gas and Electric, Southern California Gas Company, and Southern California Edison (herein referred to as the California Investor Owned Utilities (CA IOUs)), together with the Appliance Standards Awareness Project, American Council for an Energy-Efficient Economy, and the Natural Resources Defense Council jointly filed a comment (herein referred to as the Joint Comment) that supported measuring lumen maintenance for HID lamps, but did not comment specifically on the proposed definition. (CA IOUs, No. 8 at p. 1; Joint Comment, No. 9 at p. 1) NEMA disagreed with the definition, citing inconsistent references to measured and rated values. NEMA disagreed with DOE's use of “rated luminous flux or rated lumen output” as an equivalent to “measured lamp lumen output,” stating that the terms “rated” and “measured” are not interchangeable. According to NEMA, because measured values were expected to be reported, possible confusion and misreporting could arise if rated values were reported instead. (NEMA, No. 6 at pp. 2, 5–6)
DOE no longer proposes to measure lumen maintenance. Therefore, in this SNOPR, DOE withdraws the proposed definition of “lumen maintenance” for HID lamps as proposed in the December 2011 TP NOPR. 76 FR 77914, 77918 (December 15, 2011).
In the December 2011 TP NOPR, DOE proposed to define “rated luminous flux or rated lumen output” as “the initial lumen rating (100 hour) declared by the manufacturer, which consists of the lumen rating of a lamp at the end of 100 hours of operation.” This is the same definition set forth for medium-base CFLs at 10 CFR part 430, subpart B, appendix W, section (2)(d), and proposed in the December 2011 TP
DOE has removed the term “rated luminous flux or rated lumen output” from the proposed definition of “lamp efficacy” in this SNOPR. Therefore, in this SNOPR, DOE proposes to withdraw the proposed definition of “rated luminous flux or rated lumen output” for HID lamps as proposed in the December 2011 TP NOPR. 76 FR 77914, 77918 (Dec. 15, 2011).
In the December 2011 TP NOPR, DOE proposed to define “self-ballasted lamp” as “a lamp unit that incorporates all elements that are necessary for the starting and stable operation of the lamp in a permanent enclosure and that does not include any replaceable or interchangeable parts.” 76 FR 77914, 77918 (Dec. 15, 2011).
In the December 2011 TP NOPR, DOE proposed an amended definition of “ballast efficiency” for HID fixtures, currently set forth at 10 CFR 431.322. 76 FR 77914, 77918 (Dec. 15, 2011). Currently, “ballast efficiency” for an HID fixture means, in relevant part, “the efficiency of a lamp and ballast combination, expressed as a percentage, and calculated in accordance with the following formula:
Where:
(1) P
(2) P
In the December 2011 TP NOPR, DOE noted that the definition of the term “P
Where:
(1) Lamp electrical power input means the total electrical power input to the lamp, including both arc and cathode power where appropriate, at the reference condition, in units of watts;
(2) Ballast power input equals the measured operating input wattage . . .”
NEMA commented that the proposed definition would produce inaccurate results for ballast efficiency because the lamp and ballast power inputs are measured at reference and non-reference conditions, respectively. (NEMA, No. 6 at pp. 6–7) DOE received no other comments related to the proposed definition of “ballast efficiency.”
Upon review, DOE determined that HID lamp testing and MH lamp ballast testing are conducted separately, which effectively eliminates any overlap and confusion of electrical power terms. As discussed earlier in this document, DOE proposes to use the term “wattage” instead of “lamp electrical power input” in its revised definition for “lamp efficacy.” Therefore, in this SNOPR, DOE withdraws the proposed definition of “lamp electrical power input” for HID lamps. In addition, DOE acknowledges that testing inaccuracies could arise from the proposed definition for “ballast efficiency,” which was intended to prevent confusion between the terms “P
In the December 2011 TP NOPR, DOE proposed defining “basic model” for the HID lamp test procedures as follows: “ `Basic model' with respect to HID lamps means all units of a given type of covered equipment (or class thereof) manufactured by one manufacturer, having the same primary energy source and which have essentially identical electrical, physical, and functional (or hydraulic) characteristics that affect energy consumption, energy efficiency, water consumption, or water efficiency, and are rated to operate a given lamp type and wattage.” 76 FR 77914, 77918 (Dec. 15, 2011).
NEMA commented that the definition of “basic model” should be addressed in the HID lamps standards, and not the test procedures. (NEMA, Public Meeting Transcript, No. 5 at p. 32) Because provisions regarding the definition of basic model relate closely to the sampling plan and test burdens that the test procedures address, DOE addresses the definition of basic model in its test procedures rulemaking. DOE will consider comments submitted to the ongoing HID lamps standards rulemaking (Docket No. EERE–2010–BT–STD–0043) to develop the definition of “basic model,” and DOE will use the same definition of “basic model” in the standards rulemaking.
At the January 2012 TP public meeting, General Electric (GE) commented that the terms “hydraulic” or “water consumption” in the definition of “basic model” for HID lamps are potentially confusing and should be removed. (GE, Public Meeting Transcript, No. 5 at p. 33) In response to GE's comment, DOE reviewed the definition of “basic model” for MH lamp fixtures at 10 CFR 431.322. The definition of “basic model” at 10 CFR 431.322 is the same as the definition that DOE proposed in the December 2011 TP NOPR. DOE also reviewed the “basic model” definition for GSFL/GSIL/IRL at 10 CFR 430.2 and notes that this definition of basic model is general and applies to faucets and showerheads in addition to the various lamp types. But DOE acknowledges that the terms identified by GE may cause confusion with respect to HID lamps. DOE also notes that the definition of “basic model” proposed in the December 2011 TP NOPR contains the phrase “and are rated to operate a given lamp type and wattage,” which applies to lamp ballasts (
Therefore, in this SNOPR, DOE proposes to define “basic model” for HID lamp test procedures to read as follows: “ `Basic model' means all units of a given type of covered equipment (or class thereof) manufactured by one manufacturer, that have the same primary energy source, and that have essentially identical electrical, physical, and functional characteristics that affect energy consumption or efficacy.”
DOE has determined that changes are warranted for certain test setup and condition requirements proposed in the December 2011 TP NOPR. In the discussion that follows, DOE describes the December 2011 TP NOPR proposals for ambient conditions, power supply characteristics, reference ballasts, and instrumentation. DOE also describes the changes being proposed in this SNOPR and notes those provisions that remain unaffected.
In the December 2011 TP NOPR, DOE proposed a requirement that the test apparatus be operated in a location where ambient conditions (
In the December 2011 TP NOPR, DOE proposed an ambient temperature requirement of 25 °C ±5 °C for HID lamp testing in accordance with ANSI C78.389. 76 FR 77914, 77919 (Dec. 15, 2011). This is the industry standard temperature for testing most ballasted and non-ballasted light sources (both HID and other lamp types). It is also the temperature required by the MH lamp ballast TP final rule, wherein DOE stated that ambient temperature is not critical to MH lamp operation and light output, but can affect lamp electrical performance. 75 FR 10950, 10956 (March 9, 2010).
NEMA agreed with the proposed ambient test temperature for HID lamps (25 °C ±5 °C), but noted that other lamp types have a ±1 °C tolerance for photometric testing. (NEMA, No. 6 at p. 7) OSRAM SYLVANIA commented that, unlike fluorescent lamps, HID lamps are not significantly affected by ambient temperature. OSRAM SYLVANIA also stated that the ambient temperature required in IES standard LM–51 is intended to benefit the measurement instrumentation, which is more sensitive to ambient temperature variations than the HID lamps being tested. (OSRAM SYLVANIA, Public Meeting Transcript, No. 5 at pp. 49, 54)
DOE reviewed applicable ANSI and IES documents for testing discharge lamps (fluorescent and HID) and fixtures. Table II.1 compares the recommended ambient test temperatures from these documents.
DOE acknowledges that for fluorescent sources, the tolerance in these documents for ambient test temperature is ±1 °C. DOE also agrees with OSRAM SYLVANIA that ambient temperature is not critical to HID lamp operation and light output. Therefore, in this SNOPR, DOE retains the ambient temperature and tolerance of 25 °C ±5 °C proposed in the December 2011 TP NOPR. However, as discussed in section II.C.1.a.ii, DOE proposes referencing the 25 °C ±5 °C requirement in IES LM–51–13 based on the absence of the associated maximum air speed requirement.
In the December 2011 TP NOPR, DOE proposed a specific air speed limit of ≤0.5 meters per second (m/s) for HID lamp testing because the ANSI C78.389 requirement for “draft-free” conditions is unclear because no definition of the term “draft-free” is provided in the standard. In the MH lamp ballast TP final rule, DOE researched different air speed limits from different test procedures and adopted an air speed limit of ≤0.5 m/s. 75 FR 10950, 10956 (March 9, 2010). In its comments on the December 2011 TP NOPR, OSRAM SYLVANIA stated that air speed is relevant for ballast measurements, but not for HID lamps. OSRAM SYLVANIA elaborated by stating that the typical “lamp within a lamp” construction of HID lamps (
In the December 2011 TP NOPR, DOE reviewed LM–51–13, ANSI C78.389, and LM–73–04 for the ambient test temperature requirements discussed previously. Table II.2 provides the review of air speed limits for HID lamp and fixture testing.
DOE agrees with OSRAM SYLVANIA and NEMA that HID lamps are typically insensitive to ambient air movement because the light-generating component of the lamp (
In the December 2011 TP NOPR, DOE proposed power supply characteristics (voltage waveshape, voltage regulation, and power supply impedance) for the HID lamps test procedures based on ANSI C78.389 and LM–51. 76 FR 77914, 77919 (Dec. 15, 2011). NEMA agreed with DOE's proposal (NEMA, No. 6 at p. 8), and DOE received no other comments on these characteristics. As a result, the power supply characteristics are not affected by this SNOPR.
In the December 2011 TP NOPR, DOE proposed to adopt the reference ballast requirements of ANSI C78.389 for HID lamp testing. Based on a review of industry literature, communication with independent testing laboratories, and comments from industry, DOE determined that reference ballasts are readily available and that their use is likely to provide repeatable and consistent measurements. 76 FR 77914, 77920 (Dec. 15, 2011). In this SNOPR, DOE addresses several comments and questions received in response to the December 2011 TP NOPR regarding: (1) Lamps for electronic ballasts only; (2) self-ballasted lamps; (3) multi-start type ballasts; and (4) effects of lamp orientation (position) on reference ballasts. Each of these items is discussed herein.
In a written comment, the CA IOUs suggested that DOE develop reference specifications for lamps that can operate only on electronic ballasts. (CA IOUs, No. 8 at p. 3) During the January 2012 TP public meeting, GE commented that HID lamps currently designed to operate only on electronic ballasts do not have reference ballasts. (GE, Public Meeting Transcript, No. 5 at p. 63) NEMA encouraged DOE not to attempt to define reference ballasts where they do not exist because of potential conflicts with ongoing industry efforts. NEMA also stated that lamps for which there are no ANSI standard ballasts should be measured in accordance with the manufacturer's guidance. (NEMA, No. 6 at p. 8)
DOE acknowledges that currently there are no reference ballasts for lamps operating only with electronic ballasts. HID lamps operating only with electronic ballasts are a new and emerging technology and represent an insignificant portion of the market. Current manufacturer guidance for testing these types of lamps is inconsistent or incomplete, and the industry has not yet developed standard testing guidance. Therefore, in this SNOPR DOE does not propose test procedures for lamps that only can be operated with electronic ballasts.
During the January 2012 TP public meeting, GE commented that self-ballasted lamps do not have reference ballasts. (GE, Public Meeting Transcript, No. 5 at p. 63). In the December 2011 TP NOPR, DOE did not require reference ballasts for self-ballasted HID lamps. DOE further notes that in the April 2013 HID lamps ECS Interim Analysis public meeting, DOE is not considering standards for self-ballasted HID lamps (Docket No. EERE–2010–BT–STD–0043, DOE, Public Meeting Transcript, No. 23, at p. 18). Therefore, DOE is not proposing test procedures for self-ballasted HID lamps.
During the January 2012 TP public meeting, the CA IOUs questioned whether the December 2011 TP NOPR provided enough guidance for testing multi-start type HID lamps that can operate on multiple ballast types (
DOE reviewed manufacturer catalog data sheets and found that manufacturers of multi-start type MH lamps identify the ANSI lamp designations that the lamps have been designed to replace (
DOE also reviewed independent testing of multi-start type MH lamps conducted by the California Lighting Technology Center (CLTC), which directly compared the measured performance of ten 205-watt multi-start type MH lamps operated by a pulse-start ballast (for lamps designated M153) and ten 205-watt multi-start type MH lamps operated by a probe-start ballast (for lamps designated M58). The results of CLTC testing indicated that, for pulse-start operation, the mean values for lamp power and light output were 7 percent and 6 percent higher, respectively, than for probe-start operation. The mean value for lamp efficacy for pulse-start operation was within 1 percent of that for probe-start operation (see Table II.3).
CLTC's limited testing of multi-start type lamps suggests that these lamps provide nearly identical efficacy with probe-start and pulse-start operation. However, DOE recognizes that clear guidance is needed for selecting reference ballast characteristics from multiple compatible ANSI lamp designations. In this SNOPR, DOE proposes that multi-start type HID lamps be tested using the characteristics for a compatible probe-start ballast. DOE proposes that the probe-start ANSI lamp designation data sheets be the primary source of reference ballast characteristics used for testing multi-start type HID lamps, due to the greater prevalence of existing probe-start MH systems.
Most of the ANSI lamp designation codes referenced in the manufacturer literature for multi-start type MH lamps are included in ANSI C78.43–2013, “ANSI Standard for Electric Lamps: Single-Ended Metal Halide Lamps.” These lamp designations (
In summary, DOE proposes in this SNOPR that the multi-start type MH lamps be tested on a reference ballast with the characteristics defined in the equivalent probe-start ANSI lamp designation as listed in the lamp catalog or manufacturer data sheets with the lowest ANSI lamp designation. If no probe-start ANSI lamp designation is listed by the manufacturer, DOE then proposes that the lamp be tested on a reference ballast with the characteristics defined in the lowest ANSI lamp designation listed.
The CA IOUs commented that it was unclear in ANSI C82.5 whether lamp orientation had any bearing on the selection of reference ballasts. (CA IOUs, Public Meeting Transcript, No. 5 at p. 72) Philips noted that lamp orientation does not affect the choice of reference ballast to be used since the lamp operating position does not change the HID lamp wattage. (Philips, Public Meeting Transcript, No. 5 at p. 74) The electrical properties of the lamp are intrinsic to the lamp; as a result, they should not differ based on lamp orientation. Because lamp orientation does not affect lamp wattage, DOE does not propose to specify lamp orientation for the selection of reference ballasts.
In the December 2011 TP NOPR, DOE proposed to adopt the electrical and photometric instrumentation requirements of ANSI C78.389 and LM–51, respectively, for its HID lamp test procedures. 76 FR 77914, 77920 (Dec. 15, 2011). The instruments proposed for electrical measurements are described in ANSI C78.389, section 3.8. DOE received no comments on these requirements, and they are unaffected by this SNOPR. The instruments proposed for photometric instruments are described in LM–51–13, section 7.0, which includes the same instruments described in LM–51–00, section 9.0, as referenced in the December 2011 TP NOPR. The proposed instrumentation requirements for photometric measurements are detailed in the following sections.
In the December 2011 TP NOPR, DOE proposed that the photometer have a relative spectral responsivity that approximates that of the human eye (
As described in the following paragraphs, DOE proposes additional specificity for these measurements in this SNOPR, and proposes to allow only the use of an integrating sphere for the photometric measurements. DOE also clarifies, as discussed further in section II.D.3, that CRI is being considered in the HID lamps ECS rulemaking (Docket No. EERE–2010–BT–STD–0043) only to define the CRI above which standards will not be considered for HID lamps. (Docket No. EERE–2010–BT–STD–0043, DOE, Public Meeting Transcript, No. 23 at pp. 15–18)
For integrating sphere measurements, DOE stated in the December 2011 TP NOPR that the spectral responsivity would take into account the relative spectral throughput of the sphere and detector spectral responsivity.
DOE also proposed that an integrating sphere for luminous flux measurements must be large enough to allow the sphere's interior temperature to reach thermal equilibrium at the specified ambient temperature and to permit the internal baffle(s) to be small relative to the size of the integrating sphere. 76 FR 77914, 77920 (Dec. 15, 2011).
GE commented that NEMA members needed more detailed specifications for the integrating sphere diameter, and suggested that CIE standards might provide guidance. (GE, Public Meeting Transcript, No. 5 at p. 77) NEMA stated that it accepted DOE instrumentation requirements in principle, but requested more detailed guidance on integrating sphere diameter, suggesting that DOE reference IES LM–78–07, “IESNA Approved Method for Total Luminous Flux Measurement of Lamps Using an Integrating Sphere Photometer.” (NEMA, No. 6 at pp. 8–9) DOE reviewed LM–78 and notes that sections 3.1, “Size of the Sphere,” and 6.3, “Sources of Errors and Corrections,” provide detailed guidance on integrating sphere diameter. DOE also reviewed CIE 84, “Measurement of Luminous Flux,” and determined that those sphere size specifications are already incorporated into LM–78. Therefore, DOE proposes that luminous flux be determined as specified in section 7.0 of IES LM–51–13 and, when using an integrating sphere, determined as specified in sections 3.1 and 6.3 of IES LM–78–07.
In the December 2011 TP NOPR, DOE proposed that for measurements using a goniophotometer, the detector required for intensity distribution would have a cosine response. 76 FR 77914, 77920 (Dec. 15, 2011). DOE did not receive any comments related to the use of goniophotometers in response to the 2011 TP NOPR. Because directional HID lamps are not covered in this SNOPR (see section II.C.3), DOE is revising its proposed test procedures to omit intensity measurements for directional lamps. Upon review of measurement correlation, testing burden, and relative incidence of use between goniophotometers and integrating spheres, DOE also proposes using an integrated sphere, rather than a goniometer system, to carry out all photometric measurements of HID lamps.
While DOE recognizes that the integrating sphere and goniophotometer (a goniometer fitted with a photometer as the light detector) are both valid means of photometric measurement, DOE is concerned about the potential for a difference in the measured values. A test procedure that yields more than one possible value depending on instrumentation presents problems for certification and enforcement. If DOE and the manufacturer use different test methods, DOE could find that a lamp certified as compliant could be tested as non-compliant during a verification or enforcement proceeding. IES LM–51–13 does not explicitly specify the scanning resolution (
In consideration of the lack of measurement correlation between goniophotometers and integrating spheres and the reduced burden and much higher incidence of use of integrating spheres, DOE proposes in the SNOPR to require all photometric measurements for HID lamps to be carried out in an integrating sphere and that goniometer systems must not be used. DOE invites interested parties to comment on the proposal to require all photometric values be measured by an integrating sphere (via photometer or spectroradiometer).
In the December 2011 TP NOPR, DOE proposed test procedures for HID lamp testing to determine the energy efficiency characteristics of each basic model. 76 FR 77914, 77921 (Dec. 15, 2011). As discussed in section III.A.3 of the December 2011 TP NOPR, a “basic model” is a group of lamp models that are essentially identical in design and performance.
In the December 2011 TP NOPR, DOE proposed a HID lamp sampling method similar to that used for GSFL/GSIL/IRL at 10 CFR 429.27(a)(2)(i)–(ii), as follows.
For each basic model of HID lamps, samples of production lamps from a minimum sample size of 21 lamps are to be tested, and the results for all samples are to be averaged over a consecutive 12-month period. The manufacturer is to randomly select a minimum of three lamps from each month of production for a minimum of 7 months out of the 12-month period. If production occurs during fewer than 7 of the 12 months, the manufacturer is to randomly select three or more lamps from each month of production, and the number of lamps selected for each month is to be distributed as evenly as practicable among the months of production to obtain a minimum sample of 21 lamps. Due to inherent uncertainty in any sample measurement, the confidence limit is set to 95 percent based on the sample's statistical t-test.
(A) The mean of the sample,
(B) The lower 95-percent confidence limit of the characteristic value true mean divided by 0.97,
In the paragraphs that follow, DOE discusses its proposals in the December 2011 TP NOPR for sample size, statistical representation, and the divisor. DOE proposes changes to the sampling rate and lower confidence limit (LCL) as a result of comments received on the December 2011 TP NOPR.
In formulating the proposed sampling plan requirements, DOE reviewed sample size requirements for European Union (EU) testing and sample size requirements for other HID and fluorescent lighting technologies, as well as US testing and sample size regulations for other lighting technologies.
EU sample size requirements are set forth in Commission Regulation (EC) No. 245, published in the
DOE surveyed the sample size for other covered lamps. Table II.4 compares the sample size for each of the covered lamps and the different metrics that are tested.
Based on its review of sample size requirements, DOE proposed in the December 2011 TP NOPR to use a sample size of 21 for HID lamps. 76 FR 77914, 77921 (Dec. 15, 2011). NEMA stated that a sample size of 21 lamps is not appropriate for HID lamps because of the significant capital investment and electricity costs for long-term lumen maintenance testing, and that having to test 21 samples of numerous basic models (200 basic models by Philips' estimate) would further compound these costs. NEMA provided best and worst case cost estimates of $150,000 to $450,000 for testing the DOE proposed 21 samples for 50 basic models—this cost range is for both initial efficacy measurements and lumen maintenance measurements. (NEMA, No. 6 at p. 10) NEMA noted that lamp production can be interrupted based on changing demand, which could compel manufacturers to sample as many as 21 lamps from a first production run, as well as lamps from any additional runs within a 12-month reporting period. NEMA stated that because of demand fluctuations for certain lamps, some lamps may not have continuous (or multiple) production runs within the same calendar year. Therefore, manufacturers might test 21 lamps in the first production run to meet the proposed sample size requirement, in case future production runs of that lamp type did not occur in that year. NEMA suggested that, to meet DOE's proposed monthly sampling rate requirements, manufacturers might then have to test another sample of three or more lamps later in that same year if customer demand required additional production runs.
NEMA also raised the logistical concern of lumen maintenance testing, which NEMA stated requires many thousands of hours with staggered start times. (NEMA, No. 6 at p. 10) To mitigate this ongoing testing requirement, NEMA proposed an initial sample of 21 lamps for lumen maintenance testing with an additional 2 lamps per production run sampled over the rest of the reporting year for 100-hour confirmation testing. (NEMA, No. 6 at p. 10) In response to the February 2012 HID lamps ECS Framework document, Venture Lighting (Venture) supported a bifurcated approach of testing a large initial sample set for initial values and then using the same sample for lumen maintenance testing, performing supplemental efficacy testing with a smaller additional sample set(s). Venture also noted that NEMA's working group for lamp statistics was still determining optimal sample sizes. (Docket No. EERE–2010–BT–STD–0043, Venture, Public Meeting Transcript, No. 6 at pp. 167–168)
DOE reviewed NEMA's concerns regarding sample size, which can be categorized as follows: (1) Sampling rate; (2) sample size required for lamp efficacy, CCT, and CRI testing; and (3) sample size required for lumen maintenance testing. DOE notes it has withdrawn the proposal to establish a test method for lumen maintenance and has withdrawn the proposal to establish a sampling plan for CRI measurements. However, DOE's review includes those elements because NEMA based their concerns, cost scenarios, and examples on their inclusion in the testing requirements.
In the December 2011 TP NOPR, DOE proposed a sampling rate of three lamps per month for a minimum of 7 months in a given reporting year. 76 FR 77914, 77921 (Dec. 15, 2011). NEMA proposed a sampling rate based on production runs, but did not define a production run. Based on its review of business terminology, DOE understands a production run to be a group of similar or related equipment produced using particular manufacturing procedures, processes, or conditions. Production run size will depend on customer demand for lamps produced, as well as the costs to set up production and carry excess inventory. This general description underscores some of the challenges manufacturers might face in balancing costs and inventory with changes in customer demand and challenges for DOE to administer regulations based on production runs.
DOE surveyed the sampling rate for other covered lamps. Table II.5 compares the sample size and sampling rate for each of the covered lamps and related metrics.
In its comments on the December 2011 TP NOPR, NEMA expressed concern about different sample size requirements in the United States and Europe, and expressed its desire to use existing testing data for domestic and international reporting where possible. (NEMA, Public Meeting Transcript, No. 5 at pp. 43, 79–80) Commission Regulation (EC) No. 245/2009 requires a minimum sample size of 20 HID lamps, but does not specify the frequency or rate at which the 20 lamps are to be sampled during a reporting year.
LSD 63–2012 recommends a sampling plan for lamps not regulated (as of the year 2012) in the
Because of the fluctuating demand for certain HID lamp types and the challenge of defining production runs for this equipment, DOE proposes a sampling rate requirement for HID lamps that allows random selection. This is consistent with the sampling rate requirements of the EU, as well as for some other covered lamp types, and would allow manufacturer discretion in sampling rate,
DOE originally proposed a total sample size of 21 lamps in the December 2011 TP NOPR. 76 FR 77914, 77921 (Dec. 15, 2011). NEMA objected to the proposed sample size, citing potentially prohibitive electricity costs and capital investment for testing facilities (particularly for lumen maintenance testing). (NEMA, No. 6 at p. 10)
The LSD 63–2012 recommended sampling plan for lamps not covered in the
DOE understands that electricity costs are a component of testing burden, and are affected by sample size. (Testing burden for HID lamps is discussed in section III.B of this SNOPR.) DOE notes that it no longer proposes lumen maintenance testing for potential energy conservation standards for HID lamps. Because DOE no longer proposes testing for lumen maintenance, NEMA's comment related to testing burden over a subsequent period of time is moot.
DOE proposed a sample size of 21 lamps for CCT testing in the December 2011 TP NOPR. 76 FR 77914, 77921 (Dec. 15, 2011). DOE received no comments supporting or opposing this proposal. DOE proposes that the sample size for CCT be the same as it is for lamp efficacy for potential energy conservation standards. Therefore, DOE proposes a minimum sample size of 21 for CCT for potential energy conservation standards.
In this SNOPR, DOE does not propose a sample size requirement for CRI because CRI is being considered in the standards rulemaking only to define an exemption for lamps.
In review, for the HID lamps that have the potential to be subject to future energy conservation standards, DOE proposes the sample sizes shown in Table II.6.
In the December 2011 TP NOPR, DOE proposed that any represented value of lamp efficacy or color characteristics for a basic model be based on a sample of 21 lamps and be less than or equal to the lower of either the sample mean or the LCL of the characteristic value true mean
DOE reviewed its application of the t-test and interprets NEMA's concerns about application of the t-test as applying to instances where the sample mean is less than the quotient of the LCL and divisor (currently set at 0.97). DOE recognizes that in the absence of a divisor, the LCL of a sample will always be lower than the sample mean. However, as the divisor decreases from 1.00 to 0, the resulting quotient (LCL divided by the divisor) can be greater than the sample mean. Based on this calculation, DOE proposed in the December 2011 TP NOPR that any represented characteristic value be the lower of either (1) the sample mean or (2) the LCL of the characteristic value true mean divided by the divisor. 76 FR 77914, 77921 (Dec. 15, 2011).
The EU requires the average (mean) of the sample to be within 10 percent of the limit, threshold, or declared values. Under EU requirements, a significant portion of the sample could be less than the declared (or required standard) value and still be considered compliant because mean values can be skewed by outliers or extreme values. In contrast, DOE proposed in the December 2011 TP NOPR to use the confidence interval of 95 percent to calculate the LCL, which approximates the proportion of a sample that may be expected to contain the true mean. 76 FR 77914, 77921 (Dec. 15, 2011). To better represent differences in manufacturing variability between HID lamp types, DOE revises its proposed confidence intervals in this SNOPR (as discussed in section II.C.2.b.iii).
NEMA also commented that the sample mean calculation does not provide tolerance for manufacturing and measurement uncertainties. NEMA stated that there is inherent variation in HID lamp manufacturing and measurement uncertainties across different National Voluntary Laboratory Accreditation Program (NVLAP)-accredited laboratories. (NEMA, No. 6 at p. 9)
DOE acknowledges that there are uncertainties related to both lamp manufacturing and testing. DOE addressed this issue previously in the May 1997 fluorescent and incandescent lamp test procedures rulemaking (herein referred to as the May 1997 FL/IL TP final rule). 62 FR 29222 (May 29, 1997). During the rulemaking process for the May 1997 FL/IL TP final rule, NEMA and other manufacturers proposed different derating values for both the sample mean and the LCL. 62 FR 29222, 29230 (May 29, 1997). DOE, NEMA, and NIST met during the rulemaking process to discuss the sampling plan, variability, and uncertainties. 62 FR 29222, 29230 (May 29, 1997). In the May 1997 FL/IL TP final rule, DOE stated that all variability was accounted for by the confidence limit equation using the “t-test” and the derating factor (divisor) applied only to the LCL, and not to the mean. 62 FR 29222, 29230 (May 29, 1997).
The LCL is a function of the sample mean and encompasses manufacturing variations. Historically, DOE has not applied the divisor to the sample mean lumen per watt value.
In the December 2011 TP NOPR, DOE proposed a confidence interval of 95 percent to calculate the LCL, which reflects the inherent uncertainty in any sample measurement resulting from manufacturing variations. This proposal included the same certification requirements that were used in 10 CFR 429.27 for GSFLs (a related gas-discharge lamp). Based on comments received and additional research, DOE proposes in this SNOPR to specify two separate confidence intervals applicable to: (1) MH lamps; and (2) MV and HPS lamps.
In response to the December 2011 TP NOPR, GE commented that the tolerances in DOE's statistical approach should be modified because HID lamps have much wider manufacturing tolerances for lumen output than fluorescent and incandescent lamps. (GE, Public Meeting Transcript, No. 5 at p. 82) OSRAM SYLVANIA agreed, noting that it is difficult to report HID lamp lumen output beyond the nearest 100 lumens. (OSRAM SYLVANIA, Public Meeting Transcript, No. 5 at pp. 31–32). During the March 2012 ECS public meeting, Venture commented that the physical complexity of metal halide (
NEMA provides long-term manufacturing data variability as a ratio of the observed long term standard deviation (s
There is significant variability in luminous flux for HID lamps, with pulse-start quartz MH lamps showing the highest variability for all HID lamp types discussed in LSD 63–2012. LSD 63–2012 does not provide variability values for MV lamps, but DOE believes these values would be comparable to those of HPS lamps because MV lamps have similar, comparatively simple lamp chemistry. Because HID lamps are measured at a fixed power value (per LM–51–13), this variation in lumens correlates to the same variation in lamp efficacy.
DOE agrees with the findings of LSD 63–2012, which indicate less manufacturing variability for HPS lamps than for MH lamps. Due to the difference in inherent uncertainty in a typical sample of each of the different HID lamp types, DOE proposes to set the confidence intervals differently for MH versus HPS and MV lamps. Based on LSD 63–2012, MH lamps have more manufacturing variation than GSFLs, while HPS (and by association MV lamps) have less variation than GSFLs. Using these values, DOE calculated confidence intervals so that the values of the LCL divided by the sample mean for all HID lamps types are consistent with those values used in test procedures for GSFLs.
In the December 2011 TP NOPR, DOE proposed that the LCL be divided by a divisor of 0.97, which translates to an expected variation of 3 percent. 76 FR 77914, 77921 (Dec. 15, 2011). In written comments, NEMA stated that CRI and CCT should be given tolerances of 3 and 4 percent, respectively. (NEMA, No. 6 at p. 3) NEMA also described a typical 4 percent measurement variation between testing laboratories. (NEMA, Public Meeting Transcript, No. 5 at p. 102) DOE received no other comments related to the divisor.
DOE uses various divisors for other covered light sources. General service fluorescent lamps (10 CFR 429.27) and general service incandescent lamps (10 CFR 429.27) use a divisor of 0.97. In contrast, medium base CFLs (10 CFR 429.35) and candelabra-base and intermediate-base incandescent lamps (10 CFR 429.40) use a divisor of 0.95. In the December 2011 TP NOPR, DOE proposed a divisor of 0.97 (76 FR 77914, 77921 (Dec. 15, 2011)). In this SNOPR, DOE continues to propose a divisor of 0.97 for all HID lamps.
NEMA has commented on this topic in previous rulemakings. In its comments on the September 2010 CC&E NOPR, NEMA provided a formula for calculating divisors:
In the December 2011 TP NOPR, DOE proposed a sample size of 21 lamps and an LCL divisor of 0.97.
Finally, NEMA commented that NVLAP's “Proficiency Testing for Energy Efficient Lighting Products” shows lab-to-lab variations of more than 4 percent, depending on the lamp technology. (NEMA, No. 6 at p. 13) According to NEMA, the overall uncertainty for any lamp measurement will include variation of the measured characteristics. Therefore, for highly variable characteristics such as light output and color, the measurement uncertainty may be significantly greater than just the variation of the characteristic itself (which is typical for discharge lamps). (NEMA, No. 6 at p. 13) In this SNOPR, DOE proposes to retain an LCL divisor of 0.97 for all HID lamps.
DOE proposes, for each basic model of HID lamp, randomly selected samples of production lamps shall be tested and the results averaged. A minimum of 21 lamps shall be tested. Any represented value of lamp efficacy of a basic model shall be less than or equal to the lower of:
(A) The mean of the sample,
(B) The lower confidence limit (LCL) of the true mean divided by 0.97,
For each basic model of HID lamp, the CCT must be measured from the same lamps selected for the lamp efficacy measurements (
In the December 2011 TP NOPR, DOE proposed that lamps be seasoned (
DOE received additional comments on testing orientation for lamps with no specified operating position. The CA IOUs and the Joint Comment suggested that DOE examine other testing orientations, but did not disagree that the lamps should be seasoned and stabilized in the testing orientation. (CA IOUs, No. 8 at pp. 2–3; Joint Comment, No. 9 at p. 2) Therefore, DOE proposes in this SNOPR to require that HID lamps with no specified operating position (including universal position lamps) be seasoned and stabilized in the position in which they will be tested (vertical base-up position as discussed in section II.C.1.c.iv).
In the December 2011 TP NOPR, DOE also proposed a lamp stabilization method (warm-up and stabilization criteria) based on ANSI C78.389, section 3.7. 76 FR 77914, 77922 (Dec. 15, 2011). NEMA concurred with using the stabilization criteria of ANSI C78.389 for the HID lamp test procedures. (NEMA, No. 6 at p. 10) DOE received no other comments on its proposed approach. Therefore, the warm-up and stabilization criteria are unaffected by this SNOPR.
In the December 2011 TP NOPR, DOE proposed to adopt the lamp cool-down and re-stabilization methods of ANSI C78.389, section 3.7, for HID lamp test procedures. 76 FR 77914, 77922–23 (Dec. 15, 2011). HID lamps are sensitive to movement once they are warmed up and stabilized. Therefore, any significant movement or disturbance could destabilize the lamp operation, altering its output or electrical characteristics and requiring the lamp to be re-stabilized prior to testing. The re-stabilization time varies by lamp type, whether the lamp arc has been extinguished, and whether lamp orientation has changed. Lamp cool-down, in contrast, is needed only when the lamp arc is extinguished prior to relocating the lamp in the integrating sphere.
The lamp cool-down and re-stabilization requirements of ANSI C78.389, section 3.7, are shown in Table II.10. In the December 2011 TP NOPR, DOE proposed using the re-stabilization requirements in ANSI C78.389, rather than LM–51, because ANSI C78.389 provides specific guidance for re-stabilization requirements for each of the HID lamp types, whereas LM–51 provides only general guidance. 76 FR 77914, 77922 (Dec. 15, 2011). DOE received no negative comments regarding its proposed requirements as they relate to lamps that are extinguished and/or changed in orientation prior to relocation.
During the January 2012 TP public meeting, OSRAM SYLVANIA explained an industry practice where HID lamps are energized, stabilized, and moved into the integrating sphere. There is no cool-down or re-stabilization because the lamps are not extinguished. (OSRAM SYLVANIA, Public Meeting Transcript, No. 5 at pp. 85–86) NEMA provided further details on how the lamps are moved into the integrating sphere while operating, and how stabilization is reconfirmed inside the sphere. (NEMA, No. 6 at p. 11) NEMA stated that this methodology is more efficient than extinguishing, cooling, and re-stabilizing the lamp. (NEMA, No. 6 at p. 11) NEMA also stated that this method generally requires a maximum stabilization time of only 15 minutes. NEMA was concerned that DOE's proposed cool-down and re-stabilization requirements would apply unnecessarily to lamps that remain operating with no change in orientation. (NEMA, No. 6 at p. 11) According to NEMA, “The table [Table II.10], as written seems to apply to lamps that are turned off before locating them in the sphere. This should not apply to the lamps that remain lighted with no change in orientation.” (NEMA, No. 6 at p.11) DOE understands that this methodology is an industry practice but is not documented in any industry standards.
DOE agrees with NEMA's distinction, and proposes that lamps that remain energized with no change in orientation when moved should be operated for the minimum time needed to verify lamp stabilization prior to measurements. If the lamps are changed in orientation and/or extinguished and then moved, DOE proposes to apply the cool-down and re-stabilization requirements from the NOPR (shown in Table II.10).
In the December 2011 TP NOPR, DOE proposed to adopt the lamp orientation requirements of ANSI C78.389, section 3.6, for HID lamp testing. 76 FR 77914, 77923 (Dec. 15, 2011). As discussed herein, industry procedures have been developed to ensure that the correct orientation is maintained for consistent electrical and photometric measurements.
ANSI C78.389, section 3.6, requires that a lamp marked or designated on the lamp's data sheet for use in a specific operating position be tested in that position. If no operating position is specified or the lamp is marked “universal,” this industry standard directs that the lamp is to be operated in the vertical base-up position.
In contrast, LM–51 does not contain lamp orientation requirements for testing, except to note that lamp orientation during warm-up must be the same as that during photometry. LM–51 also states that the manufacturer's specifications should be consulted for any restrictions on lamp orientation.
During the January 2012 TP public meeting, the CA IOUs asked whether HID lamps performed best in a vertical operating position. (CA IOUs, Public Meeting Transcript, No. 5 at pp. 89–90) OSRAM SYLVANIA stated that it measures lumen output for universal position lamps in horizontal and vertical orientations. (OSRAM SYLVANIA, Public Meeting Transcript, No. 5 at pp. 90–91) Manufacturers further elaborated that universal position lamps are often used in floodlights where the aiming angle is unknown, and it would be burdensome to test them in additional orientations. (OSRAM SYLVANIA, Public Meeting Transcript, No. 5 at pp. 91–93; GE, Public Meeting Transcript, No. 5 at pp. 92–93)
In their comments, the CA IOUs expressed concern that universal position lamps were less efficacious and, because they are less expensive than position-dedicated lamps, they might be substituted in position-dedicated applications. (CA IOUs, No. 8 at pp. 2–3) The CA IOUs urged DOE to require testing universal position lamps at multiple orientations, suggesting that two or three additional orientations would not add significant testing burden. (CA IOUs, No. 8 at pp. 2–3) The Joint Comment agreed, encouraging DOE to examine the range of efficacy levels of universal position lamps when operated in a horizontal position. (Joint Comment, No. 9 at p. 2) NEMA stated that it agreed with ANSI C78.389, which limits testing to a lamp's specified orientation or a vertical base-up orientation if not specified (including universal position lamps). (NEMA, No. 6 at p. 11)
DOE reviewed manufacturer performance data for horizontal position only lamps, vertical base-up position only lamps, and universal position lamps (tested in a vertical, base-up position). In its review, DOE found the data reported in catalogs did not provide conclusive evidence of differences in efficacy between these lamp types. DOE also reviewed published data, such as manufacturer catalogs, for universal orientation lamps when operated in vertical base-up and horizontal orientations. This data suggests that universal position lamps are generally less efficacious when operated in a horizontal orientation.
DOE acknowledges that manufacturers cannot know the orientation in which universal lamps will be operated, and agrees that testing at multiple orientations would impose an undue burden. At the January 2012 TP public meeting, OSRAM SYLVANIA and GE stated that universal orientation lamps are most commonly used in a vertical position. (OSRAM SYLVANIA, Public Meeting Transcript, No. 5 at p. 91; GE, Public Meeting Transcript, No. 5 at p. 92)
Vertical position specifies the orientation of the lamp, but does not denote whether the base is up or down in the orientation. Of the HID lamps, only MH lamps are affected by operating position. Vertical burning MH lamps are available in base-up, base-down, and base-up/base-down designations.
Universal lamps are specified for projects for two major reasons: (1) The fixture can be aimed (
In this SNOPR, DOE retains its original proposal that HID lamps with a manufacturer-specified operating position be tested in the position specified, and that HID lamps with no specified operating position (including universal orientation lamps) be tested in the vertical base-up orientation.
Directional lamps, which are typically reflector lamps with a discernible beam pattern, have different setup and measurement requirements than omni-directional lamps. In the December 2011 TP NOPR, DOE proposed set-up and measurement requirements of directional lamps in accordance with ANSI C78.379, which provides classification of beam patterns and specification of directional lamp measurement and evaluation. 76 FR 77914, 77923 (Dec. 15, 2011).
The CA IOUs and the Joint Comment supported DOE's proposal to develop a new metric and test procedures for directional HID lamps. (CA IOUs, No. 8 at p. 4; Joint Comment, No. 9 at p. 1) NEMA agreed with using ANSI C78.379, but noted that industry standards and technical guidance are being developed for directional lamps, and recommended that DOE not include directional lamps in its rulemakings until the new industry references are available. (NEMA, No. 6 at p. 11)
In the February 2013 HID lamps ECS Interim Analysis document, DOE stated that it was considering excluding directional HID lamps from standards coverage, citing their small market share and the fact that this application is replacing less-efficient halogen lamps. (Docket No. EERE–2010–BT–STD–0043) As a result, DOE is not including directional lamp testing in this SNOPR.
In the December 2011 TP NOPR, DOE proposed that HID lamp efficacy be calculated as the initial lumen output divided by the measured input lamp wattage, with the resulting quotient rounded off to the nearest tenth of a lumen per watt. 76 FR 77914, 77923 (Dec. 15, 2011). This requirement is consistent with the 2009 GSFL/GSIL/IRL test procedures final rule, in which DOE required testing to a tenth of a lumen per watt. 74 FR 31829, 31836 (July 6, 2009).
In this SNOPR, DOE proposes specific provisions for initial lumen output and lamp input power measurements for clarity. DOE proposes that the initial lumen output be measured in accordance with section II.C.1.d, in which DOE maintained its proposal from the NOPR that photometric testing be conducted per IES LM–51–2013. For lamp input power, DOE proposes measurements be conducted in accordance with section 3.5, 3.9, and 3.10 of ANSI C78.389. Section 3.5 details the circuit types that can be used for the connecting the required measurement instrumentation, including the reference ballast, voltmeter, wattmeter, and/or ammeter to the HID lamp. Section 3.9 describes the methods necessary to compensate for the presence of instruments in the lamp circuit when taking the measurements. Lastly, section 3.10 (which applies exclusively to HPS lamps) gives instructions for the measurement of lamp amperes and volts at nominal lamp wattage. To measure the wattage of an HID lamp, if a voltmeter and ammeter are used then the product of the measured voltage and the current is the lamp wattage (input electrical power) of the HID lamp. If a wattmeter is used, then the measured value in watts is the lamp wattage of the HID lamp. DOE did not receive any comments following the December 2011 TP NOPR regarding input power measurements for HID lamps. In this SNOPR, DOE proposes to calculate HID lamp efficacy as the measured initial lumen output divided by the measured input power in watts, with the resulting quotient rounded off to the nearest tenth of a lumen per watt. DOE requests comment on the input power and lumen output measurements necessary to calculate lamp efficacy.
In the December 2011 TP NOPR, DOE proposed measuring center beam intensity and calculating the beam angle for directional lamps using the procedures described in ANSI C78.379. 76 FR 77914, 77923 (Dec. 15, 2011). During the January 2012 TP public meeting, NEMA expressed general concern about DOE's directional HID lamp requirements. (NEMA, Public Meeting Transcript, No. 5 at pp. 88–89) GE clarified that NEMA agreed with using ANSI C78.379, but that its concern was related to the specific metrics and related tolerances once the measurements were completed. (GE, Public Meeting Transcript, No. 5 at p. 89) NEMA elaborated that measuring the beam performance of directional lamps increases the measurement variation if zonal lumens are used to set efficiency limits. (NEMA, No. 6 at p. 11)
As discussed in section II.C.3, DOE is considering excluding directional lamps from its HID lamps ECS rulemaking. For this reason, DOE is not including center beam intensity or beam angle calculation provisions in this SNOPR.
In the December 2011 TP NOPR, DOE proposed to adopt CCT and CRI measurement methods based on CIE 15 and CIE 13.3. 76 FR 77914, 77924 (Dec. 15, 2011). DOE previously incorporated these standards in the GSFL/GSIL/IRL test procedures final rule. 74 FR 31829, 31834 (July 6, 2009).
During the January 2012 TP public meeting, the CA IOUs asked NEMA to distinguish its position on the proposed methodology for color quality measurements from its disagreement of using color quality to establish equipment classes in the HID lamps ECS. (CA IOUs, Public Meeting Transcript, No. 5 at pp. 106–107) NEMA responded that it had no issue with the proposed methods for measuring color quality of HID lamps. (NEMA, Public Meeting Transcript, No. 5 at p. 107)
NEMA commented that test standards are appropriate for CCT and CRI for lamps at 100 hours. NEMA further elaborated that the industry does not endorse the concept of CRI or CCT maintenance. (NEMA, No. 6 at p. 3) DOE acknowledges that after HID lamps have been seasoned (operated for 100 hours), the color characteristics can be measured. Although DOE is considering using initial CCT and CRI to determine scope and equipment classes in the HID lamps ECS rulemaking, DOE is not considering CCT or CRI maintenance requirements. (Docket No. EERE–2010–BT–STD–0043)
DOE acknowledges that the color shift of HID lamps occurs over time and is not possible to predict. Therefore, DOE proposes that after the initial seasoning period (100 hours of operation), manufacturers would measure CCT values for 21 HID lamps (see section II.C.2.b.i for a discussion of proposed sample size requirements). The sample
In the past, DOE has used CCT to define and categorize certain kinds of lamps (
Ushio commented that DOE should establish CCT requirements for MH lamps used in general lighting applications, but not for MH lamps used for special applications such as disinfection, curing, and aquariums. (Ushio, No. 7 at p. 1) In the concurrent HID lamps ECS rulemaking, DOE is considering excluding certain HID lamps in a given CCT range from coverage because they are used only for specialty applications. DOE will address comments related to CCT requirements as part of the standards rulemaking.
NEMA stated that if CCT requirements are established, CCT should have a tolerance of 4 percent. (NEMA, No. 6 at p. 3) DOE researched CCT and considered three options related to tolerances for CCT values for HID lamps:
1. Set a fixed tolerance of at least 4 percent for the CCT value as proposed by NEMA in written comments. For other covered products (
2. Define the x,y coordinates for the different nominal CCTs, and then apply a seven-step MacAdam ellipse to the center of the x,y value. If the measured x,y values corresponding to a lamp's CCT were within that ellipse, the lamp would be characterized by that nominal CCT. This is the standard protocol for lighting industry chromaticity standards.
No industry chromaticity standards are currently defined for HID lamps. DOE researched available chromaticity standards for fluorescent lamps (ANSI C78.376–2001) and solid-state lighting (SSL) (ANSI C78.377–2011). DOE notes that in the ENERGY STAR November 30, 2012 letter, EPA stated that there is no industry standard to reference.
DOE researched publicly available chromaticity data for HID lamps found in manufacturer catalogs, and found that the graphed x,y coordinates for many HID lamps would not fall within the seven-step MacAdam ellipses for nominal fluorescent lamp CCT values in ANSI C78.376–2001. Because of the lack of industry chromaticity standards for HID lamps, and DOE's findings that HID lamps often do not fall within the seven-step MacAdam ellipses for fluorescent lamps, DOE rejects this method of testing CCT values in HID lamps.
3. Round the mean of the sample of lamps' CCT values to the nearest 10 kelvin, as is prescribed in test procedures for general service fluorescent lamps in 10 CFR part 430, subpart B, appendix R. In the 2012 GSFL/GSIL/IRL test procedures final rule, DOE discussed originally requiring rounding to the nearest single kelvin, but increased it to the nearest 10 kelvin per a recommendation from NEMA and in consultation with NIST. 77 FR 4203, 4207 (Jan. 27, 2012).
Therefore, DOE proposes that the HID lamps be measured for CCT and, like the rounding approach used in the GSFL/GSIL/IRL test procedures, that CCT values be rounded to the nearest 10 kelvin.
In the December 2011 TP NOPR, DOE proposed a test method to measure CRI because DOE was considering CRI as a means to define the scope of coverage for HID lamps for potential energy conservation standards. DOE proposed to adopt the methods and procedures set forth in CIE 13.3 to determine lamp CRI. 76 FR 77914, 77924 (Dec. 15, 2011).
The CA IOUs supported the proposed color quality measurements. (CA IOUs, No. 8 at p. 2) NEMA commented that CCT and CRI have little relevance to the energy efficiency of HID lamps. (NEMA, No. 6 at p. 3) However, in commenting on the February 2012 HID lamps ECS Framework document, NEMA supported using CRI as a metric for possible exclusion of certain lamps (
In the HID lamps ECS rulemaking, DOE is considering a CRI above which lamps would not be considered for standards. (Docket No. EERE–2010–BT–STD–0043) DOE and manufacturers would use the proposed CRI test method to determine whether a lamp is subject to standards based on CRI applied to a basic model of lamp. In this SNOPR, DOE proposes that the CRI of HID lamps be rounded to the nearest whole number, as is consistent with rounding for other lighting technologies.
NEMA stated that if CRI requirements are established, CRI measurements should be given a tolerance of at least 3 percent. (NEMA, No. 6 at p. 3) In the HID lamps ECS rulemaking, DOE is only considering using CRI to determine whether a particular lamp model is considered for standards. The CRI itself is not under consideration for being regulated or reported. (Docket No. EERE–2010–BT–STD–0043) Because of this, DOE did not give further consideration to the tolerance of at least 3 percent requested by NEMA.
In the December 2011 TP NOPR, DOE proposed measuring lumen maintenance for HID lamps at 40 percent and 70 percent of rated lamp life, as described in LM–47. 76 FR 77914, 77923–24, 77934 (Dec. 15, 2011).
The Joint Comment supported measuring lumen maintenance, which is used in lighting design calculations to estimate future light output and energy use in lighting systems more accurately. The Joint Comment stated that improved lumen maintenance results in energy savings in the field and encouraged DOE to include lumen maintenance in the test procedures. (Joint Comment, No. 9 at p. 1) The CA IOUs also supported DOE's proposal to measure lumen maintenance for HID lamps. (CA IOUs, No. 8 at p. 1)
NEMA raised a number of logistical issues related to the proposal and was generally not supportive of lumen maintenance testing. NEMA cited particular concerns about lumen maintenance testing for HID lamps, including: (1) The significant capital investment and operating expenses for long-term testing of 21 or more samples for tens or hundreds of basic models, ranging in wattage from 50 to 1,000 watts; (2) the difficulty of obtaining NVLAP accreditation for manufacturer testing facilities for lumen maintenance; and (3) the potential delays in new product introduction while long-term lumen maintenance data is gathered. (NEMA, No. 6 at pp. 2, 3, 12, 13) NEMA stated that new product introduction to the market could be delayed if testing at 40 percent of rated life is required before a lamp can be introduced. (NEMA, No. 6 at p. 3)
At this time, DOE does not plan to include lumen maintenance requirements in potential energy conservation standards for HID lamps,
In the December 2011 TP NOPR, DOE referenced LM–47–01. 76 FR 77914, 77916–17, 77923–24 (Dec. 15, 2011). Intertek commented on the use of older versions of IES standards (
NEMA commented that the 2012 version of the IES Design Guide 10 (DG–10–12) states “mean lumens are defined as the lumens emitted at 40 percent (fluorescent and HID) or 50 percent (other sources) of rated lamp life.” (NEMA, No. 6 at p. 3) NEMA stated that this definition is incorrect, and should specify 40 percent for MH/MH lamps and 50 percent for HPS lamps. (NEMA, No. 6 at pp. 2–3) NEMA stated that it has alerted IES to the error. NEMA stated that the accepted industry practice is to measure lumen maintenance at 40 percent of rated life for MH lamps. (NEMA, No. 6 at pp. 2–3) For HPS and MV lamps, NEMA stated that the accepted industry practice is to measure lumen maintenance at 50 percent of rated life. (NEMA, No. 6 at pp. 2–3)
The CA IOUs were supportive of measuring lumen output at one defined point in the rated lamp life for all HID lamp types. The CA IOUs further encouraged lumen maintenance testing even if the proposed 40 percent and 70 percent measurement points had to be modified to accommodate industry concerns. (CA IOUs, No. 8 at pp. 1–2) NEMA commented that HID lamps can have very long operating lifetimes (
NEMA also stated that if 40 percent of life lumen maintenance is required, for newly introduced products DOE should allow projection of lumen maintenance values using manufacturer-accepted practices. (NEMA, No. 6 at p. 3) NEMA stressed that existing data should be used, where possible, to reduce potential delays to market. (NEMA, No. 6 at pp. 2, 13; NEMA, Public Meeting Transcript, No. 5 at pp. 35–36, 39–42) The CA IOUs also supported lumen maintenance testing and suggested that standardizing on a measurement point of 40 percent of rated lamp life for all HID lamps would not be overly burdensome to manufacturers, and would facilitate comparison of lamps. (CA IOUs, No. 8 at pp. 1–2) DOE reviewed technical reports, industry test procedures, and other literature and could not find a lumen maintenance extrapolation methodology for HID lamps.
In the December 2011 TP NOPR, DOE proposed a requirement that the HID lamp be energized before efficiency testing was conducted. 76 FR 77914, 77921 (Dec. 15, 2011). DOE did not propose testing at reduced light output. At the January 2012 TP public meeting, the CA IOUs asked about HID lamps designed to operate on dimming systems, to which OSRAM SYLVANIA responded that HID lamps are typically not designed for dimming, but can be dimmed in compatible lamp and ballast systems. (CA IOUs, Public Meeting Transcript, No. 5 at pp. 113–114; OSRAM SYLVANIA, Public Meeting Transcript, No. 5 at p. 114) In written comments, the CA IOUs noted that dimming performance can vary significantly among HID lamp technologies, and encouraged DOE to develop a procedure to test and measure the performance of HID lamps in a dimmed state. (CA IOUs, No. 8 at p. 4) The Joint Comment agreed. (Joint Comment, No. 9 at p. 2)
In the April 2010 HID lamps notice of proposed determination, DOE stated that dimming (operating the lamps at less than full power) HID lamps is uncommon. 76 FR 22031, 22034 (April 27, 2010). NEMA responded that there were currently no industry standards for dimming HID lamp and ballast systems, although an industry task force had been organized to address the issue. (Docket No. EE–DET–03–001, NEMA, No. 2 at p. 2) NEMA also directed DOE to NEMA LSD 14–2010, “Guidelines on the Application of Dimming High-Intensity Discharge Lamps.” (Docket No. EE–DET–03–001, NEMA, No. 2 at p. 2) DOE has since reviewed LSD 14–2010 and identified three major issues related to dimming HID lamps:
1. HID lamps should not be dimmed below 50 percent of rated lamp wattage.
2. Color, lamp life, lumen depreciation, and efficacy can be affected by dimming.
3. Lamps, ballasts, and control systems could have compatibility issues because each component of the HID system would be required to be designed for use with dimming (
In the February 2013 HID lamps ECS Interim Analysis document, DOE stated that it plans to assess HID lamp performance at full light output only. (Docket No. EERE–2010–BT–STD–0043, DOE, Framework Document, No. 2 at pp. 15) Therefore, in this SNOPR, DOE is not proposing to require testing of HID lamps in the dimmed state for potential energy conservation standards.
In the December 2011 TP NOPR, DOE stated that HID lamps do not operate in standby or off mode and, thus, energy use in those states would not be
In the December 2011 TP NOPR, DOE proposed that testing be conducted by test laboratories accredited by NVLAP or an accrediting organization recognized by NVLAP. 76 FR 77914, 77923 (Dec. 15, 2011). NVLAP establishes standards for the accreditation of laboratories that test for compliance with relevant industry standards pursuant to 15 CFR 285.3.
DOE received comments on the following related topics: (1) Additional accrediting organizations; (2) color measurements; (3) lab-to-lab measurement variations; and (4) lumen maintenance testing and NVLAP.
NEMA generally supported DOE's proposed laboratory accreditation requirements but stated that NVLAP does not recognize other accrediting organizations. NEMA cautioned DOE against involving other accrediting organizations, citing additional administrative and cost burdens, and recommended that DOE limit its laboratory accreditation requirements to NVLAP-accredited laboratories only. (NEMA, No. 6 at p. 12) NEMA also stated that any CCT or CRI measurements should be performed by an NVLAP-accredited facility. (NEMA, No. 6 at p. 3)
NEMA stated that almost all HID lamp lumen maintenance testing occurs at lamp manufacturing facilities, which are typically not NVLAP-accredited. (NEMA, No. 6 at p. 13) During the March 2012 ECS public meeting, Venture elaborated by stating that manufacturers support using NVLAP-accredited laboratories for testing color and efficacy, but that lumen maintenance testing could overload these external laboratories. Venture stated that this was a similar problem with GSIL life testing. (Docket No. EERE–2010–BT–STD–0043, Venture, No. 7 at pp. 166–167) DOE recognizes these comments related to lumen maintenance but no longer proposes lumen maintenance as part of this SNOPR.
DOE finds that the benefits from testing in NVLAP-accredited laboratories only do not outweigh the costs, both in terms of financial costs and additional time before new lamp models are approved for commercial sale. Because of this, DOE does not propose that testing related to efficacy and color measurements be performed in NVLAP-accredited laboratories only. DOE requests comment on the proposal to not require testing to be performed in NVLAP-accredited laboratories only.
NEMA directed DOE to NVLAP's “Proficiency Testing for Energy Efficient Lighting Products,” which shows lab-to-lab measurement variations of more than 4 percent, depending on the lamp technology. (NEMA, No. 6 at p. 13) DOE researched this document and determined that the “Proficiency Testing for Energy Efficient Lighting Products” document is still being developed and not available.
The test procedures will be effective 30 days after publication of any final rule in the
The compliance date for making any representations of the energy efficiency of covered HID lamps is 180 days from the date of the publication of any final rule in the
Until DOE establishes energy conservation standards for HID lamps, manufacturers, including importers, are not required to submit compliance statements or certification reports for HID lamps. DOE will address these requirements should DOE establish energy conservation standards for HID lamps.
The Office of Management and Budget (OMB) has determined that test procedures rulemakings do not constitute “significant regulatory actions” under section 3(f) of Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993). Accordingly, this action was not subject to review under the Executive Order by the Office of Information and Regulatory Affairs (OIRA) in the OMB.
The Regulatory Flexibility Act (5 U.S.C. 601
DOE reviewed the test procedures considered in today's SNOPR under the provisions of the Regulatory Flexibility Act (RFA) and the policies and procedures published on February 19, 2003. As discussed in more detail below, DOE found that because the proposed test procedures have not previously been required of manufacturers, all manufacturers, including small manufacturers, may potentially experience a financial burden associated with new testing requirements. While examining this issue, DOE determined that it could not certify that the proposed rule, if promulgated, would not have a significant impact on a substantial number of small entities. Therefore, DOE has prepared an Initial Regulatory Flexibility Analysis (IRFA) for this rulemaking. The IRFA describes the potential impacts on small businesses associated with HID lamp testing and labeling requirements. DOE has transmitted a copy of this IRFA to the Chief Counsel for Advocacy of the Small Business Administration (SBA) for review.
SBA has set a size threshold for electric lamp manufacturers to describe those entities that are classified as “small businesses” for the purposes of the IRFA. DOE used the SBA's small business size standards to determine whether any small manufacturers of HID lamps would be subject to the requirements of the rule. 65 FR 30836, 30849 (May 15, 2000), as amended at 65 FR 53533, 53545 (Sept. 5, 2000) and codified at 13 CFR part 121. The size
In the December 2011 TP NOPR, DOE stated that none of the HID lamp manufacturers surveyed would be considered a small business under SBA size standards—NAICS code 335110 and under 1,000 employees. 76 FR 77914, 77925 (Dec. 15, 2011). In making this determination, DOE developed a list of potential manufacturers by referring to the energy conservation standards (Docket EERE–2010–BT–STD–0043), reviewing NEMA membership, and surveying the lighting industry. After developing the list of potential manufacturers, DOE researched each manufacturer to determine if the manufacturer was domestic and how many employees the manufacturer employed. DOE received no comments on its statement on small businesses following the December 2011 TP NOPR. However, DOE's additional review identified two small manufacturers that potentially qualify for a small business under NAICS 335110 because these companies had fewer than 1,000 employees, were domestic, and not owned by a subsidy or owned by a larger company.
DOE also acknowledges Philips and NEMA's comments that DOE underestimated testing expenses in the December 2011 TP NOPR. Philips stated in the HID TP public meeting that annual electricity cost alone for lumen maintenance testing would exceed $200 per individual lamp, extrapolating to $4,200 for a sample size of 21 lamps. Philips estimated their catalog represents 200 basic models and thus the total cost of electricity could be over $2.3 million (accounting for the fact that lumen maintenance testing could require two to three years to complete). (Public Meeting Transcript, No. 5 at pp. 110–111) NEMA reiterated that electricity costs for lumen maintenance testing were $200 per lamp (or more than $4,200 for 21 lamps of a basic model per year). (NEMA, No. 6 at p. 13) DOE determined that GE, Philips, and OSRAM SYLVANIA (none of which qualify as small HID lamp manufacturers) each possibly have more than 200 basic models of HID lamps, and used an estimated number of basic models from these manufacturers' catalogs to estimate the potential annual electricity costs per manufacturer for lumen maintenance testing. As stated previously, DOE no longer proposes lumen maintenance testing for use with the possible energy conservation standard.
Labor and operating costs associated with conducting the input power, lumen output, CCT and CRI testing contribute to overall burden. However, DOE believes that calculating the efficacy of an HID lamp does not result in any incremental testing burden beyond the cost of carrying out lumen output and input power testing. DOE expects that the majority of manufacturers are already testing for lumen output, input power, CCT and CRI, as these metrics are well-established and most manufacturers report the values in their catalogs. However, DOE's sample size and other requirements may differ from those selected for a manufacturer's existing data. Therefore, DOE included the cost of carrying out these tests in its assessment of testing burden.
Table III.1 lists representative rated lamp wattages and the ballast input power required to operate the corresponding lamps. DOE calculated the annual costs of operating the lamps for representative ballast input power values. Table III.1 facilitates comparison of representative lamp wattages.
The potential total number of lamps tested is a function of the number of basic models and the required sample size. In the December 2011 TP NOPR, DOE proposed a sample size of 21 for lamp efficacy, CCT, and lumen maintenance. As previously stated in this SNOPR, DOE only plans to test lamp efficacy and CCT in setting potential HID lamps energy conservation standards (and CRI for excluding certain types of lamps from standards coverage). In addition, DOE continues to propose in this SNOPR to use a sample size for lamp efficacy and CCT of 21 lamps per basic model.
For stabilization and related testing, DOE assumed 7 hours of operation for the MH lamps and 3 hours for HPS and MV lamps. That ballast input power required to operate the lamps (shown in Table III.1) was multiplied by the respective hours and an electricity rate of $0.1052 per kilowatt-hour (kWh).
NEMA's written comments reference an electricity cost of $0.10 per kWh. These rates should be considered the same for most purposes.
The costs in the table were calculated as follows:
Table III.2 shows the operating costs for MV lamps for a possible manufacturer. The number of basic models is multiplied by the sample size by the input power (see Table III.1) by the operating hours (seasoning plus testing operation) and finally multiplied by the electricity cost per kilowatt-hour. The total cost for electricity for testing this family of lamps can be determined by summing the total electricity costs for the lamps—$1,218.52. The cost per basic model for electricity can be determined by dividing the total electricity costs ($1,218.52) by the total number of basic models (16), which is a cost per basic model of $76.16.
NEMA requested in its review of estimated testing costs that labor-year costs be added into the analysis. (NEMA, No. 6 at p. 13) DOE reviewed the 2012 median pay for electrical and electronic engineering technicians ($57,850), electrical and electronics engineers ($89,630) and electro-mechanical technicians ($51,820), and calculated an average annual salary of $66,433 from the U.S. Department of Labor Bureau of Labor Statistics.
DOE assumed that the testing technician would not be needed for the entire time because the technician can perform other tasks not related to testing the lamp while the lamp is being stabilized. Therefore, DOE multiplied the full labor rate by 50 percent of the expected total operation time of the lamp.
Table III.3 shows the labor costs for MV lamps for a possible manufacturer. The number of basic models is multiplied by the sample size by the hourly labor rate by the testing time by the time utilization of the technician (50 percent of the technician's time during testing) to determine the total labor costs. The total example labor costs can be determined by summing all of the values in the total labor costs column to equal $22,841.28. The total example labor cost per basic model can be determined by dividing the total labor costs ($22,481.28) by the total quantity of basic models (16) to equal about $1,427.58.
The process of determining the electricity costs (depicted in Table III.2) and determining the labor costs (depicted in Table III.3) was repeated for MH and HPS lamps. In summary, the cost for electricity per HPS basic model was $55.88 and per MH basic model was $59.81. The labor costs per HPS basic model was $1,427.58 and the labor costs per MH basic model was $3,331.02.
In the August 30, 2013, memorandum documenting ex parte communication, NEMA indicated further reservations concerning future interpretation of the proposed definition of “basic model,” stating that because HID lamps are not classified into families, every HID lamp could potentially be identified as a separate basic model requiring testing and significantly increasing costs. (Docket EERE–2010–BT–STD–0043, NEMA No. 29 at p. 2) In response to NEMA's comment about the lack of families for HID lamps, DOE analyzed a large number of potential basic models for each type of HID lamp.
DOE was able to collect annual revenue estimates for the two small
The final cost per manufacturer primarily depends on the number of basic models of that lamp type that a manufacturer sells. Some lamp types have more basic models than others. These are not annual costs because DOE does not require manufacturers to retest a basic model annually. The initial test results used to generate a certified rating for a basic model remain valid as long as the basic model has not been modified from the tested design in a way that makes it less efficient or more consumptive, which would require a change to the certified rating. If a manufacturer has modified a basic model in a way that makes it more efficient or less consumptive, new testing is required only if the manufacturer wishes to make representations of the new, more efficient rating.
DOE seeks comments on its determination that it could not certify that the proposed rule, if promulgated, would not have a significant impact on a substantial number of small entities. DOE also seeks comment on the methodologies and data used to reach this determination, including data on the average number of years a basic model remains unchanged (and therefore does not require annual retesting).
There is currently no information collection requirement related to the test procedures for HID lamps. In the event that DOE proposes an energy conservation standard with which manufacturers must demonstrate compliance, or otherwise proposes to require the collection of information derived from the testing of HID lamps according to these test procedures, DOE will seek OMB approval of such information collection requirement.
Manufacturers of covered products must certify to DOE that their products comply with any applicable energy conservation standard developed by DOE. In certifying compliance, manufacturers must test their products according to the applicable DOE test procedure, including any amendments adopted for that test procedure.
DOE established regulations for the certification and recordkeeping requirements for certain covered consumer products and commercial equipment. 76 FR 12422 (March 7, 2011). The collection-of-information requirement for the certification and recordkeeping was subject to review and approval by OMB under the Paperwork Reduction Act (PRA). This requirement was approved by OMB under OMB Control Number 1910–1400. Public reporting burden for the certification was estimated to average 20 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.
As stated above, if DOE proposes an energy conservation standard for HID lamps with which manufacturers must demonstrate compliance, DOE will seek OMB approval of the associated information collection requirement. DOE will seek approval either through a proposed amendment to the information collection requirement approved under OMB Control Number 1910–1400 or as a separate proposed information collection requirement.
Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.
In this proposed rule, DOE proposes test procedures that it expects will be used to develop and implement future energy conservation standards for HID lamps. DOE has determined that this rule falls into a class of actions that are categorically excluded from review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321
Executive Order 13132, “Federalism,” 64 FR 43255 (Aug. 4, 1999), imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have Federalism implications. The Executive Order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive Order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE has examined this proposed rule and has determined that it 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. EPCA governs and prescribes Federal preemption of State regulations as to energy conservation for the equipment that is the subject of today's proposed rule. States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297(d)) No further action is required by Executive Order 13132.
Regarding the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (Feb. 7, 1996), imposes on Federal agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a clear legal standard for affected conduct rather than a general standard; and (4) promote simplification and burden reduction. Section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in sections 3(a) and 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, the proposed rule meets the relevant standards of Executive Order 12988.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104–4, sec. 201 (codified at 2 U.S.C. 1531). For a proposed regulatory action likely to result in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a proposed “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect small governments. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820; also available at
Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105–277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.
DOE has determined, under Executive Order 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights,” 53 FR 8859 (March 18, 1988), that this regulation would not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.
Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed today's proposed rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.
Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OMB a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that: (1) Is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (3) is designated by the Administrator of OIRA as a significant energy action. For any proposed significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use.
Today's regulatory action to create the test procedures for measuring the energy efficiency of HID lamps is not a significant regulatory action under Executive Order 12866. Moreover, it would not have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as a significant energy action by the Administrator of OIRA. Therefore, it is not a significant energy action, and, accordingly, DOE has not prepared a Statement of Energy Effects.
Under section 301 of the Department of Energy Organization Act (Pub. L. 95–91; 42 U.S.C. 7101), DOE must comply with section 32 of the Federal Energy Administration Act of 1974, as amended by the Federal Energy Administration Authorization Act of 1977. (15 U.S.C. 788; FEAA) Section 32 essentially provides in relevant part that, where a proposed rule authorizes or requires use of commercial standards, the notice of proposed rulemaking must inform the public of the use and background of such standards. In addition, section 32(c) requires DOE to consult with the Attorney General and the Chairman of the Federal Trade Commission (FTC) concerning the impact of the commercial or industry standards on competition.
The proposed test procedures incorporate testing methods contained in the following commercial standards:
1. ANSI C78.389–R2009, “American National Standard for Electric Lamps—High Intensity Discharge—Methods of Measuring Characteristics” (sections 1.0, 2.0, 3.0, and Figure 1);
2. CIE 13.3–1995, “Technical Report: Method of Measuring and Specifying Colour Rendering Properties of Light Sources”;
3. CIE 15:2004, “Technical Report: Colorimetry”;
4. IES LM–51–13, “Approved Method for the Electrical and Photometric Measurements of High Intensity Discharge Lamps” (sections 1.0, 5.2, 7.0, and 8.0); and
5. IES LM–78–07, “IESNA Approved Method for Total Luminous Flux Measurement of Lamps Using an Integrating Sphere Photometer” (sections 3.1 and 6.3).
DOE evaluated these standards and is unable to conclude whether they fully comply with the requirements of section 32(b) of the Federal Energy Administration Act, (
DOE will accept comments, data, and information regarding this proposed rule no later than the date provided in the
However, your contact information will be publicly viewable if you include it in the comment or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Otherwise, persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments.
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Include contact information each time you submit comments, data, documents, and other information to DOE. If you submit via mail or hand delivery/courier, please provide all items on a CD, if feasible, in which case it is not necessary to submit printed copies. No facsimiles (faxes) will be accepted.
Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are not secured, written in English, and free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author.
Factors of interest to DOE when evaluating requests to treat submitted information as confidential include: (1) A description of the items; (2) whether and why such items are customarily treated as confidential within the industry; (3) whether the information is generally known by or available from other sources; (4) whether the information has previously been made available to others without obligation concerning its confidentiality; (5) an explanation of the competitive injury to the submitting person which would result from public disclosure; (6) when such information might lose its confidential character due to the passage of time; and (7) why disclosure of the information would be contrary to the public interest.
It is DOE's policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure).
DOE requests comments and data on the HID lamp test procedures proposed in this SNOPR. Although comments are welcome on all aspects of this rulemaking, DOE is particularly interested in comments on the following:
DOE seeks comments on all of the proposed definitions in this SNOPR.
DOE requests comments on its proposal to withdraw the December
DOE requests comments on its proposal to retain the December 2011 TP NOPR proposed definition of “color rendering index.”
DOE requests comments on its proposal to retain the December 2011 TP NOPR proposed definition of “correlated color temperature.”
DOE requests comments on its proposal to revise the December 2011 TP NOPR proposed definition of “directional lamp.”
DOE requests comments on its proposal to retain the December 2011 TP NOPR proposed definition of “high-pressure sodium lamp.”
DOE requests comments on its proposal to add a definition for “initial lumen output.”
DOE requests comments on its proposal to revise the December 2011 TP NOPR proposed definition for “lamp efficacy.”
DOE requests comments on its proposal to withdraw the December 2011 TP NOPR proposed definition of “lamp electrical power input.”
DOE requests comments on its proposal to revise the December 2011 TP NOPR proposed definition of “lamp wattage.”
DOE requests comments on its proposal to withdraw the December 2011 TP NOPR proposed definition of “lumen maintenance.”
DOE requests comments on its proposal to retain the December 2011 TP NOPR definition of “mercury vapor lamp.”
DOE requests comments on its proposal to retain the December 2011 TP NOPR definition of “metal halide lamp.”
DOE requests comments on its proposal to withdraw December 2011 TP NOPR definition for “rated luminous flux or lumen output.”
DOE requests comments on its proposal to retain the December 2011 TP NOPR definition for “self-ballasted lamp.”
DOE requests comments on its proposal to retain the definition of “ballast efficiency” for high-intensity discharge fixtures, currently set forth at 10 CFR 431.322.
DOE requests comments on its proposal to revise the December 2011 TP NOPR definition of “basic model.”
DOE requests comments on retaining the December 2011 TP NOPR proposed ambient test temperature requirements (25 °C ±5 °C) based on IES LM–51–13.
DOE requests comments on its proposal to eliminate the December 2011 TP NOPR proposed specific air speed requirements.
DOE requests comments on its proposed approach for testing HID lamps for which there are no ANSI reference ballasts.
DOE requests comments on its proposal to incorporate by reference sections 3.1 and 6.3 of LM–78–07, and add related text that references LM–78–07 guidance on integrating sphere measurement errors and corrections.
DOE requests comments on its proposed sampling plan as summarized and discussed in section II.C.1.c, especially regarding sample size (21 units for lamp efficacy and correlated color temperature), statistical representation (confidence intervals of 90 percent for MH lamps, and 99 percent for HPS and MV lamps), and divisor (0.97).
DOE requests comments on its proposed requirement that HID lamps with no specified operating position (including universal position lamps) be operated in the vertical base-up orientation for seasoning and stabilization purposes.
DOE requests comments on its proposed cool-down and re-stabilization requirements.
DOE requests comments on its proposed requirement that HID lamps with no specified operating position (including universal position lamps) be tested in the vertical base up position.
DOE requests comments on its proposal to exclude directional lamp testing in this SNOPR.
DOE requests comments on its proposed method of calculating HID lamp efficacy and reporting efficacy to the nearest tenth of a lumen per watt.
DOE requests comments on its proposed measurement methods for color characteristics (CCT and CRI).
DOE requests comments on its proposal that eliminates testing HID lamps in a dimmed state.
DOE requests comment on its determination that it could not certify that the proposed rule, if promulgated, would not have a significant impact on a substantial number of small entities. DOE also seeks comment on the methodologies and data used to reach this determination.
DOE requests comment on the expected frequency of introductions of new basic models and the average number of years a basic model remains unmodified to potentially better determine the potential effects of this rule on small businesses.
The Secretary of Energy has approved publication of this supplemental notice of proposed rulemaking.
Administrative practice and procedure, Buildings and facilities,
Administrative practice and procedure, Confidential business information, Energy conservation, Household appliances, Imports, Incorporation by reference, Reporting and recordkeeping requirements, Small business.
For the reasons stated in the preamble, DOE proposes to amend parts 429 and 431 of chapter II of title 10, Code of Federal Regulations as set forth below.
42 U.S.C. 6291–6317.
(a) When testing of covered products or covered equipment is required to comply with section 323(c) of the Act, or to comply with rules prescribed under sections 324, 325, or 342, 344, 345, or 346 of the Act, a sample composed of production units (or units representative of production units) of the basic model being tested must be selected at random and tested, and must meet the criteria found in §§ 429.14 through 429.55 of this subpart. Components of similar design may be substituted without additional testing if the substitution does not affect energy or water consumption. Any represented values of energy efficiency, water efficiency, energy consumption, or water consumption for all individual models represented by a given basic model must be the same.
(b) Unless otherwise specified, the minimum number of units tested must be no less than two (except where a different minimum limit is specified in §§ 429.14 through 429.55 of this subpart).
(a)
(2)(i) For each basic model of HID lamp, a sample of sufficient size, but not less than 21 units, shall be randomly selected and tested to ensure that—any represented value of lamp efficacy of a basic model shall be less than or equal to the lower of:
(A) The mean of the sample,
(B) The lower confidence limit (LCL) of the true mean divided by 0.97,
(ii) For each basic model of HID lamp, the correlated color temperature (CCT) must be measured from the same lamps selected for the lamp efficacy measurements in paragraph (a)(2)(i) of this section (
(b)
42 U.S.C. 6291–6317.
(1) The light-producing arc is stabilized by the arc tube wall temperature; and
(2) The arc tube wall loading is in excess of 3 watts/cm
This subpart sets forth energy conservation requirements for high-intensity discharge lamps, pursuant to Parts A and A–1 of Title III of the Energy Policy and Conservation Act, as amended, and 42 U.S.C. 6291, et al.
(a)
(b)
(1) ANSI C78.389–2004 (R2009) (“ANSI C78.389”), American National Standard for Electric Lamps—High Intensity Discharge—Methods of Measuring Characteristics, approved August 9, 2009, IBR approved for § 431.454.
(b) [Reserved].
(c)
(1) CIE 13.3–1995 (“CIE 13.3–1995”), Technical Report: Method of Measuring and Specifying Colour Rendering Properties of Light Sources, 1995. IBR approved for § 431.454.
(2) CIE 15:2004 (“CIE 15–2004”), Technical Report: Colorimetry, 2004. IBR approved for § 431.454.
(d)
(1) IES LM–51–13 (“LM–51–13”), Approved Method for the Electrical and Photometric Measurements of High Intensity Discharge Lamps, 2013. IBR approved for § 431.454.
(2) IES LM–78–07 (“LM–78–07”), IESNA Approved Method for Total Luminous Flux Measurement of Lamps Using an Integrating Sphere Photometer, 2007. IBR approved for § 431.454.
After [DATE 180 DAYS AFTER PUBLICATION OF TEST PROCEDURE FINAL RULE IN THE
(a)
(2)
(3)
(4)
(5)
(b)
(2)
(3)
(c)
(1)
(ii) Measure the input power in watts as specified in sections 3.5, 3.9, and 3.10 of ANSI C78.389 (incorporated by reference, see § 431.453). If a voltmeter and ammeter are used for measurements, multiply the measured voltage and current values.
(iii) HID lamp efficacy must be calculated as the value from (c)(1)(i) divided by the value from (c)(1)(ii) of this section, with the resulting quotient rounded off to the nearest tenth of a lumen per watt.
(2)
(ii) Determine HID lamp CRI using the methods for measurement and characterizing color set forth in CIE 15 and CIE 13.3 (incorporated by reference, see § 431.453). Measure HID lamp CRI if necessary to determine whether a lamp is subject to standards based on its CRI as specified in § 431.455. The CRI must be rounded to the nearest whole number.